Macy's Beats Earnings Estimates, Signals Positive Retail Sector

An earnings beat by Macy’s sent a signal to the stock market that the retail sector is doing just fine.

The stock market got a surprise on Wednesday, when Macy’s (M) brought Santa to New York two weeks earlier than usual. Santa’s sleigh landed right on top of Macy’s earnings estimates, crushing them. Macy's reported third-quarter earnings of 47 cents per share on revenue of $6.28 billion, beating estimates of 39 cents per share on revenue of $6.19 billion. Macy’s stock price skyrocketed 9.39 percent to $50.68. Investors took the report as a signal that other retailers will have good news for us in the days ahead. Wal-Mart (WMT) reports its earnings on Thursday, before the opening bell.

The Dow Jones Industrial Average (DIA) picked up 70 points to finish Wednesday’s trading session at a new record-high close of 15,821.63 for a 0.45 percent advance. The Dow also hit a new record intraday high of 15,822.98. The S&P 500 (SPY) surged 0.81 percent to close at a new record high of 1,782.

The Nasdaq 100 (QQQ) jumped 1.20 percent to finish at 3,405. The Russell 2000 (IWM) soared 0.97 percent to 1,112.

In other major markets, oil (USO) climbed 0.77 percent to close at $33.90.

On London’s ICE Futures Europe Exchange, January futures for Brent crude oil advanced $1.29 (1.22 percent) to $106.83/bbl. (BNO).

December gold futures advanced $9.80 (0.77 percent) to $1,281.00 per ounce (GLD).

Transports successfully navigated their way through space debris on Wednesday, with the Dow Jones Transportation Average (IYT) climbing 0.52 percent.

In Japan, declines by shipping company stocks led Wednesday’s modest retreat. After the Baltic Dry Index fell 1.34 percent for its fourth consecutive day in the red, Japanese shipping companies saw their stocks behave as submarines. The exchange rate for the yen strengthened to as much as 99.44 per dollar during Wednesday’s trading session in Tokyo (FXY). The Nikkei 225 Stock Average declined 0.14 percent to 14,567 (EWJ).

In China, stocks took a hard hit as no significant announcements were reported at the conclusion of the Communist Party meeting. Although most commentators had been expecting to hear about proposed reforms to state-owned enterprises, there was nothing new. The Shanghai Composite Index dropped 1.83 percent to 2,087 (FXI). Hong Kong’s Hang Seng Index sank 1.91 percent to end the day at 22,463 (EWH).

Stocks declined in Europe following a batch of weak earnings reports from the financial sector. The Euro STOXX 50 Index finished Wednesday’s session with a 0.45 percent decline to 3,021 – remaining above its 50-day moving average of 2,960. Its Relative Strength Index is 52.03 (FEZ).

Technical indicators revealed that the S&P 500 climbed further above its 50-day moving average of 1,718 after climbing 0.81 percent to finish Wednesday’s session at an all-time high of 1,782. Its Relative Strength Index rose from 59.77 to 63.95. The MACD nudged upward, closer to the signal line, which would suggest a continued advance in the immediate future.

On Wednesday, all sectors finished solidly in positive territory. The consumer discretionary sector led the group, with a 1.45 percent advance.

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