Stock Market News for Jan 12, 2011 - Market News

Markets on Tuesday climbed modestly higher as the euro-zone debt crisis eased to lessen investors' nervousness. Reports of a New York appeals court ruling in favor of MBIA Inc. and upbeat earnings results also helped indices break out of the red zone.

 

Indices gained modestly as bond insurer MBIA Inc. MBI won a major battle against twenty of the world's biggest financial institutions, including Bank of America BAC, Citibank C, Morgan Stanley MS, HSBC HBC, and UBS UBS among others. MBIA was battling this lawsuit over a restructuring plan. The company's split in 2009 had been challenged through the lawsuit which claimed the split was fraudulent. The banks had argued that the split neglected policy holders' interests and only favored holders of muni-insurance. MBIA shares jumped 10.3% and closed at $13.53. Other insurance stocks also joined the rally, including American International Group AIG and Genworth Financial GNW, which rose 2.9% and 2.5%, respectively.

 
On the international front, reports of the European Central Bank lending support to bond markets and Japan's decision to buy debt issued by the European Financial Stability Facility helped indices end in the green.

 

At the start of the week, markets were negatively impacted by reports of Portugal's need for a bailout package. However, markets restored the lost points yesterday and Portugal's Prime Minister Jose Socrates denied any such requirements. The Prime Minister stated in a press conference that improved revenue, higher social security funds and lower spending had helped budget elevation. According to reports, the government's website quoted him as saying: “Portugal does not need to ask for financial assistance because it is not necessary”. He also dismissed reports about financial assistance as rumors and claimed such news was negatively affecting the country and market sentiment.

 

The Dow Jones Industrial Average gained 0.3% and closed at 11,671.88. The S&P 500 added 0.4% and ended the day at 1,274.48. The Nasdaq rose 0.3% to close at 2,716.83. The CBOE Volatility Index fell below 17. On the New York Stock Exchange, breadth of the market was on the positive side as for every 1,756 stocks that rose, 1,213 stocks ended in the red and volumes were on the lighter side.

 

Coming to earnings and estimates news, Alcoa kick-started the earnings season after reporting a profit that exceed analyst expectations primarily due to a rise in demand and prices of aluminum. However the stock dropped 1%. Supervalu SVU dropped 11.6% after the company reported an unexpected fiscal third quarter loss as it posted $252 million of write downs and weak sales and margins. The company also lowered its full year guidance and estimates for the current quarter were below analysts' expectations. Shares of Lennar LEN, a home builder company, surged 7.1% after the company reported fourth quarter results which surpassed expectations. However, apparel maker Talbots sank 17.4% after the company reduced its fiscal fourth quarter earnings estimates due to weak preliminary sales figures. Sears Holdings jumped 6.3% after the retailer estimated fourth quarter earnings above analysts' expectations.

On to individual counters that stole focus on Tuesday's trade, shares of Apollo APOL jumped 13.4% after the for-profit education firm commented on the cost savings it had managed in spite of a 42% fall in new student enrollments. HSBC HBC rose 2.2% after Citigroup upgraded the stock from “hold” to “buy”. Tech giant, Intel INTC was up 1.7% following reports that the company had settled a patent dispute with Nvidia NVDA agreeing to pay $1.5 billion as licensing fees. Shares of Nvidia dropped 1.6%.

 
AMER INTL GRP (AIG): Free Stock Analysis Report
 
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