Dow briefly adds 150 points as stocks rebound; biotechs up 2.5%

Adam Jeffery | CNBC Traders work the floor of the New York Stock Exchange.

Adam Jeffery | CNBC
Traders work the floor of the New York Stock Exchange.

U.S. stocks traded higher on Friday, rebounding from Thursday’s selloff, as investors kept an eye on higher Treasury yields and economic reports. ( Tweet This )

The Dow Jones industrial average traded about 100 points higher after briefly adding more than 150 points in early trade. The major indices recovered the prior day’s losses, with the Nasdaq outperforming. The iShares Nasdaq Biotechnology ETF gained more than 2 percent after ending more than 3 percent lower on Thursday.

The S&P 500 briefly climbed back above 2,100, a key level TD Ameritrade chief strategist JJ Kinahan is watching. Besides trying to interpret the bond market, he said, “I think people are going to position themselves ahead of employment (next Friday).”

The key monthly jobs report for April comes out next Friday morning and will indicate whether or not the first quarter slowdown could continue into the rest of the year.

U.S. Treasury yields continued to gain, with the 10-year topping 2.11 percent, a seven-week high. The U.S. dollar edged higher, gaining against the yen. The euro held above $1.12.

US 10-year Treasury yield performance year-to-date

On Thursday, weekly jobless claims came in at 262,000, a 15-year low. The major indices closed below their 50-day moving average, with biotechs sending the Nasdaq down 82.22 points, or 1.6 percent, recovering slightly from a 2 percent dip.

The Dow Jones Industrial Average closed down 1.1 percent, with Apple down 2.7 percent as the greatest laggard.

“I think the market is starting to realize there’s lower growth ahead,” said Nick Raich, CEO of The Earnings Scout. “The earnings are turning (in beats) but the second quarter estimates are coming in lower.”

Read More Stocks entering May with low expectations

“Signs of exhaustion have arisen on the 30-minute chart of the S&P futures, supporting an oversold bounce today,” BTIG’s chief technical strategist Katie Stockton said in a note. “The lack of upside follow-through after last week’s breakout from a triangle pattern is a little concerning, but there is support nearby and we expect momentum to improve next week. Overbought conditions are far from widespread and earnings have generally been well-received, so we would use weakness to add exposure.”

Symbol
Name
Price
Change
%Change
DJIA Dow Jones Industrial Average 17969.54
129.02 0.72%
S&P 500 S&P 500 Index 2098.49
12.98 0.62%
NASDAQ Nasdaq Composite Index 4975.83
34.40 0.70%

Auto sales come out throughout the day. General Motors and Ford reported stronger-than-expected U.S. auto sales, with GM sales up nearly 6 percent and Ford posting a 5.4 percent gain from the same month last year. Fiat Chrysler and Nissan reported an increase of 5.8 and 5.7 percent, respectively. Toyota missed expectations, up 1.8 percent versus an increase of 5.9 percent.

Expansion in the U.S. manufacturing sector weakened in April as growth in output and new orders fell, according financial data firm Markit. The report said the final U.S. Manufacturing Purchasing Managers’ Index fell to 54.1 in April from 55.7 in March. The preliminary read was 54.2.

On the back of disappointing first-quarter GDP data, April’s manufacturing ISM index missed slightly, coming in at 51.5, unchanged from the previous month. The report was expected to show a modest rise to 52 that would follow five consecutive months of weakening.

Construction spending data for March showed a decline of 0.6 percent. The University of Michigan’s consumer sentiment survey for April showed a final read of 95.9, up from 93.0 in March.

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Speaking two days after the Federal Reserve’s statement release, Cleveland Fed President Loretta Mester said the central bank needs a clearer understanding of how problems in housing—stemming from changes in household finance—might destabilize the U.S. economy. Mester is an alternate voting member of the Federal Reserve Open Market Committee.

Mester also said the Federal Reserve is getting close to the appropriate time to raise interest rates and all policy meetings, including June’s, are “on the table for a move.”

Oil remains in focus as prices continued to trade near highs. Crude pulled back slightly after hitting an intraday record for 2015 of $59.90 a barrel.

Yum Brands spiked 5 percent to highs not seen since its spinoff from PepsiCo on news that Dan Loeb’s Third Point took a significant stake in the firm. The hedge fund also announced a stake in Devon Energy.

Shares of tank car makers Greenbrier, Trinity Industries, Wabtec and American Railcar jumped on news of new oil railcar standards.

Chevron, Clorox and Public Service were among the few companies reporting before market open.

Oil and natural gas producer Chevron posted a 43 percent drop in quarterly profit on Friday due to low oil prices. The company reported net income of $2.57 billion, or $1.37 per share, compared to $4.51 billion, or $2.36 per share, in the year-ago period. Production grew 4 percent to 2.68 million barrels of oil equivalent per day.

Moody’s earned $1.11 per share for its latest quarter, beating estimates by 8 cents, with revenue also well above estimates. Its results were powered by strong increases in both debt rating and analytics revenue.

VF Corp. matched estimates with quarterly profit of 67 cents per share, with revenue very slightly below Street forecasts due to international weakness. However, the North Face and Timberland maker also increased its full-year earnings forecast.

CVS Health earned an adjusted $1.14 per share for its latest quarter, 6 cents above estimates, while revenue also beat analyst forecasts. The company’s results were helped by stronger specialty pharmacy results, but it gave a current quarter view that falls below Street forecasts.

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The Dow Jones Industrial Average traded up 154 points, or 0.86 percent, at 17,994, with Home Depot leading gains and Chevron the greatest of three laggards.

The S&P 500 traded up 16 points, or 0.76 percent, at 2,101, with materials leading seven sectors higher and telecommunications the greatest decliner.

The Nasdaq traded up 46 points, or 9.94 percent, at 4,987. Apple also recovered from a recent post-earnings decline, with gains of about 1.5 percent to $127 a share.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded just under 14.

Two stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 158 million and a composite volume of 659 million in morning trade.

Crude oil futures fell 68 cents to $58.95 a barrel on the New York Mercantile Exchange. Gold futures fell $11.50 to $1,170.90 an ounce as of 10:24 a.m.

In Europe, U.K. equities wobbled as the majority of European markets, and many international markets, were closed for the International Workers’ Day holiday.

Wednesday’s weaker-than-expected GDP report and Fed meeting statement that removed all calendar references to an interest rate hike has put investors on edge ahead of a key economic indicator—April’s jobs report due next Friday. The data could indicate a pickup in the second quarter and could bring a rate hike forward.

Reuters and CNBC’s Peter Schacknow contributed to this report

Friday

Vehicle sales

Earnings: Berkshire Hathaway

3:45 p.m.: San Francisco Fed President John Williams

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