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Dow 10,908.97 +1.76 (+0.02%)
Nasdaq 2,309.67 +5.44 (+0.24%)
S&P 500 1,285.47 +1.75 (+0.14%)
10-Yr Bond 4.535 +0.32 (+0.71%)
NYSE Volume 1,015,389,000
Nasdaq Volume 890,779,000
12:00 pm : Heading into the afternoon, the market's major averages continue to float around the unchanged mark. A mixed bag of earnings reports couples with anticipation ahead of the week's full docket in tempering action on either side of the aisle.
Leadership has been limited to the Energy sector's 1.8% advance. With the OPEC meeting scheduled for tomorrow, that area of the market is in focus. Investors await the cartel's crude production decision. A record fourth quarter earnings report from Exxon Mobil (XOM 63.31 +2.02) has incited further buying interest there, and strong results from Smith International (SII 44.01 +1.28) adds to the upside. Those companies' reports underpin the Overweight rating that Briefing.com maintains on Energy.
Seven of the ten economic sectors presently trend lower. Utilities (-0.5%) and Financial (-0.4%), the market's rate-sensitive sectors, are pressured by the submerged Treasury market. Stock and bond traders alike remain cautious ahead of tomorrow's FOMC meeting. A 25 basis point hike in the fed funds rate is considered virtually certain, but there is less certainty over the Fed's accompanying policy statement. The market expects just one more rate increase following tomorrow's, and will attempt to glean confirmation of such in the statement's wording. Our forecast calls for two more rate hikes over the course of the next two meetings, after which the tightening cycle will go on hold.
Due largely to relative weakness in pharmaceuticals and biotechs, Heath Care (-0.4%) is also an influential laggard today. Schering-Plough (SGP 19.72 -0.36) announced Q4 profits that fell short of expectations and levies a weighty loss. Wide-spread selling has taken the Consumer Staples sector 0.1% lower, but rising Wal-Mart (WMT 46.80 +0.96) shares limit its decline. This morning, the world's largest retailer announced a preliminary 4.7% gain in January same-store sales. That figure is at the high end of its forecast, and follows its disappointing 2.2% increase in December. The uptick in January suggests there was an accelerator effect from gift card spending that is apt to show up in the same-store sales results from other retailers. The industry's January results will begin to stream in following Wednesday's closing bell.
Wal-Mart also helps to support the Discretionary sector (+0.1%), and upgraded Gap (GPS 17.92 +0.54) shares provide an additional lift. General Motors (GM 24.29 +0.49) is one of the sector's, and the Dow's, brightest spots upon reports that Citigroup (C 46.81 -0.06) is working with Cerberus Capital in offering an $11.5 billion bid for its GMAC business. Wachovia (WB 54.41 +0.01) is also reportedly considering an offer. Further to the M&A front, Arcelor rejected Mittal's (MT 35.85 +1.59) unsolicited $23 billion takeover bid.
On the economic front, personal income was up 0.4% and in line with expectations. Personal spending was up 0.9%, a bit more than the forecasted 0.8% increase. As the data were about as expected, and since the fourth quarter GDP numbers have already been released, the reports have had little impact on trade today.DJ30 -7.13 NASDAQ +2.30 SP500 +0.51 NASDAQ Dec/Adv/Vol 1546/1364/830.5 mln NYSE Dec/Adv/Vol 1589/1561/640.4 mln
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