Nasdaq and S&P 500 manage to eke out moderate gains though
U.S. stocks closed mostly higher on Tuesday, 21 January 2013 though disappointing earnings results from couple of Dow components weighed on the Dow. Stocks began the day with solid gains but the early strength faded quickly when the S&P 500 was unable to extend gains during the opening minutes. That rejection emboldened sellers, who promptly drove the indices to their lows.
Adding insult to injury was the fact that today's mostly better-than-expected earnings failed to entice buyers. Main indexes rose earlier in the session after the news that China's central bank injected liquidity into the financial system, benefiting materials and energy sectors.
The Dow Jones Industrial Average ended 44.12 points, or 0.3%, lower at 16,414.44. The Nasdaq Composite was the best performing index, gaining 28.18 points, or 0.7%, to 4,225.76. The S&P 500 closed 5.10 points, or 0.3%, to 1,843.80, breaking a two-day losing streak.
Eighteen out of thirty Dow components ended lower led by Travelers and Verizon. Verizon Communication shares fell 1.3%. The firm said it swung to a profit amid a growth in subscribers, particularly in its wireless and FiOS divisions. However, investors were concerned with tougher competition.
Among other earning reports, Shares in Johnson & Johnson slid 1.1%, also hitting the Dow, after the company reported fourth-quarter results. While the quarterly earnings per share were above analyst expectations, the full-year outlook disappointed investors. Shares in the Travelers fell 1.7% in spite of beating earnings estimates.
The name that rallied following its earnings beat was Delta Air Lines. The stock jumped 3.3%. However, the industrial space was unable to keep pace with the broader market as the top sector component, General Electric lagged after announcing a pair of acquisitions.
There was no major U.S. economic data due out Tuesday, which made for a quieter trading day for many markets. The International Monetary Fund released its world economic outlook on Tuesday, which showed a rise of 0.1%, to 3.7% in 2014. The IMF report continued a trend of generally upbeat economic data coming out of most major world economies.
In overnight news, China's central bank injected liquidity into its financial system to check a rise in short-term interest rates, which was attributed to cash needs for consumers ahead of the Chinese Lunar New Year holiday that begins on January 31. The People's Bank of China pumped 255 billion yuan (about $43 billion) into money markets via a repurchase program, hoping to address the demand for cash before the coming Lunar New Year and ease fears of a credit crunch. China is the world's second-largest oil consumer.
The German ZEW economic conditions index was released on Tuesday and it unexpectedly fell to 61.7 in January from 62.0 in December. The consensus forecast was for a reading of 64.0. The Euro currency was pressured on the German data.
Bullion prices ended lower on Tuesday, 21 January 2014 at Comex. Gold backed away from five-week high territory on Tuesday, giving back most of the gains it scored at the end of last week as dollar strength and downbeat price forecasts for the year encouraged sellers.
Gold for February delivery fell $10.10, or 0.8%, to $1,241.80 an ounce on the Comex division of the New York Mercantile Exchange. Trading floors were closed on Monday in observance of the Martin Luther King Jr. holiday. Prices had tallied a gain of roughly 1.1% on Thursday and Friday.
March silver led the percentage declines among the metals, shedding 43 cents, or 2.1%, to $19.87 an ounce.
Crude Oil futures climbed on Tuesday, 21 January 2014 finding support after the International Energy Agency raised its outlook on oil demand for this year, but prices held their ground below $95 a barrel. Prices also got a lift after China's central bank said it provided emergency funding support to commercial banks to meet demand for cash.
February crude oil added 62 cents, or 0.7%, to settle at $94.99 a barrel on the New York Mercantile Exchange after tapping a high at $95.23. The contract expired at the close, which tends to add to volatility. The March contract, which became the front-month contract, settled at $94.97 a barrel, up 38 cents, or 0.4%.
The IEA reported on Tuesday that global oil demand will grow by 1.3 million barrels a day in 2014 to 92.5 million barrels a day. That would come after a 1.2 million barrels a day gain in 2013 to 91.2 million.
Treasuries ended modestly lower with the 10-yr yield up one basis point at 2.83%.
Participation was a bit above average as 740 million shares changed hands at the NYSE.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET.
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