After The Close - The major U.S. equity indexes were range-bound around the neutral line for part of today’s session, but throughout the hours, there was definitely a positive undertone to trading. Thus, it was not a surprise that buying picked up some in the second half, especially with today’s earnings and economic news being fairly supportive.  By the closing bell, the Dow Jones Industrial Average and the S&P 500 Index were 62 and seven points, higher, while the NASDAQ, which was notably weaker for much of the session, was able to eke out a small gain. Pressuring the tech-heavy NASDAQ initially was some weakness in the shares of Apple (AAPL)—though the tech stock rebounded to close higher—and Google (GOOG) ahead of each company’s latest quarterly results. Google will report shortly, while Apple is expected to release its results tomorrow morning.

As noted, there was a definite positive bias to trading today. In fact, advancing issues led decliners on both the New York Stock Exchange and the NASDAQ—the margin was notable on the Big Board. Pushing the market higher was a series of positive earnings reports. Shares of Dow-30 components Verizon (VZ - Free Verizon Stock Report), DuPont (DD - Free DuPont Stock Report), and Travelers (TRV - Free Travelers Stock Report) were higher today, as the investment community seemed to like what they saw in each company’s latest quarterly results. Conversely, the stock of fellow Dow-30 component Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report) was lower, as its latest results, though up year over year, fell short of consensus expectations. The results from these blue chips were a microcosm of an earnings season in which most of the companies are beating lowered expectations at the bottom line. The solid earnings performances are pushing the major equity indexes, which are now not too far off of yearly or multi-year peaks, still higher. Investors should note that after today’s close International Business Machines (IBM - Free IBM Stock Report) was expected to report earnings, while fellow Dow-30 components United Technologies (UTX - Free United Technologies Stock Report) and McDonald’s (MCD - Free McDonald's Stock Report) are on the docket tomorrow.

However, not all of the news from Corporate America was about earnings. Rumors surfaced today that private-equity firm Silver Lake Partners has reached out to Microsoft (MSFT - Free Microsoft Stock Report) to help Silver Lake with a possible leveraged buyout deal to acquire Dell (DELL). Late last week, rumors surfaced that the private-equity firm was talking to the struggling computer company about a buyout in the range of $13-$14 a share. Meantime, shares of Boeing (BA - Free Boeing Stock Report) were lower again today after a financial news service reported that batteries were not the cause of recent issues observed aboard the company’s Dreamliner, while the stock of Caterpillar (CAT - Free Caterpillar Stock Report) was weaker after the Dow-30 component reported that it had uncovered accounting misconduct at its recently acquired a subsidiary in China. That will likely result in a fourth-quarter non-cash charge of roughly $580 million.  

There was also some economic news of note released shortly after trading commenced this morning. Specifically, the National Association of Realtors reported that existing-home sales eased 1% sequentially in December, but were 12.8% above the year-earlier period, while limited inventory maintained the upward momentum in home prices. Total sales in 2012 were the highest in five years, while the annual price jumped the most since 2005. (A companion report on new home sales is due on Friday.) While shares of most of the large publicly traded homebuilders were off slightly following the release, the report was yet another indication that the housing market continues to improve. Just last week, we learned that housing starts and building permits, which are strong indicators of future home sales, were up sharply in the final month of 2012.

The European bourses did not fare as well today. Germany’s DAX, France’s CAC-40, and Britain’s FTSE 100 were lower as disappointment with the Bank of Japan’s latest policy decision offset better-than-expected economic data from Germany. Specifically, Germany’s ZEW economic sentiment survey came in at 31.5, well above the consensus expectation of 12.0. The same metric for the euro zone totaled 31.2—pundits were looking for a reading of 14.0. With regards to Japan, the central bank said it would introduce open-ended monetary easing and a formal 2% inflation target, which was the consensus expectation. While investors initially cheered the announcement, lifting stocks in both Japan and Europe, the major indexes in both regions reversed course after some disappointment when the terms of the Bank of Japan’s easing measures surfaced.   - William G. Ferguson

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


12:30 PM EST - The U.S. stock market is putting in a mixed performance today, as traders wade through a large batch of earnings releases. As we pass the noon hour in New York, the Dow Jones Industrial Average is now up 18 points (0.1%); the S&P 500 Index is essentially flat; and the tech-heavy NASDAQ is lower by eight points (-0.2%). Market breadth suggests modest support for equities, as rising stocks are outweighing decliners by a narrow margin on the NYSE. Strength can be found in some of the market sectors. Specifically, the basic materials issues are having a good day. However, there is notable weakness in consumer cyclical stocks and in the technology names.

Technically, the S&P 500 Index remains near new 52-week high ground. Some of the large up moves lately have been accompanied by heavy volumes, suggesting some underlying strength. However, the market has made large gains lately, as investors have been putting funds to work, and many traders may now be “overly” bullish. This being the case, additional progress for the market, while certainly a possibility, may be a bit harder to come by. Some positive catalysts, such as better-than-expected earnings reports, and favorable economic data, may be needed.

Traders did not receive any market moving economic news this morning. Existing home sales for December came in at 4.94 million units annualized, which was a bit lower than many had anticipated, and a bit below last month’s downwardly-revised reading of 4.99 million, but volume was up nicely year to year. We will get a little more information on this front tomorrow with the release of the FHFA Housing Price Index for the month of November. Also, new home sales for December are due out in Friday. Notably, the home building stocks are off slightly today.

As previously mentioned, a series of fourth-quarter earnings reports were released today, and several Dow components were on the list. DuPont (DD - Free DuPont Stock Report) shares are up, after the chemical giant put out better-than-expected results. Verizon (VZ - Free Verizon Stock Report) stock is also slightly higher, as the telecommunications provider released mixed results. Also in the Dow, Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report) stock is off slightly. Even though profits came in ahead of expectations, guidance was disappointing. While not reporting figures today, Dow component Caterpillar (CAT - Free Caterpillar Stock Report) shares are lower on news that accounting irregularities have been discovered at a recently-acquired China-based company. - Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

Stocks to Watch from The Survey Investors and traders returning from the Martin Luther King holiday will have to hit the ground running, as there are a slew of notable earnings reports out today, several of which are from Dow-30 components. Ahead of the bell, shares of medical supplies powerhouse Johnson & Johnson (JNJFree Johnson & Johnson Stock Report) are trading slightly lower, while shares of insurer Travelers (TRVFree Travelers Stock Report), telecommunications giant Verizon (VZFree Verizon Stock Report), and chemicals company DuPont (DDFree DuPont Stock Report) are indicating higher openings (especially TRV stock). Other equities moving higher in the premarket on earnings news include railroad operator Kansas City Southern (KSU) and mining company Freeport-McMoRan Copper & Gold (FCX).

Elsewhere, shares of Research in Motion (RIMM) appear poised to advance nicely when trading begins, after the BlackBerry maker’s CEO made comments to a German newspaper suggesting the company may be open to selling its handset business or licensing out its software.

The earnings parade continues after the market closes, with technology giants Google (GOOG) and International Business Machines (IBMFree IBM Stock Report) scheduled to release quarterly results. – Matthew E. Spencer

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


Before The Bell - Wall Street will resume trading in about a half hour from now, following a three-day weekend that culminated yesterday with the observance of both the birthday of the late Dr. Martin Luther King and the second-term inauguration of President Barack Obama. The startup of trading also finds the Dow Jones Industrial Average commencing at 13,650 and the Standard and Poor's 500 Index beginning the day at a five-year high of 1,486.

The market's latest bullish run has been sparked by both relief that the contentious sparring in Washington has at least led to a resolution of the tax debate and to some expectation that a debt-ceiling deal will be reached, even if it is a short-term agreement. 

Then, there is the economy, which appears to be on modestly firmer ground than we had suspected several weeks ago, in the wake of devastating Hurricane Sandy and the bitter divide in the Capitol. Most indicators, led notably by housing, are indicating continued firming, even if this improvement is moderate and irregular in scope.

Moreover, there is also earnings season, which is acquitting itself comparatively well, with much of Corporate America meeting its lowered guidance, at the minimum. In fact, there has been more aggregate outperformance than many believed would be the case, even this early in the profit reporting cycle, which will not conclude until early next month. It should be noted that companies are, in general, a bit later reporting this time, given the year-end adjustments and other once-a-year factors for companies on a calendar-year basis.

As for the economy in the days ahead, this week will be tamer than last, but we will see a pair of pivotal issuances from the housing sector. To wit, later this morning, the National Association of Realtors, a trade group, will issue its December data on sales of existing homes. Then, on Friday, the Commerce Department will release December figures on new home sales. We would expect gains in each category, following last week's materially better December report on U.S. housing starts. That metric is now up to close to a million annual units--just about double the trough suffered through in 2009. Thursday, meanwhile, will bring weekly statistics on new jobless claims and continuing filings. Last week, the nation reported its lowest level of new filings in several years.

As to the business and financial outlook this morning, the markets in Asia closed mixed overnight, with Honk Kong's Hang Seng Index adding 0.3%, but with Japan's Nikkei shedding 0.4%, and China's Shanghai Composite pulling back by 0.6%. At the same time, the bourses in Europe are slipping back just a bit, with the London FTSE 100 off by the slimmest of margins, and with modest setbacks of 0.2% and 0.5%, respectively, in the Paris CAC-40 and the Frankfurt Dax. And on our shores, the S&P 500 Index futures are off by close to two points, while the NASDAQ futures are up just a point, presaging a mixed start to the new trading week, which, as noted, will start out in about a half hour from now.

At the time of this report's writing, the author did not have positions in any of the companies mentioned.