The Source of The Dow’s Triple-Digit Rally Today
Today is Tax Day, but this hasn’t stopped investors from going on a buying spree. If you’ve been watching the indices today, you may have noticed that they’re all trading up 1.5% to 2% today—this is fantastic news for any growth-oriented investing strategy. We’ve had wave after wave of economic and earnings news and we’re not even finished with the trading day yet. So, let’s briefly touch upon some of the latest market-moving headlines.
First, we received some upbeat news on the housing market. Even though housing starts declined more than expected in March, most of these losses were attributable to multi-unit residences, which tend to be quite volatile. Starts for single-family homes dipped just 0.2%. Meanwhile, building permits, which are the first sign of future homebuilding activity, surged to the highest level in over three years. While economists expected permits for future construction to increase to 710,000, March building permits soared to 747,000.
We also got word from across the pond that Europe is making progress. European stocks gained on an upbeat reading of German economic sentiment as well as a decent turnout at a Spanish government debt auction. This news reasserts that the largest economy in the eurozone is staying the course and that Spain will be able to get a handle on its sovereign debt.
Finally, a number of big blue chips reported earnings today, and the news was largely positive, including:
- Goldman Sachs Group Inc.’s (GS) profits more than doubled to $2.07 billion, or $3.92 per share. Analysts forecast earnings of $3.55 per share, so the company posted a 10% earnings surprise.
- The Coca-Cola Company (KO) announced that its first-quarter net income advanced 8% to $2.05 billion, or $0.89 per share; this also beat out the consensus earnings estimate of $0.87 per share.
- W.W. Grainger Inc. (GWW) reported strong volume growth in the U.S. and Canada, driving a 16% jump in net sales. First-quarter net earnings also advanced 19% to $187.5 million, or $2.57 per share; this beat analyst estimates of $2.52 per share.
Although these aren’t stunning earnings announcements, they are still pretty impressive considering the difficult year-over-year comparisons. Thanks to today’s solid turnout, the Dow has once again crossed about the psychologically important 13,000 threshold. Better yet, several big-name stocks that had been treading water in the past few trading days, including Apple Inc. (AAPL) and Priceline.com Inc. (PCLN), are gaining back their ground on this increased investor sentiment.
It is encouraging to see the market get its second wind in the wake of strong earnings, and I’m hopeful that other big blue chips will follow this trend. After the closing bell today we’ll receive word from Intel Corp. (INTC) on how it fared last quarter, and tomorrow we’ll hear from American Express Co. (AXP), Bank of New York Mellon Corp. (BK), eBay Inc. (EBAY), Halliburton Co. (HAL) and Qualcomm Inc. (QCOM). As always, I’ll keep tabs on these announcements as they come out and will cover any big earnings winners or otherwise.