Dow up 97, ends higher for fourth straight week

IBM, Intel and Microsoft power the blue chips and the S&P 500 Index higher. Google's earnings miss holds the Nasdaq back. Existing-home sales rose in December. Crude oil drops below $100; gold rallies.

By Charley Blaine Jan 20, 2012 3:02PM
Charley BlaineUpdated: 11:28 p.m. ET

This was a day for three of the biggest traditional tech companies: IBM (IBM), Intel (INTC) and Microsoft (MSFT).

All reported results late Thursday that cheered investors hugely today. The trio contributed 83 points of a 97-point gain for the Dow Jones industrials ($INDU) and helped the Standard & Poor's 500 Index ($INX) push into the black for 2012 near the end of the session. Microsoft and Intel closed at multi-year highs.

This was not Google's (GOOG) day. The company missed Street estimates with its fourth-quarter report and tumbled $53.58 to $585.99. The percentage loss was its biggest in more than three years. Google was the single biggest reason why the Nasdaq-100 Index ($NDX) is lower. It's also weighing on the Standard & Poor's 500 Index ($INX).

Today was one of those days where the initial news was mostly bad, but investors found some things to cheer about: lower oil prices, reduced Iranian tensions, a relatively good report on existing home sales. And slowly but surely losses shriveled.

The Dow closed at 12,720, its fourth straight gain. The S&P 500 was up nearly 1 point to 1,315 after being down for much of the day. The Nasdaq Composite Index ($COMPX) was off just 2 points to 2,787.

Article continues below.
The Nasdaq-100, which tracks the largest Nasdaq stocks, was down 5 points to 2,437. Google subtracted about 12.5 points from the index.

IBM shares contributed about 61 points to the Dow. The world’s biggest computer-services provider forecast 2012 earnings exceeding analysts' estimates after fourth-quarter profit rose 4.4% because of rising software demand.

Microsoft, the publisher of MSN Money, added 12 points after rising $1.59 to $29.71, its highest since May 2010. Microsoft's gain also added 12 points to the Dow.

Intel, was up 75 cents to $26.38, its highest close since Dec. 31, 2007. That added 5.7 points to the Dow.

Offsetting IBM was General Electric (GE), whose earnings of 39 cents a share beat estimates by a penny, but revenue was 8% below estimates because of weakness in Europe. Also, the company's year-ago results included revenue from NBC Universal, now majority-owned by Comcast (CMCSA). Excluding NBC, revenue was up 4%.

The stock fell to as low as $18.68, but then it caught a bid, ending the day unchanged at $19.15.

American Express (AXP) was the biggest drag on the Dow after earnings released late Thursday beat estimates. Revenue, however, was a touch lower than expected. Shares were down 91 cents to $50.04 and subtracted nearly seven points from the index.

Markets for the week



1/20/2012

1/13/2012

% chg.

YTD chg.
Dow Industrials

12,720.48

12,422.06

2.40%

4.12%
S&P 500

1,315.38

1,289.09

2.04%

4.59%
Nasdaq 

2,786.70

2,710.67

2.80%

6.97%
Russell 2000

784.62

764.20

2.67%

5.90%
Crude oil 

$98.33

$98.70

-0.37%

-0.51%
(per barrel)











U.S. Dollar Index 

80.41

81.79

-1.69%

-0.14%
10-yr. Treasury

2.03%

1.85%

9.44%

8.39%
Gold

$1,664.00

1,630.80

2.04%

6.20%

The January rally continues
While the Dow enjoyed its fourth weekly gain in a row, the S&P 500 and Nasdaq were higher for the third straight week.

The major averages are up nicely in January. A January gain would be the third monthly gain in the last four for the S&P 500 and Nasdaq. The Dow, up 4.1% this month, is looking at rising for the fourth straight month. The S&P 500 is up 4.6%, with the Nasdaq up almost 7%.

The rally has surprised many analysts, who have expected stocks to be weighed down by worries about Europe and the relatively weak economy. There is still a strong school of thought that the rally won't last beyond spring.

But easing worries: Reuters reported late Friday that Greece's private bondholders said a long-awaited bond-swap deal to slash the country's debt was coming together.

But earnings have been a touch weak. According to Thomson Reuters, of the 72 S&P 500 companies that have reported results, 60% have beaten estimates. That's the lowest percentage since the fourth quarter of 2008.

Next week, 117 S&P 500 companies will report results. Of these, 11 are Dow components, including DuPont (DD), McDonald's (MCD), Boeing (BA), 3M (MMM), AT&T (T), VerizonCommunications (VZ) and Chevron (CVX). Apple (AAPL) also will report results after Tuesday's close.

Oil moves lower
Energy shares were generally lower as crude oil (-CL) declined for the third straight day. Bloomberg News attributed the decline to news of a contraction of Chinese manufacturing and negotiations to resolve Greece’s debt crisis entering a third day, fanning concern that Europe’s economy will slow.

There were also suggestions that Iran was dialing back its rhetoric about trying to shut down the Strait of Hormuz if an embargo against Iranian oil is imposed.

Crude for March delivery settled down $2.21 to $98.33 a barrel.

Royal Dutch Shell (RDS.A) was down 60 cents to $70.42. BP (BP) dropped 69 cents to $44.02. EOG Resources (EOG) dropped $1.92 to $103.16.  Chevron (CVX), which reports fourth-quarter results in a week, was down 4 cents to $106.89. Apache (APA) dropped 36 cents to $96.80.

But oil services giant Schlumberger (SLB)  was up 94 cents to $73.80. The company said fourth-quarter profit rose 36% as higher crude prices pushed oil companies to boost exploration and production spending around the world. Net income rose to $1.41 billion, or $1.05 a share, from $1.04 billion, or 76 cents, a year ago.

And Exxon Mobil (XOM) finished up 46 cents to $87.49.

Gold (-GC) settled up $9.50 to $1,664 an ounce.

The dollar was down slightly against the euro annd British pound. The 10-year Treasury yield was at 2.028%, up from Thursday's 1.972%. That may reflect some optimism that Greece will cut a deal with bondholders to restructure its debt.

Techs lead the Dow
Seventeen of the 30 Dow stocks were higher on the day, led by four of its five tech components: IBM, Intel, Hewlett-Packard (HPQ) and Microsoft. The fifth tech stock in the index -- Cisco Systems (CSCO) -- was tenth, up 13 cents to $19.92.

Home Depot (HD) and American Express were the laggards.

Microsoft and Intel contributed nearly 15 points to the Nasdaq-100, but the big performer was Sears Holdings (SHLD), up $5.65 to $49 on continued speculation that CEO Edward Lampert will take the struggling retail giant private. Forty-nine stocks in the index were higher.

Google and Intuitive Surgical (ISRG) were the laggards. Intuitive Surgical, which makes a robotic system to perform surgery said annual growth in its da Vinci surgical procedures slowed to 27% in the fourth quarter from 30% in the third quarter. Shares fell $28.97 to $445.68.

Sears and Microsoft were the top S&P 500 stocks. Google and Intuitive Surgical were the laggards.  Only 234 stocks in the index were higher.

Energy prices -- New York close



Fri.

Thur.

Month chg.

YTD chg.
Crude oil (-CL)

$98.33

$100.54

-0.51%

-0.51%
(per barrel)











Heating oil (-HO)

$2.9884

$3.0360

2.55%

2.55%
(per gallon)











Natural gas (-NG)

$2.3430

$2.3220

-21.61%

-21.61%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.7903

$2.8228

5.00%

5.00%
(per gallon)











Brent crude 

$109.86

$111.55

2.31%

2.31%
(per barrel)











Retail gasoline

$3.3820

$3.3780

3.46%

3.46%
(per gallon; AAA)












Existing-home sales show some strength
The National Association of Realtors' existing-home sales report offered another bit of evidence that the housing crash is very close to bottoming. Many economists now believe a recovery has started to set in.

But they caution that housing is likely to make only small gains annually for several years. That's because of the huge inventories of foreclosed home that will come onto the market.

Existing-home sales ran at an annualized rate of 4.61 million units in December, up from November's 4.39 million units and a 4.45-million-unit rate in December 2010. For the year, home sales were up 1.7% from a year ago.

Still, the sales rate was slightly lower than the consensus estimate of around 4.65 million units.

Some 21% of sales were to investors, today's reports said, up from 19% in November. First-time buyers bought 31% of the homes, down from 35% in November and 33% in December 2010. Single-family sales were up 4.6% from November and condominium sales were up 8.7% from November but down 2% from December 2010.

That the report was not quite as cheery as expected explains why housing stocks were lower. The Philadelphia Housing Sector Index ($HGX) was down nearly 2 points to 117. PulteGroup (PHM) was off 32 cents to $7.76. D.R. Horton (DHI) was off 23 cents to $13.82.

Short hits from the markets -- New York close



Fri.

Thur.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0400%  0.040%

300.00%  300.00%
5-year Treasury note 

0.891%  0.851%

7.35%  7.35%
10-year Treasury note

2.028%  1.972%

8.39%  8.39%
30-year Treasury bond

3.101%  3.039%

7.34%  7.34%
Currencies











U.S. Dollar Index

80.406  80.405  -0.14%  -0.14%
British pound

1.5528  1.5494  -0.06%  -0.06%
(in U.S. $)

          
U.S. $ in pounds

£0.644  £0.645  0.06%  0.06%
Euro in dollars

$1.29  $1.30  -0.21%  -0.21%
(in U.S. $)

          
U.S. $ in euros

€ 0.773  € 0.771  0.21%  0.21%
U.S. $ in yen 

77.17  77.10  0.09%   0.09%
U.S. $ in Chinese

6.35  6.31  0.34%  0.34%
yuan

            
Canada dollar

$0.000  $0.000  -100.00%  -100.00%
(in U.S. $)

          
U.S. dollar 

$1.014  $1.011  -0.60%  -0.60%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,664.00

$1,654.50

6.20%

6.20%
(per troy ounce)











Copper (-HG)

$3.745

$3.801

8.99%

8.99%
(per pound)











Silver (-SI)

$31.6750

$30.5090

13.47%

13.47%
(per troy ounce)











Wheat (-ZW)

$6.1050

$6.0575

-6.47%

-6.47%
(per bushel)











Corn (-ZC)

$6.1150

$6.060

-5.41%

-5.41%
(per bushel)











Cotton 

$0.9863

0.9799

7.58%

7.58%
(per pound)











Coffee

$2.2850

2.297

-0.50%

-0.50%
(per pound)











Crude oil (-CL)

$98.33

$100.54

-0.51%

-0.51%
(per barrel)










 

17Comments
Jan 20, 2012 4:11PM
avatar

I think I finally got things figured out!

 

1 The banksters are bailed out with our tax dollars causing our Country to have more debt!

 

2. Because our Country has more debt, our credit rating is lowered and we'll have to pay higher interest rates.

 

3. The Banksters can NOW take the money we loaned them.... and NOW buy the debt  they caused.... at a NOW higher interest rate.

 

Wait a minute...this debt is because of them, our credit rating getting lowered is because of them and taxpayers having to pay higher interests rates is because of them. I think the light bulb has finally came on!

 

Jan 20, 2012 4:50PM
avatar
WALL STREET is just determined to keep this rally going aren't they? I would like to believe this economy is on a path to recovery but I'm still not seeing it in my neck of the woods. The 2 things I am a little encouraged by is that gas went down (3.05 per/ gal. at the pumps this morning) and the UNION PACIFIC data being strong. As a rule of thumb if the "rails" are busy that usually means things are "shakin-n-bakin" in the country. However the job market here (Midwest) is really discouraging. A few $9.00 to $10.00 an hour jobs always available but not much more. Groceries just seem to be getting more and more expensive and it seems every time I turn around some big well known business is closing up shop. K-MART and RUBY TUESDAYS have been the latest victims in my neck of the woods. Who's next?  I think if I was a "bull" in this market I would be cautious, things have been going good for the first three weeks of this new year (yes only 3 weeks in, first caution flag) maybe....a little too good.  I hope I'm wrong, I really do, but I keep having that image in my head of Admiral Ackbar in Return of the Jedi..."IT'S A TRAP!"
Jan 20, 2012 4:32PM
avatar
Moving to all cash, just waiting for this fake rally to run out of fuel.


Jan 20, 2012 5:39PM
avatar

Headline:

 

"End of World Postponed Another Week (but we're pretty sure its coming soon)"

 

Har, har, har!

Jan 20, 2012 5:06PM
avatar
   Just like to add, I like GOOGLE and I think the markets were a little harsh in their reaction to it missing estimates. Listening to some analysts and reading a few articles you would think that their next and only move is to file "Chapter 11".  I guess it's not nice to fool mother market.
Jan 20, 2012 6:22PM
avatar

We have blown through 1300 on the S&P and it's last resistance 1280-1290??

 

The RUT 2K is approaching 800 and the DOW 13,000.....I would expect a slight pullback?

The NASQ I'm a little more cautious, because Tech has many competitors and some are struggling.

Corrections are healthy for another leg up....Hot

And I believe we will be seeing some new resistance levels soon.  Nerd

Along with the 50,100 and 200 DMAs.      

Jan 20, 2012 5:37PM
avatar
This is so obvious.  It is like putting lipstick on a pig.  It's still a pig!  As you can see from Charley's column above, the big players are doing their accounting tricks to make their earnings, but they have a hard time trying to come up with revenue (sales).  This has been in the making for about one year.  You can only cover your decreasing sales for so long with accounting manipulations and expense cutting.  The market is very over valued and will have a major correction in the not so distant future.
Jan 20, 2012 4:20PM
avatar

Nope.  The fed is buying back 'printing' and has been doing so.  It is a triangle in simplicity and this will continue and more money will be continued to print and cover.  There is no substance here with the markets and there will not be for .... who cares!

Jan 20, 2012 8:33PM
avatar

Wealth stolen from whom?   Did someone hold a gun to anyones head?   When idiots (democrats?) borrow money and piss it away, did the people that lent them the money steal it?  Did the makers of all the flat screen and cell phones use a gun to overcharge?   Albiet apple does rape it's customers with 45% profit margins, but  I don't notice Apple people out there with guns.

 

I guess you just mean if democrats are too stupid to be trusted with their cash, you will blame their 'public option' education? 

 

Maybe we need less democrats?   you talk like Profit is bad...

Jan 20, 2012 5:54PM
avatar

Sully....You are moving to cash? Missing a 10% gain too soon.....Good luck with that.

 

You can color me with "lipstick" and all my little piglets too.

 

Analyst are like Economist put them all in a bag with shake 'n bake,they come out ready to deepfry.

Most Analysts are right about 4-7% of the time with their "good and bad picks"...

Read that on the wall here or at yahoo finance....Studies were done.

 

End of World ain't gonna happen..This election year..History and Charts,bare it out, if you can read.

Have a nice weekend......Ciao

avatar
Why is everyone saying the economy is doing great. It is not one just has to look at the Fed Interest Rate stuck at zero percent to know that the economy is dead. 

If there was any life in the economy it would have hit 1,000,000,000 miles an hour with the Fed rate at zero and the Fed would be raising the rate to 100 percent to slow the economy down.

WASHINGTON (AP) - The Federal Reserve has specified how it will begin signaling when its benchmark interest rate will rise and what the rate will be at points in the future.

Four times a year starting Wednesday, the Fed will show in a chart the year when Fed officials predict they will begin raising the rate. Another chart will show individual Fed members' predictions for the rate at the end of 2012, 2013 and 2014.

The more explicit guidance is part of the Fed's effort to make communications with the public more open.

The Fed has left its key short-term rate at a record low near zero for the past three years. In August, it said it planned to leave the rate there until at least mid-2013, unless the economy improved.

Jan 20, 2012 6:56PM
avatar
ComputerRicky, Sweden had a problem with their Banksters holding onto their capital, so they started charging 1/4 percent for the Banksters to hold their cash in the central Bank. Sweden now has a 5.5% growth rate and this would be a great way to re-patronize the wealth they stole from us.Gift with a bow
Jan 20, 2012 7:09PM
avatar
@ Batman 67..I think this is a total trap the United States wants everyone to invest in Wall Street and lose everything to move in the new currency, more control...the pros on Wall street were saying get out of Gold & Silver the bubble has popped...China is been buying like crazy and telling their people to invest in Gold & Silver.. I say this if Gold & Silver is sooo bad then why are all those radio & newspaper ads still out there and all over the place, back in the 80's when the so called bubble burst, after the burst people stayed away from gold & Silver,..in fact the real physical silver & gold are selling for premiums higher than the fake paper silver & gold that wall street is pushing if you dont hold it you dont own it.....MFGlobal was a test to rip off the people..expect to see more MFGlobals the comex cannot make good on the gold & silver it sells.
Jan 20, 2012 6:44PM
avatar
Soccer ballThe market will probably drop or level out this spring, but when the Big Dogs are investing heavy it's a good sign for the year. With the Great American Bypass pipe line tanked for now, this means we will have a glut of oil here which will boost our economy with lower gas prices and with auto, home and retail sales being up and along with the economic boom going on in the Dakota's and Montana, we do have some strong indicators that 2012 may exceed expectations.Hot
Jan 20, 2012 8:12PM
avatar

Believe the next up resistance level for the S&P500 will be 1345, the value on July 22, 2011. On the low side, the 200 Day Moving Average was at 1256 today, 100 DMA was at 1221, and 50 DMA was at 1247. Values to watch in the coming months. The SSO chart has been rocking along above 80% since December 23, 2011. Showed a slight down trend today, perhaps indicating the S&P500 is slightly overbought. Something else to watch next week.

While it is possible the price of gasoline may drop or hold steady, don’t believe it will be because of US Crude Oil Production. At the moment our refineries are producing at about 80% capacity because the consumer has cut back on their consumption. This could cause inventories to rise, lowering the cost of gasoline. However, the refineries, if they desire to increase their production, will export the increased refined petroleum along with the excess inventory. Depending on the export demand, the price of gasoline could remind constant or increase.

Another problem will be the price of imported crude to our refineries. The countries exporting to the rest of the world are those places like the Middle East, Russia, and others. The Arab Spring will not be forgotten by the leaders of these countries. In most of these countries, to keep their populations satisfied enough to avoid a 2012 Arab Spring, some analysis have suggested they need crude oil to sell from $75 to $100 a barrel, preferably higher if possible in a world economy near recession. Expect them to restrict production to achieve these price controls, for if the world economy reduces consumption, they will attempt to keep the prices up.

My conservative investment strategy this year is to maintain the December 30, 2011 value of my portfolio, which includes replacing my budgeted withdrawals from my savings. A gain of about 2% this year would be a win for me. Perhaps by midyear, if signs suggest a better than expected year, will put some cash back into the market. Everyone have a great week-end.

Jan 20, 2012 8:37PM
avatar

I hope someone can help me with understanding the other side of Megaupload.  I never used this site but from what I understand you could go on that site and watch copyrighted movies for free if other people put those movies up there, thus you would not have to pay a rental fee or purchase fee to get the movie.  The website makes money by charging people to get a faster download in order to enjoy those movies faster thus the people that made money had nothing to do with making the movie and no money was getting kicked back to those that made the movie.  This seems wrong to me and I have no problem with such a site being closed down.  Others are against it and I wonder what the argument is? Can someone that believes Megaupload has done no wrong explain it to me?

Jan 20, 2012 8:18PM
avatar
The markets are only back to where we were at the end of 2010. 2011 was a wash out and if we do get any gains in 2012 we are still only trying to recover our 2008 losses.
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