Markets closed in the green on Monday as strong earnings results from Exxon Mobil XOM and positive economic data help offset concerns about political unrest in Egypt.
The Dow Jones Industrial Average rose by 0.6% to close at 11,891.93. The blue-chip index gained 2.7% in January, the best January performance in the last 14 years. The S&P 500 gained 0.8% to end the day at 1,286.12. The Index rose 2.3% in January making it the best January increase since 2006.The tech-laden Nasdaq jumped 0.5% and closed at 2,700.08. On the New York Stock Exchange, breadth of the market was on the positive side as for every 5 stocks that rose, 2 stocks ended in the red. On the New York Stock Exchange 7.7 billion shares were traded. The CBOE volatility index (VIX) fell by 2.5% to 19.55
Coming to economic news, the Commerce Department reported a surge in U.S consumer spending in the month of December. According to the report, both personal income and personal spending increased in line with expectations. Personal income increased 0.4% and personal spending rose 0.7%. Another report said business activity in the U.S Midwest grew at a faster rate than expected in January. On the other hand, Dennis Lockhart, the president of the Reserve Bank of Atlanta said continued monetary policy support is needed for the U.S economy to recover.
On the international front, tensions in Egypt continued to be the major international issue weighing on the minds of the investors. Egyptian Vice President Omar Suleiman announced that President Hosni Mubarak has asked him to initiate a dialogue process with all the major political forces. Egypt's armed forces have assured that they will not fire on peaceful demonstrators bringing relief to the protestors. The political turmoil in Egypt had forced U.S markets to fall considerably on Friday amid reports of possible closing of the Suez. Although Egypt isn't a big oil exporter, the Suez and Sumed pipelines are used to transport roughly 3 million barrels of oil daily.
Coming to news of earnings and estimates, shares of the world's largest publicly traded oil company, Exxon Mobil Corp XOM jumped 2.1% to $80.68 after the company reported a 53% increase in quarterly profits. Earlier in the day its share price moved up to $80.82, hitting a two year high. The surge in the profits is due to improved profit margins and newly updated gas production operations. Although quarterly profits increased 30%, media company Gannett's GCI share prices fell 3% after the company reported lesser revenues which were at the low end of the estimates. Shares of Darden Restaurants DRI increased 4.3% to $47.11 after the company raised its earnings forecast for both the current quarter as well as the current year and projected an improved outlook.
On a sectoral basis, energy stocks led the market rally following Exxon's XOM results. The S&P energy index rocketed 2.6%, making it the biggest gaining sector for the day. Crude prices increased more than 3% to $92.19 per barrel reacting to the news of unrest in Egypt, which could spread to other oil producing countries, disrupting the oil flow through Suez Canal. Share prices of Chevron CVX increased 1.67% to close at $94.93. Share prices of BP BP and ConocoPhillips COP jumped 2.73% and 1.28% respectively.
In mergers and acquisitions news, China's top offshore oil producer, CNOOC Ltd CEO will pay $1.3 billion to Chesapeake Energy Corp CHK in its second shale deal. Share prices of Chesapeake CHK jumped 8% to $29.53. Alpha Natural Resources ANR announced a $7.1 billion deal with Massey Energy Co MEE. Reacting to the news, share prices of Massey Energy MEE jumped 9.8% to close at $62.86.
ALPHA NATRL RES (ANR): Free Stock Analysis Report
BP PLC (BP): Free Stock Analysis Report
CNOOC LTD ADR (CEO): Free Stock Analysis Report
CHESAPEAKE ENGY (CHK): Free Stock Analysis Report
CONOCOPHILLIPS (COP): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis Report
DARDEN RESTRNT (DRI): Free Stock Analysis Report
GANNETT INC (GCI): Free Stock Analysis Report
MASSEY EGY CPY (MEE): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
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