Stocks Little Change Ahead of Jobs Report

Published on Thursday, 02 February 2012 19:57 Written by Christopher Lynn

New York, February 2^nd  (TradersHuddle.com) – Stocks closed little change in a lackluster session, in which slightly better than expected economic data was not enough to spark a broad upside move amid Ben Bernanke testimony and a flurry of earnings reports ahead of the key January employment report.

The Dow Jones Industrial Average fell 11.05 points, or 0.09%. The S&P 500 index added 1.45 points, or 0.11%, while the NASDAQ gained 11.41 points, or 0.40%.

The market started near the unchanged line amid a flurry of earnings reports and a mixed overseas session. Slightly better than expected economic data failed to spark a broad move, as participants kept their focus on Greece and were trading cautiously ahead of the Non-Farm Payrolls report. National chain retailers posted their January same-store sales figures, which showed a mixed picture.

On the economic front, weekly jobless claims fell to 367,000 versus the 375,000 figure that was widely expected. Productivity was inline with expectations, while labor unit costs were higher than consensus.

In Europe, equity markets gained amid the improved economic data in the U.S., which in turn lifted optimism in the market. Another round of successful debt auctions in the euro zone also increased confidence that highly indebted countries should be able to raise enough funds to refinance.

And Federal Reserve Chairman Ben Bernanke was at Capitol Hill providing testimony. The Fed Chief said that rising federal budget deficits are posing a significant threat to the U.S. economy and are likely to cause a crisis if not brought under control. Last week, the central bank set its inflation target of 2% and signaled that it will keep interest rates near zero until late 2014.

It was a mixed bag in the S&P 500. Energy, financials, and consumer staples posted the biggest gains, while materials, healthcare, utilities, and consumer discretionary fell.

The Energy SPDR ETF (NYSE: XLE) gained 0.8% in the session, as a rally in coal stocks and stocks with heavy natural gas exposure outweighed underperformance resulting from a drop in crude oil prices.

Despite the improved labor market and manufacturing picture crude oil fell below $97 per barrel for the first time in 6 weeks. Meanwhile, natural gas prices gained 2.4% after showing increased volatility following inventory data that showed a larger draw on stockpiles than expected.

Alpha Natural Resources (NYSE: ANR) surged to the top of the sector, leading other coal stocks in the space. The stock jumped 7.55% to $21.64 closing below its calculated resistance at $21.75.

Chesapeake Energy (NYSE: CHK) was also among the outperformers, with shares rallying 5.48% to $22.12 on the higher prices for natural gas. The stock was downgraded to Underperform at JPMorgan last week. And National Oilwell Varco (NYSE: NOV) jumped more than 3% after reporting solid earnings that beat expectations.

Financials once again were in favor, with Bank of America gaining 1.2% to $7.45, posting the second biggest percentage gain in the Dow Jones Industrial Average. The company’s Merrill unit landed an underwriter role in the Facebook IPO, while there were reports that it was planning to sell several buildings in New York and Charlotte, as it continues to shed non-core assets. BofA closed below its calculated resistance at $7.50.

Rival JPMorgan (NYSE: JPM) slid 0.13% to $37.55 despite wowing the Street after landing the number 2 spot in the Facebook IPO, ahead of Goldman Sachs (NYSE: GS). Morgan Stanley (NYSE: MS) climbed 0.67% to $19.39, as the stock continued to benefit from the exposure of being the leader in the Facebook offering.

Material stocks were actually under some pressure, despite metal prices moving higher. Alcoa (NYSE: AA) did benefit from the higher prices in the metals complex, as the stock jumped more than 2% to post the biggest percentage gain in the blue chip index. However Dow Chemical (NYSE: DOW) weighed on the sector, with shares falling 1.2% to $33.54 after the company missed earnings expectations. Dow said that headwinds from Europe and input costs, particularly ethane, weighed on results during the quarter.

Consumer discretionary stocks were weighed down my mixed retail sales data. Gap (NYSE: GPS), the owner and operator of specialty retailers like Banana Republic and Old Navy, surged 10% to $21.52, posting the biggest gain in the S&P 500, after the company reported that January same-store sales fell less than expected. The retailer said January comps fell 4.1% versus a drop of more 5% that was widely expected.

Also posting sharp gains was Macy’s (NYSE: M), the department store operator, rallied more than 3% despite its January comps were less than expected. However the company raised its earnings forecast for the current quarter. Other retailers posting better January comps than expected were Costco (NASDAQ: COST), Target (NYSE: TGT), and Limited Brands (NYSE: LTD).

On the flipside, weighing on the sector were Abercrombie & Fitch (NYSE: ANF) and Ann (NYSE: ANN). A&F plunged 13.73% to $40.40 after posting a new 52-week low of $40.31. The specialty retailer issued downside guidance for the current year well below consensus after disappointing performance in the holiday season. Meanwhile, Ann tumbled 6.7% to $22.91 after the company said that it now sees earnings below consensus, as weak sales and heavy discounting impacted results.

In the technology sector, MasterCard (NYSE: MA) rallied 6.7% to $381.57, posting the biggest gain in the space with stock trading very close to its all-time high of $384.99. The company’s earnings topped expectations. MasterCard EPS beat by $0.10 consensus, while revenues jumped 20% year over year to $1.73 billion.

And Apple (NASDAQ: AAPL) fell 0.23% to $455.12 amid reports that the tech giant will unveil its new iPhone 5 in June or July timeframe. comScore also reported December mobile market share. According to data, Android and Apple’s share continued to gain at the expense of Research In Motion. Samsung was the top equipment maker with 25.3% share, followed by LG with 20%, and Motorola Mobility with 13.3%. Apple continued to gain share as equipment maker, with 12.4%, while RIM ended with a 6.7% share.