Dow up 70 as January rally continues

Investors shrug off Alcoa's loss and focus on its bullish outlook for global aluminum demand. Materials and financial stocks lead the rally. Tiffany warns on 4th-quarter results; shares slump. Oil and gold rise.

By Charley Blaine Jan 10, 2012 2:22PM
Charley BlaineUpdated: 8:09 p.m. ET

Stocks pushed higher today as investors bet on renewed global growth, particularly in China, and a rally in financial stocks continued.

The rally came courtesy of a bullish outlook for aluminum demand from Alcoa (AA) and a big rally in gold (-GC), silver (-SI) and  copper (-HG). Crude oil (-CL) finished above $102 a barrel.

The Dow Jones industrials ($INDU) finished higher for the fourth day in the last six, and the Standard & Poor's 500 Index ($INX) rallied for the fifth time in six sessions. But the S&P 500 may have offered a warning that the rally has limits. The index moved above 1,292.66, a key resistance level, for much of the day but finished at 1,292.08.  That could be setting the market up for a pullback.

Financial stocks continued a surge that began with the New Year. Bank of America (BAC), up 36 cents to $6.63, is up 19.2% since Dec. 30. Citigroup (C) is up nearly 14% for the year. The shares were up 92 cents to $30 today.

In addition to the S&P 500's close, the Dow finished up 70 points to 12,462 -- a good day except that the blue chips had been up as many as 122 points around 10 a.m. ET. The Nasdaq Composite Index ($COMPX) added 26 points to 2,703, its first close above 2,700 since November. The Nasdaq-100 Index ($NDX) added 17 points to 2,367.

Article continues below.
China affected the markets because of speculation that slowing economic activity would prompt the government to ease credit conditions.

Chipmaker Cirrus Logic (CRUS) jumped $2.67 to $19.64, tops among stocks in the Philadelphia Semiconductor Index ($SOX). The company, whose chips are used in the Apple (AAPL) iPhone and iPad, said fourth-quarter revenue should come in at $105 million; analysts had been projecting $98.5 million.

Apple was up $1.51 to $423.24. The semiconductor index was up 1% to 386 and is up 6% since Dec. 30.

Best day for Dow, S&P 500 since July
The S&P 500's finish was its best since July 29. The Dow's finish was its best since July 25. 

The Dow is up 2% this month, with the S&P 500 up 2.7% and the Nasdaq up 3.7%. That's a better open for the major indexes than the first six trading days of 2011. On Jan. 10, 2011, the Dow was up 0.5% for the month, with the S&P 500 up 1% and 2.1% for the Nasdaq.

But as the market reached its close, the European Union's competition authority recommended rejection of a proposed merger between NYSE Euronext (NYX) and Germany's Deutsche Börse (DE:DB1). The dispute is over how the deal would concentrate futures trading in Europe. The recommendation may not be a killer, but it makes getting the merger to close much more difficult.

Wednesday, the Federal Reserve will release its Beige Book report, a narrative look at the economy prepared before its next meeting on Jan. 24-25. The report should offer some insight about holiday sales, local business and consumer confidence and whether the housing market really has stabilized.

Earnings are due from 99 Cents Only Stores (NDN) and homebuilder Lennar (LEN).

Lennar, up 4 cents to $20.80, has risen 5.7% since Dec. 30, rallying with homebuilders generally. The intraday high for the shares today was $21.49, only 30 cents below its 2-year high of $21.79, set on April 23, 2010. However, the shares are also 65% below their all-time high of $65.30, set on June 17, 2005.

Futures trading suggests the market will open slightly lower on Wednesday.

Energy prices -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Crude oil (-CL)

$102.24

$101.31

3.45%

3.45%
(per barrel)











Heating oil (-HO)

$3.1014

$3.0730

6.42%

6.42%
(per gallon)











Natural gas (-NG)

$2.9410

$3.0110

-1.61%

-1.61%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.7728

$2.7590

4.34%

4.34%
(per gallon)











Brent crude 

$113.28

$112.45

5.45%

5.45%
(per barrel)











Retail gasoline

$3.3720

$3.3740

3.15%

3.15%
(per gallon; AAA)












A tough day for Tiffany
The rally came despite a 10.5% decline in shares of Tiffany (TIF), which warned that the holiday season saw cautious spending in the United States and Europe. The report added to worries that uncertain economies in Europe and the U.S. hit demand from upscale shoppers.

Tiffany was down $7 to $59.94.

Tiffany's decline is probably the reason that Saks (SKS) fell 41 cents to $9.27. LizClaiborne (LIZ) was off $1.29 to $8.64 after warning about fourth-quarter results.

There was one big exception to the pressure on retail stocks. Lululemon Athletica (LULU). The yoga-wear retailer forecast fourth-quarter earnings of 47 cents a share to 49 cents a share. The consensus estimate was 42 cents. Shares jumped $6.43 to $59.87.

Alcoa has a loss but sees a buoyant market
The trigger for the rally was Alcoa, despite reporting a loss of 3 cents a share for the quarter. But the company forecast growth in global aluminum demand of 7% this year and "a global aluminum industry deficit of 600,000 metric tons in 2012."

In a conference call with analysts, CEO Klaus Kleinfeld said business in the aerospace industry and in autos and big commercial trucks in North America and China looks strong. European business is the weak link.

Alcoa was up a penny to $9.44 after jumping to as high as $9.85.

Gold jumps above $1,630; oil rises
The dollar moved lower against major currencies, and commodities rallied in response.

Gold jumped $27.60 to settle at $1,631.50 an ounce. So far this year, gold is up 4.1%. Silver was up $1.033 to $29.82 an ounce. It's up 6.8% this month. Copper finished at $3.513 a pound, up 9.7 cents.

The commodity run-up was good news for materials stocks. While Alcoa shares pulled back from early highs, Freeport-McMoRan Copper & Gold (FCX) was up $1.56 to $40.60. U.S. Steel (X) was up 51 cents to $27.29.

Crude oil in New York settled up $1.31 a barrel to $102.24. Brent crude was up 77 cents to $113.37 a barrel.

BP (BP) was up 32 cents to $44.39. Schlumberger (SLB) was up $1.93 to $70.75.

Interest rates were little changed. The 10-year Treasury was yielding 1.975%, up from Monday's 1.96%.

A good day for financial stocks
Financial stocks were the top sector among S&P 500 stocks and numbered half of the index's top 10 performers.

Bank of America was the sixth-best S&P 500 performer AND the top performer among the 30 Dow stocks, followed by Caterpillar and United Technologies (UTX).

BorgWarner (BWA) was the top S&P 500 performer, up $7.89 to $72.29, followed by Life Technologies (LIFE) and Genworth Financial (GNW).

BorgWarner, which makes turbochargers for motor vehicles, forecast profit this year will be $5.35 to $5.65 a share. Analysts have been projecting $5.17.

Life Technologies, up $3.52 to $46.17, was the top Nasdaq-100 stock. The maker of gene-analysis tools said it's taking orders for the new benchtop Ion Proton Sequencer, designed to sequence the entire human genome in a day for $1,000.

Twenty-three Dow stocks were higher, along with 74 Nasdaq-100 stocks and 409 S&P 500 stocks.

Short hits from the markets -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0100%  0.040%

0.00%  0.00%
5-year Treasury note 

0.854%  0.841%

2.89%  2.89%
10-year Treasury note

1.972%  1.960%

5.40%  5.40%
30-year Treasury bond

3.027%  3.029%

4.78%  4.78%
Currencies











U.S. Dollar Index

81.101  81.388  0.72%  0.72%
British pound

1.5487  1.5466  -0.33%  -0.33%
(in U.S. $)

          
U.S. $ in pounds

£0.646  £0.647  0.33%  0.33%
Euro in dollars

$1.28  $1.28  -1.35%  -1.35%
(in U.S. $)

          
U.S. $ in euros

€ 0.782  € 0.783  1.37%  1.37%
U.S. $ in yen 

76.98  76.86  -0.15%   -0.15%
U.S. $ in Chinese

6.34  6.31  0.22%  0.22%
yuan

            
Canada dollar

$0.984  $0.000  0.31%  0.31%
(in U.S. $)

          
U.S. dollar 

$1.017  $1.023  -0.32%  -0.32%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,631.50

$1,608.10

4.13%

4.13%
(per troy ounce)











Copper (-HG)

$3.513

$3.416

2.24%

2.24%
(per pound)











Silver (-SI)

$29.8150

$28.7820

6.81%

6.81%
(per troy ounce)











Wheat (-ZW)

$6.3975

$6.4175

-1.99%

-1.99%
(per bushel)











Corn (-ZC)

$6.5200

$6.52

0.85%

0.85%
(per bushel)











Cotton 

$0.9652

0.9612

5.28%

5.28%
(per pound)











Coffee

$2.288

2.2465

-0.37%

-0.37%
(per pound)











Crude oil (-CL)

$102.24

$101.31

3.45%

3.45%
(per barrel)










 

51Comments
Jan 10, 2012 4:41PM
avatar

Oil prices are no longer determined by supply and demand as they are set by Speculator BS and Greed. I have already cut back on spending as gas is already $3.70 a gallon in my area as it took a 15 cent a gallon spike last week and heating oil spiked 11 cents a gallon. Higher gas prices will mean lower consumer spending which equals no growth which equals a stock market that sucks.

All of this in the name of Greed. Until Washington puts the hammer down on these thugs, nothing will ever change and the consumer will continue to be on the losing end compliments of Wall Street Pigs.

Jan 10, 2012 3:39PM
avatar
The entire Stock Market is based on words like "thinks, fears, hopes, should of, could of, maybe, etc."  and any other words that will benefit the greedy Speculators at higher costs to the everyday person.  If I had to sum up in 1 word what I think of the whole situation the word of my choice would be "Bu..Sh.t"
Jan 10, 2012 2:50PM
avatar

"Stocks Moves Higher On Alcoa's Bullishness"

 

The above is another typical MSN/The Dispatch headline.  What is should say is...Market Moves Higher on Alcoa's Bullsh*t".  They missed their earnings and their stock is trading off about 70% of their last 10 year high and yet the market "cheers" this news?  What a joke!!  Then just because their CEO says he feels things are improving that all will be well?  Well guess what??  When their is a lack of demand for aluminum made products then Alcoa along with their competitors will continue to languish.  The fact that Alcoa is shutting down plants if further indication that things aren't as ROSY as their CEO would like investors to believe...

Jan 10, 2012 4:06PM
avatar
Lots of stupid money trading today!  All bad news yet they buy.  What a bunch of dips.  If its power brokers, wonder if they're trying to sucker in others from the side lines. 

Listening to everyone's comments it all sums up nicely in two words: BS



Jan 10, 2012 3:18PM
avatar
It's so funny how they say this and that of a company causes stocks to move...All BS!
Jan 10, 2012 5:52PM
avatar

My system for the S & P says the risk is far greater than the reward right now so I haven't done anything...maybe I am missing out but somehow I don't think that's the case.  Market moving higher on Alum demand worldwide but Alcoa closing plants and selling off assets...doesn't make much sense to me...???

Jan 10, 2012 4:44PM
avatar
Please keep in mind that none of the preceding BS commentators owns a company, runs a company or manages a company.  In fact, none of them knows a damn thing about buying or selling stocks.
Jan 10, 2012 5:27PM
avatar
Alcoa I am glad to here you have extra money. Come and clean up your mess in Lebanon Pa.
Jan 11, 2012 5:49AM
avatar

@Active RIA

 

actually, my post about women's vote was wrong, as it was not 1 decision, but many decisions by the states to take away the right of women to vote.

 

Timeline of Women's Suffrage in the United States

 

1776 Abigail Adams writes to her husband, John Adams, asking him to "remember the ladies" in the new code of laws. Adams replies the men will fight the "despotism of the petticoat."
1777 Women lose the right to vote in New York.
1780 Women lose the right to vote in Massachusetts.
1784 Women lose the right to vote in New Hampshire.
1787 US Constitutional Convention places voting qualifications in the hands of the states. Women in all states except New Jersey lose the right to vote.
1792 Mary Wollstonecraft publishes Vindication of the Rights of Women in England.
1807

Women lose the right to vote in New Jersey, the last state to revoke the right.

Jan 10, 2012 4:44PM
avatar
The markets are not going to move much for a long time. Wall Street took away too much from investor portfolio's over nothing more than a rumor. With no return for the last 18 months you are not going to run looking to buy stocjks because that is not what you are buying. You are buying news only.CD"s or farm ground are the only returns right now.
Jan 10, 2012 6:32PM
avatar

Einstein was right; only two things are infinite, the universe and human stupidity.

Re-Tog demonstrated in his earlier post how we are supposed to evaluate a specific stock. The MSN commentator provided a headline on Alcoa. I could care less about his comments and most certainly all of those very early posts today.

As an investor, it is your obligation to investigate the stock and determine if it is worth adding to you portfolio. The MSN site even provides you, free of charge, with a good many of the basic tools for evaluating a stock (Charts, Financial Statements, and articles, recent and past). From this information, you can evaluate even further at other web sites. It’s called doing your Investing Homework. I call my broker to tell him what stocks I want to buy. He may have suggestions, but either way, before I make a trade, I make sure I’ve done my homework.

BTW, don’t believe I’ll invest in Alcoa at this time based on the economy and potential EURO problems. Like my portfolio at 20% cash & CDs, 30% Stocks, and 50% intermediate bonds, readjusted as needed.

Jan 10, 2012 8:15PM
avatar
So, if I got this straight, Alcoa neither met nor exceeded the streets expectations but rather had  themselves a nice little rally solely based on the fact that the CEO of Alcoa "FEELS" the demand for aluminum is going to be stronger in the upcoming quarters globally.   CHECK PLEASE!!!!!!
Jan 10, 2012 9:29PM
avatar
There's a recession?  Here I thought the things I buy like gas and groceries were just getting more expensive. As far as the name calling, you better stop, your going to hurt my feelings.  Why don't you tomorrow go out and buy $10,000 worth of Alcoa stock and hold on to em' for a few months and see what happens. And do you kinda smell a slight pull back in the wind? or did you read the same article I did and that's what it told you. "The index moved above 1,292.66, a key resistance level, for much of the day but finished at 1,292.08.  That could be setting the market up for a pullback. That's the S&P index for those of you keeping score at home.
Jan 10, 2012 4:42PM
avatar

Maybe something you have missed....AA is up about 10-12% since Dec. 30th. End of Year close.

 

They hit almost 6 billion in revenues last year, beating expectations. They had a lot of restructuring charges,that hit the bottom line....These are normally one-time events.

 

Maybe you have missed the deep recession also?.....Usually affects Companies like them rather harshly..... They are getting leaner and meaner.... Albeit,some on the backs of labor.

 

Their are projections, for healthy increases in Aluminum usage in the coming years; Also happens during most recoveries,along with inventory shortages.......Now my "ONLY"question to you, would be.....

Don't you really believe Analyst and Investors have taken notice of "all the above." ??  I don't know

Jan 10, 2012 5:22PM
avatar
Until the next European Woes....

thursday i do believe as iran has moved into primetime friday! Nerd

Jan 10, 2012 7:10PM
avatar
Based on Charley's statement regarding Alcoa....I recommend that every CEO in America of a publically traded company, just buy a bunch of your own stock and make sure to tell your congressman friends to do the same since it is legal for them to trade on insider info.  Then all the CEO has to do is hold a press conference and tell the world how wonderful things are going to be....how you see great things ahead and strong demand for your product or service and the sheep will throw money at your stock and the DOW will "cheer" along with the stock "traitors" and "Cheerleader Charley" can keep smiling and telling his readers how great the world is.  Who needs to rely on financial statements because we are in the "New World Of Investing" based on "Hype, Hope and Wishful Thinking"...so forget about earnings, new products, market expansion etc. those are the old fashion way of investing..
Jan 11, 2012 5:37AM
avatar

@Re-Tog

 

I never said there was no recession.  I said that I doubted there  was a worldwide shortage of aluminum if  prices had dropped 27% and aluminum producers were reducing capacity.  Does a falling price and companies reducing capacity seem like signs of a shortage?

 

Of course you implied  I argued there was no recession so you could try and make me look half as stupid as you are.  When people disagree with me they put words in my mouth, whereas I don't need to do this, I just quote them word for word.

Jan 10, 2012 10:00PM
avatar

@Re-Tog

 

You said "There is an Aluminum shortage world wide, inventories are low. Because of recession."

 

If there is a worldwide shortage, why did prices drop 27%?  Why is Alcoa closing plants?

 

Let me answer:  Prices dropped 27% because there is no shortage.  Alcoa is closing the high cost plants to reduce capacity to compete with lower cost producers.

 

Also, during a recession, there is typically overcapacity, not undercapacity.

Jan 10, 2012 5:22PM
avatar
Please keep in mind that none of the preceding BS commentators owns a company, runs a company or manages a company.In fact, none of them knows a damn thing about buying or selling stocks.
...yet they rant and vote and procreate...scary.
Jan 10, 2012 10:02PM
avatar

@max spartacus

 

Actually women were allowed to vote when the US first became a country.  Then an activist judge took away their right to vote.  For some reason this fact is never taught in school, so I cannot really blame you for not knowing it, I blame our educational system.

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