Loading...
 

After the Close - Some good news on the economy and selective strength in corporate earnings sparked a strong rally on Wall Street today. At the close, Dow Jones Industrial Average had gained 85 points and the NASDAQ had tacked on 18 points. Winners topped losers by a very healthy three-to-one margin on the New York Stock Exchange. Reflective of the market’s recent strength, more than 300 Big Board stocks hit fresh 52-week highs and only a couple hit new lows. 

What fired up the bulls was fresh evidence of an improving labor market, as weekly claims for initial employment benefits dropped materially, and a double-digit percentage jump in the nation’s housing starts. Better-than-expected results from Internet leader eBay (EBAY) issued after the closing bell last night also help fuel sentiment.

Another positive of late has been the stabilization that has occurred in Europe. Sovereign-debt problems across the Atlantic had been a thorn in the side of investors for more than two years, but there is more confidence now that those problems are under control. That is reflected in the euro’s rise to $1.33, from under $1.30 a few months ago. Good demand in an auction for Spain’s bonds today, where 4.5 billion euros worth were sold, underscored the improved tone.

Among Dow components, Home Depot (HD Free Home Depot Stock Report) led the way. Shares of the building supply/home improvement chain have been on a tear with the housing market in recovery mode. This morning’s news that housing starts hit a four-year high provided fresh support for the stock’s rally.

Also among the Dow’s leading gainers were shares of Exxon Mobil (XOM Free Exxon Stock Report). Oil prices added over $1 a barrel today, on fears of supply disruption from Algeria. A hostage situation at an energy facility in that African nation, which produces a sizable amount of oil, turned tragic, creating concerns about the overall level of stability there.

Elsewhere, and perhaps a bit surprisingly, Boeing (BA - Free Boeing Stock Report) shares turned in an upbeat performance, despite the fact that its 787 Dreamliner planes were grounded around the world to check on battery malfunctions. There seems to be a feeling in some quarters that worries about Boeing’s planes are overblown.

On the down side, shares of some big banks, Citigroup (C) for one, lagged.

To keep the upturn going on Friday will likely require a healthy dose of positive corporate news and guidance from companies, such as Intel (INTC - Free Intel Stock Report) and American Express (AXP - Free AmEx Stock Report) reporting after tonight’s closing bell, as well as from other major companies, including General Electric (GE - Free GE Stock Report) and Schlumberger (SLB) reporting earnings tomorrow. It would also help if an expected rise in a consumer sentiment, due out at 10:00 A.M. (EST) reading pans out. - Robert Mitkowski

At the time of this writing, the author did not have positions in any of the stocks mentioned.       

-

12:40 PM EST - The U.S. stock market opened higher this morning, and has managed to extend its gains, which is always good to see. As we pass the noon hour in New York, the Dow Jones Industrial Average is up 79 points (0.6%); the S&P 500 Index is ahead eight points (0.5%); and the tech-heavy NASDAQ is adding on 18 points (0.6%). Market breadth indicates broad support for equities, as advancing stocks are ahead of decliners by almost 3 to 1 on the NYSE. All of the market sectors are participating in the move higher. There is leadership in the consumer cyclical issues, the conglomerates, and the capital goods names. While there is no weak sector, the high-yielding utilities, and the financials, are lagging the broader market.

Technically, the S&P 500 Index is now making its way into new 52-week high ground, breaking out of a sideways range established over the past several sessions. The market will have to close higher today, and then be able to hold these gains, establishing some support for equities at this level. Sentiment remains bullish as the VIX now at 13.27, hit a 52-week low of 13.16 today. The market may well be “overbought”, but it should be noted that in bull markets these conditions can persist for some time. 

Traders probably liked the economic news that was released this morning. The employment situation looks better. Initial jobless claims for the week ended January 12th came in at 335,000, which was well below analyst forecasts, and lower than the prior week’s reading of 372,000. However, the weekly continuing jobless claims did not show any improvement, actually rising a bit. The housing market is likewise recovering. Housing starts surged to 954,000 units, annualized, in the month of December, which was better than many analysts had expected and sharply higher than November’s reading. Meanwhile, building permits for December more or less matched expectations. The home-building stocks, as a group, are moving up in response to today’s news. Elsewhere, in the regional economy, the Philadelphia Fed Survey came in with a reading of -5.8 in January, contrasting with the consensus view calling for a positive reading.

The fourth-quarter earnings season is starting to heat up. Today, we received a report from a widely-watched Dow component. Bank of America (BAC - Free Bank of America Stock Report) stock is trading lower after the company put out mixed results. Also, internet retailer eBay (EBAY) stock is rising on an upbeat release. - Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

Stocks to Watch from The Survey Earnings season rolled on with a couple of Dow-30 staples reporting fourth-quarter results, including banking giant Bank of America (BACFree Bank of America Report), which topped Wall Street’s expectations, and healthcare provider UnitedHealth Group (UNHFree UnitedHealth Group Report), which posted in-line earnings. Elsewhere, struggling financial services company Citigroup (C) continues to bump along, citing the still-challenging operating environment as the primary cause for its sizable earnings miss in the December period. Citigroup stock is opening lower this morning. – Sharif Abdou

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

-

Before The Bell 

The stock market took another breather yesterday as concerns over Boeing's (BAFree Boeing Stock Report) problems with its 787 Dreamliner and a strong recovery in the recently battered shares of Apple (AAPL) largely offset one another. Overall, the market had just a slight negative bias. 

All told, the Dow Jones Industrial Average fell 24 points, while the Standard and Poor's 500 Index was essentially flat and the tech-heavy NASDAQ, boosted by the aforementioned Apple, gained almost seven points. The smaller indexes were slightly in the red, for the most part.

In essence, Wall Street is waiting for the rush of earnings releases, which really gets going this morning and afternoon, with a quartet of key issuances from the Dow 30. In the aggregate, market pundits feel much of Corporate America will meet lowered expectations. The bar has, in fact, been set so low that it may be difficult to not meet these restrained targets.

Then, there is the economy, and we are in the midst of a very busy week. To wit, yesterday saw the release of benign inflation data in the form of an unchanged reading on the Consumer Price Index. At the same time, the Commerce Department issued a pair of surveys showing a nominal uptick in industrial production and modest improvement in factory utilization.  

Now, this morning, the same Commerce Department has intoned with data showing a surprisingly strong gain in housing starts. The December data for this critical industry will be followed in the coming days with reports on sales of existing homes and new residences. Housing is clearly on the march, and gives a key underpinning to what we think will be a modest, if at times, uneven path forward for the aggregate economy in 2013.

Elsewhere, the rest of the world seems calm for a change, with no new apparent crises in Europe, the Middle East, or Asia. We do not know how long this idyllic state of affairs will last, but so long as it does, the effect on Wall Street should be positive. Then, there are the goings in our Capitol, where concerns linger over the pending negotiations over spending cuts and the debt ceiling. Our sense is that some sort of last-minute accord will be reached, just as we had suggested would be the case with the tax issues, which were settled late last year.

The big concern on Wall Street over the next fortnight, though, will be earnings, and how well Corporate America does between now and early February will largely dictate, all else being equal, what the stock market does.

As to this morning's action, the equity futures are now turning nicely higher, perhaps on logical optimism about housing and some sense of positive expectations regarding flow of earnings to come in the next few hours and the coming two to three weeks. – Harvey S. Katz

At the time of this article's writing, the author did not have positions in any of the companies mentioned.