Stock Market News for October 17, 2012

Better-than expected quarterly results combined with a couple of positive domestic reports guided the benchmarks into the green yesterday. Encouraging quarterly results buoyed hopes about a favorable third-quarter earnings season. The bullish sentiment helped the Dow post its biggest gain since September 13. Separately, the U.S. government released data on the consumer price index and industrial production.

The Dow Jones Industrial Average (DJI) rose 1.0% to close the day at 13,551.78. The Standard & Poor 500 (S&P 500) climbed 1.0% to finish yesterday’s trading session at 1,454.92. The tech-laden Nasdaq Composite Index surged 1.2% to end at 3,101.17. The fear-gauge CBOE Volatility Index (VIX) lost 0.3% to settle at 15.22. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.2 billion shares, slightly lower than the year-on-year daily average of 6.51 billion shares. Advancing stocks outran the declining stocks on the NYSE by a ratio 3 to 1.

Benchmarks rallied throughout the day and enjoyed back-to-back gains. Following yesterday’s gains, the S&P 500 registered its best two day advance in a month. While the market sentiment had been on the cautious side before the start of this earnings season, so far we have witnessed some encouraging results from market bellwethers.

Among the encouraging results released yesterday, Johnson & Johnson (NYSE:JNJ) came out with strong third quarter results, boosted by higher revenues. The company’s shares surged 1.4% after posting better-than-expected quarterly results. Johnson & Johnson also increased its full-year profit outlook. The strong results also helped the healthcare sector add gains and the Health Care SPDR surged 1.1%. Stocks such as Watson Pharmaceuticals, Inc. (NYSE:WPI), Mylan Inc. (NASDAQ:MYL), Amgen, Inc. (NASDAQ:AMGN) and Pfizer Inc (NYSE:PFE) rose 2.5%, 0.3%, 2.1% and 0.9%, respectively.

Meanwhile, financial bellwether Goldman Sachs Group, Inc. (NYSE:GS) also reported its quarterly results that surpassed analysts’ estimates. The company also announced an 8.7% increase in its dividend. However, equity trading revenues dropped 16.0% from the prior year. Despite the record revenues, the company’s shares dipped 1% yesterday. So far, earnings from financial bellwethers like JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Company (NYSE:WFC) and Citigroup Inc. (NYSE:C) have been decent enough. Early this week, Citigroup reported strong third-quarter numbers and its shares jumped 5.5% on Monday. However, Vikram Pandit, the chief executive officer of Citigroup, yesterday announced that he is stepping down from his position.

Following back-to-back encouraging results from financial bellwethers, the financial sector had a good run yesterday. Stock such as Citigroup, JPM, Morgan Stanley (NYSE:MS) and Bank of America Corp (NYSE:BAC) climbed 1.6%, 1.1%, 0.7% and 0.2%, respectively.

Coming to domestic news, the U.S. government released its latest industrial production data, which revealed that industrial production has increased by 0.4% in the month of September, beating consensus estimates of 0.2%. However, industrial production for the third-quarter decreased at an annual rate of 0.4%. The production of consumer goods remained unchanged, but manufacturing output rose 0.2% in September, while it declined 0.9% in the third quarter.

Separately, the U.S. Bureau of Labor Statistics released consumer price index data, which revealed that CPI has increased by 0.6% in September on a seasonally adjusted basis, beating consensus estimates of 0.5%. The gasoline index rose 0.7% in September after increasing 0.9% in August. This was the primary reason behind the increase in CPI. Excluding food and energy prices, core CPI increased 0.1%, lower than the consensus estimate of 0.2%.

Coming to the sectors, the Energy Select Sector SPDR surged 1.6% after the American Petroleum Institute (API) reported a better-than-expected rise in oil supply. According to the API report, crude oil supply rose 3.7 million barrels for the week ended October 12. This provided a boost to energy stocks. Stocks such as Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), TOTAL S.A. (NYSE:TOT), BP plc (NYSE:BP) and Marathon Oil Corporation (NYSE:MRO) rose 1.0%, 1.1%, 2.7%, 1.8% and 2.6%, respectively.