Stocks Rally on Decent Economic Data (AAPL, BAC, BTU, CHK, CVX, FCX, GOOG, RIMM, MU, X, XLB, XLU)

Published on Tuesday, 03 January 2012 12:24 Written by Christopher Lynn

New York, January 3^rd (TradersHuddle.com) – Stock were rallying, with the Dow jumping more than 200 points after encouraging economic data around the globe lifted market sentiment at the first trading session of the year for the U.S. markets. Better than expected manufacturing data in the U.S. and China was spurring demand for riskier assets amid a pullback in the Dollar.

The Dow Jones Industrial Average was jumping 1.74%. The S&P 500 index was gaining 1.73%, while the NASDAQ was rallying 1.75%

The market started with solid gains following better than expected manufacturing points around the world helped spurred risk appetite, which in turn pushed the Dollar lower and equity markets higher. The official Chinese purchasing managers’ index showed a slight rise in factory activity in December, which in turn helped natural resources plays and metal prices. The data showed a return to expansion territory with a 50.3 figure versus 49.0 in the prior month reading.

Stocks extended their gains after U.S. manufacturing sector accelerated in December, rising to 53.9 in December, according to the Institute for Supply Management. Economists had expected a reading of 53.2. And construction spending climbed 1.2% in November, the highest reading since June 2010.

In Europe, equity markets extended their prior session rally, hitting a 2-month high as cyclical mining shares led the way amid improved manufacturing data points around the globe. Meanwhile euro zone debt crisis jitters weighed on the Spanish and French markets, which underperformed. UK and German PMI showed PMI contraction but still less than it was feared; even German unemployment fell to its lowest level since 1998.

Most of the S&P 500 sectors were moving sharply higher, with materials, financials, and energy logging the biggest gains Consumer staples and utilities underperformed. In fact the best performing sector for 2011, the Utilities SPDR ETF (NYSE:XLU) was falling 0.7%, as NextEra Energy (NYSE:NEE), the Florida based electric utility, was losing 1.7% to $59.84. NextEra was downgraded to Market Perform from Outperform at Wells Fargo.

The materials SPDR ETF (NYSE:XLB) was jumping 3.16% helped by the natural resource plays and steelmakers as the biggest economies in the world showed improved manufacturing data. United States Steel (NYSE:X) was posting the biggest percentage gain in the sector, as shares were rallying 6% to $28.05, breaking above calculated resistance at $26.79. Freeport McMoRan (NYSE:FCX), the world’s largest publicly traded copper producer, was jumping 5.91% to $38.96 amid a jump in copper prices, which were benefiting from the better than expected manufacturing data in China and U.S., the biggest consumers of the metal.

Financials were also seeing a strong bid above 3%, as the worst S&P 500 performer sector last year, was being embraced by participants amid the encouraging economic data. Bank of America (NYSE:BAC), the largest U.S. lender, was rallying 4.68% to $5.82, breaking above calculated resistance at $5.63, and posting the biggest percentage gain in the Dow Jones Industrial Average. Bank of America was the top “Dow Dog” in 2011.

Energy sector received also a bid on higher crude oil prices and as the difference between natural gas and crude oil hit an all-time high. High beta coal stocks were seeing the biggest bids, with Peabody Energy (NYSE:BTU) rallying to the top of the S&P 500. Peabody was surging 8.9% to $36.06.

Crude-oil futures for February delivery rose $3.44, or 3.5%, to $102.25 a barrel on the New York Mercantile Exchange, after reaching session high of $102.88 after the fuel received an additional boost after a top Iranian general issued a warning to the U.S. against returning one of its aircraft carriers in the Persian Gulf. Chevron (NYSE:CVX), the second largest U.S. energy producer, was jumping 3.12% to $109.72 after trading at a new 52-week high of $100.25.

Meanwhile, Chesapeake Energy (NYSE:CHK), the onshore natural gas and oil producer, was jumping 3.86% to $23.13 after Total (NYSE:TOT), the French energy giant, signed a $2.3 billion deal with Chesapeake Energy and EnerVest for a 25% stake in a joint venture with the two U.S. companies in the liquids-rich Utica Shale area of eastern Ohio.

Technology was also participating in the rally. Google (NASDAQ:GOOG) was climbing 2.42% to $661.55 after posting a new all-time high of $661.79.

Apple (NASDAQ:AAPL), the maker of iPads and iPhones, was gaining 1.45% to $410.88, reaching a multi month high of $412.50. The stock jumped above calculated resistance at $409.09 on the broad marker move. Ticonderoga recommended Apple as its top overall pick in the IT Hardware & Networking space it covers. The firm picked Apple as its top pick in 2011, with shares responding with a gain of 26% for the year. Ticonderoga believes Apple's portfolio in 2012 has the opportunity to create more excitement around the story with its expectation for the unveiling of iTV, a possible "iPad mini" and a major upgrade with the iPhone 5, while firm expects the company to finally come to grips with its surging cash balance and issue its first cash dividend. Last week, BMO Capital raised its price target on Apple to $460, citing strong iPhone sales amid what appears to be strong uptake at Sprint Nextel. The firm bumped its iPhone shipment estimate to 29.5 million units and its EPS estimate for the quarter to $9.82 from $9.55 per share. Meanwhile, BMO also raised its fiscal 2012 estimates on the tech giant to $34.68 per share. Apple will likely report its earnings results on January 24^th, with current consensus at $9.83 per share for the quarter and $34.79 per share for the year.

Other notable movers in the space, was Micron Technology (NASDAQ:MU), the dynamic random access memory chips maker, was surging 9.46% to $6.89, posting the biggest gain in the S&P 500 after the stock was upgraded to Overweight from Equal Weight at Barclays.

And Research In Motion (NASDAQ:RIMM), the maker of the Blackberry maker, was rallying 7.93% to $15.65, posting one of the biggest gains in the NASDAQ-100. The stock was seeing a sharp bid amid speculation of a management shakeup at the co-CEO level, which is view by the bulls as a catalyst for a possible takeover or M&A.