Daily Wrap
DJIA -9.52 (-0.07%) to 13,973.39; S&P 500 +1.05 (+0.07%) to 1,521.38; NASDAQ +1.78 (+0.06%) to 3,198.66
The market has been flexing its muscle and trying to show many different things. If your a basketball fan you might say the market is trying to show it can take you to the hole and also hit the step back jumped. The market faced another down move today and ultimately looking back at the chart the first 5 minute bar of the day market the lows. The market continued a steady climb higher and likely used the Unemployment claims, which came in better than expected (341K vs 361K consensus estimate), to help fuel the cause. As always you can visit the Event’s Calendar for the release of economic data, scheduled meetings and other news that could move the market.
Today was a big news day and for my money the stock of the day was Heinz (HNZ) which announced they agreed to be purchased by Berkshire Hathaway (BRK.A), along with partner 3G Capital for $72.50 per share. This represented a near 20% increase from the previous day’s closing price and even more impressive after you look at the chart and realize HNZ was in the midst of a rally which had been unimpeded since 2009. Yes HNZ dipped with the market in 2011 but otherwise has been an impressive rise. Congrats to anyone holding HNZ shares coming into today and frankly for the majority of the past 3 years. I think it is fair to call Heinz an iconic American brand and I think seeing the ownership change to someone like BRK and Warren Buffet likely ensures it will remain that way.
The other big news of the day was something that was in focus in a daily wrap back toward the beginning of February (maybe was end of January) and has to do with the convoluted love triangle between Anhesuer-Busch InBev (BUD), Constellation Brands (STZ) and Grupo Modelo. Back then as a reminder the news was of The Department of Justice announcing it was suing to prevent BUD from buying a controlling stake of Grupo Modelo. Today’s news was that STZ and BUD has revised their agreement which grants STZ perpetual rights to distribute Corona and other Modelo brands in the U.S. STZ CEO Rob Sands stated he believes that this move should satisfy the DoJ and concerns raised by their lawsuit. STZ gained $11.87, or 37.23%,closing at $43.75 and BUD shares gained $4.50, or 5.1%, closing at $92.76. At this point both names (STZ & BUD) are not interesting to me but maybe after a more clear pattern develops.
There were also a few big names reporting earnings today. General Motors Company (GM) announced Q4 EPS of 54c vs estimates of 51c and revenue of $39.3B vs $39.14B. Gm closed down 92c, or 3.21%, to $27.75. Also reporting earnings was PepsiCo (PEP) which like GM beat on EPS and revenue $1.09 vs $1.05 on $19.95B vs $19.7B. Along with earnings, PEP also announced they are raising the annualized dividend 5.6% to $2.27 and a new $10B share repurchase program. Unlike GM, PEP gained 78c, or 1.09%, closing at $72.28. Third big name reporting EPS I will note is Cisco (CSCO) which like the other two beat on both top and bottom line. CSCO reported Q2 EPS of 51c vs consensus estimates of 48c on revenue of $12.1B vs $12.06B. Looks like CSCO guided Q3 inline with analyst expectations but the market reaction on the report was somewhat muted as CSCO lost 14c, or 0.66%, closing at $21.00.
Along with reporting earnings last night, Zillow (Z) also announced a search agreement with Google (GOOG). This morning Citigroup took the opportunity to follow-up Z’s Q4 earnings report with a price target increase. Citi already had a Buy rating on the stock but they raised the price target to $50 from $35. While not on today’s list as it wasn’t a true upgrade, as a reminder that you can review the list I compile each day as well as an archive of past days in the Upgrades/Downgrades section.
The following noteworthy companies are scheduled to report earnings before tomorrow’s open: AEP, CPB, SJM, ZIP
As for the broad market. The trend is your friend and is pointing higher. It is funny how reminiscent this rally is with how last year started where we didn’t see a substantial top until April.
