Du Pont lead the pack of Dow winners
US stocks ended with strong gains on Tuesday, 23 April 2013. Indices recouped back after a phony terror tweet from a hacked Associated Press Twitter account, as investors embraced upbeat earnings while awaiting Apple's results. Overseas developments primed U.S. equities for an upbeat start to the session. Although economic data from Europe was largely disappointing, commentary from the region overshadowed the data.
For the day, the Dow ended higher by 152.29 points (1.05%) at 14,719.46. Nasdaq ended higher by 35.75 points (1.11%) at 3,269.33. S&P 500 ended higher by 16.28 points (1.04%) at 1,578.78.
All ten economic sectors ended higher led by financial and technology sectors. Twenty-four out of thirty Dow components ended higher led by Du Pont.
Dow lost more than 150 points in a matter of seconds, briefly trading down nearly 13 points on the day, before springing back after the Associated Press said its Twitter account was hacked. The AP's Twitter feed had erroneously said that there had been two explosions at the White House.
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Latest data showed that manufacturing and services PMI reports from France and Germany came in below 50, a level which indicates contraction. This fueled speculation about a possible European Central Bank rate cut at its upcoming policy meeting. In addition, European Commission President Jose Manuel Barroso was quoted as saying the policy of austerity "has reached its limits."
The talk of further monetary easing combined with Mr. Barroso's comments buoyed European indices, and contributed to an upbeat start to the U.S. session.
Today's economic data focused on housing. New home sales increased 1.7% in March to 417,000. There was no revision to the February report, which indicated 411,000 new homes were sold. That March number is still down from the recent January peak when 445,000 homes were sold. The consensus expected sales to increase to 415,000.
Inventory levels inched higher, rising from 150,000 in February to 153,000 in March. That represents a 4.4-month supply and is still well below levels considered normal. Like existing homes, new home inventories should trend around a 6.0-month supply when the industry is in good shape.
Among major stocks under focus, DuPont was up 4.1%, after its first-quarter earnings more than doubled as drought conditions prompted farmers to buy more of its drought-resistant seeds and other products to protect crops. Bank of America added 3% after Morgan Stanley upgraded the Dow member's shares to overweight from equal weight. In addition, Bank of America has announced the buyback of 20,000 shares. Travelers rose 2.1% after the Dow member and insurer reported a jump in first-quarter profit. Netfix shares rose 24% , a day after earnings beat estimates.
The tech space is another beneficiary of better-than-expected earnings after ARM Holdings and Texas Instruments surprised to the upside.
In the commodity space, the price of oil slipped, with crude down 1 cent at $89.18 a barrel and gold off $12.40 to end at $1,408.80 an ounce.
For every stock on the decline, four gained on the New York Stock Exchange, where 684 million shares exchanged hands. Composite volume surpassed 3.5 billion.
Indian ADRs ended mixed on Tuesday. In the IT space, Infosys was down 0.3% and Wipro was up 0.8%. In the Banking space, HDFC Bank was down 0.3% and ICICI Bank was up 2.1%. In the Telecom space, Tata Communication was down 0.6%. In other space, Tata Motors was up 0.9%, Dr Reddys was up 0.8% and Sterlite was up 0.5%.
Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET while March durable orders and durable orders ex-transportation will be announced at 8:30 ET. On the earnings front, Boeing and Ford Motor will shed light on their first quarter results before the opening bell. The U.S. Treasury will auction off $35 billion in 5-yr notes.
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