Fed member comments give U.S. stocks a boost
U.S. stocks are getting a lift from Federal Reserve comments about the central bank's bond-buying program.
The Dow Jones Industrial Average (INDEXDJX:.DJI) rose nearly 70 points after dipping below the previous close early in the trading session.
The Standard & Poor’s 500 Index (INDEXSP:.INX) began a short five-point climb from the opening bell to 1,671.55.
If the momentum continues, both indexes are set to once again reach record closes.
The NASDAQ Composite Index (INDEXNASDAQ:.IXIC) is rising nearly eight points higher to 3,505.72.
St. Louis Fed president James Bullard said he's in favour of continuing the bond-buying program. Meanwhile, New York Fed president William Dudley and vice-chairman of the Federal Open Market Committee, also in favour of the Fed's program, said markets are sensitive to any stimulus withdrawal.
There was no major U.S. economic data on today's schedule.
WHAT TO WATCH:
On Wednesday, Federal Reserve Chairman Ben Bernanke will testify before Congress and the Federal Open Market Committee will release its meeting minutes.
Herbalife (NYSE: HLF) shares are surging again today after it announced that PricewaterhouseCoopers will replace KPMG as auditor. KPMG resigned after allegations of insider trading. PricewaterhouseCoopers will retroactively audit three years of financial statements under KPMG's watch. Herbalife is the subject of a passionate debate by two vocal activist investors, Bill Ackman and Carl Icahn, both of whom have polar views on the company.
JP Morgan Chase (NYSE: JPM) rose as much as two per cent after chairman and CEO James Dimon held off a shareholder push to split his titles.
Merck & Co Inc. (NYSE: MRK) is on the rise after encouraging comments Monday from the Food and Drug Administration about suvorexant, a drug to treat insomnia. The FDA did, however, raise concerns about the drug's safety at higher doses.
Home Depot (NYSE:HD), the largest U.S. home-improvement retailer, advanced three per cent to $79.10 after it posted first-quarter profit and revenue that surpassed analysts’ estimates and raised its earnings forecast. Net income for the quarter ended May 5 rose 18 percent to $1.23 billion, or 83 cents a share, from $1.04 billion, or 68 cents, a year earlier. Analysts on average predicted 76 cents. Revenue increased 7.4 percent to $19.1 billion, exceeding analysts’ $18.6 billion prediction. The Atlanta-based company said profit this year will be $3.52 a share, up from a previous estimate of $3.37. Analysts on average anticipated $3.54.
In other retail news, Saks Inc. (NYSE:SKS), the New York-based luxury retail chain, jumped more than 10 per cent to $13.51, the highest price in more than a year, after reporting first-quarter revenue that exceeded analyst estimates. Quarterly sales increased to $793.2 million and comparable sales rose 5.9%. Adjusted earnings were 19 cents a share. Analysts expected earnings of 18 cents a share and revenue of $772.2 million.
TJX Cos. (NYSE:TJX), the owner of T.J. Maxx, HomeGoods and Marshalls stores, rose 0.7 percent to $51.69 after saying its first-quarter net income rose to $452.9 million, of 62 cents a share, from $419.2 million, or 55 cents, a year earlier. The Framingham, Massachusetts-based company reported quarterly net sales that rose to $6.19 billion from $5.8 billion a year earlier. Analysts expected earnings of 62 cents a share in the first quarter.
AutoZone Inc. (NYSE:AZO), the largest U.S. auto parts retailer, added 5.2 per cent to a record $430.25, after posting a seven per cent rise in quarterly profit. Net income for the fiscal third-quarter increased to $265.6 million, or $7.27 a share, from $248.6 million, or $6.28 a share, a year earlier. Revenue increased 4.5 percent to $2.21 billion.
Urban Outfitters Inc. (NASDAQ:URBN), a U.S. retailer based in Philadelphia, Pennsylvania, dropped more than two per cent to $43.48 after reporting quarterly sales that missed analysts’ estimates. Sales of $648.2 million fell short of the analysts' projection of $655.1 million. Net income rose to $47.1 million, or 32 cents per share from $33.9 million or 23 cents per share, a year ago.
In technology stocks, Microsoft Corp. (NASDAQ: MSFT) tricked nearly a per cent lower after it unveiled its newest Xbox console. Microsoft was short on major details, including a launch date, price and broad selection of new titles.
Apple Inc. (NASDAQ:AAPL), bounced in and out of positive territory as it faced scrutiny from a Senate panel, which released a report on Monday saying the Cupertino, California-based company used loopholes to avoid paying taxes.
Best Buy Co. (NYSE:BBY) fell more than three per cent to $25.93 after warning that higher costs to lure shoppers could hurt the bottom line. The world’s largest consumer-electronics retailer reported adjusted net earnings of 36 cents per share, 11 cents ahead of analyst predictions. Revenue dropped nearly 10 percent to $9.38 billion. Best Buy has taken strides to reduce costs, including job cuts and closing underperforming stores.
In consumer shares, Medtronic Inc. (NYSE:MDT), the world’s biggest maker of heart-rhythm devices, jumped more than five per cent to $52.52. The Minneapolis, Minnesota-based company posted a better-than-expected quarterly profit helped by strong international sales. Net earnings for the fiscal fourth-quarter ended April 26 increased to $969 million, or 95 cents a share, from $991 million, or 94 cents a share, a year earlier. Excluding one-time items, Medtronic earned $1.10 a share, above the $1.03 a share predicted by analysts. Net sales increased 4 percent to $4.46 billion.
Carnival Corp. (NYSE:CCL), the world’s largest cruise operator, tumbled nearly seven per cent before recovering to $33.80, after lowering its profit forecast for the second half of this year. The Miami, Florida-based company said late on Monday that full-year profit will total $1.45 to $1.65 a share, down from a previous forecast of $1.80 to $2.10. Analysts were modeling $1.99.
Amazon.com Inc. (NASDAQ:AMZN), the world's largest online retailer, edged up 0.8 per cent to $269.50 after it won a key security clearance from the U.S. government for its cloud service known as Amazon Web Services. That approval allows Amazon to expand the business by going after government agency contracts.