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Stock Market News for January 29, 2013

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Discouraging home sales data overshadowed better-than-expected reports on durable orders, dragging the S&P 500 and the Dow Jones into negative territory on Monday. But gains in the shares of technology bellwether Apple lifted the Nasdaq higher. Homebuilding stocks took a hit following discouraging reports on the housing sector. The technology sector emerged as the major gainer among the S&P 500 industry groups.     

The Dow Jones Industrial Average (DJI) lost 0.1% to close the day at 13,881.93. The Standard & Poor 500 (S&P 500) slipped 0.2% to finish yesterday’s trading session at 1,500.18. The tech-laden Nasdaq Composite Index inched up 0.2% to end at 3,154.30. The fear-gauge CBOE Volatility Index (VIX) plunged 5.3% to settle at 13.57. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.1 billion shares, lower than 2012’s daily average of 6.45 billion shares. Declining stocks outnumbered advancers on the NYSE; as for 56% stocks that fell, 41% moved higher.

The Street began yesterday’s trading session on a positive note boosted by encouraging reports from the manufacturing sector. But stocks declined after a report on the housing sector showed that pending home sales declined in December. In the previous week, encouraging economic reports and earnings from major companies pushed the S&P 500 above 1,500 for the first time in more than five years.

Meanwhile, the U.S. Department of Commerce reported that orders for manufactured durable goods jumped 4.6% to touch $230.7 billion in December. This was well above the consensus estimate and also flew past the Street’s estimates. New orders have now gained for the seventh time out of the last eight months.

On a less encouraging note, the National Association of Realtors (NAR) said that pending home sales fell in December.  According to the report, pending home sales declined 4.3% to 101.7 in December from the November figure of 106.3. But year-on-year pending home sales have increased 6.9%. According to NAR chief economist Lawrence Yun, “The supply limitation appears to be the main factor holding back contract signings in the past month. Still, contract activity has risen for 20 straight months on a year-over-year basis.”

Shares of Caterpillar Inc. (NYSE:CAT) rose 2.0% after the company reported its quarterly results. The company’s shares gained even after the quarterly profit plunged 55%. The company cautioned that the growth rate will decline in the present quarter but eventually improve in the later part of the year. To date, fourth-quarter earnings have been better-than-expected. According to data from Thomson Reuters, of the 150 companies in the S&P 500 having posted earnings results, so far 67.3% have surpassed the Street’s estimates.

Housing stocks had a bad run after the housing sector received two back-to-back discouraging news. In the previous week the U.S. Census Bureau and the Department of Housing and Urban Development reported that new home sales declined in December followed by this week’s NAR data of a fall in pending home sales in December. Stocks such as The Home Depot Inc. (NYSE:HD), Lowe's Companies Inc. (NYSE:LOW), D.R. Horton, Inc. (NYSE:DHI) PulteGroup Inc. (NYSE:PHM) and KB Home (NYSE:KBH) lost 0.4%, 0.6%, 2.1%, 3.3% and 1.8%, respectively.

The technology sector emerged as the major winner among the S&P 500 industry groups and the Technology SPDR (XLK) gained 0.4%. Stocks such as Apple Inc. (NASDAQ:AAPL), Hewlett-Packard Company (NYSE:HPQ), Microsoft Corporation (NASDAQ:MSFT), Silicon Graphics International Corp (NASDAQ:SGI) and Super Micro Computer Inc. (NASDAQ:SMCI) added 2.3%, 0.2%, 0.1%, 0.8% and 1.4%, respectively.

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