The major averages finished the trading day mixed with the Dow and S&P 500 rising on Friday and the Nasdaq recording a small loss. The markets are focusing primarily on earnings season as most of the world's leading companies will be reporting their quarterly results over the coming weeks.
On Friday, Intel (INTC) and Morgan Stanley (MS) were among the active stocks moving on earnings news. As always, investors are also keeping an eye on Washington D.C. and the negotiations over the debt ceiling.
Consumer Sentiment
The University of Michigan Consumer Sentiment Index was released on Friday, showing a drop in consumer confidence in January. The reading fell from 72.9 in December 2012 to 71.3 in the preliminary January report, the lowest reading since December 2011. This number missed economists' consensus estimates of 75.0 by a wide margin.
The fall in consumer sentiment was likely triggered by the hangover from the fiscal cliff negotiations as well as concerns about the debt ceiling. Economists had expected that sentiment would rebound after Congress passed a bipartisan compromise to avert the fiscal cliff, but this did not happen.
Although the fall in consumer sentiment is a worrying development, consumption trends are significantly more correlated to changes in income. Therefore, as long as incomes are not dramatically effected, consumption should remain steady despite the decline in sentiment.
Major Averages
The Dow Jones Industrial Average climbed a little less than 54 points, or 0.39 percent, to close the day at 13,649.70.
The S&P 500 added around 5 points, or 0.34 percent, and finished at 1,486.
The laggard on the session was the Nasdaq Composite, which lost 0.04 percent to 3,134.71. The Nasdaq was held back by Intel which fell sharply after its quarterly results.
Currencies
The U.S. dollar was significantly higher on Friday, which may have provided a headwind for risk assets. Late in the day, the PowerShares DB US Dollar Index Bullish ETF (UUP), which tracks the greenback versus a basket of foreign currencies, was up 0.51 percent.
The EUR/USD was last trading down around 0.45 percent to $1.3320, but the euro remains in a steady uptrend. The British Pound also fell against the greenback, with the GBP/USD last trading down 0.87 percent. Other notable movers were the USD/CAD and AUD/USD which were up 0.68 percent and down 0.35 percent, respectively.
Commodities
Crude oil prices were mixed late on Friday. NYMEX crude futures, the U.S. benchmark, were last down around 0.09 percent to $95.41 while Brent crude contracts had climbed 0.69 percent to $111.86. Natural gas futures had added better than 2 percent on the session to $3.57.
Precious metals were also mixed on the day with gold falling and silver rising. COMEX gold futures were up 0.37 percent to $1,684.50 at last check while silver futures had added 0.13 percent to $31.85.
In the agricultural complex, corn and wheat were both higher on the day. Corn futures were last up 0.41 percent while wheat had added 1.28 percent. Soybeans recorded a very small loss on the session.
Bonds
Long-term Treasury prices rose on the session. Heading into the closing bell, the iShares Barclays 20+ Year Treasury Bond ETF (TLT) had added 0.70 percent to $119.90.
Yields fell across the curve on Friday with the biggest declines coming at the long end. The 2-Year lost 1 basis point to 0.25 percent while the 5-Year declined by 3 basis points to 0.76 percent. The 10-Year Note and 30-Year Bond yields fell 3 and 4 basis points respectively to 1.84 percent and 3.03 percent.
Volatility and Volume
The VIX plunged to 52-week low levels to end the trading week. The instrument, which is a widely watched barometer of market fear, lost more than 9 percent to finish at 12.33. The VIX has rarely traded below 15 in recent years.
Market volume was slightly below average on Friday. Around 132.6 million SPDR S&P 500 ETF (SPY) shares traded hands compared to a 3-month daily average of just under 140 million.
Stock Movers
A number of prominent stocks saw big moves based on quarterly earnings reports. Morgan Stanley (MS) rose around 8 percent on the day after its earnings.
Both Intel (INTC) and Capital One Financial (COF) recorded sharp losses after releasing their quarterly results. Near the close, INTC had lost around 6.40 percent while COF was down 7.60 percent.
Shares of Intel competitor Advanced Micro Devices (AMD) were also hit very hard, losing around 10 percent on the day.
State Street (STT) rose roughly 6 percent on the session after releasing its quarterly financial results prior to the opening bell.
Life Technologies (LIFE) was up almost 11 percent on Friday as investors speculated that the company is a buyout target.
Research in Motion (RIMM) climbed better than 6 percent after an analyst upgrade.
Shares of Monster Beverage (MNST) fell roughly 4 percent after market rumors surfaced that noted hedge fund manager David Einhorn may be shorting the stock.
by Scott Rubin
On Friday, Intel (INTC) and Morgan Stanley (MS) were among the active stocks moving on earnings news. As always, investors are also keeping an eye on Washington D.C. and the negotiations over the debt ceiling.
Consumer Sentiment
The University of Michigan Consumer Sentiment Index was released on Friday, showing a drop in consumer confidence in January. The reading fell from 72.9 in December 2012 to 71.3 in the preliminary January report, the lowest reading since December 2011. This number missed economists' consensus estimates of 75.0 by a wide margin.
The fall in consumer sentiment was likely triggered by the hangover from the fiscal cliff negotiations as well as concerns about the debt ceiling. Economists had expected that sentiment would rebound after Congress passed a bipartisan compromise to avert the fiscal cliff, but this did not happen.
Although the fall in consumer sentiment is a worrying development, consumption trends are significantly more correlated to changes in income. Therefore, as long as incomes are not dramatically effected, consumption should remain steady despite the decline in sentiment.
Major Averages
The Dow Jones Industrial Average climbed a little less than 54 points, or 0.39 percent, to close the day at 13,649.70.
The S&P 500 added around 5 points, or 0.34 percent, and finished at 1,486.
The laggard on the session was the Nasdaq Composite, which lost 0.04 percent to 3,134.71. The Nasdaq was held back by Intel which fell sharply after its quarterly results.
Currencies
The U.S. dollar was significantly higher on Friday, which may have provided a headwind for risk assets. Late in the day, the PowerShares DB US Dollar Index Bullish ETF (UUP), which tracks the greenback versus a basket of foreign currencies, was up 0.51 percent.
The EUR/USD was last trading down around 0.45 percent to $1.3320, but the euro remains in a steady uptrend. The British Pound also fell against the greenback, with the GBP/USD last trading down 0.87 percent. Other notable movers were the USD/CAD and AUD/USD which were up 0.68 percent and down 0.35 percent, respectively.
Commodities
Crude oil prices were mixed late on Friday. NYMEX crude futures, the U.S. benchmark, were last down around 0.09 percent to $95.41 while Brent crude contracts had climbed 0.69 percent to $111.86. Natural gas futures had added better than 2 percent on the session to $3.57.
Precious metals were also mixed on the day with gold falling and silver rising. COMEX gold futures were up 0.37 percent to $1,684.50 at last check while silver futures had added 0.13 percent to $31.85.
In the agricultural complex, corn and wheat were both higher on the day. Corn futures were last up 0.41 percent while wheat had added 1.28 percent. Soybeans recorded a very small loss on the session.
Bonds
Long-term Treasury prices rose on the session. Heading into the closing bell, the iShares Barclays 20+ Year Treasury Bond ETF (TLT) had added 0.70 percent to $119.90.
Yields fell across the curve on Friday with the biggest declines coming at the long end. The 2-Year lost 1 basis point to 0.25 percent while the 5-Year declined by 3 basis points to 0.76 percent. The 10-Year Note and 30-Year Bond yields fell 3 and 4 basis points respectively to 1.84 percent and 3.03 percent.
Volatility and Volume
The VIX plunged to 52-week low levels to end the trading week. The instrument, which is a widely watched barometer of market fear, lost more than 9 percent to finish at 12.33. The VIX has rarely traded below 15 in recent years.
Market volume was slightly below average on Friday. Around 132.6 million SPDR S&P 500 ETF (SPY) shares traded hands compared to a 3-month daily average of just under 140 million.
Stock Movers
A number of prominent stocks saw big moves based on quarterly earnings reports. Morgan Stanley (MS) rose around 8 percent on the day after its earnings.
Both Intel (INTC) and Capital One Financial (COF) recorded sharp losses after releasing their quarterly results. Near the close, INTC had lost around 6.40 percent while COF was down 7.60 percent.
Shares of Intel competitor Advanced Micro Devices (AMD) were also hit very hard, losing around 10 percent on the day.
State Street (STT) rose roughly 6 percent on the session after releasing its quarterly financial results prior to the opening bell.
Life Technologies (LIFE) was up almost 11 percent on Friday as investors speculated that the company is a buyout target.
Research in Motion (RIMM) climbed better than 6 percent after an analyst upgrade.
Shares of Monster Beverage (MNST) fell roughly 4 percent after market rumors surfaced that noted hedge fund manager David Einhorn may be shorting the stock.
by Scott Rubin