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Stock Market News for January 16, 2013

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The Dow Jones and S&P 500 finished in the green on Tuesday following better-than-expected retail sales numbers which negated concerns about raising the debt ceiling. But shares of technology bellwether Apple once again pushed the Nasdaq lower. Meanwhile, the New York Empire State Index declined in January for the sixth consecutive month. The consumer discretionary sector enjoyed a decent gain following positive retail sales data and was the major gainer among the S&P 500 industry groups whereas technology once gain emerged as the biggest loser.

The Dow Jones Industrial Average (DJI) gained 0.2% to close the day at 13,534.89. The Standard & Poor 500 (S&P 500) added 0.1% to finish yesterday’s trading session at 1,472.34. The tech-laden Nasdaq Composite Index dropped 0.2% to end at 3,110.78.The fear-gauge CBOE Volatility Index (VIX) gained 0.2% to settle at 13.55. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.8 billion shares, significantly lower than 2012’s daily average of 6.45 billion shares. Advancing stocks outpaced decliners on the NYSE; as for 55% stocks that rose, 41% moved lower.

Investor concerns about the debt ceiling and earnings pushed benchmarks into negative territory during the morning trading session. But an encouraging report from the retail sector pushed the S&P 500 and the blue-chip index higher in the late afternoon. Apple Inc. (NASDAQ:AAPL) continued to decline following Monday’s reports that demand for the company’s products has declined and dragged the Nasdaq lower for the second consecutive day.

Meanwhile, the U.S. Census Bureau revealed that retail sales surged in December. According to the report, advance monthly sales for retail and food services increased 0.5% to $415.7 billion in December from the previous month. This was above consensus estimates of an increase of 0.2%. Retail trade sales added 0.4% from the previous month and 4.4% from the comparable period last year. Better-than-expected retail sales was primarily driven by gains in sales of auto, furniture and clothing.

Following the report, the consumer discretionary sector had a good run and the Consumer Discretionary SPDR (XLY) gained 0.7%. Stocks such as J.C. Penney Company, Inc. (NYSE:JCP), American Eagle Outfitters (NYSE:AEO), Dillard's, Inc. (NYSE:DDS), Dollar Tree, Inc. (NASDAQ:DLTR) and The Gap Inc. (NYSE:GPS) jumped 3.4%, 4.8%, 2.8%, 1.5% and 3.4%, respectively.

Treasury Secretary Timothy Geithner informed Congress leaders that the U.S. government will exhaust its borrowing limits between mid- February and the beginning of the March. He also said if Congress fails to raise the debt ceiling by the beginning of March then this could “impose severe economic hardship.”

President Barack Obama said he is unwilling to bargain with Congress on the issue on Monday. He also said: “If congressional Republicans refuse to pay America’s bills on time, Social Security checks and veterans’ benefits will be delayed.” “We might not be able to pay our troops, or honor our contracts with small business owners. Food inspectors, air traffic controllers, specialists who track down loose nuclear material wouldn’t get their paychecks.”

Separately, the Federal Reserve Bank of New York reported that manufacturing activity declined in January. According to the report, the general business conditions index declined for the sixth consecutive month and was at -7.8. This is contrary to consensus estimates of 2.25. The new order index declined to -7.2 whereas shipment index fell to -3.1.

The technology sector emerged as the biggest loser for the second consecutive day and the Technology SPDR (XLK) slipped 0.7%. The sector was largely affected by fall in Apple’s share price. Apple has lost nearly 7% in the previous three trading session. Stocks such as Intel Corporation (NASDAQ:INTC), Hewlett-Packard Company (NYSE:HPQ), Super Micro Computer, Inc. (NASDAQ:SMCI), IAC/InterActiveCorp (NASDAQ:IACI) and Oracle Corporation (NASDAQ:ORCL) lost 0.5%, 2.5%, 1.4%, 1.7% and 0.7%, respectively.

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