“Stocks are modestly undervalued now…We’re early in an economic cycle where stocks sell at 16 to 16.5 times earnings so we think there’s upside for the market and we think there are lots of areas in the market that represent very good opportunities,” he told CNBC.
Among the morning's earnings reports, Lowe's reported a profit that beat expectations. This comes after a day rival Home Depotreported an upbeat quarter, raised its sales and earnings forecasts and boosted its dividend. In addition, at least three brokerages raised their price targets on Home Depot.
Luxury homebuilder Toll Brothers swung to a profit, helped in part by an increase in the average delivery price of homes it sold.
Car-rental company Hertz posted a better-than-expected profit, helped by strong growth at its US off-airport business.
Among retailers, Saks reported a profit as it sold more items at full price, and the luxury department store chain said it expects higher sales at existing stores to continue this year. Meanwhile, TJX reported a 15 percent drop in earnings, dragged down by costs to close its A.J. Wright store division. The parent company of TJMaxx also plans to repurchase $1.2 billion of its stock this fiscal year and raise its dividend.
And Chico's shares jumped more than 8 percent after the women's clothing retailer forecast better 2011 gross margins and set an optimistic earnings goal,.
Notable after-the-bell reports include Priceline.com and Limited Brands .
Hewlett-Packard plunged for a second day after the IT firmtrimmed its 2011 revenue projectionsTuesday afternoon on weak consumer PC demand and a lackluster showing from its services arm. In addition, at least six brokerages cut their price targets on the tech giant.
Apple is expected to hold a shareholder meeting this afternoonwhere investors will vote on a resolution that may force the company board to disclose its succession plans. (No cameras are allowed, but CNBC.com will be blogging this event in real-time.)
Meanwhile, Apple sent an invitation to media to attend a "special event" on March 2, which sources have said is intended to showcase a new iPad with features including a camera.
Meanwhile, Nasdaq OMX is exploring options that include teaming up with a partner on a rival bidfor NYSE Euronext , according to a person familiar with the situation.
The alternatives include the possibility of tying up with IntercontinentalExchange or CME Group to wrest NYSE Euronext out of its deal with Deutsche Boerse, the person said.
On the economic front, home loan requests jumped 13.2 percent last weekas rates eased and encouraged refinancing, according to the Mortgage Banker's Association. Meanwhile, sales of previously owned U.S. homes rose unexpectedly in January, but prices fell to their lowest level in nearly nine years, according to the National Association of Realtors.
Homebuilders were lower across the board, including Pulte , D.R. Horton and Beazer .
The government is expected to auction of $35 billion in 5-year notes at 1pm ET.
Philadelphia Federal Reserve President Charles Plosser is expected to speak at 1:30 pm ET on the outlook for the economy, and Kansas City Fed President Thomas Hoenig speaks at 12:30 pm ET at an event on housing and finance.
Chicago Federal Reserve President Charles Evans said on Wednesday Federal Reserve policy was likely to remain accommodative for some time yet.
Investors are increasingly focused on inflation pressures and will continue to debate how high oil prices might affect the economic recovery.
Minutes to the Bank of England's latest meeting showed an increase in the number of Monetary Policy Committee members who voted in favor of a rate hike, raising expectations that the Bank of England will be among the first to raise interest rates.
Moreover, the report suggested that some of those opposed a rate hike this month would consider if it if the economy shows signs of picking up after an unexpected fall in output at the end of 2010.
On Tap This Week:
WEDNESDAY: Kansas City Fed President Hoenig speaks, 5-year Treasury note auction; Earnings after-the-bell from Limited Brands, Priceline.com, and Transocean.
THURSDAY: Durable goods orders, jobless claims, USDA agricultural trade outlook, new home sales, natural gas inventories, oil inventories, 7-year Treasury note auction, money supply; earnings before-the-bell from General Motors, Kohl's, Newmont Mining, Safeway, Sears and Target; earnings after-the-bell from AIG, First Solar, Gap and Salesforce.
FRIDAY: GDP (second reading), consumer sentiment; earnings before-the-bell from JCPenney.
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