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With little in the way of economic data on the table today, all eyes are now fixated on the start of earnings season, which is scheduled to kick off after the bell with aluminum giant Alcoa's (NYSE: AA ) second-quarter report.
Estimates for Alcoa are all over the place -- and rightfully so. Aluminum prices around the globe remain depressed because of oversupply and weak demand. Alcoa has responded by idling some of its capacity to reduce its costs and ultimately cut market supply in the hope of regaining some of its pricing power. It still may be a bit too early to tell if these actions have had a material impact on Alcoa's bottom line, but tonight's report will certainly set the tone for the struggling commodity-based sector.
Investors definitely have high hopes that historically low lending rates will keep the good times rolling this quarter and helped push the broad-based S&P 500 (SNPINDEX: ^GSPC ) higher by 8.57 points (0.53%), to finish at 1,640.46, its seventh gain in the past nine trading sessions.
Despite no company-specific news, coal miner Peabody Energy (NYSE: BTU ) took the reins of leading the S&P 500 higher with a gain of 4.9%. Coal stocks have been beaten down mercilessly by declining demand and encouragement from the Obama administration for companies to seek out alternative and cleaner energy sources. Electric utilities, for instance, have been converting some of their coal-powered electric plants to natural gas-powered, curbing coal demand, hurting pricing, and creating a coal supply glut. Peabody's rise today could be a reminder to investors that coal still plays a vital role in U.S. electricity generation and isn't going to disappear overnight. It isn't my favorite company in the sector, but I do think it merits a deeper dive by value-seeking investors.
Sticking with the energy sector, NRG Energy (NYSE: NRG ) jumped 4.2% after filing its IPO plans for the spinoff of its NRG Yield subsidiary, which will hold stakes in natural gas, wind, and solar projects. NRG has high hopes for the spinoff which could raise the company up to $411 million when it prices 19.6 million shares between $19 and $21 per share. Spinoffs like these are becoming more common, as transparency in the complex energy sector is proving helpful to investors who are looking to better understand how these companies make their living.
The other big mover today was online travel booking specialist priceline.com (NASDAQ: PCLN ) , which advanced 3.9% after receiving an upgrade from Morgan Stanley. Priceline, which is now nearing $900 a share, received a ratings boost to "overweight" from "equal weight" and had a price target set for $1,010, pushing it to a 14-year high. Specifically, Morgan Stanley pointed out that Priceline's Booking.com website is maintaining its dominant market share in the European markets. While it's been hard to argue against Priceline's performance since the recession, I would think twice about paying this kind of premium for shares at this level.
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