"We had some mixed economic data, but the bulls' ability to push things higher later in the day was impressive," noted Schaeffer's Senior Technical Strategist Ryan Detrick, CMT, at the end of a mixed session. The Dow Jones Industrial Average (DJI) slowly fought its way into positive territory by the close, settling with a minor 0.2% gain. The tech sector was not as fortunate, as two of its heavy hitters -- Apple Inc. ( AAPL ) and Facebook ( FB ) -- moved lower after an analyst downgrade and a highly watched product announcement, respectively.
Continue reading for more on today's market, including :
- Why Senior Trading Analyst Bryan Sapp advises keeping a "close eye" on this trio of banking names tomorrow.
- Speaking of banks, short-term call buyers bet on upside in Goldman Sachs ( GS ) today.
- Senior V.P. of Research Todd Salamone dissects the broad-market implications of tomorrow's VIX options expiration.
- A warning from Fitch Ratings, bullish trading activity on Cisco ( CSCO ), and a sarcastic response to Facebook's big reveal in our Tweet of the day.
The Dow Jones Industrial Average (DJI) explored a range of roughly 100 points during the session, gapping near its intraday low at the open and settling just shy of its intraday peak. By the close, the index had gained 28 points, or 0.2%. Seventeen of the Dow's 30 components moved higher, with Microsoft ( MSFT ) taking top honors with a 1.2% gain. Fellow tech bellwether Hewlett-Packard (HPQ) paced the 12 laggards with a 2.5% drop, and Alcoa (AA) was unchanged on the day.
The S&P 500 Index (SPX) charted a similar path as the Dow, closing up 1.7 points, or 0.1%, to end the day near its session high. Notably, the index came within 1 point of its annual peak of 1,474.51 during afternoon trading. Elsewhere, the Nasdaq Composite (COMP) was dragged lower by some of its mega-cap components, ending the day with a loss of 7 points, or 0.2%.
The CBOE Market Volatility Index (VIX) started the day solidly higher but closed with only a fractional gain after losing steam in the late afternoon. By the closing bell, the VIX had added less than 0.1 point, or 0.2%.
A Trader's Take :
"Today's price action in retail stocks was great," observed Detrick. "Retail sales came in better than expected and the SPDR S&P Retail ETF (XRT) rose more than 2%. We've seen lots of talk about the economy slowing down, especially lots of paychecks a little bit less this year thanks to our government," he quipped, "but you have to be very impressed with retail stocks here and their ability to continually shake off bad news. Meanwhile," Detrick added, "we all know the market is over-extended on a near-term basis and is 'due' for a pullback. Yet -- with nearly everyone expecting this -- wouldn't it be something if Mr. Market keeps on moving higher?"
3 Things to Know About Today's Market :
- Today's highly anticipated FB media announcement debuted not a smartphone -- as some technophiles had hoped -- but a new internal search system. The technology, referred to as "graph search," will allow FB users to search their content to quickly determine, for example, which Facebook friends live in Boston, or how many "liked" the movie Big Momma's House 2 . The new functionality launched today in beta; interested FB members are being invited to sign up for a graph-search waiting list.
- Retail sales rose by 0.5% to a seasonally adjusted $415.70 billion last month, the Commerce Department reported. This was a pleasant surprise to economists, who had projected a more modest rise of 0.2%. Elsewhere, the Labor Department reported a seasonally adjusted 0.2% drop in the producer price index (PPI), amid falling gasoline and food prices. Economists had targeted a 0.1% decline. The core PPI -- which excludes gasoline and food costs -- ticked 0.1% higher.
- Ahead of the opening bell, Fitch Ratings warned policymakers that continued failure to raise the debt ceiling would force a formal review of the nation's sovereign ratings, adding that this evaluation would come with "highly uncertain" consequences.
Plus ... Samsung earned the distinction of becoming the most-tweeted brand at the annual International Consumer Electronics Show (CES) in Vegas last week. The Korean electronics name was popular across the social media platform as it unveiled several new products, including a flexible cell phone and a curved television. Including former U.S. President Bill Clinton in its keynote address didn't hurt the company's buzz, either. Other brands seeing plenty of Twitter activity during the four-day show were Sony, Panasonic, and LG.
Today's Top Tweet :
"I just met my new fiancé on the social graph! We're registered at FarmVille. $FB"
@ReformedBroker, (Downtown Josh Brown), 1:26 p.m.
5 Stocks We Were Watching Today :
- Facebook Inc ( FB ) was targeted by short-term call buyers before the company's product announcement hit the newswires.
- Recent buyout rumors inspired some put buying in Dell Inc. (DELL) today.
- Cisco Systems ( CSCO ) traders bet on future upside .
- Option traders opened bullish positions on Morgan Stanley (MS) ahead of the company's earnings report.
- NIKE, Inc. (NKE) saw heavy trading on front-month puts as speculators bet on a retreat in the shares.
Question of the Day :
Q : What is the "January effect?"
A : This refers to the tendency for stock prices to collectively rise during the first month of the year. The primary, though unproven, theory behind this phenomenon is that traders who sell out of positions in December for tax purposes are ready to re-enter the market when the calendar turns. Another theory is that holiday or year-end bonuses are committed to stocks during January. We are halfway through the month, and the broader market (as tracked by the S&P 500 Index), is up roughly 3.2%.
For a look at today's options movers and commodities activity, head to page 2.
Economic concerns from home and abroad impacted crude oil futures today as the February contract gave back $0.86, or 0.9%, to settle at $93.28 per barrel. On the metals front, February gold futures jumped up $14.50, or 0.9%, to $1,683.90 an ounce. Meanwhile, platinum prices were notably higher on Tuesday (gaining almost 2% in the front-month series), to overtake gold prices for the first time in 10 months. The largest producer of the metal said it would halt operations at a number of South African mines, cutting annual production by 15%.
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