Stocks Gained for Fourth Straight Day amid Mixed Earnings Reports

Published on Friday, 20 January 2012 18:56 Written by Christopher Lynn

New York, January 20^th (TradersHuddle.com) – Stocks gained for the 4^th consecutive session amid a mixed bag of earnings reports, which weighed on sentiment. The session saw lackluster action amid reluctant investors ahead of the weekend and a busy earnings-reporting week, amid ongoing negotiations over a Greek debt swap deal between the indebted country and private bondholders.

The Dow Jones Industrial Average jumped 96.50 points, or 0.76%. The S&P 500 index added less than 1 point or 0.07%, while the NASDAQ slid 1.63 points, or 0.06%.

For the week the Dow jumped 2.40%, while the NASDAQ rallied 2.80% and the S&P 500 gained 2.04%.

The market started near the flat line following a mixed batch of earnings from tech giants yesterday after the close and amid a mixed overseas markets performance. An earnings miss by Google (NASDAQ: GOOG) weighed on the NASDAQ and was offsetting solid earnings reports from Microsoft (NASDAQ: MSFT) and IBM (NYSE: IBM). Questionable earnings by Dow component General Electric (NYSE: GE) also weighed on the early hour, along with jitters over the ongoing talks between Greece and private bondholders to agree on a debt swap and after a report in China showed sluggish factory activity in January.

In Europe, equity markets slid for the session but still logged a fifth straight week of gains. The rally in Europe came from depressed levels after an improved outlook in the global economy and as refinancing needs in the euro zone has been so far fulfilled by successful debt auctions. Weighing on participants going into the weekend were the ongoing negotiations on the Greek debt swap deal, in which Greece is seeking for private bondholders to take a haircut of 60 to 70% and therefore avoiding a disorderly default.

Action was lackluster, with financials receiving a late bid, which in turn helped the overall market to edged higher. Among the S&P 500 sectors, Financials posted the biggest gains, along with technology, while consumer discretionary, industrials, and materials posted the biggest declines.

In the financial space, regional banks were the biggest performers, with SunTrust (NYSE: STI) surging to the top of the sector, as shares rallied 5.2% to $21.29. SunTrust jumped after a weaker earnings related start after the company posted earnings that were inline with estimates on revenues that were below consensus. SunTrust said profit was $0.28 per share on revenues that fell 12% year over year to $2.05 billion.

Comerica (NYSE: CMA), the financial services holding company based in Dallas, Texas, jumped 3.14% to $29.58 after posting a profit of $0.60 per share, excluding $0.12 per share in merger and acquisitions charges. The lender saw loan growth of $1.5 billion in a period-end basis.

Meanwhile, Capital One (NYSE: COF) tumbled to the bottom of the sector, with shares losing 5.6% to $46.03 after yesterday evening its earnings report fell well short of estimates. Capital One missed by $0.69 per share on revenues of $4.05 billion that were also below consensus. Oppenheimer cut its target price to $55, as the firm trimmed fiscal 2012 estimates on an uptick in expenses.

Also in the sector, Bank of America (NYSE: BAC) turned higher and was able to close above calculated resistance at $7.02. BofA gained 1.76% to $7.07, posting one of the biggest gains in the Dow Jones Industrial Average. FBR Capital said that capital levels at the lender were moving at the right direction, while earnings power remains questionable.

Technology was also in focus after both Microsoft (NASDAQ: MSFT) and IBM (NYSE: IBM) posted the biggest jumps in the blue chip index, as participants embraced the solid earnings reports. Microsoft rallied 5.65% to $29.71, closing above calculated resistance at $28.19, after the company beat earnings expectations while reporting inline revenues.

And IBM jumped 4.4% to $188.50, closing just below calculated resistance at $188.70 after the company beat both earnings and revenues by a materially high margin, while it provided upside guidance for the full year 2012.

However, Google (NASDAQ: GOOG) earnings miss, weighed on the NASDAQ and the tech sector as well. Google shares plunged 8.4% to $585.99, posting the biggest decline in the S&P 500. Barclays cut its target price to $700 from $730, while Robert W. Baird trimmed its target price to $750 from $760. Earlier in the month, the stock had reached a 52-week high of $670.25.

Apple (NASDAQ: AAPL) won a partial victory against Samsung in Germany, but still fell 1.74% to $420.30, as participants took profits amid the sell-off in Google and ahead of its earnings report next week, with analysts on average expecting a profit of $10.03 on revenues of $38.78 billion. The highest estimate is for Apple to earn $11.45 per share.

FBR Capital initiated coverage on Apple with Outperform and a target price of $500.

In the energy space, crude oil fell below $99 per barrel, weighing on price action on the equity side. Nevertheless Schlumberger (NYSE: SLB), the provider of oilfield services to the international petroleum industry, jumped 1.3% to $73.80 after posting quarterly results that beat on both the bottom and top lines.

Elsewhere, Sears Holdings (NASDAQ:SHLD), the holding company that owns and operates the Sears and Kmart retail chains, surged once more to the top of the S&P 500, with shares rallying 13% to $49, extending weekly surge to a whopping 44%. The stock had sold off in December after it reported disappointing holiday sales and a report that CIT requested a letter of credit to the retailer, however reports surfaced that CIT relented after discussions with Sears and now was accepting Sears orders.

And General Electric (NYSE: GE) closed unchanged after it traded as low as $18.68 following earnings that beat on the top line but were short in the revenue side. Midday, participants embraced the stock, helping it pare all of its losses.