FOX Business: The Power to Prosper
Capping off a turbulent day on Wall Street, U.S. stocks erased a solid selloff on Tuesday to end with just slight losses as the bulls continue to push the Dow toward the psychologically-important 12000 level.
The Dow Jones Industrial Average fell 3.33 points, or 0.03%, to 11977.19, the Standard & Poor's 500 rose 0.34 points, or 0.03%, to 1291.18 and the Nasdaq Composite gained 1.70 points, or 0.06%, to 2719.25. The FOX 50 added 0.37 points, or 0.04%, to 927.30.
It was an uncharacteristically rocky day for stocks as the blue chips slumped more than 70 points on two occasions, only to storm back each time and close the day virtually unchanged. The impressive comeback kept the Dow from backing too far away from the 12000 mark, an area it hasn't seen since June 2008.
“I think the focus on [Dow] 12000 is a little misguided. The market has been on a heck of a roll,” veteran NYSE trader of Seaport Securities told FOX Business. “I think the lines of least resistance are still on the upside but I think we need to give a little bit back in the short term.”
There didn't appear to be a clear catalyst for the bounce off the lows, but it does underscore the increased volatility on Wall Street in recent days. Despite the back-and-forth action, the blue chips preserved nearly all of the gains from Monday's 109-point rally and were still on track for their first nine-week win streak since May 1995.
Half of the Dow's 30 stocks closed in the green, led by Wal-Mart (NYSE:WMT) and Verizon (NYSE:VZ). The index's weakest links were financial giants Bank of America (NYSE:BAC) and American Express (NYSE:AX).
The Nasdaq Composite eked out a gain, its second in a row, amid strength from tech giants Google (NASDAQ:GOOG) and Intel (NASDAQ:INTC).
There was no shortage of earnings reports for traders to use for guidance on Tuesday and while most big-name companies beat Wall Street's expectations, their stocks struggled to capitalize on the results. The resistance is largely due to the fact that strong earnings reports have largely been built into stock prices, especially given the markets' January rally.
“This is a classic example of buying into the earnings and selling on the announcement. It’s more of that than anything else because the numbers certainly support the market,” said Peter Kenny, managing director at Knight Capital Group. “Earnings have been robust and solidly positive.”
Five Dow components released fourth-quarter results on Tuesday: chemical giant DuPont, diversified manufacturer 3M (NYSE:MMM) and insurer Traveler’s (NYSE:TRV) all beat the Street, but telecom giant Verizon missed estimates and Johnson & Johnson’s (NYSE:JNJ) sales disappointed.
“A lot of the profit news is not strong enough to make people excited and it’s not bearish enough to let the market fall apart. We’re kind of just chopping around here,” said Nick Kalivas, vice president of financial research at MF Global.
Much of Wall Street will be tuning in Tuesday night to President Barack Obama's State of the Union address, which traders hope will continue the White House's recent outreach to the business community. The markets responded positively when the White House leaked out the tidbit that Obama will call for a five-year freeze on non-security discretionary spending and look for cuts and efficiencies in areas outside of the freeze.
Wall Street also saw a brief pop after the Conference Board said its consumer confidence index jumped in January to an eight-month high of 60.6, widely topping forecasts for 54.3 and well above December’s 53.3.
On the other hand, home builders like Pulte (NYSE:PHM) mostly lost ground amid disappointment with the S&P/Case-Shiller 20-city index on home prices, which slid 1% in November compared with October. Prices were down 1.6% from the year before. Both gauges slightly missed expectations from economists and underscored the weakness in the housing industry.
In the commodities complex, crude oil declined for the sixth day in a row, losing $1.68 a barrel, or 1.91%, to $86.19 -- its lowest settle since November 30. Gold fell $12.20 a troy ounce, or 0.91%, to $1,332.30.
Meanwhile, Tuesday marks the start of the Federal Reserve's two-day policy meeting, which isn't expected to result in a significant change in the central bank's easy-money policies.
DuPont (NYSE:DD) widely beat the Street with a fourth-quarter non-GAAP profit of 50 cents a share on sales of $7.74 billion. Analysts had been calling for EPS of just 32 cents on $6.95 billion in sales. The company now sees 2011 EPS of $3.45 to $3.75, compared with estimates for just $3.50.
Sara Lee (NYSE:SLE) soared 7% after Bloomberg News reported Brazilian beef processor JBS is offering to acquire the company for $21 a share. A group of private-equity firms is also reportedly interested in acquiring Sara Lee, which is said to only be willing to accept a bid in the low $20s a share.
3M (NYSE:MMM) reported fourth-quarter profits of $1.28 a share, a penny better than analysts called for, on a 9.6% increase in sales to $6.7 billion. 3M boosted its full-year non-GAAP EPS guidance to $6.17 to $6.42, but the diversified manufacturer's stock was hurt by tightening margins.
Traveler's (NYSE:TRV) solidly exceeded expectations by posting a fourth-quarter profit of $1.89 a share, compared with the Street's view of $1.67. The insurance giant also unveiled plans to boost its share buyback plan.
Tellabs (NASDAQ:TLAB) plummeted 19% to 52-week lows after posting a non-GAAP profit of 2 cents a share on a 5.4% rise in sales to $410.5 million. Analysts had called for much stronger EPS of 8 cents on $418.4 million in sales. The network equipment maker’s 2011 sales guidance of $315 million to $335 million would badly miss the Street’s view of $402.7 million.
Google (NASDAQ:GOOG) plans to hire more than 6,200 workers this year, marking the biggest expansion yet for the search giant, The Associated Press reported. Google’s workforce grew by 23% last year.
Yahoo! (NASDAQ:YHOO) is laying off another 1% of its staff, mostly in its media and advertising group, All Things Digital reported.
American Express (NYSE:AXP) slumped after revealing a 48% jump in fourth-quarter profits and revenue of $7.32 billion that narrowly surpassed estimates.
Verizon (NYSE:VZ) missed estimates by a penny with a non-GAAP profit of 54 cents a share. The telecom giant's revenue of $26.4 billion in revenue came in just shy of the Street's view. Verizon Wireless, which it co-owns with Vodafone (NYSE:VOD), said it added 872,000 subscribers, well above forecasts for an increase of 646,000.
Johnson & Johnson (NYSE:JNJ) said it earned $1.03 a share, matching estimates from analysts, but its stock slipped on weaker-than-expected sales of $15.6 billion. Wall Street had been hoping for sales of $16 billion. J&J's U.S. consumer products division revealed a 29% drop in sales amid recalls.
BlackRock (NYSE:BLK) more than doubled its fourth-quarter net income and posted a non-GAAP profit of $3.42 a share that easily exceeded estimates. Revenue surged 61% to $2.49 billion.
The U.K.'s FTSE 100 fell 0.44% to 5919.71, Germany's DAX slid 0.12% to 7059.01 and France's CAC 40 declined 0.34% to 4019.62.
In Asia, Japan's Nikkei 225 jumped 1.15% to 10464.40, Hong Kong's Hang Seng lost 0.05% to 23788.80 and China's Shanghai Composite slumped 0.68% to 2677.43