Stock Market News for January 26, 2012 - Market News


Markets recouped initial losses of and made a strong comeback after the Federal Reserve provided assurances that it would keep interest rates near zero until late 2014.The Dow hit its highest levels since May last year, while a robust earnings report from Apple propelled Nasdaq to a finish in the green.

The Dow Jones Industrial Average (DJI) gained 0.6% to close at 12,756.96. The Standard & Poor 500 (S&P 500) moved up 0.9% to finish yesterday's trading session at 1,326.06. The tech-laden Nasdaq Composite Index inched up 1.1% and settled at 2,818.31. The fear-gauge CBOE Volatility Index (VIX) dropped 3.2% and closed at 18.31. For 74% of the advancing stocks on the New York Stock Exchange (NYSE), 23% of the stocks moved down. The remaining 3% stocks were left unchanged. Total volume on the NYSE was 1.71 billion shares.

Benchmarks have been hovering around 5-month highs for the past few days and the Dow posted its highest closing levels since May 2011. The blue-chip index had been trading lower in the initial trading hours, before the central bank provided the impetus. It was a decent performance by the blue-chip index by the end of the day and only six of its 30 components ended lower. Stocks including Alcoa Inc. (NYSE: AA ), Caterpillar, Inc. (NYSE: CAT ), E.I. du Pont de Nemours (NYSE: DD ), The Travelers Companies, Inc. (NYSE: TRV ) were up 2.0%, 2.6%, 2.4% and 2.0%, respectively, and led the gains for the Dow.

The Federal Open Market Committee provided good news for investors, as the central bank announced that it would keep interest rate at record lows, or near zero, at least until 2014.The Fed extended its earlier decision to keep the rates low until 2013, and the move is surely to stimulate spending amidst low interest rates.

Meanwhile, the central bank did not announce any new monetary measures, but the Fed chairman Ben Bernanke said that "expanding the balance sheet certainly remains an option", and Federal Reserve will consider it "very seriously if, in particular, progress towards full employment was -- continued or became more inadequate, or if inflation remained exceptionally low". Some strategists believe that it might be too early to announce an additional simulative policy while Operation Twist is still in place. However, Bernanke also dwelt on lingering European concerns and said: "We continue to see headwinds emanating from Europe, coming from the slowing global economy…"I don't think we're ready to declare that we've entered a new, stronger phase at this point. We'll continue to look at the data".

On the earnings front, the limelight was squarely on Apple Inc. (NASDAQ: AAPL ), which reported a robust first quarter after the closing bell on Tuesday following which the company's shares jumped 6.2%. Earnings per share sky-rocketed 115.7% and revenues soared 73.3%. The tech-giant also surpassed the Street's estimates. However, another tech bellwether, Yahoo! Inc.'s (NASDAQ: YHOO ) quarterly results were modest, though it managed to beat expectations. The company's shares dropped 0.8%. Meanwhile, United Technologies Corporation (NYSE: UTX ) and The Boeing Company (NYSE: BA ) both managed to beat the Street's estimates.

The National Association of Realtors released data on pending home sales, which declined in December after posting a 19-month high in November. NAR reported that The Pending Home Sales Index dropped 3.5% to 96.6 in December from November's figure of 100.1. However the index is above the December 2010 figure. Chief Economist of NAR, Lawrence Yun, said: "Even with a modest decline, the preceding two months of contract activity are the highest in the past four years outside of the homebuyer tax credit period".


ALCOA INC ( AA ): Free Stock Analysis Report
APPLE INC ( AAPL ): Free Stock Analysis Report

BOEING CO ( BA ): Free Stock Analysis Report
CATERPILLAR INC ( CAT ): Free Stock Analysis Report
DU PONT ( EI ) DE (DD): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis Report
UTD TECHS CORP (UTX): Free Stock Analysis Report
YAHOO! INC (YHOO): 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 , AAPL , BA , CAT , EI

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