This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Market Preview: Halfway to May

Updated from 5:30 p.m. ET to include additional information on after-hours action.

NEW YORK ( TheStreet) -- Odd day on Wall Street.

The Dow Jones Industrial Average posted a solid gain as Americans shopped up a storm in March, the S&P 500 was lethargic, and the Nasdaq slumped with Apple (AAPL - Get Report) playing the role of albatross, falling for a fifth straight session.

Fear not though. Tobias Levkovich, chief U.S. equity strategist at Citigroup, argued early Monday that there's good reason to believe that consumer spending will continue to hold up well despite any blips in the housing or employment data.

This is because it's ultra rich who open their wallets the most, he explained. As it turns out, the ultra rich also own the majority of the stocks, so they're likely feeling awful flush these days.

"Stock prices remain a key bulwark for spending potential as higher end consumers drive roughly half of discretionary spending," Levkovitch said. "While investors often focus on home prices when considering the household sector's financial health, it is critical to recognize the impact of stock prices on household wealth and thereby on retail sales trends. Furthermore, almost half of all discretionary consumer spending is coming from the top 20% of income earners who happen to own an estimated 90% of all stocks. Thus, despite the recent pullback, investors are up meaningfully from levels seen six months ago, supporting consumption."

Meantime, the positives coming out of this early round of first-quarter reports were enough to prompt UBS to boost its earnings estimate for the S&P 500 on Monday. The firm went to a bottoms-up profit view of $24.50 per share, increased from $24 per share, and left intact its year-end target of 1475 for the index, which would represent a 7.7% gain from Monday's finish at 1370. From a sector standpoint, UBS sees the financials, energy and technology as the best bets to outperform.

"As we look at early reports (8.7% of the S&P 500 has reported by market-cap), we see that initial results have come in very strong. In particular, earnings have exceeded forecasts by 10.4%, and revenues have beaten estimates by 2.8%," the firm noted, adding later: "Although the magnitude of earnings beats looks quite large, we are not overly surprised. More specifically, while robust economic activity and a healthy stock market pointed to strength in 1Q, consensus estimates were revised lower over the course of the quarter, contradicting these trends."
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.00 0.38%
GS $161.94 -2.60%
INTC $30.22 -1.30%
FB $117.85 -0.61%
GOOG $695.72 -0.36%


Chart of I:DJI
DOW 17,698.80 -192.36 -1.08%
S&P 500 2,058.67 -22.76 -1.09%
NASDAQ 4,759.78 -57.8140 -1.20%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs