Stocks Fall as Disappointing Data Overshadow Euro Developments

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Published January 31, 2012

| FOXBusiness

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Stocks took a turn into negative territory after a round of weaker-than-expected data on the U.S. economy stifled enthusiasm over generally upbeat news from the other side of the Atlantic.

Today's Markets

As of 3:10 p.m. ET, the Dow Jones Industrial Average fell 32.8 points, or 0.26%, to 12622, the S&P 500 dipped 1.1 points, or 0.08%, to 1312 and the Nasdaq Composite rose 1.4 points, or 0.05%, to 2813.

The European Union summit in Brussels on Monday was widely considered reasonably successful by analysts. All of the EU member countries agreed to closer fiscal ties except for Great Britain and the Czech Republic. The purpose of the agreement, which is expected to be signed in March, is to enforce budget discipline across the bloc with the hope of staving off a repeat of the current crisis. 

The EU officials also agreed to the permanent sovereign rescue fund, called the European Stability Mechanism, which is expected to come into effect in July, European Council President Herman Van Rompuy said in a press conference following the summit. The fund's firepower, which has been the subject of much speculation, remains at 500 billion euro, although Van Rompuy said during the conference that this will be reassessed down the line. 

"This represents a small step towards closer fiscal integration and stronger governance in the euro area and will hopefully set the stage for a significant expansion of the [European Central Bank's] balance sheet to prevent a potential break-up of the monetary union," analysts at Nomura wrote in a note to clients on Tuesday. 

Still, other analysts who closely watch the situation in Europe struck a considerably more cautious tone: The fiscal pact may help to "prevent the next crisis, but really does nothing for the current one," Louise Cooper, a markets analyst at BGC Partners said in an interview with FOX Business. 

In Athens, Greece and private bondholders continued negotiating a debt swap deal aimed at staving off a messy default. The country's Prime Minister Lucas Papademos said earlier "significant progress" was made and that he expects a deal by the end of the week, according to a report from Reuters

The euro changed direction and fell 0.41% to $1.3089, while the U.S. dollar rose 0.16% against six world currencies that are tracked by the dollar index.

On the U.S. front, the S&P/Case-Shiller composite index of 20 metropolitan areas shows home prices fell 1.3% on a non-seasonally adjusted basis, a bigger drop than the 0.8% decline economists had expected. Home prices are down 3.7% from a year ago, more than the 3.3% economists had expected.

Consumer confidence unexpectedly fell in January, according to fresh data from the Conference Board. The gauge fell to 61.1 for the month from an upwardly revised 64.8 in December. The median forecast was for a reading of 68.

Earnings season is in full swing, with two Dow components reporting on Tuesday. 

ExxonMobil (XOM) revealed fourth-quarter profits of $1.97 per share on $121.61 billion in revenue. Wall Street expected the biggest U.S. oil company to earn $1.96 per share on $119.7 billion.

Pfizer (PFE) unveiled adjusted fourth-quarter earnings of 50 cents per share on revenue of $16.7 billion. Analysts were expecting the pharmaceutical giant to earn 47 cents per share on $16.61 billion.

United Parcel Service (UPS) posted adjusted fourth-quarter profits of $1.28 per share, beating analysts’ forecasts by two cents. The shipping company, seen as a bellwether of the economy, said its sales came in at $14.2 billion for the quarter, shy of estimates of $14.46 billion.

Amazon.com (AMZN) posts its earnings after the closing bell. 

Commodities markets were mixed, shedding significant gains. The benchmark crude oil contract traded in New York slumped 30 cents, or 0.3%, to $98.48. Wholesale RBOB gasoline climbed 0.58% to $2.887. 

In metals, gold jumped $6.00, or 0.35%, to $1740.40 a troy ounce. 

Foreign Markets

European blue chips rose 0.5%, the English FTSE 100 gained 0.19% to 5682 and the German DAX edged higher by 0.22% to 6459. 

In Asia, the Japanese Nikkei 225 edged 0.11% higher to 8,803 and the Chinese Hang Seng tacked on 1.1% to 20,391. 

URL

http://www.foxbusiness.com/markets/2012/01/31/stocks-climb-as-euro-fears-wane/