MARKET SNAPSHOT: U.S. Stocks End Higher; BlackBerry Tanks
By William L. Watts and Victor Reklaitis, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks settled with modest gains Monday as investors took a cue from upbeat earnings and shook off fears the market is overdue for a correction.
The S&P 500 (SPX) rose 6.29 points, or 0.4%, to close at 1,767.93, not far from the all-time closing high of 1,771.95 set early last week. The Dow Jones Industrial Average (DJI) shook off earlier weakness to advance 23.57 points, or 0.2%, to 15,639.12.
The Nasdaq Composite(RIXF) gained 14.55 points, or 0.4%, to 3,936.59.
A "stretched" valuation for the S&P 500 indicates further gains will be sluggish, said analysts at futures broker R.J. O'Brien in Chicago.
"We still look for a generally rising stock market into 2014, but there is likely to be a lot of sideways action with only a modest upward bias. The medium-term earnings outlook looks positive, but the S&P 500 is already trading at the relatively rich level of 15.9 times forward earnings. That is well above the five-year average of 14.0 and the 10-year average of 14.8," they wrote in a note.
"Due to stretched valuations, we believe the stock market will only be able to climb as fast as earnings grow," the R.J. O'Brien analysts said, adding that the "good news" is that the market is looking for strong earnings growth of 11.3% in 2014 after growth of only 5.8% this year.
Investors are also trying to gauge when the Federal Reserve will begin to slow the pace of monetary stimulus.
"The market's Kryptonite is early taper talk at the moment, and this first full week of November has the potential for it to be hurled at it from all directions," said Jim Reid, strategist at Deutsche Bank.
St. Louis Federal Reserve Bank President James Bullard told CNBC that the Federal Reserve did not have to be in a "hurry" to pare its $85 billion-a-month in bond purchases, because inflation is low. But Bullard also made several comments that suggested a taper could come soon.
U.S. factory orders for September rose 1.7%. That met the consensus forecast from a MarketWatch poll of economists. Other surveys called for a 1.8% gain.
In other Fed news, Dallas Fed President Richard Fisher suggested in Sydney on Monday that tapering of bond buys could come sooner than expected, and that fiscal risks shouldn't stop the Fed from doing what is right for the economy. Late Monday, Boston Fed President Eric Rosengren, a voting member of the Fed's policy-making arm, said a delay in the reduction of the bond-buying program from December to April would make only a small difference to the overall size of the central bank's balance sheet.
A strong October for stocks, with the S&P 500 gaining 4.5% and hitting record highs, has left some strategists cautious. "The outsized gains the stock market enjoyed in October [...] suggest a pause is likely before the year-end rally continues," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co., in a note on Monday. Bittles and other strategists say the principal driver for stocks continues to be Fed policy. (Read more: The next pain trade involves March taper assumptions http://blogs.marketwatch.com/thetell/2013/11/...-b-of-a/.).
Others note that, historically, strong year-to-date gains through October have tended to point to further gains for equities in November and December.
Among blue chips, shares of Visa Inc. (V), down 1.4%, and Du Pont (DD), down 1.3%, were the biggest losers. DuPont had gained ground last week after it said it would spin off its performance chemicals unit to existing shareholders.
Fellow Dow component Johnson & Johnson (JNJ) fell 0.4% after the company said it would pay around $2 billion to settle a Justice Department probe into the marketing of antipsychotic drug Riperdal. The company will plead guilty to a misdemeanor, officials said.
Exxon Mobil Corp. (XOM) was the Dow's top gainer, advancing 2.5% and tracking gains in the energy sector.
Elsewhere, shares of BlackBerry Ltd. (RIMM) fell more than 16% on news the ailing smartphone maker has abandoned a plan to sell itself. BlackBerry said it would replace Chief Executive Thorsten Heins and receive a $1 billion investment from institutional investors. See: BlackBerry tries to keep the lights on.
Kellogg Co. (K) rose 0.7% after the cereal maker reported earnings and said it would cut its workforce by 7% by the end of 2017.
Twitter Inc. (TWTR) on Monday raised the price range for its initial public offering a few days before its trading debut. Twitter set a range of $23 to $25 a share, versus its previous target of $17 to $20. The move drew mixed reactions, with one skeptic warning of an "overvaluation challenge" that recalled the hype that surrounded Facebook Inc.'s (FB) troubled public debt last year.
Steel makers rose after analysts at Goldman Sachs upgraded their view on the sector to neutral from cautious and upgraded the shares of individual steel makers. Goldman lifted AK Steel Holding Corp. (AKS) and United States Steel Corp. (X) to buy from sell and raised Steel Dynamics Inc. (STLD) to buy from neutral. AK Steel shares rose 8.7%, while United States Steel advanced 4.4% and Steel Dynamics gained 2.2%. Also, Goldman downgraded Reliance Steel & Aluminum Co. (RS) to neutral from buy. Shares rose 0.2%.
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By William L. Watts and Victor Reklaitis, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks settled with modest gains Monday as investors took a cue from upbeat earnings and shook off fears the market is overdue for a correction.
The S&P 500 (SPX) rose 6.29 points, or 0.4%, to close at 1,767.93, not far from the all-time closing high of 1,771.95 set early last week. The Dow Jones Industrial Average (DJI) shook off earlier weakness to advance 23.57 points, or 0.2%, to 15,639.12.
The Nasdaq Composite(RIXF) gained 14.55 points, or 0.4%, to 3,936.59.
A "stretched" valuation for the S&P 500 indicates further gains will be sluggish, said analysts at futures broker R.J. O'Brien in Chicago.
"We still look for a generally rising stock market into 2014, but there is likely to be a lot of sideways action with only a modest upward bias. The medium-term earnings outlook looks positive, but the S&P 500 is already trading at the relatively rich level of 15.9 times forward earnings. That is well above the five-year average of 14.0 and the 10-year average of 14.8," they wrote in a note.
"Due to stretched valuations, we believe the stock market will only be able to climb as fast as earnings grow," the R.J. O'Brien analysts said, adding that the "good news" is that the market is looking for strong earnings growth of 11.3% in 2014 after growth of only 5.8% this year.
Investors are also trying to gauge when the Federal Reserve will begin to slow the pace of monetary stimulus.
"The market's Kryptonite is early taper talk at the moment, and this first full week of November has the potential for it to be hurled at it from all directions," said Jim Reid, strategist at Deutsche Bank.
St. Louis Federal Reserve Bank President James Bullard told CNBC that the Federal Reserve did not have to be in a "hurry" to pare its $85 billion-a-month in bond purchases, because inflation is low. But Bullard also made several comments that suggested a taper could come soon.
U.S. factory orders for September rose 1.7%. That met the consensus forecast from a MarketWatch poll of economists. Other surveys called for a 1.8% gain.
In other Fed news, Dallas Fed President Richard Fisher suggested in Sydney on Monday that tapering of bond buys could come sooner than expected, and that fiscal risks shouldn't stop the Fed from doing what is right for the economy. Late Monday, Boston Fed President Eric Rosengren, a voting member of the Fed's policy-making arm, said a delay in the reduction of the bond-buying program from December to April would make only a small difference to the overall size of the central bank's balance sheet.
A strong October for stocks, with the S&P 500 gaining 4.5% and hitting record highs, has left some strategists cautious. "The outsized gains the stock market enjoyed in October [...] suggest a pause is likely before the year-end rally continues," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co., in a note on Monday. Bittles and other strategists say the principal driver for stocks continues to be Fed policy. (Read more: The next pain trade involves March taper assumptions http://blogs.marketwatch.com/thetell/2013/11/...-b-of-a/.).
Others note that, historically, strong year-to-date gains through October have tended to point to further gains for equities in November and December.
Among blue chips, shares of Visa Inc. (V), down 1.4%, and Du Pont (DD), down 1.3%, were the biggest losers. DuPont had gained ground last week after it said it would spin off its performance chemicals unit to existing shareholders.
Fellow Dow component Johnson & Johnson (JNJ) fell 0.4% after the company said it would pay around $2 billion to settle a Justice Department probe into the marketing of antipsychotic drug Riperdal. The company will plead guilty to a misdemeanor, officials said.
Exxon Mobil Corp. (XOM) was the Dow's top gainer, advancing 2.5% and tracking gains in the energy sector.
Elsewhere, shares of BlackBerry Ltd. (RIMM) fell more than 16% on news the ailing smartphone maker has abandoned a plan to sell itself. BlackBerry said it would replace Chief Executive Thorsten Heins and receive a $1 billion investment from institutional investors. See: BlackBerry tries to keep the lights on.
Kellogg Co. (K) rose 0.7% after the cereal maker reported earnings and said it would cut its workforce by 7% by the end of 2017.
Twitter Inc. (TWTR) on Monday raised the price range for its initial public offering a few days before its trading debut. Twitter set a range of $23 to $25 a share, versus its previous target of $17 to $20. The move drew mixed reactions, with one skeptic warning of an "overvaluation challenge" that recalled the hype that surrounded Facebook Inc.'s (FB) troubled public debt last year.
Steel makers rose after analysts at Goldman Sachs upgraded their view on the sector to neutral from cautious and upgraded the shares of individual steel makers. Goldman lifted AK Steel Holding Corp. (AKS) and United States Steel Corp. (X) to buy from sell and raised Steel Dynamics Inc. (STLD) to buy from neutral. AK Steel shares rose 8.7%, while United States Steel advanced 4.4% and Steel Dynamics gained 2.2%. Also, Goldman downgraded Reliance Steel & Aluminum Co. (RS) to neutral from buy. Shares rose 0.2%.
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