FOX Business: The Power to Prosper
A strong weekly jobs report, solid debt auctions in Europe and better-than-expected quarterly results from two financial giants unleashed the bulls on Wall Street for the third day in a row.
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The Dow Jones Industrial Average rose 45 points, or 0.36%, to 12624, the S&P 500 rose 6.5 points, or 0.49%, to 1315 and the Nasdaq Composite climbed 18.6 points, or 0.67%, to 2788.
The markets have been on a roll so far this year. The blue chips have added more than 400 points so far in 2012 and are presently sitting at their highest level since July.
Roughly a quarter of the gains on a point basis come from Caterpillar (NYSE:CAT), one of the world's biggest heavy-machinery makers, according to an analysis by FOX Business. 3M (NYSE:MMM), United Technologies (NYSE:UTX) and American Express (NYSE:AMX) are responsible for another quarter, the analysis showed.
Financial and industrial players led the gains on the day.
Bank of America (NYSE:BAC) and investment bank Morgan Stanley (NYSE:MS) were both strong performers after unveiling quarterly results that came in ahead of what many analysts were predicting.
Bank of America posted fourth-quarter earnings of 15 cents per share on $25.1 billion in revenue, net of interest expense. Analysts were expecting the bank to earn 15 cents on $24.1 billion. Morgan Stanley's (NYSE:MS) quarterly loss of 14 cents per share on continuing operations was narrower than the 57-cent loss analysts forecast. Morgan's results come a day after Goldman Sachs (NYSE:GS) revealed much strong-than-expected per share profits.
Union Pacific (NYSE:UNP) posted results that topped expectations on the top and bottom lines, and estimated it would achieve record profits this year. The railroad titan saw its shares jump more than 2% on the news.
Utilities, such as Chesapeake Energy (NYSE:CHK) and NRG Energy (NYSE:NRG), struggled the most on the day.
Traders parsed through a deluge of data on the day.
New claims for unemployment benefits fell to 352,000 last week from an upwardly revised 402,000 the week prior, a drop of 50,000. Economists had expected a drop of only 14,000. Claims are at their lowest level since the week ended April 19, 2008.
Inflation at the consumer level was unchanged in December, compared with expectations of a 0.1% increase. Excluding the food and energy components, the so-called core reading was up 0.1%, which was in-line with economists’ estimates.
"After a recent spike in headline prices, the [inflation report] indicates that inflation worries should become less of a problem for analysts and we expect further declines in the rate," BTIG Chief Global Strategist Dan Greenhaus wrote in a note to clients following the report.
Meanwhile, on the new-home front, housing starts fell 4.1% in December to an annualized rate of 657,000, shy of estimates of 680,000. Housing permits ticked 0.1% lower during the month to a 679,000-unit rate, also less than the 680,000-unit rate that had been expected. That market has been slow to recover because of high inventory, tight credit conditions and stubbornly low prices.
The Philadelphia Federal Reserve's gauge of manufacturing in the mid-Atlantic region showed continued expansion in January. The index hit 7.3 for the month, from 6.8 in December, missing expectations of a reading of 10. Readings above 0 indicate expansion, while those below point to contraction.
Strong Bond Auctions Boost European Sentiment
On the European front, Spain sold 6.61 billion euro in medium and long-term bonds, topping its target of 4.5 billion. This is the second-straight week the country saw high demand for its bonds, helping to ease concerns that the country may run into difficulty financing itself on the private market. Indeed, according to an analysis Thursday by London-based Markit, Spain has now issued more than 19% of its entire issuance for the year.
France also had a strong debt auction as traders shrugged off Standard & Poor's downgrade of the country one notch from triple-A last week.
The euro rose by 0.44% to $1.292, its third-straight day of gains. Meanwhile, the U.S. dollar was off 0.31% against a basket of world currencies.
Commodities were to the downside. Natural gas futures plunged 6.1% to $2.322 per million British Thermal Units, the lowest settle in a decade.
The benchmark crude oil contract traded in New York fell 20 cents, or 0.2%, to $100.39 a barrel. Wholesale RBOB gasoline dipped 0.34% to $2.816 a gallon.
In metals, gold was down $5.40, or 0.33%, to $1,654 a troy ounce.
European blue chips rallied 1.9%, the English FTSE 100 rose 0.68% to 5,741 and the German DAX climbed 0.97% to 6,416.
In Asia, the Japanese Nikkei 225 gained 1% to 8,640 and the Chinese Hang Seng jumped 1.3% to 19,943.