Published February 02, 2011
FOX Business: The Power to Prosper
Wall Street reached Wednesday’s finish line in a stalemate as an outbreak of violence in tumultuous Egypt gave the markets pause and restrained the bulls from adding to their two-day burst of buying.
The Dow Jones Industrial Average rose 1.81 points, or 0.02%, to 12041.97, the Standard & Poor's 500 declined 3.56 points, or 0.27%, to 1304.03 and the Nasdaq Composite slid 1.03 points, or 0.04%, to 2750.16. The FOX 50 lost 2.36 points, or 0.25%, to 930.14.
The pause on Wall Street pushed the S&P 500 away from its newly-hit 1300 level, but left the Dow above the 12000 threshold for the second day in a row. It also largely preserved Tuesday's 150-point surge that marked the blue chips' best day since December 1.
“Given the kind of move we’ve had, most people were expecting some kind of a giveback. But the market remains well bid,” said Peter Kenny, managing director at Knight Capital Group. “There’s no question the appetite is still there for equities.”
After days of turbulence fueling swings in the markets, the blue chips moved in a very tight range of just 39 points on Wednesday.
For the most part, the markets managed to shrug off TV images showing growing unrest in Egypt, the most populous nation in the Arab world and a key American ally. Still, the chaos in Cairo may have been enough to blunt enthusiasm for a stronger-than-expected ADP private-sector jobs report.
“If the market can stay above 12000, I expect people to start pouring in and not let it get away too fast,” Bobby Heller, a NYSE trader from MEB Options, told FOX Business. "People are starting to believe that maybe the economy is moving into the next stage of growth.”
Despite surging shares of Electronic Arts (ERTS), the Nasdaq Composite slipped slightly lower on the day.
U.S. markets continue to monitor the situation in Egypt, where gunfire was heard on the streets of Cairo as anti-Mubarak protestors clashed with his supporters, leaving more than 600 injured. A day after President Hosni Mubarak refused to resign immediately, opposite leader Mohamed ElBaradei called on the army to not stay neutral and to "intervene today."
In a significant shift, the powerful military early on Wednesday told anti-Mubarak protestors still gathered in Cairo they must clear the streets. At the same time, Moody's slashed its credit ratings on five Egyptian banks and warned further cuts could be in store. Amid the uncertainty, the cost to insure Egyptian sovereign debt jumped, nearing the peaks seen on Friday.
Still, fears that the violence will spill over into oil-producing nations, namely Saudi Arabia, have not yet been realized and Egypt's vital Suez Canal remains open. Crude oil, which has been viewed as a good barometer of the markets' fears about the situation in Egypt, rose just 9 cents a barrel, or 0.10%, to $90.86.
Wall Street had a muted response to the ADP report, which showed the U.S. added 187,000 private-sector jobs in January, beating consensus calls for a rise of 143,000. The report is the first of three major labor indicators slated for release this week, capped off by Friday's crucial government jobs report.
“The real story is the fact that hiring is starting to gather some momentum in the small companies. That’s the trick. That’s what we really need,” said Kenny.
After a disappointing December report, economists believe the government will say the U.S. added 148,000 jobs last month and the unemployment rate ticked up to 9.5%.
The markets were also keeping an eye on Chicago, which is digging out of what may be the largest snowstorm in its history. The massive blizzard has paralyzed the travel industry as all flights out of Chicago's O'Hare Airport were postponed until at least Thursday. Major air lines like United Airlines (UAUA) and Delta Air Lines (DAL) closed solidly lower as analysts predicted the the severe weather will hurt the industry's recovery.
Time Warner (TWX) leaped 8% to 52-week highs as it beat the Street with a non-GAAP profit of 67 cents a share on an 8.4% rise in revenue. The media heavyweight that owns HBO, CNN and Sports Illustrated also issued bullish 2011 guidance, boosted its stock buyback plans by $4 billion and raised its dividend.
Electronic Arts (ERTS) surged almost 16% in the wake of revealing a stronger-than-expected profit of 59 cents a share and plans to buy back another $600 million of its shares. The video game publish also boosted its full-year earnings guidance.
News Corp. (NWSA) launched The Daily, a digital publication that will appear on Apple’s (AAPL) iPad and other tablet devices. News Corp., which is the parent of FOX Business, said the application will have over 100 pages of content, include original video and cost 99 cents a week, or $39.99 a year.
Broadcom (BRCM) tumbled 5% after giving a cautious sales view for the current quarter.
Mattel (MAT) beat the Street with a fourth-quarter profit of 89 cents a share. Analysts had called for EPS of 86 cents. The toy maker's sales rose 9% to $2.12 billion and it hiked its annual dividend by 11% to 23 cents a share.
Hershey (HSY) met forecasts with a non-GAAP profit of 61 cents a share on $1.48 billion in sales.
Nasdaq OMX Group (NDAQ) more than tripled its fourth-quarter profits and posted non-GAAP EPS of 55 cents, exceeding the Street's view of 51 cents. The stock market operator said its revenue rose 8% to $400 million, surpassing consensus calls.
AOL (AOL) solidly exceeded estimates with a non-GAAP profit of 60 cents a share, compared with estimates for 46 cents. The Internet company's revenue slid 26% to $596 million as its ad sales tumbled 29% and display ads dropped 14%.
The U.K.'s FTSE 100 jumped 0.71% to 6000.07, Germany's DAX inched down 0.01% to 7183.67 and France's CAC 40 slipped 0.15% to 4066.53.
In Asia, Japan's Nikkei 225 jumped 1.78% to 10457.40, Hong Kong's Hang Seng leaped 1.81% to 23909.00 and China's Shanghai Composite was closed.