Stocks Receive Boost from Global Data

Published on Wednesday, 01 February 2012 18:23 Written by Christopher Lynn

New York, February 1^st (TradersHuddle.com) – Stocks started February with a bang, as all of the S&P sectors closed with gains. Participants appetite for riskier assets received a boost after improved manufacturing data points around the world, helped eased concerns over the global economy. Optimism in the euro zone that Greece should be able to wrap up a deal on a debt swap plan with its private creditors also boosted sentiment.

The Dow Jones Industrial Average gained 83.55 points, or 0.66%. The S&P 500 index climbed 11.68 points, or 0.89%, while the NASDAQ jumped 34.43 points, or 1.22%.

The market started with strong gains, after stocks posted the best January performance in 15 years. Better than expected manufacturing data points around the world spurred a risk on trade, which saw little impact from the weaker than expected private employment report from payroll firm ADP. According to the report, private employers added 170,000 jobs versus consensus of 200,000.

In Europe, equity markets saw sharp gains, starting strongly the new month, hitting a six-month high. Expectations of that a Greece will reach an agreement this week with its private bondholders helped banking stocks, while miners and other cyclical stocks also moved higher after a report showed manufacturing in China expanded, easing concern over the extent of the slowdown in the world’s second largest economy.

Trading became choppier after the ISM Manufacturing Index was a little worse than expected, but still showing an improvement, meanwhile construction spending jumped 1.5% in December. The highs of the session were hit in morning hours, with the S&P hitting the 1330 level before drifting lower in afternoon trading.

Financials, industrials, technology, and materials posted the biggest gains, while consumer discretionary and utilities logged the smallest advances. The Financial Select SPDR ETF (NYSE: XLF) jumped 1.6% to $14.28 after being higher by 2% earlier in the session.

American International Group (NYSE: AIG), the insurer, rallied close to 6% to $26.6, posting the biggest percentage gain in the sector, as shares surged past its 200day moving average. Morgan Stanley (NYSE: MS) was another outperformer in the sector. Shares rallied 3.97% to $19.39 amid the broad rally in the financial shares on optimism over the global economy and as jitters in Europe eased. Morgan Stanley was also in focus amid the filing of the Facebook IPO, in which the bank is expected to take a leading role.

Other banks also posted sharp gains. Bank of America (NYSE: BAC) rallied 3.2% to $7.36, posting the biggest gain in the Dow Jones Industrial Average. Yesterday Guggenheim raised its target price on the stock to $9 from $6.50. The Charlotte, NC based bank plans to sell and lease back three buildings it owns in New York and Charlotte, North Carolina, as it looks to shed non-core assets under an efficiency program The properties are the Fifth Third Center and the Hearst Tower in Charlotte, and 222 Broadway in lower Manhattan, which BofA inherited in the acquisition of Merrill Lynch.

Meanwhile, Citigroup (NYSE: C) climbed 2.86% to $31.60 after it was upgraded to Outperform from Market Perform at Wells Fargo.

In the energy sector, crude oil slumped after bearish inventory data. The fuel closed below $98 per barrel. Marathon Petroleum (NYSE: MPC) was the top performer, with shares surging 9% to the second spot in the broad market gains. The company said revenues jumped 11.3% year over year to $19.44 billion, while its board of directors authorized a $2 billion stock repurchase program. Marathon Petroleum also said that it was exploring strategic opportunities to minimize taxes on its mid stream assets.

Technology helped the NASDAQ to outperform once again. Broadcom (NASDAQ: BRCM) was a top performer, with shares rallying 8% to $37.13 after the company beat earnings by $0.03 per share and increased its quarterly dividend by 11% to $0.10 per share.

Also providing upside to the NASDAQ. Seagate Technology (NASDAQ: STX) surged 20.8% to $25.53 after posting a new 52-week high of $26.15. Seagate beat on the top and bottom lines and issued encouraging guidance on the conference call. The stock was upgraded to a Buy at Stifel Nicolaus

Meanwhile, Apple (NASDAQ: AAPL) underperformed despite hitting a new all-time high of $458.99. Shares of Apple slid 0.06% to $456.19, likely as its rival Amazon got clobbered after a weak quarter and gloomy outlook.

Amazon (NASDAQ: AMZN) tumbled 7.7% to $179.46 to post the biggest decline in the consumer discretionary sector and in the broad S&P 500 index. Amazon traded as low as $172, testing support in the $170 area after it disappointed investors with a revenue miss. The online retailer also reported record sales of its Kindle family of products, but still provided a weak outlook, as the firm continues to spend heavily in infrastructure and development.

On the flip side, Whirlpool (NYSE: WHR) surged to the top of the broad market index. Shares of Whirlpool rallied more than 13% after it reported earnings that beat expectations.