The bulls are hoping to wrap up the week with a clean sweep for the Dow although the major averages are mixed as we go to press. The Dow is up 28 points to 11,162 while the S&P 500 is higher by 3 to 1,211. The Nasdaq is down less than a point at 2,518.
The market got a nice surprise when new home sales came in better than expected. The report showed a record increase after a record low from the previous month. February’s level was the lowest on record since the government began keeping tallies in 1963 and the fourth straight month of declines. However, sales of new homes surged over 25% last month as government incentives and much better weather helped sales.
The Commerce Department said new home sales rose in March to a seasonally adjusted annual sales pace of 411,000 which was the strongest month since last July and the biggest monthly increase in 47 years.
Wall Street had expected an increase to 330,000. The average sale price came in at $214,000.
On the flip side, March durable goods orders came in a little weak. The Commerce Department said orders fell 1.3% versus an expected increase of 0.2%. However, if you back out the transportation items the number would have showed an increase of 2.8%.
In earnings news, Microsoft (MSFT, $30.95, down $0.44) is slipping a little despite beating estimates. The company earned $4 billion, or $0.45 a share, versus $3 billion, or $0.33 a share, in the year earlier period. Analysts had penciled-in 42 cents a share.
Revenue rose 6% to $14.5 billion which was slightly higher than the $14.4 billion Wall Street was expecting.
Shares of Microsoft have held $30 and we can see a higher price target down the road for the company as Windows 7 will be a money maker. However, the stock doesn’t move fast enough for a short-term option trade. We talked about LEAPs yesterday so we might do some legwork over the weekend if the stock is going to be at $40 over the next year.
Looking ahead to Monday, one catalyst that could weigh on the Dow, good or not so good, are the results due out from Caterpillar (CAT, $68.21, up $0.70). The company will announce their numbers before the bell and analysts are looking for 39 cents on revenue of $8.6 billion. There is a ton of analyst coverage with estimates ranging from 22-66 cents a share on revenue of $7.45-$9.65 billion.
Shares are at a 52-week high today but last time out the company reported mixed results and the stock dropped from $55 to $53. The rebound in three months has been amazing but are investors setting up for a “buy the rumor, sell the news” event?
We will cover the rest of next week’s earnings in our Weekly Wrap on Sunday and we have some special announcements coming your way. We can’t wait to share the exciting news. Subscribers, check the Members Area for the afternoon updates.