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Stock Market News for January 20, 2012 - Market News

Friday, January 20, 2012

Strong corporate earnings results and a positive jobless claims report helped carry the markets forward on Thursday. On an otherwise lackluster day, the S&P 500 touched a five-month high as investors awaited results from Google. However, post the closing bells, Google’s results were big a disappointment.

Benchmarks continued to hover around five-month high levels and the Dow Jones Industrial Average (DJI) gained 0.4% and moved up to 12,623.98. The Standard & Poor 500 (S&P 500) added 0.5% and finished the day at 1,314.50. The Nasdaq Composite Index was up 0.7% and closed yesterday’s trading session at 2,788.33. The fear-gauge CBOE Volatility Index (VIX) reflected the investors’ confidence, declining 4.9% to 19.87. For every couple of stocks that advanced on the New York Stock Exchange (NYSE), one stock was on the declining side. Volumes on the NYSE were slightly higher than the average, at 4.4 billion shares.

The Dow, S&P 500, and Nasdaq have gained 3.3%, 4.5% and 7%, respectively until now this year. While economic data has set the pace for the uptrend, corporate earnings have also chipped in to help benchmarks extend their gains. Alcoa Inc. (NYSE:AA) had unofficially kick-started the earnings season last week and had helped the markets move up after announced an upbeat outlook. In a similar fashion, encouraging results from financial bellwethers acted as one of the catalysts for the markets’ upward movement yesterday.

Bank of America Corporation (NYSE:BAC) and Morgan Stanley (NYSE:MS) both impressed investors with their own set of earnings results. As for Bank of America, the company swung to profit in this quarter after it reported a loss in the year-ago quarter. That was enough encouragement for the investors given the turmoil the global economy has been suffering and with the consequent effects on the financial sector. Morgan Stanley’s loss per share this quarter was narrower-than-expected, thus cheering investors’ mood.

Bank of America and Morgan Stanley’s shares jumped 2.4% and 5.4%, respectively. The financial sector enjoyed an upward movement and the Financial SPDR Select Sector Fund (XLF) gained 0.9%. Other key stocks like Citigroup, Inc. (NYSE:C), JP Morgan Chase & Co. (NYSE:JPM) and The Goldman Sachs Group, Inc. (NYSE:GS) moved up by 1.0%, 1.1% and 3.2%, respectively. So far this year, the financial sector is having a good run and the S&P financial (GSPF) index has gained 8.1% so far.

While the corporate reports was one of the factors responsible for the markets’ movement, economic data also came in strong and. Investors received a boost after learning that initial claims had dropped to their lowest levels in almost four years. The U.S. Department of Labor reported that the advance figure for seasonally adjusted initial claims dropped by 50,000 from the previous week's revised figure of 402,000 to 352,000, for the week ending January 14, 2012.

Investors also awaited quarterly results from tech bellwether Google Inc. (NASDAQ:GOOG) and the company’s shares were up 1.1% at the close of markets. However, after the closing the bell, the internet search-engine giant dampened sentiment after both its revenues and earnings failed to match up to the Street’s expectations. Retail ads during the holiday season was expected to boost Google’s results, but below-than-expected performance in the fourth quarter offset the increase in revenues and the marginally improved net income. After the close of the markets, Google’s shares plunged 9.0%.

 


 
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