The major U.S. indices all finished the day with moderate gains, closing out a very strong week. The Dow, Nasdaq, and S&P 500 all finished the week with gains of almost 3%. Today, the Dow finished higher by 53, while the Nasdaq and S&P 500 closed higher by 17 and 7 respectively.
The strong gains on the week are obviously primarily as a result of the Federal Reserve lowering interest rates by 50 basis points on Tuesday, but corporate earnings were also very strong this week.
The major sectors were all stronger today, though some were just marginally positive. Energy stocks showed significant strength, as did the capital goods companies.
Smith International (NYSE:SII) was just one of many oil and gas producers and explorers who traded to a new 52 week high today, as its shares gained 2.81% on the day. Oilfield service companies were also strong on the day, led by Baker Hughes Inc. (NYSE:BHI), which gained 1.89%. Southwestern Energy Corporation (NYSE:SWN) also gained by 1.84% on the day, though it is still well of its yearly high.
The capital goods sector showed significant strength today. Aerospace stocks were especially strong today. Lockheed Martin Corporation (NYSE:LMT) shares gained 2.14% after it was added to the Merrill Lynch U.S. 1 list as a best-in-class defensive play. The Boeing Company (NYSE:BA) also gained 1.32% on the day.
Consumer cyclicals were the among the weakest of sectors on a relative basis today. Nike Inc. (NYSE:NKE) reported its earnings last night after the bell and the numbers were quite good. Apparently, investors were in the mood to take profits though, as NKE shares fell by 1.82% at the end of the day today. Polo Ralph Lauren (NYSE:RL) showed a good deal of weakness today as well, falling by 3.34%.
New 52 Week Highs Today:
- Oracle Corporation (Nasdaq:ORCL)- shares traded up by 4.44% after strong earnings after the bell last night. Volume was extremely heavy.
- Verizon Communications (NYSE:VZ) shares traded higher by 1.32% on the day.
- Google Inc. (Nasdaq:GOOG) finished up by 1.32% on the day to a new all-time high on double their average volume.
- DryShips Inc. (Nasdaq:DRYS) finished higher by 7.48% on strong volume. Shares have risen to a current level of $81.65 from a 52 week low of just $12.63.
- United Technologies Corporation (NYSE:UTX)- shares finished up by .89% to close at an all-time high.
- Amazon Inc. (Nasdaq:AMZN) finished higher by 1.84% and shares are now within about 11 points of their all-time high set in 1999.
Today's gains were backed by very heavy volume due to some index rebalancing as well as options expirations. Up volume bested down volume by about 2 to 1 on both the NYSE and the NASDAQ. New highs outnumbered new lows 2 to 1 on the NYSE and almost 3 to 1 on the NASDAQ.
The strong corporate profit reports from this week have been largely unexpected. It will be very interesting to see if profits continue to come in above analysts expectations through the rest of the earnings season. The bulls are counting on continuing strong profits, while the bears believe profit growth should be slowing at anytime.
The bulls have to be happy to ride this streak into the weekend after stocks finished off their best week of the year.
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