Posted on January - 25 - 2011
Sentiment Mixed Amid Mixed News, Pending Home Sales Data Looms
- The major U.S. index futures are pointing to a mixed opening on Thursday, with sentiment deteriorating following the release of the weekly jobless claims report that showed a spike in claims. Although the durable goods orders report of the Commerce Department showed an unexpected decline in orders, the inner details were mostly positive, with core orders as well capital goods orders, excluding aircrafts, showing month-over-month increases.
Earnings news has been mostly encouraging, with companies such as Caterpillar (CAT) and Netflix (NFLX) reporting solid earnings and issuing upbeat forward guidance. However, there were disappointments as well. The market may also closely watch the pending home sales index due to be released shortly after the markets open.
After showing some indecision in early trading, the major averages spiked sharply higher following the release of upbeat housing data. While the Nasdaq and the S&P 500 remained positive throughout the remainder of the session, the Dow briefly pulled back into the red before recovering and ending the day modestly higher.
The Dow Industrials ended up 8.25 points or 0.07% at 11,985, a fresh multi-year closing high, while the Nasdaq Composite Index closed 20.25 points or 0.74% higher at 2,740 and the S&P 500 Index added 5.45 points or 0.42% to close at 1,297.
The market breadth among the Dow components was tilted in favor of the decliners, with 17 stocks ending lower, while the remaining 13 stocks closed in positive territory. Alcoa (AA), DuPont (DD) and Verizon (VZ) were among the notable gainers, while Boeing (BA) slipped over 3% in reaction to its quarterly results and Disney (DIS) fell over 1%.
Among the sector indexes, the Dow Jones U.S. Basic Materials Average rose 2.43%, the NYSE Arca Oil Index moved up 1.31%, the Philadelphia Oil Service Index added 4.60%, the NYSE Arca Gold Bugs Index surged up 3.90% and the NYSE Arca Airline Index gained 2.11%. Additionally, the Philadelphia Housing Sector Index advanced 1.17%, the NYSE Arca Disk Drive Index climbed 2.10% and the NYSE Arca Networking Index rose 1.68%.
On the economic front, the Commerce Department reported that new home sales jumped 17.5% month-over-month in December to a seasonally adjusted annual rate of 329,000, marking the first increase since September. The bulk of the increase was in the West, which saw sales growth of over 70%.
Inventories of new homes in terms of months of supply slid to 6.9 months from 8.4 months, while the median price of a new home rose 12.1% month-over-month and 8.5% year-over-year to $241,500.
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