Morning selling gives way to afternoon buying
Better than expected jobless claim figures helped push stocks higher at the open. Volume jumped at the open as investors cheered, but the happy times did not last for much longer. Sellers took to the market pushing stocks into negative territory. This week has seen its share of pullbacks during the morning hours and Thursday was not an exception. Stocks appeared to look ahead to tomorrow’s release of the third quarter GDP or perhaps the market was nervous heading into Microsoft’s (MSFT) earnings report after the market close. But, that didn’t stop the market from finding buyers to step up and push stocks well off their lows.
The biggest news story after the close was Microsoft’s earnings announcement. For the second straight quarter earnings and sales growth accelerated from the prior quarter. CNBC and many stock pickers have criticized MSFT for the lack of growth and innovation needed to push the company forward. Since the 2000 stock market collapse MSFT has been a laggard, a dog of a stock. The fundamental growth picture may be changing and although MSFT is one large company it accounts for a large percentage of the NASDAQ. We have to take notice.
MSFT reported a jump of 55% in earnings and 25% in sales year over year. Last quarter year over year growth was 42% growth in EPS and 22% in sales. While the growth picture may be getting interesting the fact MSFT has been lagging its relative strength line is quite glaring and lack of accumulation. Perhaps the stock will prove the doubters wrong, but I am not willing to step up with MSFT just yet.
Tomorrow’s GDP report will certainly perk up the market pundits and whether or not the Federal Reserve should continue with QE 2. Regardless of what the Federal Reserve will do the market will react to it and we’ll plan accordingly.
Enjoy the weekend, as always cut your losses and ride your winners. Don’t forget to take some profits along the way.
