Closing Bell for Tuesday on Wall Street: Market Opens Higher, Waiting for Fed

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U.S. equity markets opened higher this morning following a benign report on U.S. inflation. The rise of just 0.1% in the May CPI very likely means that the FOMC meeting that began this morning will result in no change either the Fed’s overnight interest rate or its asset purchases, both positive signals for equities. In Europe, eurozone consumer sentiment came in higher than forecast, as did German sentiment. On the down side, new car registrations dropped nearly 6% in May, to reach an all-time low. In Asia, house prices in China jumped again and reports on industrial production in Japan came in higher, but below expectations. U.S. new housing starts rose less than expected.

The U.S. dollar index is trading down 0.24% today, now at 80.5900. The GSCI commodity index is down 0.1% at 630.52. WTI crude oil closed up 0.7% today, at $98.44 a barrel. Brent crude trades up 0.6% at $106.08 a barrel. Natural gas is up 0.4% today at about $3.89 per million BTUs. Gold settled down 1.2% today at $1,366.90.

The unofficial closing bells put the DJIA up more than 138 points to 15,318.23 (0.91%), the NASDAQ rose about 30 points (0.87%) to 3,482.18, and the S&P 500 rose 0.78% or nearly 13 points to 1,651.81.

There were a several analyst upgrades and downgrades today, including:

  • Charles River Labs International Inc. (NYSE: CRL) cut to ‘sell’ with a price target of $38 at Goldman Sachs;
  • T-Mobile US Inc. (NYSE: TMUS) started as ‘hold’ at Canaccord Genuity;
  • Palo Alto Networks Inc. (NYSE: PANW) maintained as ‘buy’ but removed from Conviction Buy List at Goldman Sachs;
  • Toronto-Dominion Bank (NYSE: TD) cut to ‘equal weight’ at Barclays; and
  • Quintiles Transnational Holdings Inc. (NYSE: Q) exited its post-IPO quiet period today with mostly positive coverage from analysts.

Earnings reports since markets closed last night resulted in some price moves today, including these as of the last half hour of trading:

  • Korn/Ferry International (NYSE: KFY) is down 0.7% at $17.99 and
  • FactSet Research Systems Inc. (NYSE: FDS) is down 5.2% at $98.36.

Before markets open tomorrow morning, we are scheduled to get earnings reports from Adobe Systems Inc. (NASDAQ: ADBE) and FedEx Corp. (NYSE: FDX).

Some standouts among heavily traded stocks today include:

Nokia Corp. (NYSE: NOK) is up 4.6% at $3.86. The mobile phone got a boost from comments that Huawei would consider acquiring the Finnish company.

Walter Energy Inc. (NYSE: WLT) is up 18.9% at $13.91. The coal miner is getting a boost from a note supporting the company from analysts at Morgan Stanley, which offset this rather tepid review of the company and coal sector in general.

Orchard Supply Hardware Stores Corp. (NASDAQ: OSH) is down 17.5% at $1.74. The home improvement and garden supply store is being bought out of bankruptcy by Lowe’s Companies Inc. (NYSE: LOW) for $205 million plus payables due to nearly all Orchard’s suppliers.

Stay tuned for Wednesday. The Federal Open Market Committee (FOMC) ends its two-day meeting. We have (also) noted the following events on the schedule (all times Eastern):

  • 7:00 a.m. – Mortgage Bankers Association purchase applications
  • 10:30 a.m. – EIA weekly petroleum status report
  • 2:00 p.m. – FOMC meeting announcement and forecasts
  • 2:30 p.m. – Fed Chairman Bernanke’s press conference
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