After the Close - The investment community is throwing caution to the wind, as buying continued on Wall Street today, pushing the S&P 500 Index further above 1,500 and leaving the Dow Jones Industrial Average on the doorstep of 14,000. Even the NASDAQ was able to overcome some disappointing guidance from some of the technology companies to finish just slightly below breakeven today. Another advance by Apple (AAPL) stock helped the tech-heavy NASDAQ regain its equilibrium after initially falling well into negative territory. It should be noted that buying picked up some in the final hour of trading, with the overall spread of advancing stocks over declining issues widening on the Big Board. That said, the win by the bulls may not have been as convincing as a quick glance at the major U.S. equity indexes would seem to suggest, as there was a mixed result in the small- and mid-cap indexes.

Over the last fortnight, quarterly earnings have grabbed the attention of investors, and that surely was the case again today. Investors also seemed to quickly dismiss a rather dour report on consumer confidence (more below). Of note today were strong quarterly results from drugmaking giants Eli Lilly (LLY) and Pfizer (PFE Free Pfizer Stock Report), and not surprisingly healthcare stocks reacted positively. It was a different story for the technology sector, where subpar guidance from a number of companies weighed on the group. Those stocks posting noteworthy declines today included VMware (VMW), Seagate Technology (STX), and EMC (EMC). Other talked about earnings reports today came from automobile maker Ford Motor (F) and homebuilder D.R. Horton (DHI), with the stocks of those two companies moving in opposite direction.

Speaking of the homebuilding industry, we received another encouraging report on this recovering sector. Specifically, the S&P/Case Shiller Home Price Index, the leading measure of U.S. home prices, showed home prices rose 4.5% for the 10-City Composite and 5.5% for the 20-City Composite in the 12 months ending in November. It was yet another encouraging sign that the sector is on the mend and will be a meaningful contributor to the nation’s economic output in 2013.

However, the housing news took a back seat to a very discouraging report on consumer sentiment. At 10:00 A.M. (EST), the U.S. Conference Board reported that the Consumer Confidence Index fell sharply in January, as consumers expressed concerns about the effects higher payroll taxes will have on their spending budgets. Not surprisingly, consumer cyclical stocks underperformed today. The consumer cyclical and, to a greater extent, the aforementioned technology groups were the laggards among the top-10 sectors.  It should also be noted that certain basic materials stocks rebounded after a difficult start to the trading week yesterday. Energy stocks were also in demand today, helped by rising oil prices and a good quarterly showing from refinery operator Valero (VLO).

As noted above, there seems to be little holding the bulls back at this moment. In fact, the S&P 500 Volatility Index (or VIX) fell today after rising modestly over the prior four trading days. It remains at a level that clearly suggests that the market is overextended right now. Nevertheless, investors continue to eschew fixed-income securities in favor of stocks, which in this low interest-rate environment still look to be the most attractive investment option.  - 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 another mixed showing today. Of note, though, is the fact that the market has shown some weakness in the mornings, while bargain hunters have moved in later in the session. This type of trading likely suggests that there is still some support for equities, even at these levels. Technically, the S&P 500 Index is holding above the 1,500 mark, for now.

As we pass the noon hour in New York, the averages are starting to make some progress. The Dow Jones Industrial Average is up 59 points (0.4%); the S&P 500 Index is ahead by five points (0.3%); and the tech-heavy NASDAQ, which is now making its way toward positive territory, is off just four points. Market breadth shows a slightly positive bias, as advancing stocks are just ahead of decliners on the NYSE. Most of the market sectors are making strides, with gains in the healthcare, energy, and basic materials names. In contrast, the consumer cyclical and technology issues are lagging today.

Some stocks are moving on earnings-related news. Today, we heard from Dow component Pfizer (PFE - Free Pfizer Stock Report). That stock is trading higher after the drug giant put out a decent report. We also heard from Ford Motor (F). Those shares are off, even though the automaker reported strong profits. Investors may well be concerned about weakness in Europe. In technology, Internet provider Yahoo! (YHOO) put out a better-than-expected release. Those shares were higher, but have since slipped. Stocks on the move up include: Hess (HES), DR Horton (DHI), and Valero (VLO). Issues headed lower include: Research in Motion (RIMM) and Seagate (STX).

Meanwhile, the economic reports were mixed this morning. Specifically, the Case-Shiller 20-City Index rose 5.5% in November, which was ahead of the consensus view, and better than the 4.2% increase logged in the prior month. The homebuilding stocks (XHB) are rallying on the news. In contrast, the consumer may be losing steam. According to the Conference Board, consumer confidence slipped to 58.6 in January, from the upwardly revised reading of 66.7 in December.  Meanwhile, the Fed has started its two-day meeting and a rate decision will be issued tomorrow afternoon. Traders will also be watching the ADP Employment change report, which is slated to be released tomorrow, as well. But the big report of the week comes out in Friday, when the Government releases the nonfarm payroll data for January. Notably, that report has the capability to move various equity, commodity, and currency markets across the globe. - 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 - Earnings season continues in earnest today with a report from pharmaceutical titan and Dow-30 component Pfizer (PFE - Free Pfizer Stock Report). The company its increased bottom-line outlook for 2013, but the shares are up only incrementally thus far.

Another prominent drug company Eli Lilly & Co (LLY) said on Tuesday that fourth-quarter profits fell as competition from generic drugs, particularly for its once top-selling schizophrenia drug Zyprexa, drove revenues lower.

Car maker Ford Motor (F) reported higher-than-expected earnings and revenues Tuesday, but predicted a wider loss in Europe due to persistent weakness in the region.

Results for Corning Inc. (GLW), the specialty glass and ceramics maker, showed the company easing past analysts’ consensus forecast for earnings in the fourth quarter. The company turned a net profit of $283 million, or 19 cents a share, down from $491 million, or 31 cents, earned in the fourth quarter of 2011. Shares were suggesting a small early loss. - Erik M. Manning

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 kicked off the new week with a modest decline, as some very overdue profit taking set in across selected market sectors, most notably the basic materials and health care issues. To wit, we saw price declines in the shares of Alcoa (AAFree Alcoa Stock Report) and U.S. Steel (X) in the former group, and Merck (MRK - Free Merck Stock Report) in the latter category. Conversely, the technology stocks fared well, led by a $10-a-share gain in the shares of recently battered tech icon Apple (AAPL).

Overall, though, it was an uneventful day, with comparatively decent earnings data balanced out with a mixed economic backdrop. Specifically, the Commerce Department issued a survey showing that durable goods orders jumped by 4.6% last month, easily beating the estimated 2.0% increase and the prior month's tepid 0.7% gain. We note, however, that this is a notoriously volatile series, given the disproportionately large impact of swings in orders for high-priced jet aircraft. Nevertheless, the results were generally good here, and such data augur well for tomorrow's initial look at fourth-quarter GDP. Expectations on this latter score are that the nation's economy, which bounded forward by a solid 3.1% in the third quarter, will have eased to a nominal growth rate of just 1.0% in the final stanza. Also, yesterday, we had the report of a dip in pending home sales. Here, though, the overall outlook in housing remains quite bright, with this once-beleaguered sector most likely leading the economy moderately higher in 2013.

As to the current session, it will be again influenced by earnings. And several large companies have already issued their statements for the final quarter of 2012. For example, Ford Motor Co. (F) has posted results that beat the consensus Wall Street targets. But the the auto giant is forecasting only flattish results in 2013, and its losses in the troubled European market are widening. After an early runup in the pre-market, Ford shares are indicating a nominally lower start to the trading day. Also, a pair of drug giants have issued their results this morning. Here, we have seen solid results from Pfizer (PFEFree Pfizer Stock Report), the largest U.S. drugmaker and a Dow-30 component. Pfizer shares, which have been strong in recent months but eased somewhat yesterday, are indicating some modest strength in the pre-market this morning. Finally, Eli Lilly (LLY) has reported adjusted fourth-quarter revenues and earnings that also have beaten estimates, but the stock of that conservative good-yielding issue is suggesting just a flat-to-slightly higher opening.

Meantime, on the economic front, we will be hearing from the Conference Board some 30 minutes into the trading session, when that New York-based research organization will issue its latest survey on consumer confidence. A modest retracement seems likely at that time. Finally, on this count, the Labor Department will be releasing its monthly report on non-farm payrolls and the jobless rate on Friday morning. An employment gain north of 150,000 is the expectation along with a flat 7.8% rate of unemployment.

As to the markets this morning, they are little changed, in the aggregate, in Europe so far today, while our futures are suggesting a little additional profit taking when the markets open for business in about a half hour from now. – Harvey S. Katz

At the time of this article's writing, the author had positions in PFE.