Stocks Gain for the Week on Encouraging Economic Data (AAPL, BAC, CHK, CMG, EK, M, MCD, MON, NFLX, TGT, YHOO)

Published on Saturday, 07 January 2012 08:59 Written by TradersHuddle Staff

Weston, January 7^th (Tradershuddle.com) – Stocks started the year with solid weekly gains, as participants cheered solid labor market data in the U.S. and better than expected manufacturing data points around the globe. Additional data points on retail and auto sales figures confirmed that the world’s largest economy was gathering strength. However concerns over massive refinancing needs in euro zone countries limited the upside move.

For the week the Dow closed with a 1.17% gain, while the NASDAQ jumped 2.65% and the S&P 500 climbed 1.61%.

Stocks started the year with a bang, as participants cheered encouraging economic data around the world. Particularly better than expected manufacturing data points in China and the U.S. spurred risk appetite and a pullback in the Dollar, which in turn helped equities.

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 closed with sharp gains, with energy, materials, and financials leading the advance. Meanwhile, utilities and consumer staples fell, with the Utilities SPDR ETF (NYSE:XLU) closing with a loss of 1.8%. The Utilities SPDR ETF was the best performer sector last year.  NextEra Energy (NYSE:NEE), the Florida based electric utility, pressured the sector lower as it was downgraded to Market Perform from Outperform at Wells Fargo. The stock posted a new 52-week high of $61.20 last Friday.

In the consumer arena, both McDonald’s (NYSE:MCD) and Kraft (NYSE:KFT) posted new record highs today before reversing and ending with a loss for the session. McDonald’s posted the biggest percentage decline in the Dow Jones Industrial Average, after posting a new all-time high of $101.59. Meanwhile, Kraft lost 0.24% to $37.27 after posting a fresh 52-week high of $38.05.

Lifting the consumer discretionary sector were shares of TripAdvisor (NASDAQ:TRIP). The online travel research Company rallied 5.16% to $26.63 after it was upgraded to a Buy from Neutral at Bank of America Merrill. Netflix (NASDAQ:NFLX), the online video rental company, was also among the top performers in the space during the session. Netflix jumped more than 4%. Last year the stock was among the worst S&P 500 performers, plunging 60.6% during the year after it plunged sharply from its all-time high of $304.79 that was posted mid-July.

Wynn Resorts (NASDAQ:WYNN), the luxury casino operator, jumped 3.15% to $113.97 after the Macau Gaming Inspection and Coordination Bureau reported December gross gaming revenue jumped 25% year over year to 23.6 billion patacas. It also reported that Macau gross gaming revenue for 2011 jumped 42% to 267.9 billion patacas versus a 58% increase for 2010. Wynn Resorts generated 73% of its third quarter net revenues and 78% of its third quarter adjusted-EBITDA in Macau.

Materials also benefited from the drop in the Dollar and the increased bid on natural resource plays, which came on higher metal prices, as the major consumer of metals had encouraging economic reports that bode well for future demand. Gold prices also moved higher following an additional boost from increased Iranian tensions.

Alcoa (NYSE:AA), the aluminum producer, rallied 6.71% to $9.23, posting the biggest percentage gain in the blue chip index, while Freeport McMoRan (NYSE:FCX), the world’s largest publicly traded copper producer, surged 7.37% to $39.50, posting the biggest gain in the sector amid a rally in copper prices, which benefited from the better than expected manufacturing data in China and U.S., the biggest consumers of the metal. Freeport closed above calculated resistance at $38.66.

Energy also benefited from the risk on trade and the lower greenback. Crude oil rallied to close near $103 per barrel after improved economic reports in the U.S. and China and on concern over possible supply disruptions, as the tensions with Iran continue to rise.

Chevron (NYSE:CVX), the second largest U.S. energy producer, jumped 3.73% to $110.37 after trading at a new 52-week high of $100.99. Chevron posted one of the biggest gains in the blue chip index.

Meanwhile, Chesapeake Energy (NYSE:CHK), the onshore natural gas and oil producer, rallied 5.88% to $23.60 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.

Financials also saw a strong bid, but closed off its highs of the session. The Financial sector was the worst S&P 500 performer sector last year, but at the start of 2012 participants amid the encouraging economic data embraced it. Bank of America (NYSE:BAC) rallied 4.32% to $5.80, closing above calculated resistance at $5.63, and posting one of the biggest percentage gains in the Dow Jones Industrial Average. Bank of America was the top “Dog” of the Dow in 2011.

Technology was also active in the rally. Google (NASDAQ:GOOG) gained 3% to $665.41 after posting a fresh 52-week high of $668.15.

Apple (NASDAQ:AAPL) gained 1.54% to $411.23, reaching a multi month high of $412.50. The stock jumped above calculated resistance at $409.09, as 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.

And Research In Motion (NASDAQ:RIMM), the maker of the Blackberry maker, rallied 6.97% to $15.51 after trading as high as $15.86. The stock saw a sharp bid amid speculation of a management shakeup at the co-CEO level, which is view by many bulls as a catalyst for a possible takeover or M&A.

Mid week, the market started in negative territory amid choppy trading in overseas markets. Both the euro and European markets pullback on concern over the higher costs for banks to raise more capital amid a new refinancing cycle for euro zone countries. A disappointing rights offering from Italian lender Unicredit and cautious comments about China's growth outlook weighed on market sentiment, spurring a cautious trade.

In Europe, equity markets closed lower, snapping its 2-session rally this year, amid thin trading volume and with banks leading the declines after UniCredit priced its rights issue at a 43% discount. A report showing record bank deposits at the ECB also sparked renewed jitters and highlighted the concerns of European banks to lend to each other.

But stocks were able to edge higher in afternoon trading, amid an upside move in materials, consumer discretionary, and industrial stocks, which led the S&P 500, while utilities, healthcare, and financials fell the most and weighed on the session. The Material Sector received a boost from slightly better than expected factory data in the U.S. and solid auto sales figures.

CF Industries (NYSE:CF), the North American manufacturer and distributor of agricultural fertilizers, jumped 2.72% to $157.99, as it posted the biggest gain in the sector. CF was upgraded to a Buy from Neutral at Citigroup.

Alcoa (NYSE:AA), the aluminum producer, was also among the notable movers in the sector, as shares gained 2.38% to $9.45. Alcoa benefited from the factory data and solid auto sales, helping the stock to post the biggest percentage gain in the Dow Jones Industrial Average.

Consumer discretionary stocks were also a source of strength amid auto sales figures and analyst actions ahead of same store national retail sales figures and jobs data due out later this week.

Netflix (NASDAQ:NFLX) surged to the top of the S&P 500, jumping 11.36% to $80.97, breaking above calculated resistance at $74.58 on M&A speculation that was sparked by comments from an analyst from Piper Jaffray on CNBC. The analyst said that since Yahoo’s new CEO said that it will expand content, it sees Netflix as one of the limited options it has to beef up its video content, which is the weakest part of Yahoo’s content offering.

Ford Motor (NYSE:F), the Dearborn, MI automaker, gained 1.53% to $11.30, moving away from calculated resistance at $11. The company reported that U.S. December sales climbed 10% year over year to 210,140 units. Guggenheim initiated its coverage on Ford with a Neutral. Ford traded as high as $11.53.

Also in the sector, fast food restaurants saw upside on the back of actions by Goldman Sachs. Chipotle Mexican Grill (NYSE:CMG) gained 2.2% to $348.75 after Goldman Sachs added the stock to its coveted Conviction Buy List. While, McDonald’s (NYSE:MCD) climbed 0.56% to $99.39 after Goldman Sachs bumped its price target to $110 from $103.

Retailers and apparel makers also saw upside after Goldman Sachs added lululemon (NASDAQ:LULU) to its Conviction Buy List. The designer and retailer of athletic apparel surged 8.76% to $50.94. Goldman’s move lifted shares of Nike (NYSE:NKE) and Polo Ralph Lauren (NYSE:RL). The athletic footwear and apparel giant gained 1.46% to $98.22 after posting at a new all-time high of $98.76.

Polo Ralph Lauren traded as high as $144.21, just above its 50day exponential moving average at $143.09, but the move above it was short lived, as the stock closed with a gain of 4.20% at $142.88.

In the technology space, the Yahoo! drama continued. Yahoo (NASDAQ:YHOO) tumbled 3.10% to $15.78 after naming former PayPal President Scott Thompson as its new CEO. Yahoo has been undergoing a strategic review and it’s being touted as an acquisition target as a whole or splitting its valuable Asian assets, and apparently participants that were hoping for a sale exited the name on the news, speculating a deal could take longer with a new CEO. Meanwhile, eBay (NASDAQ:EBAY), the owner of paypal and operator of an auction marketplace, lost 3.77% to $30.16 on the news that it has lost a key executive.

Microsoft (NASDAQ:MSFT), the largest software publisher, gained 2.37% to $27.40, closing to its multi-month high of $27.50. Microsoft posted the second biggest gain in the blue chip index after Sanford Bernstein cut its target price on Salesforce.com (NYSE:CRM), citing that the company is growing revenue by acquisitions but not by stealing share from the likes of Microsoft or Oracle. Shares of salesforce.com tumbled 3.68% to $97.48 after Bernstein cut its target price to $89 from $108.

Apple (NASDAQ:AAPL) climbed 0.54% to $413.44, moving away from resistance at the $410 level after the company announced that its iPhone 4S will be available in China and 21 additional countries on Friday, January 13th, as it tries to capitalize on the strong customer response to Apple products in China.

Elsewhere, Eastman Kodak (NYSE:EK), the once iconic U.S. Company, plunged 28.19% to $0.47 after a report that Eastman Kodak is preparing for a bankruptcy filing.

On Thursday, 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 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; however some mixed same store sales figures from national chain retailers and euro zone debt crisis jitters weighed on sentiment.

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) 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. On Wednesday, Pete Najarian said on the Fast Money show that it was expecting a bullish move in the stock due to increased call buying.

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 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 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.

At the end of the week, stocks ended the session mixed, as a better than expected jobs report in December was unable to outweighed concerns over the global economy being impacted by the euro zone debt crisis. The improved economic data in the U.S. also helped the Dollar, which in turn weighed on equities.

The market started with a modest bid after a better than expected December jobs report helped futures turn positive. The improved labor picture, with the U.S. economy creating 200,000 jobs was welcomed news, however despite consensus being at 150,000, the Wall Street whisper number was north of 200,000 following the strong ADP report. Jitters in Europe with the euro trading below $1.27 also weighed on the sentiment and limited the upside move.

The Consumer Staples SPDR ETF (NYSE:XLP) fell 0.65% to $32.16, as Costco Wholesale (NASDAQ:COST) tumbled more than 2.5% to the bottom of the sector, continuing its slide from the prior session in which the company posted December same store sales that were weaker than expected. Rival PriceSmart (NASDAQ:PSMT) plunged 14.10% to $60.63 after the wholesale club retailer reported earnings of $0.47 per share on revenues that jumped 24% year over year to $478.87 million, which is above consensus on the revenue side, but lower on the earnings front.

Financials gave back part of their prior session gain, amid concerns over the debt crisis in the euro zone. The better than expected jobs figures didn’t prevented for Bank of America (NYSE:BAC) to slide 2%, giving back part of its prior session rally. Bank of America closed at $6.18, posting the second largest percentage decline in the Dow Jones Industrial Average after Dick Bove, the famed Rochdale Securities banking analyst, said that such a program would be a negative for the stocks, as banks will likely loose money.

Morgan Stanley (NYSE:MS), the operator of a global securities business, tumbled 2.33% to $15.90 after Ticonderoga lowered its fourth quarter estimate to a loss of $0.59 per share from a profit of $0.40 per share, reflecting weaker assumptions for revenue, higher compensation accruals, and a $1.2 billion after tax charge for the MBIA settlement. The firm cut its target price to $19 from $22. JPMorgan also cut estimates on Morgan Stanley and other investment banks, citing worsening conditions in fixed income and equities. So far this week, the stock has rallied 7.6%.

Meanwhile in the tech space, Microsoft (NASDAQ:MSFT), the world’s largest software publisher, gained 1.54% to $28.11, posting the biggest percentage gain in the blue chip index, closing very close to its July high of $28.14.

Apple (NASDAQ:AAPL) gained 1.05% to $422.40, with the stock closing at an all-time high. The upward momentum continued with the stock now targeting its all-time high of $426.70 after the ISI Group raised its estimates on Apple, citing better than expected iPhone and iPad units and a robust product pipeline in 2012. Canaccord Genuity also noted that its check indicate record iPhone December quarter sales. The firm estimates that Apple sold 12 million iPhones in the quarter in the U.S. market, with AT&T selling 6 million, Verizon 4 million, and Sprint 2 million. Cannacord said that it expects EPS at $10.75 on revenue of $41.3 billion.

Elsewhere, in the consumer discretionary space, Netflix (NASDAQ:NFLX) surged to the top of the S&P 500, as shares continued with their sharp gap up at the start of the year. Shares of Netflix rallied 8.8% to $86.29, breaking above its 50day moving average at $84.92. Netflix continued with upside momentum on M&A speculation and after plunging 60% last year.

On the flip side, Family Dollar (NYSE:FDO), the owner and operator of a national discount retail chain, tumbled to the bottom of the S&P 500, following negative reaction to its quarterly results. The company posted inline results, while it also provided inline second quarter EPS guidance and reaffirmed its fiscal 2012 EPS guidance. Family Dollar lost 7.5% to $53.63, breaking below calculated support at $56.28.