Stock Market News for Jan 14, 2011 - Market News - Alcoa (NYSE:AA), Chubb (NYSE:CB)

On Thursday, markets ended marginally lower and shed gains from the previous session. The dismal show of the indices yesterday was primarily due to disappointing economic data. However, successful bond auctions in Europe somewhat soothed investors' frayed nerves.

The Dow was down 0.2% and closed at 11,731.9. The S&P 500 lost 0.2% and ended the day at 1,283.76. The Nasdaq composite edged down 0.1% and closed at 2,735.29. On the New York Stock Exchange, breadth of the market was marginally on the negative side and consolidated volumes stood at 4.4 billion shares.

The economic data that caused much of the tension in the markets was from a report issued by the Labor Department. According to the report, the number of jobless claims surged to its highest level since October 2010. First-time unemployment claims rose by 35,000 to jump to 445,000 from 410,000 in the week ended January 8, 2011. It was also the biggest one-week jump recorded in the last six months. Economists were alarmed by the report as they had actually estimated a drop by a small margin.

Reports from the Labor Department further deepened investors' frowns as latest reports suggested food and energy were rising faster. The Producer Price Index (PPI) rose to 1.1% in December, surpassing estimates of 0.8%. This is also one of the sharpest jumps in a year.

Meanwhile, Federal Reserve Chairman Ben Bernanke encouraged hopes by saying that the economy would likely grow 3-4% in 2011. Speaking at the Small Business Forum in Washington D.C. he said that higher economic growth would help in more sales and business, but the strengthening economy will not be sufficient to reduce unemployment at the expected rate.

On the international front, successful bond auctions helped ease investors' concern about an impending crisis in Europe. After the Portuguese government had a successful session of bond auctions on Wednesday, Spain joined the party by selling $3.9 billion of five-year bonds. Italy also drew similar optimism from its' oversubscribed bond auction that gained strength with the successful issue of new government bonds.

On a sectoral basis, materials were the laggards in trade on Thursday as metal prices dropped following U.S. economic data that failed to live up to investors' expectations. Key shares in the materials sector to fall included Alcoa AA which dropped 3.02%, Newmont Mining NEM which shed 1.7% and Goldcorp Incorporated GG which slid 3.6%. In other news, shares of Freeport-McMoRan Copper & Gold FCX dropped 3.1% after unionized workers at Sociedad Minera Cerro Verde SAA, a copper mining company controlled by Freeport-McMoRan, geared up to go on a strike from Friday.

On to news on earnings and estimates, tech giant Intel INTC announced its results after market hours which beat analysts' expectations handsomely both on revenues and on earnings and presented a very robust 2011 outlook. TTM Technologies TTMI, a printed circuit board maker, soared 21.34% after the company upped its fourth quarter forecast indicating a boost in demand for its high technology products.

Coming to individual counters, drug maker Merck & Company MRK slumped 6.6% after the company discontinued clinical trials of its anti clotting drug vorapaxar. Shares of Whole Foods Market WFMI jumped 4.6% after Jefferies maintained a buy rating on the stock and raised the target price from $47 to $60 per share. Health insurer Chubb CB dropped 1.24% after Deutsche Bank DB downgraded the stock from “buy” to “hold”. AT&T T traded marginally in positive territory after the company announced that it expects to take a $2.7 billion pre tax charge in the fourth quarter reflecting an accounting change related to pensions and retirement benefits.

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Stock Market News for Jan 14, 2011 - Market News

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