Stocks rallied into positive territory this afternoon after starting the week in the red. The Dow Jones Industrial Average (^DJI 0.03%) is up 0.17% with 45 minutes left in trading, and the S&P 500 (^GSPC 0.01%) has risen 0.54%.
The opening drop was driven by a weaker-than-expected housing report. The National Association of Realtors said existing-home sales declined 0.6% in March to a seasonally adjusted rate of 4.92 million. This fell below the 5.03 million estimate and shows at least a small slowing in the housing market. The Chicago Fed also released a reading of market activity that showed a swing into negative territory from a positive reading in February.
Caterpillar (CAT -4.32%) is one of the big winners today, climbing 2.3% after reporting a pretty terrible first quarter. The company's net income fell 45% as the sale of mining equipment dropped, and management now expects full-year revenue to be between $57 billion and $61 billion from a previous guidance of $60 billion to $68 billion. The only positive item was a $1 billion stock buyback announced today, and investors are clinging to the only good news available right now.
Microsoft (MSFT -0.23%) is leading the Dow, jumping 3.9% today. There are reports that ValueAct Capital Management has acquired a $2 billion stake in the company. Option volume skyrocketed in trading today as investors bet on which way the stock will head after today's pop. Most of this move is speculation, so I wouldn't buy on ValueAct's reported position alone. With that said, Microsoft did have a good Q1, and I'm still bullish on the stock.
General Electric (GE -0.65%) is having a rough go of it today, dropping 2% after analysts at JPMorgan said the stock is "dead money." The analysts downgraded the stock from overweight to neutral and lowered their price target from $24 to $22. Analyst upgrades and downgrades can impact stocks in the short term, but by the time the market opens tomorrow this will be old news, and markets will have forgotten about the downgrade.