Prior to the opening bell Tuesday, investors were pummeled with a variety of earnings failures and triumphs that led to a slightly positive opening but then a decline. And it took the remainder of the session for the analysts and observers to sort out the blizzard of financial reports.
The following stocks reported better-than-expected earnings: Schering-Plough (SGP), Archer Daniels Midland (ADM), Emerson Electric (EMR), Automatic Data Processing (ADP), and Tyco (TYC).
But there were a host of losers, too: UPS, Dow Chemical (DOW), Aflac (AFL), SanDisk (SNDK), Avon Products (AVP), Motorola (MOT), and PNC Financial (PNC) all missed estimates.
But after the smoke cleared, the focus went back to the stimulus plan and the news there seemed to get better despite the administration’s inability to get broad support from Republicans. Instead, the GOP looks like it is making headway on a plan that could cut some of the pork out of the Dems’ plan and even get away with a temporary corporate tax cut.
It all may be “pie in the sky bye and bye” but it did turn the market north, despite lousy but expected sales figures from the auto industry.
Ford (F) was the best of the domestics, with sales in January off 40% versus last year. General Motors (GM) reported a decline of more than 50%, and Chrysler was off more than 60%. Even Toyota Motors (TM) fell more than 34%.
Economic data was light but the National Association of Realtors said that pending home sales increased 6.3% in December. That exceeded what was expected to be a flat comparison.
At the close, the Dow Jones Industrial Average (DJI) rose 142 points, closing at 8,078, the S&P 500 (SPX) gained 13 points at 839, and the Nasdaq (NASD) rose 22 points to close at 1,516.
The New York Stock Exchange traded 1.4 billion shares, with advancers ahead by about 9-to-5. On the Nasdaq, 835 million shares changed hands, with advancers there ahead of decliners by 7-to-5.
The March crude oil contract gained 70 cents, closing at $40.78 a barrel, and the Amex Energy SPDR (XLE) gained 80 cents, closing at $46.97. The gain in crude was attributed to a cut in production by OPEC and increased sales of existing homes in the United States.
Gold futures rose, with the February contract up $4.80 to $911.50, and the PHLX Gold/Silver Index (XAU) gained 13 cents at $119.85.
What the Markets Are Saying
I’d like to make a comment on the “Dow Theory” today: Since there were several write-ups circulating Tuesday about a new “bear-market signal” given by the theory on Monday, it is worth addressing.
Some analysts were all atwitter, saying that Monday’s close on the Dow Jones Industrial Average (DJI) and the Dow Transports (DJT) broke under the January lows. Thus, they said, a new Dow sell signal was triggered.
The theory states that if a double confirmation occurs, (i.e., that if two of the three Dow averages make a new high or low) then a trend is confirmed.
Well, the Transportation Average did fall below both its January and November intra-day low and closing low. (I mention January only because one report said that it is relevant — but it actually has no significance at all.) And the Industrial Average did break the closing low of January — but that is irrelevant, since the market’s lows were made in November.
Even at their lowest point on Monday, the Industrials were more than 400 points from the November low. In other words, one of the averages, the Transports, did break but the Industrials did not. And since then, the Industrials have turned away from the support line at 7,774 and may be triggering what Dow theorists call a “non-confirmation” — and that is a very bullish signal.
You are correct if you have perceived me to have turned from an aging bear to a very cautious calf.
Today’s Trading Landscape
Earnings of note to be reported include: 99 Cents Only (NDN), Adept Technology (ADEP), Akamai Technologies (AKAM), Alcatel-Lucent (ALU), Alexander & Baldwin (AXB), Allergan (AGN), Alvarion (ALVR), American Capital Agency Corp (AGNC), Arch Chemicals (ARJ), ArvinMeritor (ARM), Assurant (AIZ) and Avalonbay Communities (AVB).
BHP Billiton PLC (BHP), Blackboard (BBBB), BMC Software (BMC), Cadence Design Systems (CDNS), Capitol Federal Financial (CFFN), Central Garden & Pet Co (CENTA), Cisco Systems (CISC), Clorox (CLX), Datalink Corp (DTLK), Dawson Geophysical (DWSN), Devon Energy Corp (DVN), Dice Holdings (DHX), Diebold (DBD), Dolby Laboratories (DLB) and Dyncorp Int’l (DCP).
Equifax (EFX), Essex Property Trust (ESS), ExpressJet Holdings (XJT), Fidelity National Financial (FNF), FMC Corp (FMC), Furniture Brands (FNB), Goodrich Corp (GR), Griffon (GFF), Hain Celestial Group (HAIN), Harman Int’l Industries (HAR) and Harris (HRS).
Imperial Sugar (IMP), ITT Corp (ITT), Kraft Foods (KFT), Lazard Ltd (LAZ), National Oilwell Varco (NOV), Natural Alternatives (NAII), Ness Technologies (NTSC), New Jersey Resources (NJR), NewMarket Corp (NEWM), NIC Inc. (NGOV), Nobel Learning Communities (NLCI) and Novellus Systems (NOV).
ON Semiconductor Corp (ONNN), Opnet Technologies (OPNT), Panasonic Corp (PC), PepsiAmericas (PAS), Philip Morris Int’l (PM), Polo Ralph Lauren Corp (RL), Power Integrations (POWI), PPL Corp (PPL), Prudential Financial (PRU), Pulte Homes (PHM), Regal-Beloit Corp (RBC), Regency Centers (REG), Resource America (REXI) and Ryder System (R).
Sara Lee (SLE), Savvis (SVVS), Shutterfly (SFLY), Silicon Laboratories (SLAB), Snap-on (SNA), Solera Holdings (SLH), Spartan Stores (SPTN), Spherion Corp (SFN), Star Gas Partners (SGU), Sunoco (SUN), SWS Group (SWS) and Symmetricom (SYMM).
The Brinks Co (BCO), Thermo Fisher Scientific (TMO), Thomas & Betts (TNB), THQ Inc. (THQI), Time Warner Cable (TWC), Time Warner (TWX), TrueBlue (TBI), Tupperware Brands (TUP), Universal Forest Products (UFPI), Varian (VARI), Visa (V), WGL Holdings (WGL) and Wolverine World Wide (WWW).
The following economic reports are due: January ADP Employment Survey (the consensus expects a loss of 508,000), January Non-Manufacturing Index (the consensus expects 39.0), and the Jan. 30, U.S. Energy Dept. Oil Inventories.
Time Warner (TWX) reported a Q4 loss of $4.47 versus an expected gain of 28 cents.
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