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After four straight days of gains, the Dow Jones Industrial Average took a breather today, finishing the session unchanged at 14,865, though it was down all session, at one point by as much as 0.5%. The S&P 500 and Nasdaq both declined slightly.

Disappointing retail sales numbers from March seemed to cool off this week’s rally, especially after some strong results from individual retailers yesterday. Sales at the consumer level dropped by 0.4%, its worst performance in nine months, with no expectations of any change, while a separate consumer confidence report also showed poorer results than expected. The combination of federal budget cuts through sequestration and an increase in the payroll tax seems to be weighing on consumer spending habits. The Producer Price Index was also off by 0.6%; however, the core rate, which excludes the volatile food and energy categories, was up 0.2%. While a long-term drop in prices is generally bad for the economy, a short-term decline can help spur consumption. The numbers also indicate that inflation continues to be well under control.

JPMorgan Chase finished down 0.6% after reporting earnings this morning. A slowdown in lending hampered the nation’s No. 1 bank by assets, as well as rival Wells Fargo , which also reported earnings this morning. Both banks topped earnings estimates, but did so on cost-cutting rather than strong revenue growth. Wells delivered EPS of $0.92, while JPMorgan had an adjusted per-share profit of $1.41.

Home Depot was today’s big winner, gaining 2.4% after its former unit, HD Supply, announced it would go public with a $1-billion IPO. Home Depot remains HD Supply’s biggest customer, and the IPO seems to confirm investor belief in the continued recovery of the housing sector. The home-improvement specialist also received an upgrade from Jeffries Group to “buy,” from “hold,” after the investment research firm said that increasing housing prices and conservative guidance could provide strong upside potential in the stock.

McDonald’s was another strong gainer, moving up 1.6% after bringing back Steve Easterbrook as Chief Global Brand Officer. Easterbrook had formerly overseen McDonald’s Europe, the Golden Arches‘ biggest region, with 7,000 restaurants in 39 countries. The fast-food chain also tripled the pay for its former and current CEO, and was also receiving some negative publicity after an ad in Massachusetts came out that seemed to associate eating Big Macs with mental illness and depression. McDonald’s immediately pulled the ad.

With big finance firms still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new normal, or whether finance stocks are a screaming buy today. The answer depends on the company, so to help figure out whether JPMorgan is a buy today, I invite you to read our premium research report on the company today. Click here now for instant access!

From: http://www.dailyfinance.com/2013/04/12/dow-takes-a-break-after-a-strong-week/

By Rich Duprey, The Motley Fool

Filed under: Investing

Since sequestration kicked in on Saturday and The End of The World As We Know It was supposed to materialize, the Dow Jones Industrial Average has packed on an additional 164 points, an almost 1.2% jump from where it closed on Friday. It was up 126 points yesterday alone and pushed the index to a new five-year high.

Had we known massive spending cuts would generate such market enthusiasm, we could have allowed sequestration to begin when it was supposed to at the start of the new year.

The three stocks below, however, had their own causes to celebrate, but resist the urge to high-five everyone in the cubicles next to you. Smart investors won’t celebrate until they know why their stock surged, because without a fundamental basis for the bounce, these stocks could just as quickly make the return trip down.

Company	% Gain
MGIC Investment	27.8%
Dyax	19.6%
Cree	14.4%

Insuring housing’s future
They were some of the biggest casualties of the housing market implosion, but today, mortgage insurers are the market darlings, the epitome of the industry’s nascent recovery, and its potential as the government scales back its dominance of the mortgage industry. Both MGIC Investment and Radian Group have soared in value over the past week with the former more than doubling in price and the latter up a not-so-insignificant 24%.

Both companies have used the opportunity to raise more cash. Radian started the funding cycle by raising $689 million selling stock and notes while MGIC followed with a dual set of announcements that it would float 135 million shares of common stock and $350 million in convertible notes that come due in 2020.

Analysts say the clouds have parted for the insurers, and Barclays thinks it’s no longer how much further down they’ll fall, but rather “how much upside there still is despite the big move since bottoming in August.” The industry could return to normalized earnings by 2015 as it moves toward profitability and the high-risk legacy business expires, but of the two, MGIC is seen as the better bet by analysts because Radian has greater capital needs.

Seems to me if the FHA is trying to limit its risk by limiting the scope of its exposure, that could mean the private mortgage insurers will be incurring it. In the short term, this may benefit MGIC, but longer term, we may find ourselves right back where we were.

License to kill
Biotech Dyax also jumped after analysts weighed in on its prospects with Jeffries Group setting a $6 per share target on its stock.

While it might seem to be a bit of too little, too late when it comes to Dyax, since it was one of the best performing stocks in the market last year having surged 156%, the Jeffries analyst says there’s still a lot of room to run yet because of its …read more
Source: FULL ARTICLE at DailyFinance

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