At the Close: Stocks Rise Because They Can; Career Education Rises 50% on Asset Sale

Stocks went up today. Why? Heck if I know.

The S&P 500 gained 0.3% to 1,752.07, while the Dow Jones Industrials rose 0.6% to 15,509.21.

The wires trotted out the usual explanations: Earnings, strong China manufacturing indicators, hope that the Federal Reserve will maintain the status quo for longer. Take your pick, your guess is as good as mine.

Which isn’t to downplay those factors, which are clearly in play. It’s just that citing them as a reason for a relatively small move is one of the silliest things about markets reporting. I say that as a former currency reporter at Bloomberg, where I would write that the dollar was falling because commodities were strong, while my counterpart on the commodities desk was writing that commodities rose because of the weak dollar.

Silvercrest Asset Managment Group’s Patrick Chovanec explains why U.S. stocks look attractive:

…from an investor's point of view, U.S. corporations look attractive. Earnings growth may be sluggish, but profit margins are wide and balance sheets are solid. All the cash sitting on corporate balance sheets may represent a hesitation to invest and drive growth, but also indicates a capacity to pay out higher dividends, buy back shares, and snap up smaller companies. Price-to-earnings ratios are reasonable and, based on historical experience, have room to grow. The energy revolution in U.S. shale oil and gas, in particular, is a major trend that is going to make American companies more competitive.

More worrisome: Investor sentiment. Let the American Association of Individual Investors’ Charles Rotblut explain what’s happening:

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 2.9 percentage points to 49.2%. This is the highest level of optimism registered by our survey since January 24, 2013. It is also the fifth time in the past seven weeks that bullish sentiment is above its historical average of 39.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged, rose 4.4 percentage points to 33.2%. This is the first time in three weeks neutral sentiment is above its historical average of 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 7.3 percentage points to 17.6%. This is the lowest pessimism has been since January 12, 2012. (It was also at 17.2% on January 5, 2012.) Bearish sentiment has now been below its historical average of 30.5% for five times in the past seven weeks.

Career Education Corp. (CECO) has gained 53% to $5.80 in after-hours trading after it sold its international schools to a private equity firm.

Express Scripts (ESRX) has fallen 2.7% to $62 in after-hours trading after it reported a profit of $1.08, in line with analyst forecasts, but said the fourth quarter would come in between $109 and $1.13. Analyst had forecast $1.12.

Deckers Outdoor Corp. (DECK) has gained 14% to $66.50 in after-hours trading after the maker of UGGs reported a profit of 95 cents, above forecasts for 72 cents.

Resmed (RMD) has plunged 12% to $49.50 in after-hours trading after it reported a profit of 56 cents, below estimates of 58 cents.

Cliffs Natural Resources (CLF) has gained after it reported a profit of 68 cents, missing forecasts for 71 cents, but beat on revenue.