After The Close - The U.S. stock market put in another constructive session today. At the close, the Dow Jones Industrial Average finished higher by 49 points (0.4%); the broader S&P 500 Index ended up nine points (0.6%); and the technology-heavy NASDAQ tacked on 29 points (0.9%). Market breadth was largely favorable, as advancing stocks outnumbered decliners by about 2 to 1 on the NYSE. Almost all of the market sectors made solid progress, with notable strength in the technology and healthcare issues. However, some weakness was apparent in the consumer non-cyclical issues. Also, the high-yielding utilities lagged a bit, as traders likely rotated into more dynamic issues.
Technically, the S&P 500 Index managed to hold firm above the 1,500 mark. Notably, this level, which is located at a large round number, may carry some special “psychological” significance with traders. The market has been a bit more volatile lately, but traders may have felt more assured today, as the VIX fell to just over 13. Investors also were less inclined to buy gold and government Treasuries, which may indicate a greater tolerance for risk.
The markets in the U.S. probably got some help from the earlier trading overseas. More specifically, the major markets on the Continent all put in a decent session today. France’s CAC-40, which closed up over 1%, was the large standout here.
Back on our shores, there were a few economic reports released that also helped lift sentiment. Specifically, the nation’s trade gap narrowed to $38.5 billion in December, which was a better reading than analysts had expected, and also an improvement over November’s trade figure. Elsewhere, wholesale inventories declined slightly in December, where analysts had been looking for a slight increase.
Meanwhile, the fourth-quarter earnings season is likely still playing a role in the rally. Even though many of the large names have already reported, we are still hearing from companies that have some influence on the market’s direction. Today, we heard from LinkedIn (LNKD). That issue moved sharply higher, after the social media company put out a better-than-expected report. Also, Activision Blizzard (ATVI) stock was higher, after the video game maker put out a solid quarterly report. However, things did not go as well for Coinstar (CSTR). Shares of the kiosk operator fell on concerns about the outlook.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned. - Adam Rosner
12:20 PM EST - Stocks are moderately higher on the final day of trading this week. Approaching the noon hour on the East Coast, the Dow Jones Industrial Average is up 45 points and the NASDAQ is 28 points to the good, and notably better on a percentage basis than the Dow. The broader market is leaning to the upside, as well, with winners outpacing losers by two-to-one on the New York Stock Exchange. And, with the major indexes near multiyear highs, the number of stocks hitting fresh 52-week highs is swamping those touching new lows.
The morning started out with some favorable news on the U.S. trade deficit, which fell 20% in December, marking the biggest drop in four years. The narrowing of the trade gap was helped by a surge in oil exports and a falloff in petroleum imports, manifesting what has been hailed as an energy renaissance in the United States. Rising oil production from fields in North Dakota and south Texas has led to the smallest level of crude oil imports since 1997.
There is hope in many quarters that the benefits of the domestic oil boom will be followed by a wave of natural-gas exports in a couple of years, too. That would further benefit the nation’s trade position.
Positive economic data out of China, where it was reported that the pace of exports and imports picked up in January, reinforced the bulls today. Economic growth in China and other emerging markets is still seen as one of the pillars underpinning corporate profit expansion.
An unexpected decline in wholesale inventories, noted by the Commerce Department, dampened sentiment a bit, though.
In company news, shares of LinkedIn (LNKD) are sharply higher after the company reported better-than-expected fourth-quarter earnings. The professional social network added 39% more users in 2012. Shares of AOL, Inc. (AOL) are also getting a nice lift from a good profit report that showed an impressive rise in ad revenue.
On the down side, Moody’s (MCO) stock is lower, despite strong earnings, on word that New York’s attorney general is investigating ratings it issued on certain securities prior to the financial crisis. There is a concern that the company may be tied up in expensive litigation.
This afternoon, trading is apt to be light, given that many on Wall Street may be leaving early to get in out of what is forecast to be a severe snowstorm in the Northeast this evening. -Robert Mitkowski
At the time this article was written, the author did not have positions in any of the companies mentioned.
Stocks to Watch from The Survey – Although a looming blizzard is on the minds of many in the Northeast, there is some earnings news that investors will want to be aware of today, especially in the Internet sector. Indeed, shares of LinkedIn (LNKD) and AOL Inc. (AOL) are both trading sharply higher in the premarket, after the social network operator and the global web services company reported solid fourth-quarter results. Wall Street also appears pleased with December-period financials from video game developer Activision Blizzard (ATVI), and that stock is up nicely ahead of the bell. It’s not all good news, however, and shares of speech-recognition software developer Nuance Communications (NUAN) and automated retail provider Coinstar (CSTR) are down notably in pre-market trading on earnings news. – Matthew E. Spencer
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell - The U.S. equity market enters the final day of the trading week looking to avoid its first five-day losing streak of 2013. Indeed, January was a good month for stocks and the first trading day of February cooperated with the bulls. Investors should note that the Dow Jones Industrial Average and the S&P 500 Index are currently not far removed from multi-year highs. Weighing on equities the last few days, though, have been growing concerns about the financial health of some euro zone nations, most notably Italy and Spain. The worries on the Continent have more than offset continued decent earnings results stateside.
Yesterday the markets sold off mildly after European Central Bank (ECB) President Mario Draghi expressed concerns following the conclusion of the lead bank’s two-day monetary policy meetings about the strength of the euro and the effect it will have on the region’s economic growth. The euro immediately weakened against the dollar. The comments by the ECB President came just days after Italy’s bond yields rose significantly on worries about the struggling nation’s banking woes. The concerns about the euro-zone economies and what effect continued weakness on the Continent would have on the global economy pressured economically sensitive sectors. Not surprisingly, the materials, energy, and financials sectors were the biggest laggards on Wall Street.
The escalating concerns about the euro zone overshadowed what was another fairly supportive day of earnings news. Among the positives were good earnings reports from cigarette producer Philip Morris (PM) and auto parts retailers Advance Auto Parts (AAP) and O’Reilly Automotive (ORLY). Conversely, shares of Akamai Technologies (AKAM) tumbled after the networking company fell short of revenue expectations and guided lower.
Meantime, the only notable companies that were scheduled to report quarterly results today, AOL (AOL) and Moody’s (MCO), gave investors something to cheer about this morning. AOL's quarterly profit jumped, aided by a 13% rise in advertising sales. It marked the first time revenues grew in eight years for the Internet search engine company. Credit rating agency Moody's said that quarterly profits jumped 66% last quarter and issued a strong forecast for 2013. Shares of both companies are higher in pre-market trading. These two reports continue the trend of solid earnings results that have been fairly supportive to the performance of equities over the last three weeks.
The final day of the trading week brought a key piece of U.S. economic data, and at first blush in was an encouraging report. At 8:30 A.M. (EST), the Commerce Department reported that the nation’s international trade deficit in goods and services decreased to $540.4 billion in 2012 from $559.9 billion in 2011. For the month of December, the trade gap was a deficit of $38.5 billion, down from $48.6 billion in November and well below the consensus expectation of $45.4 billion. Meanwhile, the economic data from overseas today was also heartening. Specifically, data showed that China’s exports grew 25% year over year last month, while imports jumped nearly 29%, an indication of strong domestic demand for the world’s second-largest economy. Likewise, Germany reported that its 2012 surplus was the second-highest total in more than 60 years, an indication of the underlying strength of Europe's biggest economy. China’s major equity indexes finished higher overnight, while the major European bourses are in positive territory as trading enters the latter stages on the Continent.
With less than a half-hour to go before the commencement of trading on these shores, the futures are indicating a flat to slightly positive opening for the U.S. equity market. Given the lack of major earnings news on these shores and that the Northeast section of the United States is bracing for a major snowstorm this morning, we would not be surprised if trading was rather listless during the week’s final session. Stay tuned. – William G. Ferguson
At the time of this article’s writing, the author did not have positions in any of the company’s mentioned.