Stocks bounce back in continuation of see-saw trend
The major averages are higher at midday as the market continues its recent see-saw action. Stocks slid yesterday as investors considered headlines regarding proposed tax hikes, which would partly offset the cost of already implemented and proposed spending measures. Bloomberg reported yesterday that the Biden administration was considering nearly doubling the capital gains tax rate on wealthy taxpayers. The market also continues to ponder the spike in virus cases in some regions and nations relative to ongoing progress on vaccinations, especially in the U.S.
ECONOMIC EVENTS: In the U.S., Markit's flash April PMI data remained robust and solidly above record low levels from a year ago. The manufacturing index rose 1.5 points to 60.6, the services PMI climbed 2.5 points to 63.1 and the composite index increased 2.5 points to 62.2 in the flash print for this month. New home sales surged 20.7% to a 1.02M pace in March, which was stronger than forecast.
TOP NEWS: Intel (INTC) shares were 6% lower near noon despite the company reporting better than expected earnings and revenue for the first quarter. Of note, Intel provided slightly downbeat second quarter earnings guidance, but raised its fiscal 2021 adjusted earnings view. Following the results, Needham analyst N. Quinn Bolton cut the firm's price target on Intel to $70 from $74 but maintained a Buy rating on the shares, saying that the "strong" first-half gross margin level is expected to be offset by a softer second half. The anlayst added that new CEO Pat Gelsinger is correctly focused on regaining Intel's technological leadership and defending market share.
Shares of American Express (AXP) were also trading lower after its earnings report, down about 2% after its Q1 revenue came in below consensus estimates. Commenting on the quarter, CEO Stephen Squeri said he saw continued improvements in the core business and is "encouraged" by the progress the company is making to "rebuild our growth momentum going forward."
Also on the earnings front, Snap (SNAP) shares rose 1% after the social media company reported better than expected Q1 results, with daily active users for the quarter rising 22% and ARPU jumping 36% year-over-year. The company also provided upbeat revenue guidance for Q2.
In non-earnings news, shares of Silicon Labs (SLAB) jumped 8% after the company agreed to sell its Infrastructure & Automotive business to Skyworks Solutions (SWKS) for $2.75B in all-cash consideration. The transaction includes Silicon Labs' power/isolation, timing and broadcast products, intellectual property and associated employees. Skyworks shares rose 4% after the news.
Meanwhile, the Wall Street Journal reported that the Advisory Committee on Immunization Practices panel is set to meet this Friday to determine whether the pause on the Johnson & Johnson (JNJ) COVID-19 vaccine should be lifted or continued. Many public-health authorities have already determined the benefits of the vaccine outweigh the risks, the Journal noted.
MAJOR MOVERS: Among the noteworthy gainers was Microvision (MVIS), which rose 35% after gaining focus as a short squeeze candidate on WallStreetBets subreddit. Also higher was Meridian Bancorp (EBSB), which gained 20% after signing a definitive merger agreement to be acquired by Independent Bank (INDB). Independent Bank fell 1% after the news.
Among the notable losers was Inovio (INO), which declined 25% after the Department of Defense discontinued funding for the Phase 3 segment of the INNOVATE trial. Also lower was Kimbery Clark (KMB), which fell 6% after reporting quarterly results.
INDEXES: Near midday, the Dow was up 168.44, or 0.50%, to 33,984.34, the Nasdaq was up 194.96, or 1.41%, to 14,013.37, and the S&P 500 was up 41.72, or 1.01%, to 4,176.70.