Markets Higher, Closing News 1/9/12

Markets closed slightly higher as investors seemed to hold their breaths in advance of the beginning of the past quarter’s earnings period which officially launched with Alcoa’s earnings announcement. There is a growing feeling that the U.S. markets are trying to diverge from the European debt issues, but there is much riding on this earnings season and actual developments in Europe.

Germany and France warned Greece on Monday it will get no more bailout funds until it agrees with creditor banks on a bond swap and pressed for an early deal to avert a potential default. German Chancellor, Angela Merkel and French President, NSarkozy both voiced their determination to move ahead with a tax on financial transactions opposed by Britain, but they appeared to divided on the timing. Merkel said all 27 EU finance ministers should report in March on a new EU treaty;  she believes that the 17-nation euro zone should move ahead if other countries continued to block an EU decision, but she acknowledged that she did not have full agreement on this within her centre-right coalition government.

U.S. consumer borrowing rose by the most in a decade during November, surging 10% due in large part to holiday spending with credit cards. The level of consumer credit outstanding increased by $20.37 billion to $2.478 trillion, the Federal Reserve said Monday. Economists surveyed by Dow Jones Newswires had forecast an $8.0 billion increase.

Bill Daley has resigned as President Obama’s Chief of Staff after only a year on the job.  White House budget director, Jack Lew will be replacing Mr. Daley.

Market Indices/Statistics:

  • Dow closed up 32.77 pts/+0.27% to 12,392.69
  • S&P closed up 2.89 pts/+0.23% to 1,2780.70
  • Nasdaq closed up 2.34 pts/+0.09% to 2,676.56
  • 21 of the 30 Dow stocks closed higher
  • 7 of the 10 S&P 500 sectors closed up
  • Industrials was the most positive sector (+0.75%);  IT were the biggest laggards (-0.26%)
  • The VIX was up 0.44 to 21.07
  • Oil is down $0.16 to $101.40
  • Nat Gas is down $0.047 to $3.051
  • Gold is down $6.50 to $1,610.30
  • Euro vs. Dollar up $0.0078 to $1.2767
  • Dollar vs. Yen down $0.04 to $76.83

Companies in the News:

GameStop Corp. (-$0.88/-3.5% to $23.99) again lowered its same-store sales view to a loss of 1-2% for the year as a steep decline in new hardware sales pressured results over the holiday period.

Shares in Brocade Communications, a maker of switches and software used to connect corporate servers and data-storage systems, are up $0.28/+5.2% to $5.77 on reports that the company has hired a consultant to pursue offers from potential buyers of the company.

Inhibitex Inc. closed up $13.80/+139.8% to $23.70 on the news that Bristol-Myers Squibb (-$0.31/-0.9% to $33.91) has offered $26.00 per share for the company in an all-cash tender offer, valuing the company at $2.5 billion.

Netflix continues its positive momentum as the biggest gainer in the S&P for the year.  NFLX shares are up $12.37/+14% (40% on the year) to $98.18. Aside from launching its internet subscription service in the U.K. and Ireland, directly competing against Amazon’s Lovefilm, pundits are saying it was oversold in 2011 and/or it is ripe for a takeover offer.  AMZN is down $4.01/-2.2% to $178.56.

CareFusion Corp. (-$2.20/-8.6% to $23.28) estimated that its fiscal Q2 results will fall short of analyst forecasts, saying that sales of its core procedural products were softer-than-anticipated through the quarter and that margins were under pressure. For the quarter ended Dec. 31, the company estimated earnings of $0.41 to $0.45 a share on revenue between $910 million and $915 million. Analysts were expecting a per-share profit of $0.46 cents on $923 million in revenue. The company was also downgraded by William Blair.  Complete Q2 results are scheduled for release on Feb. 2.

Apple Inc. hit an all time intraday high of $427.75 since its 1980 IPO after Goldman Sachs raised its price target to $550 from $520.  AAPL did retreat off the high to close at $421.73 down $0.79/-0.2%.

Earnings:

Alcoa Inc. traded up during the day, closing +$0.27/+2.9% to $9.43, ahead of its Q4 earnings report which was a loss of $0.03 ex items due to restructuring charges associated with the closure and curtailment of high-cost production capacity, lower aluminum prices, and continued market weakness.  Revenue was $5.99 billion vs. estimates of $5.7 billion. The company had pre-announced that it would be taking a charge and cutting back its smelting capacity by 12%, so today’s results were not shocking; analysts had adjusted their estimates on that news. After trading up as much as 2.5% after-market, AA is currently trading little unchanged at $9.43.

Coming Tuesday:

Economic Reports:  NFIB Small Business Optimism (93.9 expected) at 7:30 a.m.; IBD/TIPP Economic Optimism (45.0 expected), JOLT’s (3.27 mil. for Oct.) and Wholesale Inventories (+0.5% expected) at 10:00 a.m.  Earnings:  None