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Stocks Close Mostly Higher On Positive Reaction To Earnings - U.S. Commentary


Stocks moved mostly higher over the course of the trading day on Tuesday, extending a recent move to the upside. The markets benefited from a positive reaction to the latest earnings news, although buying interest was somewhat subdued.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow rose 62.43 points or 0.5 percent to 13,712.13, the Nasdaq climbed 8.47 points or 0.3 percent to 3,143.18 and the S&P 500 advanced 6.53 points or 0.4 percent to 1,492.51.

With the gains on the day, the Dow and the S&P 500 reached new five-year closing highs, while the Nasdaq ended the session at its best closing level in well over three months.

Stocks initially turned in a lackluster performance as traders expressed uncertainty about the outlook for the markets following the recent strength.

A positive reaction to the latest batch of earnings news eventually generated some buying interest, with DuPont (DD), Travelers (TRV), and Delta Air Lines (DAL) all posting notable gains after reporting their quarterly results.

Shares of DuPont rose by 1.8 percent after the chemical giant reported fourth quarter earnings that fell year-over-year but came in above analyst estimates. The company also forecast better than expected results in 2013.

Insurance giant Travelers ended the day up by 2.2 percent after reporting fourth quarter earnings that came in well above expectations. Delta advanced by 2.9 percent after its fourth quarter adjusted earnings matched estimates.

On the other hand, shares of Johnson & Johnson (JNJ) moved to the downside after the healthcare giant reported better than expected fourth quarter earnings but provided disappointing guidance.

The markets may have also benefited from a statement from the White House indicating that President Barack Obama would not oppose a House Republican bill that would tie a short-term increase in the debt limit to the passage of a budget. The House is scheduled to vote on the bill on Wednesday.

Meanwhile, traders largely shrugged off a report from the National Association of Realtors showing an unexpected drop by existing home sales in the month of December.

Sector News

Computer hardware stocks showed a strong move to the upside over the course of the trading day, driving the NYSE Arca Computer Hardware Index up by 2.2 percent. The gain extended a recent upward move by the index, which ended the day at a four-month closing high.

Seagate Technology (STX) and Western Digital (WDC) turned in two of the hardware sector's best performances, jumping by 7.1 percent and 5.7 percent, respectively.

Considerable strength also emerged among health insurance stocks, as reflected by the 2.1 percent gain posted by the Morgan Stanley Healthcare Payor Index. With the gain, the index reached its best closing level in nine months.

Natural gas also saw significant strength on the day amid optimism that an arctic blast that hit the U.S. Midwest and Northeast will boost demand. Airline, gold, and healthcare provider stocks also posted notable gains.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. Japan's Nikkei 225 Index ended the day down by 0.4 percent, while Hong Kong's Hang Seng Index rose by 0.3 percent.

Meanwhile, the major European markets all ended the day in the red. While the U.K.'s FTSE 100 Index closed just below the unchanged line, the French CAC 40 Index and the German DAX Index fell by 0.6 percent and 0.7 percent, respectively.

In the bond market, treasuries turned higher over the course of the session after showing a notable move to the downside in early trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by less than a basis point to 1.835 percent after reaching a high of 1.874 percent.

Looking Ahead

Earnings news is likely to be in focus on Wednesday, with tech giants Google (GOOG) and IBM (IBM) among the companies releasing their quarterly results after the close of today's trading.

McDonald's (MCD) and United Technologies (UTX) are also among the companies due to report their quarterly results before the start of trading on Wednesday.

by RTTNews Staff Writer

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