Stocks Eked Weekly Gain; NASDAQ Outperformed on Record Apple Earnings

Published on Saturday, 28 January 2012 08:29 Written by TradersHuddle Staff

Weston, January 28^th (Tradershuddle.com) – Stocks were able to extend January’s rally, with the S&P 500 eking a gain for the week and the NASDAQ outperforming amid record shattering quarterly results from Apple. Concern over negotiations on the Greek debt swap plan stalling and jitters over Portugal needing a second bailout weighed on the market, which received a jolt mid week from the Fed, with the Central Bank pledging to maintain interest rates near zero until late 2014, while hinting of additional policy action if economic conditions deteriorate. Mixed economic data during the week, including weaker than expected GDP, highlighted that the economic recovery was fragile.

For the week the Dow fell 0.47%, while the NASDAQ climbed 1.07% and the S&P 500 added 0.07%.

At the start of the week, stocks closed practically unchanged, as participants were unable to commit ahead of a busy earnings reporting season and a two-day Fed meeting. Developments on the negotiations of a Greek debt swap plan were also in focus and weighing on sentiment through out the session.

The Energy Select SPDR ETF (NYSE: XLE) gained 0.8% after crude oil received a lift from the EU move to ban Iranian oil imports and as natural gas rallied after Chesapeake Energy (NYSE: CHK), one of the biggest natural gas producers in the U.S., announced that it was cutting the number of rigs it has drilling for natural gas amid soft prices due to a warmer than usual winter. Chesapeake jumped more than 6% on the news

Halliburton (NYSE: HAL), the oilfield services provider, fell 2.10% to $35.44 on negative reaction to its quarterly results. Shares moved to the downside despite a jump of 50% in fourth quarter profits, as investors showed concern over its exposure to natural gas drillers.

Financials were also in focus amid EU optimism that a deal on privately held Greek debt can be brokered soon and on a report of a call for relaxing global capital requirements. Bank of America (NYSE: BAC) jumped 2.55% to $7.25, posting the biggest percentage gain in the Dow Jones Industrial Average and the financial sector.

In tech land, Research In Motion (NASDAQ: RIMM), the maker of the Blackberry smartphone, plunged 8.5% to $15.56 despite the company announcing a top level management shake up, with both of its co founders and co CEOs resigning, while it named co COO Thorsten Heins as the new Chief Executive Officer.

Apple (NASDAQ: AAPL) climbed 1.69% to $427.41 after trading as low as $422.30 in trade that appear as consolidating ahead of its quarterly earnings report. Brigantine Advisors was the latest of brokerage houses to increase its target price to $500 from $450 ahead of the earnings report. Last week, RBC Capital bumped its target price to $525 from $500, citing their expectations of a first quarter beat and healthy guidance for the second quarter.

Elsewhere, weighing on the NASDAQ and the consumer discretionary sector was Netflix (NASDAQ: NFLX). The online video rental company tumbled more than 6% to the bottom of the S&P 500. Netflix announced that its Chief Marketing Officer would leave its role to assume a position at its board of directors. Northland Capital also added to the downward pressure after setting its target price at $50, while maintaining its Underperform rating. The firm cited margin compression and uncertainty regarding international growth.

On Tuesday, the market started lower amid weakness in Europe following the rejection of the Greek debt swap deal by euro zone finance ministers. The rejection of the debt swap deal raised worries that Greece was heading into a disorderly default, which coupled with a report speculating that Portugal might need a second bailout weighed on sentiment amid a busy earnings-reporting morning.

Most S&P 500 sectors closed in negative territory, with utilities, consumer staples and energy posting the biggest percentage declines, while consumer discretionary, industrials, and healthcare gained.

The energy sector was also lower as the European Union’s ban on Iranian oil imports and a lower global economic growth estimate from the International Monetary Fund combined to weigh on oil futures. ConocoPhillips (NYSE: COP), the third-largest U.S. oil company, closed slightly higher on the day ahead of its quarterly results.

Also in the sector and weighing on the space was Baker Hughes (NYSE: BHI), a stock that has been in a tailspin for several months, delivered a decent earnings report but still closed lower.

On the financial space, earnings disappointments weighed, as both Travelers (NYSE: TRV) and Zions Bancorporation (NASDAQ: ZION) fell after missing earnings expectations. Travelers tumbled 3.8%, posting the biggest decline in the Dow Jones Industrial Average after its earnings were below expectations. And Zions plunged to the bottom of the S&P 500, as shares closed lower by 7.55% to $17.15 after it missed earnings by $0.03 per share and the stock was downgraded to a Hold at Sifel Nicolaus.

Also in the sector, but moving to the upside was Bank of America (NYSE: BAC). BofA continued to outperform this start of the year, as shares gained 0.69% in the session, closing above calculated resistance at $7.29. The Charlotte, NC based bank gained 0.69% to $7.34 despite euro zone jitters and concern over a possible messy Greek default.

In the consumer discretionary space, McDonald’s (NYSE: MCD) fell 2.18% to $98.75 even after the world’s largest restaurant chain posted record profits. McDonald’s posted one of the biggest declines in the blue chip index despite it beat earnings estimates by $0.03 per share.

Also in the space, Coach (NYSE: COH), the leading American designer and maker of luxury lifestyle handbags and accessories, rallied 5.8% to $67.97 after better than expected results. The company said that it earned $1.18 per share, $0.03 better than consensus, on revenues that climbed 14.6% year over year to $1.45 billion versus consensus of $1.43 billion.

In the technology space, better than expected earnings from EMC Corp. (NYSE: EMC) and Western Digital (NYSE: WDC) helped the sector, with both stocks posting the biggest gains in the sector.

Meanwhile Apple (NASDAQ: AAPL) fell 1.64% to $420.41 ahead of its quarterly results. In after hours however, Apple surged more than 7%, trading at a new all-time high and becoming the world’s most valuable company after it posted results that crushed estimates, as the iPhone and iPad sales soared. Apple posted earnings of $13.87 per share, practically double the $6.43 per share it posted last year. Revenue surged 73% year over year to $46.3 million. The tech giant said it sold 37 million iPhones, 15.4 million iPads and 5.2 million Macs during the quarter, all record shipments.

Mid week, stocks jumped after the Fed said that it expects to keep interest rates low until at least late 2014, signaling the possibility of additional policy action if economic conditions deteriorate. The market started mixed, with modest weakness in the S&P 500 and Dow Jones, while the NASDAQ received a boost from the record-breaking results from Apple (NASDAQ: AAPL). Overseas markets were also mixed amid ongoing jitters in Europe over a possible messy Greek default. 

The moderate selling pressure eased, with stocks able to climb after the Federal Open Market Committee issued its latest Policy Statement. The afternoon advance eventually gained enough momentum to take the stock market to a new multi-month high.

The FOMC announced that it would keep the federal funds rate at 0.00% to 0.25%. It also stated that economic conditions are likely to warrant such exceptionally low rates through at least late 2014. The advance was temporarily interrupted when the Fed disclosed that it now expects GDP for 2012 to grow in a range of 2.2% to 2.7% this year, down from the range of 2.5% to 2.9% that it had stated previously. But Fed Chairman Bernanke acknowledged, though, that if inflation remains below target and employment remains slow there is a case for further policy action.

All of the S&P 500 select sectors closed higher, with utilities, materials, and energy posting the biggest gains, while financials and consumer discretionary closed with the smallest advances. Both energy and materials received some of the biggest bids after the Fed statement pressured the Dollar, lifting the commodities space and spurring a rally in Gold. Newmont Mining (NYSE: NEM), the largest gold producer, rallied 4.82% to $60.25, as the bullion rallied above $1700 an ounce.

Also in the space, DuPont (NYSE: DD) jumped 2.39% to $50.59, posting the second biggest percentage gain in the Dow Jones Industrial Average. Yesterday, the company beat earnings by $0.02 per share on revenues that were slightly below expectations.

In the energy sector, equities were mixed amid earnings news. But stocks with exposure to natural gas received another jolt after ConocoPhillips (NYSE: COP) following earnings that beat the Street said that it also plans to cut natural gas output amid slumping prices for that commodity. ConocoPhillips closed the session with a 0.9% loss, while shares of Chesapeake rallied close to 4% to $23.38.

Also in the earnings front, Hess (NYSE: HES) tumbled 5% after the company posted a fourth-quarter loss of $0.39 per share, versus a loss of $0.18 in the year ago period. Decreased production and the sale of an interest in a shuttered refinery plagued Hess’ fourth-quarter numbers.

In technology, it was all about Apple (NASDAQ: AAPL). Shares rallied 6.24% to $446.66 after posting a new all-time high of $454.45. Apple more than doubled the profit from a year ago, while increasing revenues by 73%. The company shipped record numbers of iPhones, iPads, and Macs. Numerous analysts raised their target prices to reflect new estimates and shipments. Apple also reported close to $98 billion in its cash balance, while becoming the most valuable company in the world. The mind-boggling cash hoard prompted speculation of a possible dividend or even an acquisition.

Also in the sector, Corning (NYSE: GLW) weighed on the sector and the broad market as shares plunged to the bottom of the S&P 500. The company Reported EPS and revenues in line but noted expectation of double digit price decline from last to this quarter. Shares closed with a decline of more than 10%.

Elsewhere, JC Penny (NYSE: JCP), the department store operator, fell 0.92% to $34.28 after the company unveiled its new strategy to transform its stores, as it will introduce a new pricing model and clearance deal that will prompt repeat customer visits. CEO Ron Johnson unveiled strategy on an event in New York, saying that the retailer will adopt a simple pricing model, which will permanently slash prices by 40%, while reducing the number of sales it holds. Mr. Johnson also discussed the retooling of the stores, by creating distinct retail spaces within its stores that will feature different brands.

On Thursday, the market started with gains, buoyed by solid earnings reports from Caterpillar (NYSE: CAT) and 3M (NYSE: MMM), while participants were still seeing upside momentum from the prior session rally that came following the Fed’s statement. Economic data was mixed with durable goods orders surpassing expectations and initial jobless claims climbing last week to 377,000.

The early advance put the broad market at its best level since summer, but without any real source of leadership, stocks fell to selling pressure that start building following data that showed that new homes sales in December unexpectedly fell. A retreat in the euro also coincided with the additional downward pressure in equities, with the market unable to hold to gains and closing in negative territory.

In the energy sector, crude oil received a lift from Iran concern, with the fuel closing at $99.70 per barrel, however the rally in natural gas that resulted after Chesapeake (NYSE: CHK) and ConocoPhillips (NYSE: COP) announced cuts in production amid soft prices was short lived, as the priced tumbled in the session following inventory data. Both Range Resources (NYSE: RRC) and Chesapeake Energy plunged more than 6% on the weak price action in the underlying commodity. Meanwhile, Murphy Oil (NYSE: MUR) was the top performer in the sector, as shares jumped 2% after its CEO in an interview said that the company was contemplating also the spinoff of its retail operations.

Financials were also under some pressure amid sharp weakness in some regional banks. SunTrust (NYSE: STI) tumbled 5.18% to $20.50 after it was downgraded to a Hold at Deutsche Bank. And Zions Bancorp (NASDAQ: ZION) continued its slide, tumbling 5.4% to $16.58.

Meanwhile in the sector, Bank of America (NYSE: BAC) slid 0.7% to $7.30 after trading above its calculated resistance and as high as $7.50. BofA moved to the upside earlier on reports that it was limiting its cash bonuses to its investment bankers and shifting them to stock. On the other hand, Citigroup (NYSE: C) gained 1.4% to $30.38. Yesterday, there were reports that the financial firm was considering e cuts in its securities and banking unit.

Industrials saw support from the performances of Caterpillar (NYSE: CAT) and 3M (NYSE: MMM). Both stocks closed at the top of the Dow Jones Industrial Average after better than expected quarterly results.

Also in the Dow, but tumbling to the bottom of the index was AT&T (NYSE: T). The stock lost 2.5% to $29.45 after it narrowly missed earnings expectations, as the iPhone sales impacted margins. The company posted better than expected revenues thanks to a jump in subscribers.

In tech land, the Technology SPDR ETF (NYSE:XLK) fell 0.74% to $26.90 after posting a new 10-year high at $27.19. Apple (NASDAQ: AAPL) pulled back from its prior session upside move. Apple fell 0.45% to $444.63 a day after posting a new all-time high of $454.54. FBR Capital joined the parade by bumping its target price to $525 from $500, citing the earnings results and the new product cycle for this year that includes an iPhone 5 and an iPad 3. 

And SanDisk (NASDAQ: SNDK) was hit hard, posting one of the biggest declines in the S&P 500 after the company posted mixed results.

Consumer discretionary stocks received support from a surge in Netflix (NASDAQ: NFLX) and JC Penny (NYSE: JCP). The sector SPDR ETF (NYSE: XLY) lost 0.12% to $41.49 after posting a new all-time high of $41.90.

Netflix surged to the top of the S&P 500, as shares rallied 22% to $116 after a better than expected report in both earnings and revenues and news that the company added new subscribers spurred a short squeeze that boosted the upside move.

Meanwhile JC Penny rallied 18.8% to $40.72 after posting a new 52-week high of $41.24. The move in the shares came after it gave a full year earnings forecast which came in better than Wall Street expectations.

At the end of the week, stocks struggled in the session, with the major benchmark indices ending mixed after GDP data in the U.S. disappointed investors. Ongoing jitters in the euro zone weighed as well. The NASDAQ was able to outperform in the session, capping its forth-consecutive weekly gain.

The market started under pressure after the first reading of fourth quarter GDP disappointed investors, which have been expecting a number with a 3 handle. The economy however still grew at a pace of 2.8%; however factoring the inflation, real GDP increased 1.7%. Overseas trade turned lower following the data, which came amid a new earnings parade from Chevron (NYSE: CVX), Procter & Gamble (NYSE: PG), and Ford (NYSE: F).

The Utilities SPDR ETF (NYSE: XLU) fell more than 1%, posting the biggest declines with American Electric Power (NYSE: AEP) tumbling more than3% to $39.95 after it posted inline earnings on better than expected revenues; the stock was downgraded to a Hold from Buy at Deutsche Bank. The Utilities sector was the best performer last year, and it now has dragged in January, losing 3.5% sp far.

In the earnings front, Chevron (NYSE: CVX) led the declines in the Dow Jones Industrial Average and weighed on the energy sector after the company’s fourth-quarter results missed Wall Street estimates thanks to losses in the company’s downstream operations.

Also in the sector, but helping limit the gains, Halliburton (NYSE: HAL) gained more than 2.6% on news that a U.S. federal judge ruled BP (NYSE: BP) would have to indemnify Transocean (NYSE: RIG) for third-party claims related to the 2010 Gulf of Mexico oil spill.

In the consumer staples sector, Procter & Gamble (NYSE: PG) was weaker. The global consumer products company slid 0.77% after it issued third quarter EPS and fiscal 2012 EPS guidance below consensus. Procter actually beat earnings expectations by $0.02 per share on revenues that climbed 3.7% year over year to $22.4 billion.

Technology on the other hand was unchanged but it helped the tech heavy NASDAQ outperform the broad market, with the benchmark index, actually ending with gains for the session. First Solar (NASDAQ: FSLR) surged to the top of the S&P 500, as shares rallied more than 11% to $45.54 after the German government could not reach an agreement on cuts to the country’s solar energy subsidy program.

Apple (NASDAQ: AAPL) was able to also muster a gain in the session, with shares adding 0.6% to $447.28. Main smartphone rival Samsung Electronics posted record profits, as the Korean electronics giant also benefited from strong sales in smartphones during the holiday quarter. According to the latest data, Apple was able to toppled Samsung as the top smartphone maker in the world in the fourth quarter, however for the total 2011 year. The Korean company outsold Apple with 97.4 million smartphones versus 93 million iPhones.

Weighing on the performance of the sector were shares of Juniper Networks (NASDAQ: JNPR), which tumbled 3% after it provided a weak outlook. The company did beat the Street by a $0.01 per share on revenues that climbed 5.7% year over year. Also weighing on the networking space, were shares of Riverbed Technology (NASDAQ: RVBD). The company disappointed investors by providing downside guidance for the current quarter. Riverbed shares plunged 18% to $24.45.

The weakness in the space weighed on rival and Dow component Cisco (NASDAQ: CSCO). The networking giant fell more than 1%, posting the second biggest decline in the blue chip index.

Materials received a lift after Eastman Chemical (NYSE: EMN) surged to the top of the sector, with shares rallying 7% to $50.41 on news that it agreed to purchase Solutia (NYSE: SOA) in a deal worth $3.38 billion. The company that had sold its PET business last year was looking to expand its presence in other markets and in Asia Pacific. Shares of Solutia surged 41% to $27.52.

Elsewhere, Ford (NYSE: F) tumbled more than 4% in the session after an earnings miss; however shares were able to bounce back from below the $12 level mark to close at $12.21. The automaker results were pressured from overseas markets and rising commodity costs.

And according to the Wall Street Journal, Facebook would likely file for an IPO as early as Wednesday next week, with Morgan Stanley taking the lead role as underwriter. The highly anticipated IPO is expected to yield a valuation for Facebook of $75 to $100 billion, which could be one of the biggest IPOs in the U.S. Shares of Morgan Stanley (NYSE: MS) jumped 2.26% to $18.56 on the news.