US stocks witnessed mixed finish for the week that ended on Friday, 27 January 2012. While Dow registered losses, the other two major indices - Nasdaq and S&P 500 eked out small gains. Economic and earning reports dominated the week. The Dow would have registered gains for the week but for losses it incurred on the last trading day of the week, ie Friday, 27 January 2012.
For the week, that ended on Friday, 27 January 2012 2011, Dow ended lower by 60.02 points or 0.5% to end at 12,660.5. The Nasdaq gained 29.85 points or 1.1% to end at 2,816.55. The S&P 500 gained 0.95 points or 0.1% to end at 1,316.33.
Without any data during the first two days of the week market participants took their cues from Europe amid speculation about Greeces dealings with its creditors. Disappointment and frustration related to ongoing wrangling induced selling some days, but ultimately the euro was able to rally back. Although nothing official has been stated, rumors continue to point to a possible solution between Greece and its creditors.
The highlight of the week, however, was news that the Federal Open Market Committee decided to keep its federal funds target rate at 0.00% to 0.25%, and that economic conditions are expected to warrant exceptionally low levels for the federal funds rate through at least late 2014. That forecast for the fed funds rate preceded news that the Fed now believes economic growth in 2012 will range from 2.2% to 2.7%, which is down from the previously forecasted range of 2.5% to 2.9%.
A substantial serving of economic reports during the week helped make up for the dearth of data earlier in the week, but their overall quality was mixed relative to expectations. Leading Indicators increased by 0.4% during December after a downwardly revised 0.2% increase in the prior month. Durable goods orders for December increased by 3.0% as against an expected figure of 2% increase. That came on top of an upwardly revised 4.3% increase for the prior month. Excluding autos, durable orders climbed 2.1%, which is considerably better than the 0.7% increase that had been commonly expected. Orders less autos for the prior month were revised upward to reflect a 0.5% increase.
The latest weekly initial jobless claims tally increased by 21,000 to 377,000, which is on par with the 375,000 initial claims that many had expected. New home sales for December fell 2.2% to a seasonally adjusted annual rate of 307,000 units. Market participants also dealt with disappointing pending home sales numbers for December. They showed a 3.5% drop when a 3.0% decline had been expected.
In the earnings area, Colgate-Palmolive announced in-line earnings earlier in the week, but blue chips 3M, and Caterpillar bested expectations for the bottom line. AT&T came short of the consensus estimate. Apple absolutely blew out Wall Streets forecast, prompting the stock to rebound to a new record high, but better-than-expected earnings came from Boeing, United Technologies, and ConocoPhillips.
Market participants also had varied responses to better-than-expected results from blue chips Johnson & Johnson, DuPont, and McDonalds. Fellow Dow components Travelers and Verizon posted earnings that came short of what had been widely expected.
U.S. stocks on Friday, 27 January 2012 finished mostly lower, but a late surge in financial shares helped the S&P 500 preserve a fourth week of gains after the White House said it would expand a foreclosure-prevention program and hope grew for a Greek debt-deal. Down much of the session, the financial sector reversed course in the final hour of trade as the White House said it would loosen rules on a loan-modification program.
The Dow Jones Industrial Average lost 74.17 points, or 0.6%, to end at 12,660.46. The Nasdaq Composite Index added 11.27 points, or 0.4%, at 2,816.55. The S&P 500 Index shifted briefly higher and ended the day down 2.1 points, or 0.2%, at 1,316.33.
Among economic reports expected for the day on Friday, the Commerce Department reported that U.S GDP rose 2.8% in the fourth quarter. Market had forecast a 3% rise. Moreover, the bulk of the increase came from a buildup in inventories.
Separately, the University of Michigan/Thomson Reuters gauge of consumer sentiment reading showed that the latest measure of consumer sentiment in US rose in January for the fifth straight monthly gain as job gains helped put worries about U.S. government finances in the background. The final January reading of the University of Michigan/Thomson Reuters gauge of consumer sentiment reached 75.0, compared to a preliminary report of 74.0 and a December reading of 69.9. Market had expected the final reading to be 74.3.
In the currency market on Friday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies fell by almost 0.6%. The dollar lost ground versus major currencies on Friday, with the euro finding support after a top European Union official said Greece and private creditors are near an agreement on voluntary write-downs on Greek-government debt. The dollar stayed down after reports showed the U.S. economy grew at a slower pace than forecast in the fourth quarter and a rise in January consumer sentiment.
Fitch Ratings on Friday afternoon cut the credit ratings of Spain, Italy, Belgium, Cyprus and Slovenia, saying the five nations do not hold enough financial leverage amid the regional debt crisis. The downgrades, which Fitch warned of in December, came as negotiators for private creditors headed back to Athens for talks on a debt swap to reduce Greeces borrowings and avoid a possible default.
Crude prices ended lower on Friday, 27 January 2012 at Nymex. Prices ended lower following disappointing economic data at Wall Street on Friday. Prices had traded higher for a brief period following a weak dollar. Prices also previously got some support from the Federal Reserves decision to keep interest rates low for the next three years. Light and sweet crude for March delivery fell $0.14 (0.1%) to $99.56 a barrel on the New York Mercantile Exchange on Friday. It crossed $100 during intra day trading earlier during the day following a weak dollar. Prices rose 1.3% for the week.
Precious metal prices ended higher on Friday, 27 January 2012 at Comex. Comex February gold futures prices ended the U.S. day session at highest levels in almost two months after the dollar stayed weak and economic data for the day disappointed. Gold for February delivery ended higher by $5.5 or 0.3%, to end at $1,732.2 an ounce on the Comex division of the New York Mercantile Exchange on Friday. Gold registered gains for third straight day. For the week, gold gained 4.2%. On Friday, silver prices for March delivery rose $0.05 or 0.1% to end at $33.79. For the week, silver rose 6.7%.
For every stock on the decline nearly two gained on the New York Stock Exchange, where nearly 851 million shares traded. Composite volume neared 4 billion shares.
Indian ADRs ended mixed on Friday. Tata Motors led the gainers soaring 2% to $23.88. Sterlite rose 3.5% to $9.57. In the IT space, Infosys was down 1% at $54.31 and Wipro was down 0.3% at $10.96.
For the year till date, the Dow, Nasdaq and S&P 500 are trading higher by 3.6%, 8.1% and 4.7% respectively. The pace of earnings announcements will come down in the next week.
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