Stocks Received a Boost from Tech; Apple Jumps

Published on Monday, 22 October 2012 17:26 Written by Christopher Lynn

New York, October 22^nd (TradersHuddle.com) – Stocks edged higher for the day after erasing losses late in the day thanks to a Tech led recovery. Participants were able to shake off another batch of mixed earnings results and stage a slight rebound from the worst single-session drop since June.

The Dow Jones Industrial Average added 2.38 points, or 0.02%. The S&P 500 index climbed less than 1 point, or 0.04%, while the NASDAQ gained 11.34 points, or 0.38%.

The market started the session with small losses after Japan’s trade data showed the lowest level of exports to the U.S. and China in nine months and after another batch of lackluster earnings reports. In Spain, regional elections yielded positive results for the ruling party, while German publication Der Spiegel suggested Germany is getting a program ready from Greece to repurchase its own bonds.

Stocks remained under pressure for most of the session, but a tech led recovery late in the session helped pushed the major benchmark indices into positive ground. Among the S&P 500 sectors, it was a mixed bag, with technology, materials, healthcare, and consumer staples gaining for the day, while energy, and consumer discretionary logged the worst performances.

Technology led the gains in the session with a 0.6% jump in the day. Apple (NASDAQ: AAPL) was the best performer in the space, with a 4% jump, rebounding from Friday’s decline ahead of the event in which it will unveil the new iPad mini. According to some reports the device will be marketed at around $329 in the U.S. Apple also received support from analysts, as Goldman Sachs reiterated its Buy rating and $810 target, while Topeka Capital raised its estimates on the tech giant.

Other top performers in the space were the hard disk makers, with Seagate Technologies (NASDAQ: STX) jumping 1.45% and Western Digital (NASDAQ: WDC) climbing 1.15% ahead of Western’s quarterly results. In after hours, Western Digital was jumping more than 5% following results that topped expectations on both the top and bottom lines. Rival Seagate was gaining 2.26%.

On the flip side in the sector, Microsoft (NASDAQ: MSFT) tumbled more than 2% to post the biggest decline in the Dow Jones Industrial Average. Microsoft reported lackluster earnings last week and is scheduled to release its long awaited Windows 8 later this week.

In the materials sector, steelmakers saw a boost despite the higher Dollar after coal maker Peabody Energy (NYSE: BTU) reported earnings results that topped expectations, while raising the lower-end of its sales forecast for the full year and issuing a profit outlook for the year that was above consensus. Peabody led the energy sector and the S&P 500, as shares surged nearly 12%.

United States Steel (NYSE: X) gained 3.5% on the back of speculation over improved demand and signs that the slowdown in China was turning the corner.

Also in the sector, Freeport McMoRan (NYSE: FCX) fell 1.46% to $40.58 despite beating earnings and revenue expectations. Freeport beat by $0.13 per share, but revenue fell 15% from a year ago to $4.42 billion versus consensus of $4.35 billion.

Among other notable earnings reports, Caterpillar (NYSE: CAT), a bellwether for the global economy, gained 1.45% to $85.08 after it recovered from earlier losses. The world’s largest earthmoving equipment maker reported earnings that topped consensus, but its revenue fell shy of expectations. Caterpillar also cut its full-year guidance. Its CEO said that it was more difficult to forecast the short-term, maintaining that he is still very bullish long-term.

In the consumer discretionary space, Netflix (NASDAQ: NFLX) jumped more than 4% to post the biggest gain in the sector ahead of its third quarter results due out tomorrow after the close. The stock received a boost from Citigroup reiterating its Buy rating and target price of $120. The firm cited increased user satisfaction levels and increasing lead on unique visitors each quarter.

On the flip side, VF Corp (NYSE: VFC) slumped to the bottom of the sector, with shares losing 4.4% on the day after reporting revenue that was below consensus. The company beat earnings expectations and raised its full year guidance above consensus and its quarterly dividend to $0.87 per share from $0.72.

Elsewhere, Hasbro (NYSE: HAS) fell 1.5% after posting mixed quarterly results. The toymaker beat earnings expectations but sales fell short of consensus, dragged by a drop in revenue at its boys and pre-school product lines.