EmailThe S&P 500 was flat on Wednesday, yet that performance belied what was an otherwise optimistic day of trading. Our tell in that respect is that the economically-sensitive sectors registered some decent-sized gains, led by the basic materials sector (+1.5%), while the small-cap stocks outpaced their larger counterparts by a comfortable margin.
It wasn't a great day for the countercyclical sectors, which got hit on disappointing earnings results/guidance from heavyweights like Procter & Gamble (PG), AT&T (T) and Amgen (AMGN) that took some bloom off their highly-valued rose. Losses in the consumer staples (-1.7%), health care (-1.7%), and telecom services (-2.9%) sectors were notable drags on the broader market.
Today, the market is indicated to open about 0.4% higher in the midst of the heaviest day of earnings reporting this period.
It should come as no surprise by now to hear that the majority of companies, including ExxonMobil (XOM), reported earnings that topped the Capital IQ consensus estimates. Dow component 3M (MMM) was not among those companies. It missed by four cents and lowered its FY13 EPS outlook. Shares of 3M are down nearly 4.0% in premarket action.
This isn't a market, however, that tends to dwell on the negative for too long, if it dwells on it at all. 3M might get clipped today, yet its disappointment isn't being seen as a market mover.
Participants have managed to distance themselves from bad news by taking refuge in the idea that central banks are going to stay easy with their monetary policy, if not ease even further given the weak data points of late.
That has been a steadying influence that has helped overshadow disappointing revenue growth from many companies, including ExxonMobil which reported a 12.3% decline in first quarter revenues.
Notwithstanding a rash of disappointing economic reports of late, today's data is imbued with an encouraging vibe (we'll just not mention the 27.1% unemployment rate reported for Spain).
First quarter GDP rose a better-than-expected 0.3% in the UK and initial claims in the US for the week ending April 20 fell by 16,000 to 339,000 (Briefing.com consensus 351,000). Continuing claims for the week ending April 13 dropped by 93,000 to 3.00 mln (Briefing.com consensus 3.06 mln).
The initial claims figure is laudable because it matches with the encouraging trend that was unfolding in front of the Easter holiday, which tends to create some seasonal adjustment problems each year for the Department of Labor.
Those problems, the DOL said with today's report, are ending. That means that labor conditions can be thought of as being on a better path insomuch as layoffs have been subsiding. Now, it is hiring activity that needs to pick up again.
The market liked what it heard in the initial claims report. That was evidenced in the S&P futures, which moved to their highs of the morning after the release as participants at the moment seem to be cheering good news and bad news alike.
--Patrick J. O'Hare, Briefing.com
