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2 hr 28 min ago
[BRIEFING.COM] The market managed to sustain its gains on Tuesday. As had been the case yesterday, buying interest was broad-based. The difference today, though, was that there were some macro factors that supported the market's rise. Bond yields stabilized, the price of crude declined, and influential areas of the market provided leadership. Underpinning the optimistic tone was another dose of M&A activity.

In the early going, the Treasury market staged a recovery. With that, stocks rose and followed Treasuries' direction for part of the session. Bond traders lacked a catalyst, however, and demonstrated some caution ahead of Friday's much anticipated Employment report. At the close of equity trade today, the 10-year was yielding 4.87%. That still leaves it at a 22-month high, but the facts that bonds were less defensive and their yields stood relatively still provided some relief for the stock market.

That stabilization was one reason for a solid, market-leading gain in the Financial sector (+1.2%). Another reason was the brokerage industry. Per usual, that group lent considerable momentum. The merger and acquisition front continues to be a robust one, and reports that Computer Sciences (CSC 59.80 +2.51) is up for sale, that 3M (MMM 77.04 +1.20) is considering a divesture of its branded pharmaceutical business, and that International Paper (IP 34.90 +0.18) is selling over $6 billion worth of land only emphasized that idea today. On a related note, Citigroup (C 48.21 +0.80) was another factor. The Fed lifted a ban on its ability to pursue major acquisitions. The rate-sensitive Utilities sector (+1.1%) also caught a bid from the tame Treasury trade.

Lately, the equity market has not responded to energy price action in a very consistent manner. For example, both intra-day spikes and late-day slides went under yesterday's radar, but an extended decline in crude was a reason behind today's rally. The 3% pullback in natural gas and a decline in heating oil were also supportive. The action was bullish for the broader market, and even more so in that it did not (today) result in any market-dragging selling in the Energy sector. In fact, that area of the market contributed a strong 1.3% gain. A catalyst was gasoline, which rose more than 1%. Expectations ahead of tomorrow's inventory report were a reason behind the disjointed trade across the complex. Analysts are expecting a 1.2 million barrel build in crude and a 1.4 million drawdown in gasoline supply. The latter is garnering some particular attention as supply concerns surface ahead of the summer driving season.

Industrial stocks also fared well today. 3M, as mentioned above, benefited from M&A news. Transportation stocks caught a bid from the energy price declines, and the Dow Jones Transportation Average hit an all-time high. Positive comments on Caterpillar (CAT 75.30 +1.80) lent further upside to the sector as well as to the Dow. Speaking of Dow components, Merck (MRK 35.48 +0.07) also received some added attention. With the first quarter earnings season looming, the market is mindful of guidance updates. Merck, for its part, upped its first quarter guidance. The good news was somewhat stifled, however, by the fact that its full-year guidance was left intact. Check Point Software (CHKP 18.76 -1.07), on the other hand, issued a profit warning. That stock weighed on the Nasdaq, but it did not prevent its advance.NYSE Adv/Dec 1905/1377...Nasdaq Adv/Dec 1561/1477