Yesterday the stock market moved ahead, but once more it was a day of only modest advances. The S&P 500 (SPX) extended its gains to six straight sessions, but most stocks spent the day going sideways, and volume was again relatively low.
As Q4 earnings for most stocks approach, with the report of the first major company last night, buyers seem unwilling to make new commitments until they see some black on the quarterly releases. And last week’s disappointing employment report still hung over the trading floors.
The Dow Jones Industrial Average (DJI) was held back by several of its important members. Home Depot (HD) and Disney (DIS) were lower by 2.8% and 1.6%, respectively. Disney was cut to “neutral” from “buy” in a report from Janney Capital Markets. But Chevron (CVX) rose 1.8% following an upgrade by Citigroup.
The Nasdaq (NASD) fell 0.21% as big-cap technology stocks again showed weakness. Microsoft (MSFT), Apple (AAPL) and Research In Motion (RIMM) all posted a lower close.
At the close, the Dow rose 46 points to 10,664, the S&P 500 gained 2 points to 1,147, and the Nasdaq fell 5 points to 2,312.
The NYSE traded 967 million shares with advancers over decliners by 4-to-3, and the Nasdaq traded 582 million shares with decliners ahead by a small margin.
February crude oil rose 10 cents to $82.85 a barrel despite warmer weather in the Midwest and a sell-off in natural gas. The Energy Select Sector SPDR (XLE) fell 8 cents to $60.22.
January gold rose $12.50 to $1,150.70 an ounce, and the PHLX Gold/Silver Sector Index (XAU) gained 88 cents, closing at $182.62.
What the Markets Are Saying
The Q4 earnings season began last night with the traditional first report from Alcoa (AA), a Dow-30 member. Let’s hope that the big aluminum company’s earnings are not a harbinger of what’s to come from the rest of the list since AA missed its expected earnings and sales targets, reporting Q4 earnings of 1 cent per share versus the 6 cents analysts forecasted.
But expectations are high with overall market earnings expected to be up to three times better than last year. However, as illustrated by the lack of volume lately, the fear of some big earnings disappointments is keeping many investors out of the market. Again, volume on the Big Board yesterday failed to reach 1 billion.
But even though trading has taken on a much slower pace, the first few days of the year have been positive with all of the major indices up more than 2%. And the broadest-based index, the S&P 500, is up almost 3%, illustrating that a general advance is under way despite the lack of fireworks. The S&P companies are expected to earn $15.80 a share for Q4, up from 2008’s Q4 of $5.62.
The charts are telling us that stocks should continue to move higher and the saying “so goes the week, so goes the month, so goes the year” — all pertaining to January — expresses high expectations. Now it’s time for America’s industrial might to show that the expectations are warranted.
Today’s Trading Landscape
Earnings to be reported before the opening include: Great Atlantic & Pacific Tea Co., Infosys Technologies, KB Home and Supervalu.
Earnings to be reported after the close: Exfo Electro-Optical Engineering, H.B. Fuller and Xyratex.
Economic reports due: ICSC-Goldman Sachs store sales, international trade (the consensus expects -$35 billion), and Redbook.
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