Stock Market News for January 10, 2012 - Market News

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Markets registered small gains on Monday as investors anxiously awaited quarterly results of Alcoa, scheduled after the closing bell, which would also unofficially kick start the earnings season. Cross-Atlantic developments also contributed partially to the markets' movement, while trading volumes were on the lower side yet again.

 

The Dow Jones Industrial Average (DJIA) gained 0.3% to close Monday's trading session at 12,392.69. The Standard & Poor 500 (S&P 500) was up 0.2% and ended at 1,280.70. The Nasdaq Composite Index edged up 0.1% and finished trading for the day at 2,676.56. Some amount of apprehension among investors took the fear-gauge CBOE Volatility Index (VIX) up by 2.1% to 21.07. Volumes were yet again low as on the New York Stock Exchange total volumes were at 3.38 billion. Advancers managed to outnumber the decliners on the NYSE as for 62% of the stocks that gained, 35% of the stocks moved down. The balance 3% was left unchanged.

 

The Dow had a good trading session yesterday. Out of its 30 components, only seven stocks traded lower and one stock, The Coca-Cola Company (NYSE: KO ), closed flat. Among the decliners, Microsoft Corporation (NASDAQ: MSFT ), Walt Disney Co. (NYSE: DIS ), International Business Machines Corp. (NYSE: IBM ) and McDonald's Corp. (NYSE: MCD ) moved down 1.3%, 0.4%, 0.5% and 1.0%, respectively.

 

It was Alcoa, Inc. (NYSE: AA ) which led the race among the Dow components with gains of 2.9%. The markets' direction mostly depended on this company, as its results will unofficially kick start the fourth quarter earnings season. The aluminum manufacturer is considered an important economic bellwether as a large number of companies depend on Alcoa. While these results almost sets the tone for what is to arrive next through the earning session, investors would be apprehensive about the results of other bellwethers too amidst the prevailing economic uncertainty. Sadly, analysts are of the opinion that US multinational companies might suffer a drop in profits given the declining demand from international territories.

 

However, post the closing bell, Alcoa dampened sentiment, reporting a loss of $0.03 per share, excluding special items, for the period from October to December, 2011. Lower demand and restructuring charges seem to be the major reasons for the loss it suffered. However, revenues increased 6% and also topped the forecasts.

 

The markets looked to benefit from the positive sentiment that prevailed last week, the first trading week of 2012. The first week of 2012 witnessed strong US economic data, lifting the benchmarks to a green finish. Labor, housing and ISM data were all positive through the week and the Dow, S&P 500 and Nasdaq ended the week after gaining 1.2%, 1.6% and 2.7%, respectively.

                                                                   

Obviously, economic data provides direction to the markets and is expected to do so in the coming days. But, the earnings results will have significant impact on the benchmarks and investors will remain on their toes, observing the performance of each bellwether that reflects the economy's health. Analysts are projecting earnings per share growth of 11% for the S&P 500 companies, which, unfortunately is 16% lower than the third quarter of 2011.

 

Meanwhile, on the European front, French President Nicolas Sarkozy and German Chancellor Angela Merkel said that the proposed treaty, aimed at tighter fiscal measures has moved a step ahead. They expect the concerned leaders to ink the pact before the European summit on January 30. The treaty would therefore be implemented starting March.

 

After suffering a fall on Friday, the financial sector was in positive territory on Monday and the Financial Select Sector SPDR ( XLF ) fund scored gains of 0.5%. Among the bellwethers, Bank of America Corporation (NYSE: BAC ), Citigroup, Inc. (NYSE: C ), The Goldman Sachs Group, Inc. (NYSE: GS ) and Morgan Stanley (NYSE: MS ) gained 1.5%, 1.9%, 1.4% and 1.9%, respectively.

 


 
ALCOA INC ( AA ): Free Stock Analysis Report
 
BANK OF AMER CP ( BAC ): Free Stock Analysis Report
 
CITIGROUP INC ( C ): Free Stock Analysis Report
 
DISNEY WALT ( DIS ): Free Stock Analysis Report
 
GOLDMAN SACHS (GS): Free Stock Analysis Report
 
INTL BUS MACH (IBM): Free Stock Analysis Report
 
COCA COLA CO (KO): Free Stock Analysis Report
 
MCDONALDS CORP (MCD): Free Stock Analysis Report
 
MORGAN STANLEY (MS): Free Stock Analysis Report
 
MICROSOFT CORP (MSFT): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , US Markets

Referenced Stocks: AA , BAC , C , DIS , XLF

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