Mixed earnings results paved the way early for what seemed to be a day that was going to be full of mixed market action. The averages opened up in the green, but quickly gave up the gains. However, the averages were able to bounce off the lows, rally into positive territory and the Dow made it 19 Tuesdays in a row closing in the green.
Some of the early movers today were cruise operator Carnival Corp (CCL), whose shares fell after it cut its fiscal year outlook, and electronics retailer Best Buy (BBY), after its first quarter earnings report disappointed investors. In contrast, shares of Home Depot (HD), Dicks Sporting Goods (DKS), and Medtronic (MDT) closed higher after they released first quarter earnings.
Analysts’ upgrades of health benefits company Aetna (AET) and toy maker Hasbro (HAS) sent their shares higher, while Wall Street analysts’ downgrades of exchange operator CME Group (CME), investment management firm Franklin Resources (BEN), and financial services firm Comerica Inc. (CMA) sent those shares into negative territory.Don’t Press the Issue
Here’s a snapshot of what is happening at the moment: stock prices keep going up and up despite questionable fundamentals, even as we are seeing bits and pieces of better economic data pop up over recent months. Some will point to the Fed’s loose monetary policy as a reason for the market surge, while others will comment on the irrational behavior of traders pushing shares up. However, the current market rally could very well be based on a combination of the two. For long-term investors, patience continues to be a necessary virtue. It has been frustrating for most trying to find an attractive entry point to increase positions in their holdings. Unfortunately, it doesn’t seem like that will change much in the coming weeks.
As we continue on through the week, heading towards Memorial Day Weekend, a slowdown in trading volume could easily set the stage for sideways market action, or dare I say, a smidgen of profit-taking. But again, investors have been there on every downtick to scoop up shares. The only major catalyst that might decide where the markets end up this week is tomorrow’s Fed minutes release and Ben Bernanke’s testimony to Congress. But, if history is any indication, this may result in not much of a reaction from the markets.
Next week, as May closes, fund managers might begin to prop up their holdings as “window dressing” for their end of the month reports, which could provide the fuel to push stocks even further. This can be disheartening for those looking for a pullback to put some fresh money to work. Just keep your eyes on your long-term goals and try not to get caught up in these short- to mid-term nuances. Don’t press the issue or feel the need to buy just to buy.