Stocks Gained ahead of Earnings (AAPL, BAC, CBE, GOOG, INHX, JNPR, JPM, NFLX, RF, TRV, WFC)

Published on Monday, 09 January 2012 19:02 Written by Christopher Lynn

New York, January 9^th (TradersHuddle.com) – Stocks closed with modest gains, extending the solid gains from the first week of the year, ahead of a brand new earnings season. Participants focused on earnings and domestic issues, while keeping an eye on the euro zone developments.

The Dow Jones Industrial Average gained 32.77 points, or 0.27%. The S&P 500 index climbed 2.89 points, or 0.23%, while the NASDAQ added 2.34 points, or 0.09%.

The market started near the unchanged line amid mixed overseas action. Front and center over the weekend, was M&A with Bristol Myers Squibb (NYSE:BMY) agreeing to pay a whopping 163% premium for Inhibitex (NASDAQ:INHX), the hepatitis C drug developer. Bristol Myers agreed to pay $26 per share on an all-cash transaction valuing the company in $2.5 billion. Better than expected German trade figures helped European markets early on, while German Chancellor Angela Merkel and French President Nicholas Sarkozy met in Berlin to discuss plans to improve growth and fiscal integration in the euro zone.

Weakness gave way to a small but a steady bid, which helped the markets post modest gains at the end of the session. Most S&P 500 sectors closed in positive territory, with industrials, financials, and energy posting the biggest gains, while technology and consumer discretionary fell.

The Industrials Select SPDR ETF (NYSE:XLI) gained 0.74% to $34.84, moving away from calculated resistance at $34.15, a level the stock broke last week. Copper Industries (NYSE:CBE), the global diversified electrical products and tools manufacturer, was the best performer in the sector, with shares jumping 3.93% to $55.82, closing above calculated resistance at $55.27. Last week, Copper Industries was downgraded to a Neutral from Outperform at Credit Suisse.

Financials were boosted by performance from banks and insurers. Regions Financial Corporation (NYSE: RF) gained 2.72% to $4.53 after the company said it is close to a deal to sell its Morgan Keegan & Co. unit to Raymond James Financial or Stifel Financial Corp. for roughly $1 billion. The regional bank was the best performer in the sector.

Bank of America (NYSE:BAC) gained 1.46% to $6.27, posting the second biggest gain in the Dow Jones Industrial Average. BofA added to last week’s solid gains and close near its calculated resistance at $6.35. CNBC reported that the Obama Administration was near to close on a plan that will sell foreclosed properties on the books of Fannie, Freddie and FHA on a package to investors to be use as rental properties. The stock also moved to the upside ahead of rival JPMorgan (NYSE:JPM) earnings report, which is scheduled for later in the week.

JPMorgan slid 0.17% to $35.30 after trading as high as $35.68. On average analysts expect a profit of $0.93 per share on revenues of $23.44 billion. Also in the sector Wells Fargo (NYSE:WFC) gained 1.24% to $29.30 on the news of the foreclosed properties plan and after Jim Cramer recommended the stock as the best of breed of the big banks ahead of the open.

Meanwhile, Travelers (NYSE:TRV), the property and casualty insurer gained 0.57% to $59.69 after the Goldman Sachs added the stock to its coveted Conviction Buy List.

In tech land, trading was choppy for most of the session, with the group unable to hold gains. Apple (NASDAQ:AAPL) fell 0.16% to $421.73 after the stock reversed following hitting an all-time high of $427.75. Apple received a boost from Goldman Sachs and Needham, which upped estimates. Goldman boosted its target price to $550 from $520, citing upside in the December quarter and better than expected results in 2012. And Needham maintained its Buy rating and target price of $540, while citing blow out iPhone sales. The firm raised its EPS estimate to $10.85 for the quarter from $9.55. For the full year Needham said that Apple should earn $38.70 on revenues of $151.95 billion.

Google (NASDAQ:GOOG), the largest search engine, also weighed on the performance of the sector. Shares tumbled 4.24% to $622.46 after Motorola Mobility warned of worse than expected quarterly results, which sparked worries over the pending Google $12.5 billion acquisition of the mobile and smartphone maker. Also weighing on Google shares was cautious commentary from Stifel Nicolaus, which said that it rather be patient with the stock as it believes end demand in Europe may be slowing, and currency now presents a headwind, while it also cited Motorola Mobility estimates falling short of fourth quarter estimates.

Providing upside to the sector was Juniper Networks (NASDAQ:JNPR). The provider of Internet infrastructure solutions jumped to the top of the sector, as shares rallied 5.38% to $21.53, closing above calculated resistance at $20.99 and posting one of the biggest gains in the S&P 500. Juniper in after hours fell more than 2.4% to $21.02 after it lowered its fourth quarter guidance. The company sees EPS of $0.26 to $0.28 versus consensus of $0.34 on revenues of $1.11 to $1.12 billion versus consensus of $1.19 billion. Juniper said that fourth quarter performance is below the company's previous outlook primarily due to weaker than expected router demand from service providers.

The consumer discretionary space ended lower as a group, however Netflix (NASDAQ:NFLX) saw once again outsized gains. The video rental company surged to the top of the S&P 500; with shares rallying 13.78% to $98.18 and extending its year to date rally to 41.7%. The company announced the launch its streaming service in the United Kingdom and Ireland for the monthly price of 5.99 Pounds Sterling in the UK and euro 6.99 in Ireland. CEO Reed Hastings said in an interview that U.S. subscriber growth is back in positive territory, while commenting on 2012 profitability. Hedge Fund Manager Whitney Tilson also boosted the stock after an appearance on Fast Money Half-Time Report, in which he noted that he is still long on the stock, with a multiyear horizon. He noted that the stock overreacted to the downside, plenty of rumors of a takeover or a merger, international growth, and U.S. subscriber growth.

And Amazon.com (NASDAQ:AMZN), the largest online retailer, fell 2.2% to $178.56 despite Barclays bumping its target price on the stock. The firm raised its target price to $225 from $220, citing solid holiday season for online retailers and more specifically AMZN and its family of Kindle products. Barclays believes Amazon sold 5.5 million Kindle Fire Tablets in the fourth quarter, up from a prior forecast of 4.5 million. For the year, the firm is forecasting that Amazon will sell 18.4 million tablets in 2012. Meanwhile, Goldman Sachs weighed, by reiterating its Neutral rating on the stock.