Stocks Gain on Encouraging U.S. Jobs Figures (AAPL, BAC, JCP, JPM, LMT, M, MON, MOS, TGT, XLF)

Published on Thursday, 05 January 2012 19:05 Written by Christopher Lynn

New York, January 5^th (TradersHuddle.com) – Stocks gained after rebounding from earlier losses, with the Dow closing narrowly lower. A better than expected private employment report from ADP helped offset jitters surrounding the euro zone debt crisis amid a disappointing French bond auction.

The Dow Jones Industrial Average slid 2.72 points, or 0.02%. The S&P 500 index gained 3.76 points, or 0.29%, while the NASDAQ climbed 21.50 points, or 0.81%.

The market started under some pressure despite the ADP report coming much better than expectations, with private employers adding 325,000 jobs in December. Weekly jobless claims also dropped 15,000; all ahead of the key employment report from the Labor Department due out tomorrow. However some mixed same store sales figures from national chain retailers and euro zone debt crisis jitters weighed on sentiment.

In Europe, equity markets closed lower, as the euro traded below the $1.28 mark against the Dollar, following a disappointing French debt auction, which came amid jitters surrounding the massive amount of debt that needs to be refinance in the coming weeks by euro zone countries.

Participants were able to focus on the positive jobs data and were able to shake off the euro weakness and the debt crisis jitters. In the S&P 500, most sectors gained, with financials, consumer discretionary, and technology posting the biggest gains. The Financial Select Sector SPDR (NYSE:XLF) jumped 1.4% thanks to banks rallying in the day, with participants jumping in the bandwagon despite the European jitters.

Bank of America (NYSE:BAC), the largest U.S. lender, surged to the top of the S&P 500 and the Dow Jones Industrial Average, with the embattled shares rallying 8.6% to $6.31, breaking above its 50day moving average and trading above the $6 per share level for the first time since mid November. Yesterday, Pete Najarian said on the Fast Money show that it was expecting a bullish move in the stock due to increased call buying.

Rival JPMorgan (NYSE:JPM) also benefited from the broad move in the sector, shares jumped more than 2%, posting the second biggest gain in the blue chip index.

Consumer discretionary stocks moved also to the upside. Macy’s (NYSE:M), the department store operator, was among the winners. The stock rallied 3.9% to $33.92 after trading as high as $33.98, a new 52-week high. Macy’s posted solid December same store sales, while upping its prior guidance and raising its dividend. The company doubled its quarterly dividend to $0.20 per share, while it also increased its stock buyback authorization by $1 billion.

However weighing on the sector, Target (NYSE:TGT), the Minnesota based general merchandise discount store chain, tumbled 2.98% to $48.51 after trading as low as $47.25 following weaker than expected December same store sales, while the company lowering its fourth quarter EPS guidance to below consensus. The retailer cited sales softness in electronics, music, movies, and books.

Also JC Penny (NYSE:JCP) was on the losing end, with shares falling 2.69% to $33.97 after the retailer reported inline December comparable sales and lowered its fourth quarter EPS guidance well below consensus. The company said it now expects EPS of $0.65 to $0.70.

In the industrial sector, defense related stocks were under some pressure, following President Obama announcement of a new strategy that calls for a slimmed down military amid the budgetary pressures. Lockheed Martin (NYSE:LMT) fell more than 1% to $80.07.

In the tech space, Apple (NASDAQ:AAPL) gained 1.1% to $418.03, closing near the highs of the session. Apple was able to outperformed after Auriga initiated its coverage with a Buy rating and a target price of $550. BTIG Research also boosted its target price to $580 from $550, as it believes Apple had sold 35 million shares in the quarter based on strong demand in the U.S. The firm increased first quarter estimate to $10.00 per share, which is above guidance of $9.30 and consensus of $9.83. The firm also increased the number of iPhones that it expects Apple to sell in the calendar year to 125 million.

In the materials sector, Monsanto (NYSE:MON), the agricultural business company, posted the biggest percentage gain in the sector after topping earnings estimates on better than expected revenues. Monsanto beat by $0.06 per share, while it reaffirmed its fiscal 2012 EPS guidance. Mosaic (NYSE:MOS), the concentrated phosphates and potash producer, also gained breaking above its 50day moving average following positive reaction to its quarterly results.