Stocks staged the biggest rally this week, with the energy sector again leading the S&P 500 on the back of a huge rally in oil.
First, the scoreboard:
- Dow: 18,107, +71, (+0.4%)
- S&P 500: 2,106, +10, (+0.5%)
- Nasdaq: 5,012, +35,(+0.7%)
And now, the top stories on Wednesday:
- The Federal Reserve’s latest beige book showed that economic activity in its 12 districts improved at a moderate pace. Notably, districts reported evidence of wage growth pressure: “Firms in many Districts, including Richmond, Atlanta, St. Louis, Kansas City, and Dallas, reported having difficulty finding skilled workers, especially in professional and business services and the IT sectors.” Also, the oil crash caused layoffs in several districts, and consumer savings from lower gas prices boosted retail sales.
- West Texas Intermediate crude oil prices hit a year-to-date high. Futures soared by more than 5% to as high as $US56.20, last reached late in December. The rally gained steam after data from the Energy Information Administration showed that the growth of oil inventories slowed last week. Inventories rose by 1.3 million barrels, versus the 10.9 million barrels reported the prior week.
- Americans are buying more guns from Smith & Wesson than the company expected, so it raised its sales forecast for the quarter. Shares jumped by more than 15% after the company said it expects net sales of between $US175 million and $US179 million, an 8% bump from the range it projected early in March. For the full-year, the company sees sales totaling $US546-$US550 million.
- In economic data, the latest Empire State manufacturing survey from New York came in at -1.19, widely missing the expectation for a reading of 7.17. Industrial production slowed more than expected in March, falling 0.6% versus expectations of -0.3%. And, the NAHB Housing Market index climbed to 56 in April from 52 in March, beating expectations for 55.
- Bank of America reported first quarter earnings that beat on the bottom line and missed on the top line. Adjusted earnings per share came in at $US0.36 on revenues of $US21.4 billion, versus estimates of $US0.29 on revenue of $US21.6 billion. “We see continued encouraging signs in customer and client activity, with consumer spending increasing and utilization of credit by our commercial customers rising,” CEO Brian Moynihan said in the press release.
- Piper Jaffray upgraded GoPro after a poll showed teens increasingly demand and use the point-of-view cameras. The stock rallied by up to 4% after analysts changed their rating to “Overweight” from “Neutral” while maintaining their price target at $US55 a share. Piper Jaffray’s “Taking Stock with Teens” survey showed GoPro camera ownership among families with teens is around 18%, the highest on record. The analysts “believe estimates will ultimately prove conservative as our consumer survey work has suggested strong adoption in the US.”