U.S. stock markets began the year higher in the first week of trading for 2010. Markets also rallied at the end of the day on Friday despite bad news in the December payrolls report. Positive hopes for a strong earnings season also helped to move the markets higher today.
Market Roundup
Major U.S. markets were higher for the first trading week of 2010.
The Dow Industrials index was higher for the week by 190.14 points or 1.8 percent to close at 10,618.19 on Friday. The Dow spent most of Friday day in the red, but rallied at about 3:30pm.
The Standard & Poor’s 500 Index rose 29.88 points or 2.7 percent for the week to close at 1,144.98 on Friday.
The Nasdaq Composite Index rose 48.02 points, gaining 2.12 percent for the week and closing at 2,317.17.
Crude oil futures soared higher this week with February contract prices trading at $82.66 a barrel, a 4.1 percent rise since Monday.
Gold gained momentum over the past 5 days after a five week losing streak. Yellow metal spot prices closed the week at $1,137.70 an ounce today.
The greenback declined this week. The dollar index or DXY, a measure of the U.S. dollar against a trade-weighted basket of six major currencies, closed Friday at 77.47, falling for the week by 0.5 percent.
Economic News
On the economic front, growth in the manufacturing sector is picking up the pace quickly according to the ISM report. The ISM manufacturing index showed solid monthly growth in December rising to 55.9 from 53.6 in November. Economists were expecting a 54.8 reading.
On Wednesday, the National Association of Realtors released the pending homes sales data showing extreme weakness in housing markets. Pending home sales plunged 16 percent from October with all regions showing declines. The report blamed the November drop on the expiration of government programs to stimulate home sales. New stimulus measures put in place by the Congress are expected to stimulate home sales in the Spring.
On Friday, the Department of Labor's employment situation report delivered disappointing news. Nonfarm payroll employment in December fell 85,000. Economists had forecast a rise of 10,000 in jobs for December. There was a revised gain of 4,000 jobs for November—the first increase in payrolls since December 2007— and a revised decline of 127,000 in October. The unemployment rate for December edged higher to 10.1 percent from 10 percent in November.
According to minutes of the most recent Federal Reserve policy meeting, Fed governors weren't swayed by signs of an improving economy to tighten monetary policies. Fed officials still believe the recovery will be slow to grow and inflation will stay under control. Economic data began to be more positive in the weeks leading up to the mid-December Fed meeting.
Company News
Palm (PALM) announced earlier this week that Verizon Wireless (VZ) will begin selling its Pre and Pixi smartphones on January 25. AT&T (T) will also begin selling the devices in the first half of the year. The announcement was made at the Consumer Electronics Show in Las Vegas on Thursday, and is expected to boost sales. Up to now, the Pre and Pixi were available only on the Sprint (S) network. While a positive development for Palm, Verizon will continue to emphasize phones such as the Motorola (MOT) Droid that run Google’s Android operating system.
Microsoft (MSFT) introduced hand-held, keyboardless tablet computers that run on its Windows software late yesterday at the Consumer Electronics Show in Las Vegas. Microsoft CEO Steve Ballmer demonstrated a device from Hewlett-Packard (HPQ) stating it will be available later this year, as will units from Archos and Pegatron Corp.
Apple (AAPL) is expected to release a much talked about tablet computer of its own later this month.
Microsoft also demonstrated Xbox 360 games that are coming out this year, indicated it has a search distribution agreement with Hewlett-Packard to raise the profile of its Bing search engine. Microsoft is counting on Bing to challenge search engine market leaders Google (GOOG) and Yahoo (YHOO).
The TJX Companies (TJX), operator of T.J. Maxx, Marshalls, and other retail stores, substantially raised fourth quarter and fiscal 2010 earnings guidance following a 21 percent year-over-year surge in sales for the five week period ended January 2nd. Comparable store sales were up 14 percent for the period. Shares of TJX rallied more than five and a half percent.
Novartis AG (NOVN) announced early in the week it will pay $39.3 billion for the remaining 75 percent of eye-care specialist Alcon Inc. (ACL) it doesn’t already own. The Swiss pharmaceutical company said it has exercised a call option to buy Nestle’s (NSRGY) remaining 52 percent holding for $28.1 billion, or $180 a share. The remaining 23 percent of the shares will be acquired in a share-swap deal for about $11.2 billion.
Earnings News
In earnings news this week, Monsanto Company (MON) said its lost 3 cents per share compared to profit of a dollar per share in the same quarter last year. The number 1 seed maker world-wide said weak sales of Roundup weed killer pushed it into the red for the quarter. Analysts were looking for the company to break even.
Drive-in restaurant company Sonic Corporation (SONC) posted a quarterly profit of 10 cents per share. That’s down from 12 cents in the same quarter last year. Consensus expectations were for 14 cents a share. Sonic said it expects earnings will be flat in 2010, and same store sales are forecast to fall between 4 and 6 percent.
Mosaic (MOS) reported earnings that missed Wall Street targets, but the company nonetheless continued to sound bullish for the year. The company reported net quarterly earnings of 32 cents a share, adjusted for restructuring costs. Analysts were looking for per-share profits of 35 cents.
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