Earning and economic reports dominated the week. Most companies have beaten on the bottom line per usual, hurdling estimates that had been lowered in many cases ahead of the reports. Revenue growth is still weak, but similar to earnings, most companies have exceeded depressed top line growth estimates. Cautious guidance has been a common theme as many companies see headwinds in the first half of the year, although the default opinion is that the second half of the year should look better.
For the week, the Dow ended higher by 113.81 points (0.8%) at 14,009.8. Nasdaq ended higher by 29.39 points (0.9%) at 3,179.1. S&P 500 ended higher by 10.21 points (0.7%) at 1,513.17.
On Monday, the major averages ended the session largely where they began. The S&P 500 and Dow registered modest losses, while the Nasdaq added 0.2%, seeing relative outperformance from Apple. The materials sector was the weakest performer. The observed weakness resulted from a Goldman Sachs downgrade of the U.S. steel sector.
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Equities finished Tuesday's session on a mixed note. The Dow and S&P 500 gained 0.5% each, while the Nasdaq underperformed and ended flat. Health care, telecoms, and utilities were among the day's top performers as investors rotated into defensive-oriented stocks. Seagate fell 9.4% after issuing guidance which disappointed investors. The sell-off occurred after Seagate rallied nearly 50.0% in the eight weeks leading up to its quarterly report.
On Wednesday, equities started the day on a mixed note, but the slightly bearish bias which persisted throughout the session caused the major averages to end near their lows. The S&P 500 slipped 0.4%, and was the weakest performing index. Amazon.com jumped 4.8% after the online merchant reported its operating income well ahead of analyst expectations.
Thursday did not bring much change to the market as the S&P 500 slipped 0.3% and Nasdaq ended flat. Mixed trade unfolded amid economic data which was largely in-line with expectations. The personal income report stood out as the December increase of 2.6% was well ahead of the 0.7% rise expected. However, the notable rise in personal income was due to a surge in personal income on assets as investors chose to lock in a lower capital gains tax rate ahead of the New Year.
U.S. stocks rallied on Friday, 01 February 2013 to cap a fifth week of gains that lifted the Dow Jones Industrial Average above 14,000 for the first time in five years after reports on jobs and manufacturing brightened Wall Street's view of the economic recovery.
The Dow Jones Industrial Average rose 149.21 points, or 1.1%, to 14,009.79, its first finish above the 14,000 level since 12 October 2007. The S&P 500 index gained 15.06 points, or 1%, to 1,513.17, with telecommunications leading the gains among its 10 major industry groups. The Nasdaq Composite added 36.97 points, or 1.2%, to 3,179.09.
The day was busy with economic data, most of which surprised to the upside. Overseas, China's HSBC manufacturing PMI signaled continued expansion while readings in Europe were better-than-feared.
At Wall Street, investors received a full slate of data with the headline report coming in the form of January nonfarm payrolls. During the first month of 2013, the economy added 157,000 nonfarm jobs, which fell short of the 180,000 expected. In addition, the unemployment rate ticked up to 7.9%.
The immediate reaction sent equity futures higher as the rise in unemployment signals the Federal Reserve will not be removing its support from the markets in the near future.
The morning sentiment was aided by a strong January ISM index, upbeat December construction spending, as well as the positive revision to the final January Michigan Consumer Sentiment Survey.
The nation's manufacturing firms increased activity in January at the fastest pace since April, according to a closely followed survey of top executives released Friday. The Institute for Supply Management index rose to 53.1% from 50.2% in December, and above the 51.0% expected. Readings over 50% in the ISM diffusion index indicate that more firms are growing than contracting. The ISM tracks the breadth of growth across firms, asking purchasing managers if business is better this month than last.
Separate report showed that a gauge of consumer sentiment rose in January more than Wall Street had expected, but overall levels remained relatively low with respondents concerned over higher payroll taxes, according to data released Friday. The University of Michigan-Thomson Reuters sentiment gauge rose to a final January reading of 73.8, up from 72.9 in December. Market had expected a final January reading of 71.5, compared with a preliminary reading of 71.3, with higher payroll taxes continuing to weigh on consumers' moods.
Chinese manufacturing data, released during the Asian session Friday, painted a mixed picture for the key sector.
The dollar index, which weighs the strength of the dollar against a basket of six other currencies fell by 0.2% on Friday.
Crude oil futures ended moderately higher on Friday, 01 February 2013 as traders assessed the latest data on U.S. jobs, manufacturing and consumer sentiment for clues on demand prospects. The March contract for West Texas Intermediate oil climbed 28 cents, or 0.3%, to settle at $97.77 a barrel on the New York Mercantile Exchange. Prices, which ended the month of January with a gain of more than 6%, was 2% higher for the week.
Gold futures settled higher on Friday, 01 February 2013 with mixed U.S. jobs data and weakness in the dollar helping to underpin demand for the metal, but upbeat figures on U.S. consumer sentiment and manufacturing activity putting a cap on gains.
Gold for April delivery rose $8.60, or 0.5%, to settle at $1,670.60 an ounce on the Comex division of the New York Mercantile Exchange on Friday. Tracking the most-active contracts, prices finished nearly 0.9% higher than a week ago. Silver for March delivery rose 61 cents, or 1.9%, to end at $31.96 an ounce, 2.4% higher than a week ago.
For every stock falling nearly four rose on the New York Stock Exchange, where almost 757 million shares traded. Composite volume approached 3.9 billion.
Indian ADRs ended mostly higher on Friday. In the IT space, Infosys was up 0.2% but Wipro was up 0.8%. In the Banking space, HDFC Bank was up 1.2% and ICICI Bank was up 4.3%. In the Telecom space, Tata Communication was down 0.9% and MTNL was up 12.9%. In the other space, Tata Motors was up 0.8%, Dr Reddys was up 1.7% and Sterlite was up 1%.
For the year, the Dow, Nasdaq and S&P 500 are trading higher by 6.9%, 5.3% and 6.1% respectively. Next week shapes up to be pretty light in terms of economic data. On Monday, December factory orders will be reported at 10:00 ET.
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