January's hot start hasn't slowed down, as the markets put in a strong performance with all three major indices up yesterday. Despite mixed earnings results coming in, 2012 remains a positive year for investors. How Thursday fares will depend on the increasing flood of fourth-quarter earnings and pre-market releases of a handful of key economic statistics, most notably the Consumer Price Index (CPI) and housing starts.
But before we jump into this morning's events, let's cover how the three largest indices fared yesterday.
Gain / Loss
Gain / Loss %
|Dow Jones Industrial Average (INDEX: ^DJI )
|Nasdaq (INDEX: ^IXIC )
Yesterday was a great day on the market. The S&P crossed 1,300 for the first time since July, and the banking sector rebounded from Tuesday's poor showing. The 10-year Treasuries and oil both edged up slightly, while gold as suffered a minor decline. But as mentioned earlier, today could be a lot more turbulent as 81 companies report earnings, including five Dow components and significant markers speaking to the health of the American economy are released.
After Citigroup plunged 8% after disappointing with weaker-than-expected results, including a double-digit decline in earnings, investors had every right to be nervous heading in to Goldman Sachs' (NYSE: GS ) pre-market earnings announcement. Although the numbers weren't great, the influential investment bank managed to beat analyst estimates and shares popped nearly 7%. Good news coming out of the eurozone also buoyed the sector, as it appears Greece is close to reaching an agreement with its private creditors and the IMF is boosting its funding base by $600 billion with plans to help countries affected by the lingering crisis.
Combine those two items, and it's no surprise that the Direxion Financial Bull 3X (NYSE: FAS ) shot up more than 4%, and with Bank of America reporting before the market opens today, investors should not expect the wild ride to stop yet.
The Nasdaq has two heavy hitters reporting tomorrow, Dow components Intel (Nasdaq: INTC ) and Microsoft, following up on a quality report by eBay. Intel was up 1.4% ahead of earnings, and while Microsoft managed to be just one of three Dow companies with a negative day, it's still up 9% for the year. Sluggish PC demand has weighed on Intel, but solid guidance from smaller semis has lifted the sector. Analysts expect a $0.02-per-share improvement over last year for the top chipmaker, along with a 20% improvement in sales.
On the macro front, the PPI, essentially an inflation index using the wholesale price of finished goods, came in with a decline of 0.1 when an increase of 0.1 was expected. Inflation is seemingly nowhere to be found in the liquidity trap currently consuming the broader economy, easing concerns that additional Federal Reserve and Treasury action would create a high inflation scenario. Today's Consumer Price Index number and housing starts will give investors a better indication on the type of action Ben Bernanke might make in regard to another round of quantitative easing.
The real story today will continue to be earnings, including five big-name Dow components, as these blue chips will serve as a critical barometer for the health of our economy.
Stay tuned for our analysis on banking earnings and general market events throughout the day.
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