Strong Week On Wall Street
Monday-Wednesday’s Action: Pullback, What Pullback?
Stocks were relatively quiet on Monday as the bond market was closed for Columbus Day. The big news came from tech-land when privately-held Dell Inc announced plans to acquire EMC (EMC) for $67 billion. The deal is the largest technology acquisition in history. CEO Michael Dell, who will run the combined company, said the move will allow Dell to leverage EMC’s strength in the cloud and move into the enterprise space which is much more lucrative than the weakening personal computer market. Overnight, stocks in Asia and Europe fell hard after China said exports plunged nearly 20% which puts pressure on the already weak global economy. Chinese imports were only off minus -3% which suggests Beijing’s efforts to stimulate their economy may be working. A stronger Chinese consumer invariably helps U.S. multi-nationals that sell goods and services in China.
On Tuesday, stocks edged higher in the morning but quickly reversed and closed lower after the S&P 500 encountered stubborn resistance near 2020. 2020 has been formidable resistance since the big sell-off in late August. Stocks fell on Wednesday after shares of Wal-Mart ($WMT) plunged nearly 10%. The company said earnings will fall 6-12% during fiscal 2017 which was much lower than the Street’s estimate for a gain of 4%. The company announced a $20B buy back program on top of its $15B program that started in 2013. Semiconductor stocks surged on Wednesday after Intel ($INTC) announced numbers. Semiconductor stocks are a very important area for the market and the fact they rallied sharply bodes well for the bulls. Retail sales rose by 0.1% in September, missing estimates for a 0.2% gain. Retail sales for August were revised lower. Producer prices fell by 0.5%, missing estimates for a decline of 0.3%.