Morning Watch, Nov. 16
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November 16, 2009
Gains continue for stocks Monday as dollar continues its decline on mixed economic data. Last week saw gains for the major market indices, though traders had little economic news to digest. The economic calendar is much heavier this week, including data on retail sales and the Empire State Mfg. Survey this morning. Lowe's (LOW) and Intel (INTC) are a few of the stocks in the news this morning. Despite recent gains, the S&P 500 ($SPX) continues to find it difficult to break through resistance at 1,100.
As the holiday shopping season approaches, traders are closely watching the retail sector. The retail sales report for October showed a gain of 1.4 percent, 5-tenths above expectations and well above September's decline of 2.3 percent. However, when auto sales are excluded, retail sales rose just 0.2 percent, 2-tenths below expectations and half of September's figure. Unfortunately, this data shows that spending remains cautious and this could continue until the jobs market shows substantial improvement.
Lowe's shares are slightly higher this morning following its earnings report. The home-improvement retailer made 24-cents a share in the quarter on revenues of $11.38 billion. These results were in line with estimates, as was the company's guidance for Q4. Same-store sales for Q3 fell 7.5 percent, but the company did note that they are seeing some improvement in some of the hardest hit markets, including California and Florida. LOW shares are trading near $22 with a 52-week range from $13 to $24.09.
Shares of Intel are higher this morning after the chip giant increased its quarterly dividend. When a company increases its dividend, it is a sign of strength and confidence in the future. INTC lifted its dividend to 15.75-cents from 14 cents. This news has pushed the stock higher by 1.5 percent to a price near $20. Both INTC and the Semiconductor HOLDRs (SMH) are about a dollar below their 52-week highs.
The manufacturing sector has been the first to show recovery from the global recession, but recent data has not been as positive. The Empire State Mfg. Survey for November came in at 23.51, a drop of more than 11 points from October and sell below expectations for a reading of 29.0. However, it was only back in July that this index was in negative territory with a reading above 0.0 a sign of expansion. Economic news will continue to be a focus this week with data on producer prices and industrial production on tap Tuesday.
Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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