Stock Market News for Jan 18, 2011

Markets posted an optimistic picture at the week end, marking seven straight consecutive weeks of gains for the S&P with banks leading the rally. The Dow recorded new highs though it is to be seen whether it can carry the same momentum forward on Tuesday. Apart from the Dow, certain benchmarks also gained points on the closing day.

On the other hand investor worries remain after US stock futures continued their fall on Monday. S&P 500 futures dropped 0.3% and the Nasdaq dropped 0.9%. Meanwhile, Apple Inc’s (NASDAQ:AAPL) shares were badly hit after company CEO Steve Jobs decided to go on leave for medical reasons. The company’s COO Tim Cook will look after day to day operations in his absence.

On Friday, the Dow rose by 0.47% and closed at 11,787.38. The S&P 500 gained 0.74% and ended the day at 1,293.24 The Nasdaq composite edged up 0.73% and closed at 2,755.30. The CBOE Volatility Index (VIX), which is considered to be the gauge in the market, fell to 15.40.

Coming to the economic front, the major releases this week which would be in focus are Building Permits, Housing Starts, Initial Claims, Leading Indicators, New Home Sales and Crude Inventories. Anxious investors would be waiting to get some positive economic news after a series of negative reports last week. US retail sales and business inventories came in far below expectations and Consumer Prices increased by 0.5% last month. Majority of the increase in prices was due to rising gasoline prices. Gasoline prices increased to $3.09 a gallon, the highest rise since October 2008.

On to the international front, the euro-zone debt crisis has been successfully resolved after the Portuguese government sold $1.6 billion worth of bonds. The bond auction eased investor fears about an impending crisis in Europe. After Portugal, Spain also conducted successful bond auctions by selling $3.9 billion of five-year bonds. Another issue in focus is demand tightening of materials from China. Additionally, Central Bank of China has decided to increase bank reserves as a tool to curb the growing inflations. Reacting to these reports, commodities tumbled, with gold falling 2%.

On to news about earnings and estimates, major financial institutions, including Citigroup Inc (NYSE:C), Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) are expected to announce their estimates and earnings. Apart from the banks, technology companies like Apple Inc (NASDAQ:AAPL), Google (NASDAQ:GOOG) and IBM (NYSE:IBM) along with industrial major General Electric (NYSE:GE), are also in the queue to report earnings. Financial major JP Morgan (NYSE:JPM) posted results before market hours on Friday, beating Wall Street’s expectations handsomely both on the revenues and earnings front. The company reported earnings of $1.12 per share and with sales of $26 billion, which rose substantially by 13%. Lennar (NYSE:LEN), soared 6% during the week after the company announced their quarterly results that beat the Street’s estimate and presented a very robust 2011.

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