The major averages trade broadly higher at midday as the indices rebound from early May losses. The Dow Jones Industrial Average (+1.1%; month-to-date +0.7%), S&P 500 (+1.0%; month-to-date +0.7%) and Nasdaq Composite (+1.0%; month-to-date +0.5%) have each erased their monthly losses. Today's trade has featured a rebound in crude oil, range-bound action in the dollar, and relative strength from the heavily-weighted industrials (+1.5%) and financial (+1.3%) sectors.
The major averages gapped up to begin the day as investors weighed positive development from overseas. In Japan, finance minister Taro Aso was able to talk down yen strength for the second day, warning of intervention if the Japanese economy appears threatened by the continued strength of its currency. Elsewhere, China's April CPI data (+2.3% year-over-year) fell in-line with expectations while Germany's Trade Balance Report for March showed export growth (+1.9%; consensus -0.1%).
The stock market has been able to extend its initial advance with its move higher supported by a rebound in crude oil and sector leadership from the heavyweight industrial (+1.5%) and financial (+1.2%) sectors. At midday all ten sectors are registering a gain with industrials (+1.5%) leading materials (1.3%), energy (+1.3%) and financials (+1.2%). On the flipside, countercyclical utilities (+0.1%) and health care (+0.5%), and consumer staples (+0.6%) sport the slimmest upticks.
The Dow Jones Transportation Average (+1.1%) outperforms as the broader index rebounds from a May loss of 0.6%. In the group, railroads outperform with Norfolk Southern (NSC 90.04, +1.76) erasing its monthly loss while Union Pacific (UNP 86.31, +1.68) trims its May decline to 1.1%. In the broader industrial sector (+1.5%), Deere (DE 83.78, +3.25) has jumped 4.0% following the World Agricultural Supply and Demand Estimates Report.
The economically-sensitive financial sector (+1.2%) demonstrates broad-based strength with investment brokerages, money center banks, and life insurance names each outperforming. The space has benefited from a better than feared quarterly report from Swiss lender Credit Suisse (CS 13.90, +0.56). Meanwhile, Goldman Sachs (GS 161.04, +3.53) is the second best performer in the Dow.
In the energy space (+1.3%), oilfield service names and independent oil and gas companies outperform. The sector is benefiting from a rebound in crude oil following ongoing supply disruption concerns from Canada and Nigeria. WTI crude trades higher by 2.3% at $44.45/bbl. This represents a loss of 4.9% since April's settlement at $46.76/bbl. On a side note, investors will receive the latest stockpile data from the American Petroleum Institute at 16:35 ET.
Apparel retailers underperform in the consumer discretionary space (+1.0%), evidenced by the 0.1% decline in the SPDR S&P Retail ETF (XRT 43.70, -0.03). The group trades lower in sympathy with Gap (GPS 19.15, -2.66), which has declined 12.2% after reporting a disappointing same stores sales reading for April and issuing a warning regarding first quarter earnings. Elsewhere, Amazon (AMZN 699.08, +19.33) hovers below a fresh 52-week high (701.38). The move followed a price target increase to $1000 from $770 at Deutsche Bank. Separately, ChannelAdvisor reported that Amazon's same store sales rose 12.9% year-over-year in April.
The U.S. Dollar Index (94.24, +0.10) trades on a flat note as the greenback sports gains over the euro and the yen. The euro/dollar pair trades higher by 0.1% (1.1379) while the dollar shows a gain of 0.9% against the yen (109.34).
The Treasury complex on a flat note with the yield on the 10-yr note unchanged at 1.75%.
Today's economic data included the March Job Openings and Labor Turnover Survey and Wholesale Inventories for March:
- Wholesale inventories increased 0.1% in March (Briefing.com consensus +0.2%) after declining a downwardly revised 0.6% (from -0.5%) in February.
- This was the first time in six months that there was an increase in wholesale inventories.
- The modest uptick was fueled by a 0.5% increase in nondurable inventories, which was powered by a 2.0% increase in drug inventories and a 3.3% jump in petroleum inventories.
- Durable inventories were down 0.1%. That decline was led by a 2.0% drop in metals inventories and a 1.6% drop in electrical inventories. A 1.0% jump in automotive inventories acted as a major offset.
- Wholesale sales increased 0.7% following an unrevised 0.2% decline in February.
- The wholesale inventories to sales ratio held steady at 1.36, but was up from 1.32 in the same period a year ago.
- On a year-over-year basis, wholesale sales are down 2.0% while wholesale inventories are up 0.3%.
- The March Job Openings and Labor Turnover Survey showed that job openings decreased to 5.757 million from a revised 5.608 million (revised from 5.445 million) in February.