Microsoft Continues to Rally

The stock market is down a bit this morning. The S&P 500 currently stands at 1,552.88 which is 2.37 points lower from Friday’s close. The index is trading just above its 50-day moving average. We briefly dropped below the 50-DMA last week. Gold, however, is up strongly today. The metal is currently up $29 per ounce to $1.425. The economic news this morning was that existing home sales dropped 0.6% last month to an annualized 4.92 million units. That was a bit of a surprise. Economists were expecting an increase to 5.01 million.

Caterpillar ($CAT), which is a Dow component, is making news this morning. The company had a terrible earnings report and it slashed guidance. Wall Street had been expecting earnings of $1.40 per share; instead CAT earned $1.31 per share. Previously, CAT said it expected full-year earnings to fall between $7 and $9 per share. Now they say it will be $7 per share. Still, the overall earnings picture looks decent. The latest numbers show that 106 companies in the S&P 500 have reported earnings so far. Of that, 72% have topped estimates.

We have one standout on our Buy List today and that’s Microsoft ($MSFT). Shares of the software giant broke $31 per share earlier today. MSFT is now at a seven-month high. The catalyst for today’s rally is the news that an activist hedge fund has taken a massive stake in the company. CNBC said that ValueAct Capital will soon announce that it has a $2 billion position in MSFT. Bear in mind that the entire company is worth more than $250 billion. Since the earnings report came out, Microsoft is up by 7%.

CR Bard ($BCR) is due to report later today. Previously, the company warned us that 2013 would be a rough one but that growth would pick up next year. Wall Street currently expects earnings of $1.43 per share which is a big drop from the $1.61 per share Bard made for last year’s Q1.

Posted by on April 22nd, 2013 at 11:18 am


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