S&P 500: +10.77 (+1.04%)
Markets rebounded from its lower open to extend its winning streak on fewer-than-expected jobless claims, rising forecasts for oil demand, and plethora of companies increasing their earnings guidance. The S&P 500 has declined in only 19 out 50 sessions thus far during the third quarter.
The Telecom sector led the pack higher after research firm ISuppli Corp said Apple may extend its exclusive wireless agreement with AT&T (T). The sector is also gaining momentum on expectations that companies will increase spending on communication and mobile equipment as the U.S. economy pulls out of the recession.
Oil prices continue to rise after OPEC left its production targets unchanged, as expected, and the IEA expects global demand to strengthen. Energy stocks were the second best performing sector today.
Procter & Gamble (PG) jumped 4.24% after the company reaffirmed its fiscal first quarter and 2010 earnings outlook. The consumer products company sees fiscal first quarter organic sales growth of zero to down 3%, but PG sees that trend reversing in the second quarter with organic sales growth between 1% and 4%.
The company attributes the stronger sales forecast to new product launches and investments in its portfolio as well as easier year-over-year comparisons.
Monsanto (MON) fell 5.01% as the company reaffirmed fiscal 2009 earnings guidance, but said earnings will fall in fiscal 2010. The company’s gross profit for Roundup and other glyphosate-based herbicides is expected to be lower than anticipated. As I explained in late June, Monsanto’s premium price for Roundup couldn’t possibly be sustainable with such a large supply of generic brands on the market.
On the bright side, the seed and genomics franchise appears to continue gaining market share and trait penetration. Despite near-term concerns about Roundup, there is little reason to believe that the seed business won’t continue its break-neck growth and ultimately increase the bottom line. Check out the earlier post for more on this topic.
Quick Hits
- Understanding the Inflation In the Pipeline
- When Will the Dollar Slide Stabilize?
- Seasonality: S&P 500 Return by Month
Peter Lazaroff, Investment Analyst
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