Tag - Hnbc

After trading down for most of today's session stocks edged up toward the close to finish up.

The Dow finished at 9,108.51, up 15.27 points; the Nasdaq was up 1.93 point to close the day at 1,967.89; and the S&P 500 was up 2.92 points to end at 982.18.

The Russell 2000 was up 2.42 points to finish strong at 550.88.

Leading small-cap price gainers was Select Comfort Corp. (Nasdaq:SCSS) up 46% on news that while sales for the second quarter of 2009 were down compared to the same quarter in 2008, operation income was positive net losses were substantially less. The company reported that Q2 operating income was $1 million.

Other leading small-cap gainers include Cerus Corp. (Nasdaq:CERS) up 45%; Jazz Pharmaceuticals (Nasdaq:JAZZ) up 44%; Ariad Pharmaceuticals (Nasdaq:ARIA) up 42%; and Harleysville National Corp. (Nasdaq:HNBC) up 38% on news that it would be acquired by First Niagara (Nasdaq:FNFG) for $237 in an all stock deal. The deal values HNBC at roughly $5.50 per share, representing a 37.5% premium over Friday's closing price for HNBC.

*****Earnings season has been overwhelmingly positive so far. Only 16% of the S&P 500 companies that have reported so far has missed expectations. 75% have beaten expectations. That's what happens when earnings estimates are so low that they are virtually impossible not to beat. 

But what's happening now is very interesting…

Analysts are raising their earnings estimates considerably. Bloomberg reports that forward revisions to estimates now put the forward P/E of the S&P 500 at 13.13. That's 26% below the 50-year average 16.54.

So are we due for a 26% rally as stocks return to their historical norms?

*****If earnings season finishes with 75% of the S&P 500 exceeding expectations, that would be a record. Since 1933, no more than 72% of the S&P 500 has beaten earnings expectations.

But Bloomberg also reports that just half of the S&P 500 companies that have reported have beaten revenue expectations. That means much of the earnings surprises we've seen are a product of cost-cutting and not rising revenues.

To the bears, this suggests there is still risk for stock prices.

*****To the bulls, it's now clear that pessimism went way too far. Stocks were priced way too low for a disaster that never materialized. More and more strategist-types are coming out and saying things like the economy is stronger than the numbers show and that a V-shaped recovery is underway.

Some economists are even raising their 3rd quarter GDP estimates.

Federal Reserve Chief Ben Bernanke states that the economy will be in stronger footing. And this is an interesting point. Overinvestment in real estate is being written off and prices are falling to levels that make sense for the family budget and the business bottom line. Increased regulation will keep investors' money safer (we hope). Increased savings will put consumers on stronger footing.

In essence, the U.S. economy will, at some point, start growing from a much lower baseline. And while the stock market may only recover the gains it lost over the last two years, that recovery process would lead to some phenomenal gains from current levels.

*****The question for me is: when? I can't help but think that analysts may be overshooting on the upside, just as they overshot on the downside. And I'm pretty sure I'm not the only one who feels this way. Consider that existing home sales jumped 11% in June, and yet stocks are in the red so far today.

There can be no doubt that such a jump in home sales is unexpected good news. But stocks are ignoring it. I say that's because there's a lot of good news priced in already. 

*****So I may be cautious, but I'm going to do what I have been: buy quality stocks, watch them closely and take profits. That approach has been working great so far this year… 

*****TradeMaster Daily Stock Alerts readers just took another 19% gain on MYR Group (Nasdaq:MYRG). Nice work, Jason. If you missed Jason's video chart analysis from Friday, you can check it out HERE. 

*****Now let's have a look at the economic data for the week.

Tomorrow, Tuesday, June 28, we get the Case-Shiller Home Price Index and Consumer Confidence numbers. Wednesday, it's Durable Goods and Oil Inventories. Jobless Claims are out on Thursday.

Friday is the big one, with the release of Second Quarter GDP. This should be a major market mover.

Best Regards,

Ian Wyatt
Editor
SCI Daily

Trico Bancshares (Nasdaq:TCBK), Omega Flex Inc (Nasdaq:OFLX) and BancFirst Corp. (Nasdaq:BANF) are among the new 52-week highs in Friday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Union Bankshares Corp. (Nasdaq:UBSH), Arden Group Inc. (Nasdaq:ARDNA), State Auto Financial Corp. (Nasdaq:STFC), Trustco Bank Corp. (Nasdaq:TRST), Harleysville National Corp. (Nasdaq:HNBC) and NBT Bancorp Inc. (Nasdaq:NBTB).

Here are the new 52-week highs among small caps:

Small caps traded marginally in the green midday, while the other major indices skidded, as oil continued its record-setting skyward hike for the second straight session, stoking inflation concerns.

At 12:48 p.m. ET, the Russell 2000 (NYSE:IWM) edged up 5.1, or 0.69%, to 740.74, while the Dow slumped 39.73, or 0.31%, to 12,788.95.

Crude oil bolted north of $132 a barrel this morning, setting another record after the Energy Department reported a surprising decline in crude inventories last week after reporting gains in inventories for the preceding four straight weeks. After jumping as high as $132.08 a barrel, a barrel of crude retreated slightly to $131.75 midday.

While crude gained, the dollar sold off against the euro and the yen and gold gained $7.80 to $928 per troy ounce.

Midday, oil prices and inflation concerns are the major drivers behind the market; however sentiment and the market’s direction could change when the Federal Reserve releases its FOMC minutes at 2:00 p.m. ET.

In major large-cap headlines, media conglomerate Time Warner Inc. (NYSE:TWX) said this morning that it will separate both structurally and legally from its cable television division Time Warner Cable Inc. Technological juggernaut Hewlett-Packard Co. (NYSE:HPQ) reported after Tuesday’s close that second-quarter earnings increased 16%, noting that growth in the overseas arena offset domestic weakness. However, investors are still pouring over the printer and computer maker’s recent . . .

Small-cap shares pushed higher shortly after the opening, underpinned by decent earnings news and a lack of follow through on the safe-haven trade that dominated action Tuesday. At 10:01 a.m. ET, the Russell 2000 (NYSE:IWM) was up 3.32, or 0.45%, at 738.97.

The fact that stocks were able to look past yet another record high in crude oil prices was impressive, as most of the overnight news was tilted toward the bearish angle for equities. Crude oil prices climbed past $130 dollars a barrel, but it appeared that move had already been priced into the “fear” quotient during Tuesday’s decline.

In addition to the rally in crude oil, the U.S. dollar took a hit overnight, sinking about 0.7% versus the euro, and 0.3% against the yen. The greenback did appear to trim those losses when the stock market edged higher after the open.

The market has very much been tied to investment flows of late, and there is some thought that the market is underinvested in stocks with huge cash on the sideline. As that cash starts to chase the rally off the March lows, it could be enough to power the market higher, but it’s a tenuous play given strapped discretionary spending for consumers. Days of extremely light volume suggest that the sideline players . . .

The Russell 2000 small cap index turned lower shortly after the opening, following a stronger start to the day in all the major indices. Specifically, shares of Arrhythmia Research Technology, Inc. (AMEX: HRT) are falling on news of a profit decline, while a profit increase gave a boost to Pro-Dex, Inc. (Nasdaq: PDEX).

At 11:34 a.m. ET the Russell 2000 had lost 1.01 points, or 0.12%, to 813.17.  The Dow Jones Industrial Average was up 12.11 points, or 0.09%, to 13,395.95.