S&P 500 Hits 13th All-Time High Despite Selling Into Strength


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Stocks finished mixed today as earnings continue to drive the market.

The S&P 500 rose 0.1% to 2839.25 today–its 13th record high–while the Dow Jones Industrial Average gained 140.67 points, or 0.5%, to 26,392.79, also a record. The Nasdaq Composite declined 0.1% to 7411.16.

Despite the new highs, it was another day of selling into strength. That’s a sign that the market has “rallied into an extremely overbought condition and appears to be correcting to some degree,” says Todd Market Forecast. “It can also be a sideways resting period.” That’s something we haven’t seen so far this year.

The Dow, of course, appears to be the exception. Its big gain today was driven by Boeing (BA), Goldman Sachs (GS), and 3M (MMM), three high priced-stocks that just keep going higher. We’ll see how long that lasts. — Ben Levisohn

Caterpillar’s (CAT) earnings were great! No, they were terrible! You’re both right, at least judging from the stock’s reaction to the  news.

Shares of Caterpillar opened up as much as 2.8% today, and dropped as much as 3.5% before finishing up 0.6% at $169.37.

It wasn’t that there was anything wrong with the earnings. Caterpillar reported a profit of $216 a share, beating forecasts for $1.79, on sales of $12.9 billion, ahead of expectations for $12 billion. Caterpillar also said it would earn between $8.25 and $9.25, above the Street consensus for $8.15. “We see continued strength in North America in oil & gas as well as residential & non-residential construction driving sales growth. CAT sees solid order rates and increasing backlog in 2018,” CFRA Research analyst Elizabeth Vermillion said.

But when your stock has gained 73% during the past year, sometimes great isn’t good enough–until it is again. —B.L.

Just when we were getting used to the idea of a weak dollar, it turns out we misinterpreted Treasury Secretary Steven Mnuchin, and that the administration really wants a stronger dollar. So says President Donald Trump.

In an interview with CNBC, President Trump said, “The dollar is going to get stronger and stronger and ultimately I want to see a stronger dollar.” That directly contradicted Treasury Secretary Steven Mnuchin, who said a weak dollar would boost U.S. trade.

Mnuchin’s comments had caused an already-weak dollar to keep on dropping–the U.S. Dollar Index has dropped 3.1% so far this year–but the President’s comments helped the currency end its fall. The dollar rose 0.1% to $89.28 at 3:45 p.m. today.

The rebound, however, came at a time when the currency was horribly oversold. Furthermore, the dollar trade-weighted dollar typically tracks the US trade and budget deficits as a percentage of GDP, says Strategas Research Partners’ Daniel Clifton, but the relationship recently broke as the dollar sold off. “The dollar has moved much lower than the twin deficits would otherwise suggest,” Clifton explains.

Maybe it was just time. —B.L.

When Vince McMahon launched the XFL back in 2001, it was a big-time flop. But the announcement today that he would revive the league appears to have boosted shares of  WWE (WWE) anyway.

It’s not clear why that would be. The XFL is a separate venture. If anything, with McMahon splitting time between the two, the announcement seems like it should have hurt WWE, not helped it.

But that’s not quite the case, says Wells Fargo analyst Eric Katz. He notes that McMahon plans to hire football people to run the league, and that he will take a backseat. Katz also notes that WWE has a deep management bench, as well as a developmental wrestling league, so he doesn’t “see any drop-off in the quality of content, even if Vince’s attention drifts to the XFL.”

And who knows? Maybe the XFL will even succeed this time around.

Shares of WWE gained 1.9% to $34.13 today. —B.L.

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