Small Moves Disguise Big Action
The Dow Industrials tacked on a mere 5 points Wednesday but the small move disguises a lot of action, particularly the earnings parade that kicked off after the closing bell Wednesday. Cisco (NASDAQ:CSCO), Groupon (NASDAQ:GRPN), Visa (NYSE:V) and News Corp. (NASDAQ:NWSA) were among the corporate juggernauts releasing their latest quarterly report cards.
The results were mixed and gave investors lots of fodder for Thursday's session, but they may be overshadowed by developments overseas. Greek officials have apparently reached an agreement on austerity measures that would help the country secure more backing from the ECB, and stock futures have moved higher.
The smooth and steady market action seen so far this year is much different that the volatility and big swings witnessed last year. Some investors will tell you the Street has returned to a "new normal" and the steady climb to the top is indicative of an improving economy and investor mentality. Others will tell you the market is ripe for popping.
Ben Willis, Director of Floor Operations at Sunrise Securities on the floor of the New York Stock Exchange, says a pop is unlikely. We should expect more of a "fizzle and fade...the market needs a 'healthy' pullback before it can pop."
All three major averages are in bull market territory, having risen at least 20% from their October 2011 lows. The Dow Industrials are just about 10% away from clinching the all-time high above 14,000. The Nasdaq, at 2,915.86, is at the highest level since December 2000.
Cisco shares are down slightly in the pre-market. Cisco has undergone a massive round of cost-cutting, including 6,500 layoffs, that seems to be working in its favor. Cisco made $2.2 billion in its fiscal second quarter.
One of the newest technology companies to join Wall Street is Groupon. Investors were expecting a better deal from the daily deals giant in its first earnings report as a public company; instead, they got a surprise net loss. Groupon pinned the poor results on a high international tax rate. The shares are down sharply before the market's open.