The new year's hot start is showing no signs of abating as the markets put in a strong performance, with all three major indices up on Thursday. An increasing flood of fourth-quarter earnings (including five Dow components), pre-market releases of a handful of key economic statistics, and a potential new round of Federal Reserve action were the key drivers.
But before we jump into the day's events, let's cover how the three largest indices fared yesterday.
Gain / Loss
Gain / Loss %
Dow Jones Industrial Average (INDEX: ^DJI)
Nasdaq (INDEX: ^IXIC)
Yesterday was a good day on the market. All three major indices continued their northward trek, and notably, the S&P 500 stayed above 1,300 after crossing it two days ago for the first time since last summer. The Nasdaq was our top performer of the day, marking its third straight victory. Several big-name tech companies announced yesterday, although Google's (NAS: GOOG) after-hours revenue miss, which has sent shares down 9% this evening, may put a damper on the tech sector tomorrow.
Jobless claims came in at a four-year low, and any trend in the right direction is a welcome relief during this prolonged recovery. Nonexistent inflation in the just-reported PPI and CPI has economists predicting that an empowered Ben Bernanke could announce a $1 trillion quantitative-easing program before the end of the month. If there is a QE3, it would certainly be a catalyst to send the markets higher.
Bank earnings continue to dominate the headlines, Dow component Bank of America and Morgan Stanley (NYS: MS) were next in line and put up some strong results. Bank of America swung to a $1.6 billion profit -- on asset sales, mind you, but it certainly beats last year's fourth quarter $1.6 billion loss. Morgan Stanley reported a loss of $0.14 a share, but that was a huge improvement over the anticipated $0.58 consensus estimate. It's no surprise that the Direxion Financial Bull 3X (NYS: FAS) levered ETF added another 2% on top of yesterday's 4% gain.
The market largely shrugged off housing starts that fell 4.1% sequentially, coming in at 657,000 versus a Bloomberg consensus estimate of 680,000. Investors will get to see the other side of the coin before the market opens today, as existing-home sales will be announced. A poor number could jeopardize the Dow's chances for closing out the week on a high note.
Stay tuned for more analysis on important earnings and general market analysis throughout the day.
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