|BEGINSUB|Stocks Turn In A Strong Performance On Positive Earnings News From IBM – U.S. Commentary|ENDSUB|
Wall Street was able to maintain positive sentiment throughout the entire day on Monday after closing sharply lower in the previous session. The markets benefited from bargain hunting following recent weakness.
The markets were boosted by IBM
(IBM), which reported better than expected preliminary fourth quarter results before the bell. The news offset some of the recent concerns about the strength of earnings season, which led investors to pick up stocks at reduced prices.
Stocks continued to perform well in late-day trading, with the major averages closing just off their highs of the day. The Dow closed up 171.85 points or 1.4 percent at 12,778.15, the Nasdaq closed up 38.36 points or 1.6 percent at 2,478.30 and the S&P 500 closed up 15.23 points or 1.1 percent at 1,416.25.
Sector News
Chemical stocks turned in some of the strongest performances, with the S&P Chemical Index closing 3.5 percent higher, setting a two-week closing high. Within the chemical sector, Hercules
(HPC) saw one of the biggest gains. Shares of Hercules closed up 5.7 percent.
Semiconductor stocks also saw sharp gains. The Philadelphia Semiconductor Index gained 3 percent, moving off the four year low set on Friday. The strength in the sector came as the news out of IBM inspired traders to buy tech stocks at reduced levels.
Computer hardware stocks saw significant buying interest as well. The Amex Computer Hardware Index climbed 3 percent, led by IBM. Other stocks that saw notable gains include steel, networking and natural gas stocks.
On the other hand, drug stocks closed modestly lower, with the Amex Pharmaceutical Index dropping 0.7 percent. Within the index, Schering Plough
(SGP) and Merck
(MRK) posted some of the worst gains after releasing a disappointing report on Vytorin.
Dow Components
With most of the Dow components closing in positive territory, the blue chip index posted a triple digit gain on Monday. Of the thirty stocks within the index, only four closed lower.
IBM led the index higher after the tech bellwether announced preliminary fourth quarter results that were much better than expected. The company reported a 24 percent rise in its earning per share, reflecting strong performances in Asia, Europe and emerging markets.
Shares of IBM closed 5.4 percent higher, moving further off the seven month low posted last Tuesday.
Intel
(INTC) saw strong buying interest as well. Shares of Intel jumped 5 percent in anticipation of its earnings announcement on Tuesday. Other stocks within the Dow that closed notably higher included Alcoa
(AA), DuPont
(DD) and AIG
(AIG).
On the other hand, Merck closed significantly lower after the pharmaceutical giant reported that its cholesterol drug Vytorin showed no significant difference from a high dose of the generic form of Zocor. Shares of Merck closed 1.3 percent lower.
Other Markets
In overseas trading, most of the Asian markets began the week on a negative note. Though the Japan’s Nikkei 225 average showed modest gains in early morning trading, the index declined steadily thereafter to close down 1.9 percent at 14,111.
Meanwhile, the major European markets closed mostly higher in Monday’s session. The French CAC 40 Index closed up 0.6 percent and the German DAX Index rose 0.2 percent. The U.K.’s FTSE 100 Index closed 0.2 percent higher.
Treasuries also saw some strength, extending the strong upward move that was seen in the previous session. Subsequently, the treasury yields ended the session lower, with the 10-year treasury yield closing down 1.7 basis points at 3.793 percent.
Looking Ahead
The markets may be affected by several earnings reports from major corporations on Tuesday. Genentech
(DNA) is scheduled to report its fourth quarter earnings tonight, while Citigroup
(C) and U.S. Bancorp
(USB) are both reporting their fourth quarter results before the bell.
A pair of key economic reports may influence Wall Street as well. The Commerce Department will release its retail sales number and the Labor Department will report the producer price index. Both reports will be released before the markets open on Tuesday and are important as they will help reveal the condition of the economy.
|BEGINSUB|European Markets Rise, Led By Techs – European Commentary|ENDSUB|
The European markets rose for the first time in four days on Monday, as solid preliminary results from International Business Machines Corp. and SAP triggered a rally among technology stocks.
International Business Machines, the world's largest computer services company, released preliminary earnings estimate for the fourth quarter that was 24% above year-ago levels. The results also came in above analysts' current consensus estimate.
Crude for February delivery rose $1.44 to $94.13 on the New York Mercantile Exchange, by the time the European markets closed, as forecasts for blustery weather across the U.S. raised expectations that demand for energy will surge in the coming days.
The FTSEurofirst 300 index of pan-European blue chips closed 0.23% higher at 1,432.14 points, while the narrower DJ Stoxx 50 index remained essentially flat at 3,539.03 points.
The U.K.'s FTSE 100 index rose 0.22% to 6,215.70. British Land, Land Securities, Barclays, Royal Bank of Scotland and Persimmon were among the top gainers, while Tesco, Shire and Imperial Tobacco were among the notable losers.
France's CAC 40 index climbed 0.60% to 5,403.51. Cap Gemini, STMicroelectronics and Alcatel-Lucent were among the major gainers, while Suez and Gaz de France were among the major losers.
Germany's DAX index advanced 0.18% to 7,732.02. Deutsche Borse, SAP, Infineon and Volkswagen were among the notable gainers, while E.ON, RWE and Merck were among the notable losers.
SAP, the world's biggest maker of business-management software, surged up 2.7% after the company said it expects fourth quarter software revenues to rise 14% from a year ago to €1.41 billion.
Cap Gemini, Europe's largest computer services company, climbed 3.2%, while STMicroelectronics, Europe's biggest chipmaker, surged up 4.4% and Infineon, the region's second biggest chipmaker of semiconductors, rose 2.5%.
Banking stocks were supported by a report of potential additional capital injections into the sector. Royal Bank of Scotland, Britain's second largest bank, rose 1.7%, while Barclays, the third largest, surged up 3.2% and UBS, Switzerland's largest bank, added 1.1%.
Shares of British real estate companies rose after analysts at Lehman Brothers said in a note they believe property shares have fallen too far in recent months and are set for a rebound. Land Securities rose 3.7%, while British Land climbed 5.1% and Hammerson jumped 9.3%. Persimmon, Britain's biggest homebuilder by market value, gained 6.9%.
Volkswagen, Europe's biggest carmaker, rose 2.4% after Commerzbank upgraded the stock to ``hold'' from ``reduce.'' Separately, the carmaker forecast record 2008 sales after deliveries last year exceeded 6 million vehicles for the first time on increased demand for Skoda and VW-brand models.
On the other hand, French utility Suez fell 1.1% after Credit Agricole, France's second biggest lender, said it would sell a 2.07% stake in the utility company. Gaz de France, which is merging with Suez, slid 1.6%.
The news also affected other stocks within the European utilities sector. German utilities E.