Stocks Log First Gain of the Week (AAPL, AET, AMZN, CHK, DF, FDX, FSLR, KORS, MRK, NVLS, UPS, XOM)

Published on Thursday, 15 December 2011 17:25 Written by Christopher Lynn

New York, December 15^th (TradersHuddle.com) – Stocks closed higher despite the rally losing some steam towards the end of the session. The market spiked higher earlier on the back of better than expected weekly jobless claims and much improved manufacturing surveys. Defensive sectors outperformed in the day.

The Dow Jones Industrial Average gained 45.33 points, or 0.38%. The S&P 500 index climbed 3.93 points or 0.32%, while the NASDAQ added 1.70 points, or 0.07%.

The market started with strong gains following improved economic data in the U.S., as U.S. jobless claims dropped to a three and half year low and the New York Fed's Empire State manufacturing survey hit its highest level since May. Data in the euro zone also supported the move, with the bloc, French, and German flash manufacturing and services figures all coming in above estimates, however, the majority of the numbers still showed the sectors were contracting.

Also the Philadelphia Fed’s Business Outlook for December surprised sharply to the upside well above expectations. A decline in industrial production and a surprising rise in November PPI tempered some the improved sentiment.

In Europe, equity markets snapped their losing streak, closing higher after better than expected economic data in the U.S. helped shift the focus away from the region’s debt crisis woes. Banks saw some pressure, particularly French banks, after Fitch ratings downgraded the credit rating of 5 major European financial institutions, including Credit Agricole, which fell more than 4% after its rating was cut to A-plus from AA-minus.

Stocks were able to hold to gains after the rally lost some steam in afternoon trading, logging their first positive day of the week. At session highs the market was as high as 1%. Most of the S&P 500 sectors closed with gains, with utilities, consumer staples, and healthcare posting the biggest gains, while energy and technology fell.

Energy stocks were once again under pressure, as crude oil continued its slide, closing below $94 per barrel. Natural gas settled lower by 0.4% at $3.13, prices Futures gapped up following this morning’s inventory data, which came in more or less in-line with expectations. Exxon Mobil (NYSE:XOM), the largest U.S. energy producer, gained 0.74% to $80.03, trimming its weekly decline; while Chesapeake Energy (NYSE:CHK), the onshore natural gas and oil producer, climbed 0.93% to $22.78.

Industrials saw support in the session after FedEx (NYSE:FDX), the worldwide express package delivery Company, surged 8% to $83.47 after the company posted better than expected earnings results on largely inline revenues. FedEx said that it earned $1.57 per share, $0.04 better than consensus, on revenues of $10.59 billion. The company also reaffirmed its fiscal 2012 EPS guidance, while providing inline guidance for the current quarter. The stock closed below FedEx has calculated resistance at $84.66. Rival UPS (NYSE:UPS) gained 1.29% to $71.55.

Earnings from FedEx, which were help by strong growth in online shopping helped boost retailers and consumer stocks. Amazon.com (NASDAQ:AMZN) gained 0.58% to $181.26 after trading as high as $184.80. The world’s largest online retailer also said that it sold 1 million of its readers and tablets in each of the past three weeks. The Kindle Fire tablet has been the top product on Amazon.com since its introduction 11 weeks ago. Morgan Keegan initiated coverage in the stock with Outperform and a target price of $210.

Also in the space, Michael Kors Holdings (NASDAQ:KORS), the designer and marketer of high fashion apparel and accessories, made its debut on the NASDAQ after late yesterday it priced its IPO at $20 per share, above the expected range of $17 to $19. The company is raising $950 million on the sale of 47.2 million shares, valuing the company at about $3.8 billion. Shares of Michael Kors soared 21% to $24 after trading as high as $25.23.

The more defensive sector of staples performed much better than discretionary, with Dean Foods (NYSE:DF), the Dallas, TX based dairy products maker, leading the sector after its shares rallied 3.37% to $10.75, closing just below calculated resistance at $11.

Participants also embraced the defensive nature of the healthcare sector, with Aetna (NYSE:AET), the diversified health care benefits company, jumped close to 2% to $40.05 after it provided a bullish outlook. The company bumped its estimate for 2011 and 2012 operating earnings per share. Aetna also said it re-purchase 40 million shares through last week.

Merck (NYSE:MRK) also jumped 2.25% to $36.36, posting the biggest percentage gain in the Dow Jones Industrial Average.

Technology stocks fell despite the M&A in the semiconductor space. Novellus (NASDAQ:NVLS), the equipment maker used for chips manufacturing, surged to the top of the S&P 500 after it agreed to be acquired by Lam Research (NASDAQ:LRCX), the maker of semiconductor processing equipment, in an all-stock transaction valued at $3.3 billion, or about $44.42 per share. Shares of Lam Research tumbled 8% to $36.17, as investors failed to show much enthusiasm in the deal. Novellus rallied 16.3% to $40.37 after trading as high as $42.50.

First Solar (NASDAQ:FSLR), the largest maker of thin film solar modules in the world, continued its slump, with shares tumbling 6% to $31.45, posting the biggest decline in the sector. First Solar logged a new multi-year low of $30 after it was downgraded to a Neutral from Outperform at Robert W. Baird, while slashing its target price to $35 from $80. The company plunged more than 20% in the prior session after it lowered its sales guidance for 2011 and issued 2012 guidance below consensus.

And Apple (NASDAQ:AAPL), the maker of iPads and iPhones, fell 0.33% to $378.94, under performing in the session after trading as high as $383.74. The stock broke below its 20day moving average in the prior session. According to reports in Israeli media, Apple will open an R&D center in Israel that will focus on semiconductors. Earlier in the week, the media in Israel also reported that Apple was on advanced talks to buy Israel's Anobit, a maker of flash storage technology, for as much as $500 million. The tech giant is interested in the technology to increase and enhance the memory volume and performance of its devices, as it may as much as double the memory volume in the new iPads and MacBooks. Yesterday, the tech giant announced that it was expanding its iTunes store to Brazil and 15 other countries in Latin America. Analysts have been warming up to the stock, reiterating their ratings and target prices, citing iPhone 4S strong demand and a possible launch of the iPad 3 in the first quarter next year; however concern over retail sales not being as strong as expected, coupled with worries over global growth and the debt crisis in Europe weighed on sentiment. Earlier in the week, Bernstein reiterated Apple as its Top Pick with a target price of $575, saying the market has been overly pessimistic on the stock in the recent weeks.