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Stock Market News for January 21, 2013

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Heartening results from corporate majors and positive developments in debt-limit negotiations boosted investor confidence on Friday. The S&P 500 and Dow Jones both finished in the green for the second consecutive day. Intel’s quarterly results came in below the Street’s estimates and dragged the Nasdaq lower. Robust data on housing and labor helped benchmarks finish in the green for the third consecutive week. The technology sector was the only loser among the S&P 500 industry groups whereas the energy sector emerged as the biggest gainer.

The Dow Jones Industrial Average (DJI) gained 1.2% to close the day at 13,649.70. The Standard & Poor 500 (S&P 500) gained 1% to finish Friday’s trading session at 1,485.98. The tech-laden Nasdaq Composite Index declined 0.1% to end at 3134.71.The fear-gauge CBOE Volatility Index (VIX) dropped 8.2% to settle at 12.46. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.6 billion shares, marginally higher than 2012’s daily average of 6.42 billion shares. Advancing stocks outpaced decliners on the NYSE; as for 62% stocks that rose, 34% moved lower.

The blue-chip index gained 1.2%, S&P 500 added 1.0% and Nasdaq surged 0.3% over the week. During the previous week, encouraging domestic reports and better-than-expected results from major financial companies pushed the indices higher. Initial claims dropped to their lowest level in five years. On the other hand, housing starts also touched a new high, the previous highest level having been achieved in June 2008.

Shares of the world’s biggest brokerage firm, Morgan Stanley (NYSE:MS) surged about 8% on Friday. Earnings from the brokerage line-of-business, more than doubled in the fourth quarter as more companies hired Morgan Stanley to help raise capital and assist with mergers. On the other hand JPMorgan Chase & Co. (NYSE:JPM) and Goldman Sachs Group, Inc. (NYSE:GS) reported their earnings in the previous week which came in above the Street’s estimates and improved investor expectations about the financial sector’s results.

Positive developments in the discussion on debt-limits fueled a jump in investor confidence. Speaker John Boehner said House Republicans will seek to raise the US borrowing limit by three-months so that they can pressurize a Senate dominated by Democrats to pass a budget. This is a major change from the earlier Republican stance which entailed that increase in debt levels would have to matched by budgetary cuts of equal size.

Shares of General Electric Company (NYSE:GE) surged 4.3% on account of strong results. The company has an order back-log of $210 billion primarily due to the aviation and health-care divisions. Energy, industrial and consumer companies gained following GE results.

Shares of Intel Corporation (NASDAQ:INTC) decreased 6.3% due to low sales for the second quarter. The company’s quarterly results came in below the Street’s estimates. This dragged technology stocks lower and the sector was the only loser among the S&P 500 industry groups. Apart from Intel, shares of Advanced Micro Devices, Inc. (NYSE:AMD), Applied Micro Circuits Corporation (NASDAQ:AMCC), Atmel Corporation (NASDAQ:ATML), and NVIDIA Corporation (NASDAQ:NVDA) decreased 10.2%, 1.5%, 1.9% and 0.7% respectively.

The energy sector had a good run yesterday and the Energy Select Sector SPDR (XLE) gained 1.0%. Stocks such as Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), Hess Corp. (NYSE:HES), and Royal Dutch Shell plc (NYSE:RDS.A) rose 0.7%, 0.4%, 0.6%, and 0.1% respectively.

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