Stock Market Today: Risky Complacency Brings Stocks Higher
NEW YORK (TheStreet) -- Major U.S. stock indices settled Monday higher as the markets returned to a state of complacency defined by expectations of extended Federal Reserve support.
The Dow Jones Industrial Average was up 0.46% to 16,569.28. The S&P 500 was up 0.72% to 1,938.99. The Nasdaq tacked on 0.72% to 4,383.89. A confluence of factors including concerns about early Fed tightening rocked the global markets last week, causing the S&P 500 to suffer its worst weekly drop since June 2012 and the Dow to turn negative for the year. But Friday's solid yet still weaker-than-expected jobs number calmed investors by triggering their expectations that the Fed will stand pat on record-low interest rates at least until June 2015.
The widespread expectation is that the Fed will continue to save the day on any hint of weak fundamentals. The markets do not appear to be ready for any type of early Fed tightening.
Carter Worth, chief market technician at Sterne Agee, warns that the market is long overdue for a loss of 5% or more. Such drops usually occurs every 71 days or 3.5 months, according to Worth. It's already been six months since the broader market last saw a 5%-plus decline. Michael Kors (KORS - Get Report) shares plunged 5.89% to $77.01 after the luxury retail company said revenue jumped 43.4% to $919.2 million vs. the consensus estimate of $851.7 million on popular demand for its handbags and accessories. Steeper discounts, however, cut into margins.
Sixty-six S&P 500 companies are expected to report this week, including 11 consumer discretionary companies and 10 energy companies. Amgen (AMGN - Get Report) popped 2.47% to $128.65 after the biotech company said that its blood cancer treatment met primary goals in a late-stage trial. GlaxoSmithKline (GSK - Get Report) gained 1.04% to $48.53 after the drug maker received a boost from a decision by Express Scripts (ESRX - Get Report), the largest U.S. pharmacy benefit manager, to reinstate its top-selling lung drug Advair as an approved drug in 2015, Reuters reports. Groupon (GRPN - Get Report) added on 8.67% to $7.02 in anticipation of its second-quarter earnings report. Groupon will report its second quarter earnings after the market close on Tuesday, August 5. Analysts surveyed by FactSet expect the company to post earnings of a penny a share and revenue of $60.87 million for the second quarter. Read More: 3 Big Takeaways From Michael Kors' Earnings -- By Andrea Tse in New York Follow @AndreaTTse
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