Utility stocks made a comeback on Thursday
after Warren Buffett's Berkshire Hathaway (NYSE:BRK.A) announced the $5.6 billion acquisition of Nevada-based NV Energy (NYSE:NVE).
The sector has come under serious pressure as of late, having recorded five straight down days in a row prior to today's bounce.
Outside of utilities, today's strength was fairly broad-based, with notable outperformance in the Russell 2000 (INDEXRUSSELL:RUT) small cap index. In fixed income, junk bonds rebounded from their recent slump, which was largely driven by fears of the Fed pulling back out of the economy.
Additionally, while many traders have been fearing that rising Japanese market volatility could bleed into the US, we didn't see that at all today as traders were not disturbed by a 5% decline in Japanese stocks yesterday. In fact, futures on Japan's Nikkei 225 (INDEXNIKKEI:NI225) rose 1.3% today.
In company news, shares of Priceline.com (NASDAQ;PCLN) rose more than 2% following yesterday's announcement of a $1 billion expansion in its share repurchase program, which will be funded by a convertible bond issue. EMC (NYSE:EMC) also popped after boosting its own buyback program and initiating a quarterly dividend.
Elsewhere, Tesla Motors (NASDAQ:TSLA) generated interest today after the company announced a massive expansion of its Supercharger network of charging stations, which will soon enable coast-to-coast driving in its electric vehicles.
On the economic front, we saw a host of data today.
Initial jobless claims were slightly worse than expected at 354K, while Continuing Claims came in at 2986K, above the 2966K consensus. First-quarter GDP growth (second estimate) was 2.4%, which was a hair below the 2.5% consensus.
The market also received energy inventory reports today, which sent oil higher and natural gas sharply lower.
We have some important economic data on tap tomorrow, starting at 8:30 a.m. EDT when April Personal Income, Personal Spending, and PCE Prices are released. Then at 9:45 a.m., May Chicago PMI and University of Michigan Consumer Sentiment will be released.
Given that in this year's rally, the market has not seemed to necessarily correlate to economic fundamentals, it is tough to gauge the potential reactions to these numbers. However, we would watch for a potential spike in US Treasuries on bad data as they have been down significantly as of late on fears of Fed tapering its QE activities and are perhaps oversold.
No positions in stocks mentioned.
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