Stocks rebound from European worries

Down 135 points after the open, the Dow ends down just 3 points. The S&P and Nasdaq move higher. Hopes build for Friday's jobs report as jobless claims fall. Bank of America tops $6. Did Apple sell 35 million iPhones in December?

By Charley Blaine Jan 5, 2012 2:14PM
Charley BlaineUpdated: 11:15 p.m. ET

For the second day in a row, U.S. stocks opened badly, thanks to worries about European stocks. And for the second day in a row, the worries faded -- and the major American averages mostly rebounded into the black -- once European markets closed.

The European concerns were set off when an auction of French debt didn't go as well as hoped and Italy reported an increase in its unemployment rate to 8.6%. It topped 30% for teens for the first time.

But U.S. jobless claims fell for the fourth time in five weeks, and the ADP National Employment Report, which measures private-sector employment, said some 325,000 private-sector jobs were created in December. The report is watched as a hint of the direction of Friday's big nonfarm payrolls and unemployment report.

At the same time, retailers' December sales overall weren't as strong as hoped, and many companies' shares were lower. Barnes & Noble (BKS) shares fell $2.31 to $11.24 after falling to as low as $9.35. The company cut its guidance for its fiscal-third quarter and said it may spin off its Nook electronic-reader business to shareholders. Also losing today: J.C. Penney (JCP), Gap (GPS) and Target (TGT).

The Dow Jones industrials ($INDU) closed down just 3 points to 12,416; the blue chips had been down as many as 135 points at 10 a.m. and up as many as 18 points around 2:10 p.m. The Standard & Poor's 500 Index ($INX) gained 4 points to 1,281. The Nasdaq Composite Index ($COMPX) had gained 22 points to 2,670, and the Nasdaq-100 Index ($NDX), which tracks the largest stocks, had gained 19 points to 2,349.

Article continues below.
The jobs report will come out at 8:30 a.m. ET Friday before U.S. markets open. The consensus estimate is for payrolls to grow by some 150,00, while the unemployment rate holds at the 8.6% reported for November. The rate may move up slightly, economists say.

Futures trading suggests stocks will open off slightly, but the jobs report will change that.

The market's rebound today was due in part to the face that Europe's markets closed, allowing optimism building about the U.S. economy grow. But it's important to note that much of the rebound itself was short-covering by investors who had bet the market would go down. They either booked profits on that trade or were forced to cover by their brokers.

The Nasdaq was helped by gains for Seagate Technology (STX) and Sirius XM Radio (SIRI) as well as strength in such giants stocks as Oracle (ORCL), Apple (AAPL), Amgen (AMGN) and Microsoft (MSFT). (Microsoft is the publisher of MSN Money.)

Seagate was up $1.08 to $17.90. The company reported preliminary second-quarter revenue of $3.1 billion to $3.2 billion. Analysts were looking for $2.79 billion.

Apple finished up $4.59 to $418.03 after Walter Piecyk, an analyst with BTIG, told The Wall Street Journal that the company's fiscal-first-quarter iPhone sales might top 35 million units. He made the estimate after Verizon Wireless said it had sold 4.2 million iPhones in December. The gain contributed nearly four points to the Nasdaq-100's gain.

Bank of America (BAC), up 50 cents to $6.31, and Merck (MRK) were the Dow leaders. Home Depot (HD) and Merck both hit 52-week highs today. Only 12 of the 30 stocks were higher. Gains for JPMorgan Chase (JPM), Caterpillar (CAT) and Walt Disney (DIS) were offset by declines in Chevron (CVX), IBM (IBM) and Boeing (BA). 

Meanwhile, 207 S&P 500 stocks were higher, led by Bank of America, LSI Logic (LSI) and home builder PulteGroup (PHM).

And 78 Nasdaq-100 stocks were higher, led by Sirius XM Radio (SIRI), up 21 cents to $2.04, and Marvell Technology (MRVL), up $1.04 to $15.23.

Meanwhile, SodaStream International (SODA), one of the hot products this year, finished up 1.79 to $39.54 after reaching as high as $41.88. The producer of soda makers reached a deal to market flavors from Kraft Foods (KFT) for use in its devices.

PepsiCo (PEP) was off 52 cents to $66.22. The company is considering cutting roughly 4,000 jobs, or about 1.3% of its 300,000 global payroll, in order to boost earnings, according to the New York Post. The soft-drink giant is also mulling ending its 401k match, the paper said. The company later conceded that it is looking at efficiencies but would communicate layoff and other news to employees first.

Why Bank of America moved higher
Bank of America closed above $6 for the first time since mid-November, apparently on speculation that the Obama administration may introduce a nationwide loan refinancing program. Bloomberg News said that White House apparently has denied such a program is in the works.

Bank of America had fallen to as low as $4.92 on Dec. 19 because of all the problems inherited with its ill-fated acquisition of Countrywide Financial.

The mortgage idea, originally created by Columbia University economists Glenn Hubbard and Christopher Mayer, would let all homeowners with a mortgage owned by Fannie Mae (FNMA) or Freddie Mac (FMCC) can refinance with a new mortgage at a fixed rate of 4.2% or less if they have been current on their payments for at least three months.

There's more for Bank of America's gain. Bank stocks are up nearly 6% this week. As Avi Salzman wrote at Barron's, analysts generally "have grown slightly more bullish with the turning of the calendar."

Dollar rises; so does gold
Stocks had rebounded despite a 1.2% decline in the euro against the dollar; normally, a rising dollar hurts stocks. Interest rates fell as the dollar rose, a signal that investors still favor safety at all costs. The 10-year Treasury fell to 1.993% from Wednesday's 1.995%.

In New York, gold (-GC) settled up $7.40 to $1,620.10 an ounce, after falling to as low as $1,597.70. Silver (-SI) had risen to $29.35 an ounce, up 25.3 cents. Copper (-HG) was off 4.5 cents at $3.43 a pound.

Crude oil (-CL) in New York settled down $1.41 to $101.81 a barrel, its first decline in three days, after the Energy Department reported larger-than-expected domestic oil supplies. Also, the worries about Europe generated fears energy demand will decline on the continent. Brent crude was down $1.35 to $112.35 a barrel.

The retail price of gasoline jumped to $3.319 a gallon, according to AAA's Daily Fuel Gauge Report. That's up 1.3% since Dec. 31 and 3% since a bottom was reached on Dec. 19.

Energy prices -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Crude oil (-CL)

$101.81

$103.22

3.02%

3.02%
(per barrel)











Heating oil (-HO)

$3.0388

$3.0899

4.28%

4.28%
(per gallon)











Natural gas (-NG)

$2.9800

$3.0960

-0.30%

-0.30%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.7365

$2.7852

2.98%

2.98%
(per gallon)











Brent crude 

$112.74

$113.70

4.99%

4.99%
(per barrel)











Retail gasoline

$3.3190

$3.2880

1.53%

1.53%
(per gallon; AAA)












Jobs picture may look a little better
New U.S. claims for unemployment benefits fell by 15,000 last week in the latest sign the labor market was improving and could help the country resist the effects of a likely eurozone recession.

Initial claims for state unemployment benefits dropped to a seasonally adjusted 372,000, the Labor Department said. The prior week's claims data was revised up to 387,000 from the previously reported 381,000.

Better-than-expected numbers on the ADP employment report are another encouraging sign for the U.S. economy -- albeit one to be taken with a grain of salt, according to John Ryding and Conrad DeQuadros at RDQ Economics. The problem, they said in a note to clients, is that the ADP report tends to vary wildly at the end of the year with the Labor Department's December report.

But the the Institute for Supply Management’s index of U.S. nonmanufacturing industries, which account for about 90% of the economy, rose to 52.6 in December from 52 a month earlier, trailing the median forecast of economists for a reading of 53.

Discounts rule; retail sales
Many retailers had to discount more than they wanted to draw customers over the holidays, cutting into profits even as December sales came in slightly better than expected overall.

Retailers such as J.C. Penney, Gap, Limited Brands (LTD), American Eagle Outfitters (AEO) and Children's Place (PLCE) all called the holiday season highly promotional.

 

If shoppers turned out, they did so on condition of getting good deals, something experts said would continue into 2012.

 

"The consumer is in the driver's seat -- they have the power," David Bassuk, head of AlixPartners global retail practice, told Reuters. "We'll still see aggressive promotions in the next six months." 


Nordstrom (JWN), Macy's (M), Limited (LTD) and Buckle (BKE) beat estimates. Zumiez (ZUMZ) shares were up $4.51 to $30.84 after the teen retailer reported a 10% December sales gain. Analysts had projected a 5.1% gain,.


J.C. Penney, Kohl's (KSS), Gap and Target missed estimates.


A big issue for many retailers in northern climates was that winter-apparel sales dropped because of unseasonably warm weather.


Short hits from the markets -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0500%  0.050%

400.00%  400.00%
5-year Treasury note 

0.883%  0.889%

6.39%  6.39%
10-year Treasury note

1.93%  1.995%

6.52%  6.52%
30-year Treasury bond

3.065%  3.043%

6.09%  6.09%
Currencies











U.S. Dollar Index

81.25  80.425  0.90%  0.90%
British pound

1.5494  1.5618  -0.28%  -0.28%
(in U.S. $)

          
U.S. $ in pounds

£0.645  £0.640  0.28%  0.28%
Euro in dollars

$1.28  $1.29  -1.28%  -1.28%
(in U.S. $)

          
U.S. $ in euros

€ 0.782  € 0.773  1.30%  1.30%
U.S. $ in yen 

77.34  76.75  0.31%   0.31%
U.S. $ in Chinese

6.34  6.30  0.15%  0.15%
yuan

            
Canada dollar

$0.982  $0.000  0.09%  0.09%
(in U.S. $)

          
U.S. dollar 

$1.019  $1.013  -0.09%  -0.09%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,620.10

$1,612.70

3.40%

3.40%
(per troy ounce)











Copper (-HG)

$3.427

$3.435

-0.28%

-0.28%
(per pound)











Silver (-SI)

$29.2960

$29.0970

4.95%

4.95%
(per troy ounce)











Wheat (-ZW)

$6.2925

$6.5000

-3.60%

-3.60%
(per bushel)











Corn (-ZC)

$6.4350

$6.59

-0.46%

-0.46%
(per bushel)











Cotton 

$0.9448

0.9572

3.05%

3.05%
(per pound)











Coffee

$2.2230

2.2945

-3.20%

-3.20%
(per pound)











Crude oil (-CL)

$101.81

$103.22

3.02%

3.02%
(per barrel)










 
50Comments
Jan 5, 2012 5:48PM
avatar
Gee, we have larger than expected oil supplies and gas went up over .20 per gallon here since last night.  isn't it about time the Federal governement puts some regulations on the oil speculators.  For instance, if you are not going to take delivery of an oil contract, you can't buy it.  These guys are trading oil contracts that involve 30 to 40 times the current world oil supply, just to drive up the price.  And, the major oil companies are profiting more than ever.  It's time to put a stop to this raping of the American family.
avatar
At the same time, retailers' December sales overall weren't as strong as hoped, and many companies' shares were lower.
Seems like we were lied to when we were told this was the best Christmas ever.
Jan 5, 2012 6:24PM
avatar

Reuters reported last month,the US " EXPORTS" over 430,000 bbls. of gasoline monthly".

We are awash in it!

They are selling it to South American countries for a better price.

How does that grab ya'?

Jan 5, 2012 5:16PM
avatar
Now that christmas is over, time for the butt rub gas here went up 28 cent a gallon in 12 hours. What do you thank is going to happen to the economy now.
You didn't need to be a rocket scientist to see this coming.  Big Oil will use any fabricated excuse or lie to justify the raping of the hard working American public.  We know where to march when the economy collapses because of their greed
avatar
Europe is collapsing fast even after a $1.2 trillion injection of cash from the Federal Reserve into the European banking system via the ECB.

The European banks were leveraged 100 to 1 and now they are being told they need to come down to 20 to 1 leverage. That means 80 times all the deposits in European banks must disappear from European banks. This is the end of the European Union folks.
Jan 5, 2012 5:46PM
avatar

Sooner

 

The news media is worst than the government. They not only slant the news but fabricate false conclusions  as headlines to attract attention. If you are a serious investor, you will soon learn to disregard the crap written as financial analysis and do your own research using the more legit financial reporting services and ignore all the other "expert" advice you read on the MSN website and the comments by some of the screwballs and dimwitts that dominate this board.You will be pleasantly surprised how well you can do with a little personal research and common sense.

Jan 5, 2012 8:32PM
avatar
You can rest assured that everyone could ride mopeds and you would still complain about the price of gas. They are going to get theirs regardless. Keep believing the supply and demand crap or the value of a dollar determines the price horse$hit if you like.  Everyone knows our goverment is in on the screwing we are getting that is why you never hear a politician discuss it. Alternative fuels aren't the answer as they will rape you with it just as they do oil because it would be bought and traded the same way. Better figure out a way to fend for yourself because the goverment is out to take everything you have and leave you with nothing with the help of all their special interest groups. If you can't see it oh well because they sure as hell ain't trying to hide it because they  are untouchable. They made it that way!!!!
Jan 5, 2012 3:17PM
avatar
They said this morning that gas purchases were down about 27% during December and now Isreal has said that they may have more crude than saudi arabia, they are in the process of setting it up as an export. Thank you Dear God!
Jan 5, 2012 2:35PM
avatar
Of all the new cars moved into the hands of the public, I would love to know how many were leased vs bought outright or financed,sold to the governments local&state,DC.
 Give me this information and then "We The People" can see a true indication of this auto marketing scam.

Lease =long term rental,not an asset.
Financed= possible Repo.
Bought outright = true buying power/asset.
Jan 5, 2012 3:17PM
avatar
Bring the military home. Put them along the Mexican border stopping the flow of drugs into our country. Mexican cartel now forced to work picking crops on a work visa in the USA making pennies.  affordable produce for the American family.  Got rid of the illeagal drug problem, reduced military spending, Just killed 2 birds with one stone 
Jan 5, 2012 3:44PM
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Now that christmas is over, time for the butt rub gas here went up 28 cent a gallon in 12 hours. What do you thank is going to happen to the economy now.
Jan 5, 2012 5:22PM
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Nice little rally this afternoon, take it any day. Scumbags again not too pleased, ready to do their thing tomorrow...We will see how the jobs report goes. Although we all know the number keeps being manipulated and the unemployment is a lot higher. Unfortunately we have one of the most corrupt governments since the Clinton era...Oh well.
Jan 5, 2012 3:19PM
avatar

I'll never forget my Mom, she would go out after Christmas and buy "GIFTS" for the following year;

 

She gave us kids guidance back in the early days....And we all have been pretty much successful.

 

Thanks Mom....

Jan 5, 2012 7:23PM
avatar
AutoCosmo, you hit the nail on the head, instead of building refineries in North Dakota and bring down gas prices here, Oil Companies want to build the pipe line to the Gulf so they can make more profit selling to Europe and South America. Great for them and exports, but I would rather see prices come down here.Party
Jan 5, 2012 4:37PM
avatar

gas went from 3.23 to 3.49 in last hour??? just last month reported we had abundance ???? speculators sell it  off overseas for more profit? or was that more smoke to hide something else.

  They tried smaller military once before an we got attacked, besides what are the men an women going to do for jobs since so much was shipped out to other countries so corps could make more profit. Next thing to happen ??? break-ins reported locally guns stolen nothing else,look out for your friends an relatives that's what will help you more than either party in power.

Jan 5, 2012 5:35PM
avatar
SOSDY:

Market volatile
Europe a problem
Oil supply up
Oil price up
Sales not as good as thought

SAME OLD SH*T DIFFERENT YEAR


Jan 5, 2012 3:24PM
avatar
They said this morning that gas purchases were down about 27% during December and now Isreal has said that they may have more crude than saudi arabia, they are in the process of setting it up as an export. Thank you Dear God!

...and that's why gas just popped another 10 cents a gallon overnight?

Jan 5, 2012 10:08PM
avatar

Crude oil has been hovering in the $100 a barrel range for some time now and gas has been holding steady until a few days ago. It has gone up by less than $3 a barrel. How does that warrant a 15 or 20 cent price hike at the pumps? Iran makes two threats and this is what we get thanks to Greed on Wall Street. You talk about price grouging, this is a prime example of what Big Oil is getting away with and our useless government will sit by and do nothing about it.

Jan 5, 2012 5:20PM
avatar
Some rebound the Dow had today (oops, the stocks were split actually); following some more traction from the temp jobs in DECEMBER effecting LAST MONTH'S unemployment claims.  Ah well, I'll wait for Charlie Blaine to mention the Eurpean debt crisis next, as if we haven't heard him mention it before :o
avatar
Isreal has said that they may have more crude than saudi arabia
Hmmm land area of Isreal 22,000   vs Saudi Arabia 2,149,690 sq km's 

Israeli oil would have to be 100 times denser than Saudi oil or be 100 times taller than Saudi oil for the above statement to be true. The main Saudi Ghawar field is about 200 feet thick on average. This means that for Israel to have 100 times more oil their oil fields would have to be about 20,000 feet thick or about 4 miles thick. 

That is a lot of oil you would wonder why Israeli would not have just floated away from the Arabian Plate it is sitting on top of with a liquid oil field 4 miles thick under it. 

No wonder Israel wants all of the region's land  a 4 mile thick oil field would give it unbelievable wealth.




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