The Wall Street Report: Two-Day Slide Halted

Matt Egan
FOXBusiness

After a back-and-forth trading session, Wall Street's two-day selloff ended on Wednesday as big rallies for retailers and life insurers overshadowed the latest bleak economic news.

Today's Markets

The Dow Jones Industrial Average rose 47.55 points, or 0.61%, to 7837.11, the S&P 500 added 9.61 points, or 1.18%, to 825.16 and the Nasdaq Composite picked up 29.05 points, or 1.86%, to 1590.66. The consumer-friendly FOX 50 gained 4.12 points, or 0.67%, to 619.15.

Without any major economic reports and mixed signals on the earnings front, the markets searched for direction throughout the day before ending near their midpoint. Stocks were pushed higher by strong gains from retailers thanks to positive earnings from Bed, Bath & Beyond (BBBY: 31.7, 6.19, 24.26%) and a surge in the life-insurer sector amid talk of a government bailout.

“I think right now the earnings picture is going to dictate trading. It’s going to be choppy, as it has been,” said Dan Greenhaus, equity analyst at Miller Tabak. “Companies that perform like Bed, Bath & Beyond are going to be rewarded and those that don’t are going to be punished.”
The gains were Wall Street's first of the week and came despite Alcoa's (AA: 8.06, 0.24, 3.07%) weaker-than-expected quarterly results and the Federal Reserve downgrading its already gloomy economic forecast.

The Nasdaq Composite widely outpaced the broader market thanks to big gains from tech and consumer discretionary stocks. The vast majority of the Nasdaq 100's components closed in the green, led by Bed Bath & Beyond and Juniper Networks (JNPR: 17.51, 1.89, 12.1%).

Home Depot (HD: 25.11, 0.77, 3.16%), Alcoa and American Express (AXP: 15.73, 0.76, 5.08%) led the way up on Dow. On the downside, General Motors (GM: 1.929, -0.071, -3.55%), Citigroup (C: 2.68, -0.08, -2.9%) and Bank of America (BAC: 7.05, -0.28, -3.82%) tumbled. Last week the blue-chip index put the finishing touches on its strongest four-week win streak since 1933.

“We’re coming off a 26% rally [from the March lows] so one would believe there would be some give back. Nothing goes up forever,” said Greenhaus.

Wall Street's rally was nearly derailed after the Fed released its March 17-18 minutes, which showed the central bank is no longer banking on a 2009 recovery. Policy makers, which decided at last month's meeting to inject another $1 trillion into the economy, expect a slow recovery next year and unemployment to continue rising.

Retailers Dominate Earnings Kickoff

A day after earnings jitters sent the Dow to a 186-point plunge, Wall Street put a positive spin on mixed earnings reports as all five major companies reporting results ended higher.

Consumer discretionary stocks like Macy's (M: 10.33, 0.65, 6.71%) and Aeropostale (ARO: 26.92, 1.39, 5.44%) rallied around Bed Bath & Beyond, which beat the Street by 11 cents and said it’s comfortable with analyst expectations for the current quarter and full year. Similarly, discount retailer Family Dollar (FDO: 34.61, 1.88, 5.74%) soared to 52-week highs after it matched expectations and upped its full-year outlook again. Also, Ruby Tuesday (RT: 6.08, 2.24, 58.33%) surged more than 50% after the restaurant operator widely exceeded estimates.

The upbeat news from the retail sector overshadowed the results from aluminum maker Alcoa, which officially started earnings season late Tuesday by reporting a weaker-than-expected loss of 59 cents per share. Mosaic (MOS: 45.575, 2.615, 6.09%) also disappointed the Street as the fertilizer company’s net income plunged 88% last quarter.

Insurers, M&A Provide Strength

Life insurers were the biggest winners on Wednesday as stocks like MetLife (MET: 24.75, 0.67, 2.78%) and Genworth Financial (GNW: 2.34, 0.24, 11.43%) surged after The Wall Street Journal reported the Treasury Department plans to soon offer TARP funds to a number of struggling life insurers that own federally chartered banks. Sources confirmed to FOX Business the government is considering such a move.

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