Markets closed almost flat yesterday after erasing losses ahead of President Obama's State of Union speech, scheduled for later in the day. Late-day buying helped the markets gained slightly before the close.
On Tuesday, the markets closed almost flat after erasing early losses due to disappointing earnings results from top notch blue chips 3M MMM and Johnson & Johnson JNJ. The Dow Jones Industrial Average ended the day down 0.03% to 11,977.19. The S&P 500 gained 0.03% to close at 1,291.18. The tech-laden Nasdaq Composite Index rose 0.10% to end at 2,719.25. The CBOE Volatility Index (VIX) increased above 18. On the New York Stock Exchange, volumes were on the lighter side with only 7.97 billion shares being traded. Advancing stocks were clearly the gainers of the day's trade outnumbering the declining ones by 1,603 to 1,212.
On the economic front, the Conference Board said Consumer Confidence had increased to 60.6 in January, its highest level since May 2008 while single-family home prices fell for the fifth consecutive month. According to a report the Case-Shiller index for home prices also fell, possibly signaling a double dip in home prices by spring. Treasury prices rose after a successful auction of $35 billion 2-year Treasury notes with a yield of 0.65%. The Treasury is also expected to carry out auctioning of 5-year Treasury Notes worth $35 billion on Wednesday. On the other hand, the Fed is expected to go ahead with its $600 billion bond buying program. Later in the day, President Barrack Obama will be delivering a State of Union Speech which will focus on job creation and American competiveness. According to a White House official, the President will use the speech to address a possible 5 year federal budget freeze and a ban on earmarks.
Coming to international news, there was no important international news that could have added to market fears. European stocks closed slightly lower on data showing slower economic growth rate for Britain in the fourth quarter.
Coming to earnings news, shares of 3M Co MMM fell 2% after the company's reported lower revenues for the fourth quarter due to declining margins. Although both earnings and revenues have outperformed the Street's estimates, analysts are pessimistic about the company's future because of its increased inclination towards acquisitions, making it more vulnerable to financial loses. Share prices of Johnson & Johnson JNJ fell 1.83% to $61.08 after the health-care giant reported poor earnings results. The company reported a 12% decrease in fourth quarter earnings and provided a gloomy outlook for 2011 that failed to live up to the Street's expectations as the company faces severe growth limitations in its health care segment. Share prices of Harley Davidson HOG rocketed up 8.06% to $39.43 after the motorcycle-maker reported lower restructuring expenses and profitability in its financial services business.Shares of DuPont DD rose 0.31% after the chemical giant reported better than expected profits for the fourth quarter and an improved 2011 outlook despite higher input costs. Share prices of the company closed at $49.04. EMC Corp EMC reported fourth quarter earnings which saw a surge of 61% in profits as both revenues and margins grew. The share price of the company gained 2.35% to end the day at $24.39.
On a sectoral basis, telecom and technology shares rose and while the energy and financial sectors incurred losses. Shares of IBM IBM increased 1.13% to $161.44. At the day's end the company added 13.70 points to the Dow. Reacting to the news of bigger than expected increase of wireless subscribers, share prices of Verizon Communications VZ increased 1.56% to close the day's trading at $35.79. Share prices of Goldman Sachs' GS, JP Morgan JPM and Morgan Stanley MS fell by 2.6%, 0.33% and 1.38% respectively. The entire banking space looked vulnerable due to weak earnings results. Share prices of Cameron International Corporation CAM fell 1.85% to close at $50.32. Oil prices reached nearly $86 a barrel and several oil companies saw share prices dip. Share prices of oil giants Chevron CVX and ConocoPhillips COP fell by 0.02% and 0.91% respectively.
CAMERON INTL (CAM): Free Stock Analysis Report
CONOCOPHILLIPS (COP): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis Report
DU PONT (EI) DE (DD): Free Stock Analysis Report
EMC CORP -MASS (EMC): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
HARLEY-DAVIDSON (HOG): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
3M CO (MMM): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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