Earnings season began this week with a whimper. Alcoa (NYSE: AA ) reported results that were largely in line with expectations, and despite a slightly positive outlook for 2013, markets moved slightly only higher for the week. In the end, the Dow Jones Industrial Average (DJINDICES: ^DJI ) was up 0.40% this week, and the S&P 500 (SNPINDEX: ^GSPC ) gained 0.38%.
There were some big movers on the Dow this week. Hewlett-Packard (NYSE: HPQ ) rose 6.7% as the stock continues to recover from major losses after it announced its Autonomy writedown. This week brought renewed talk of a possible breakup, with the notion this time coming from Bernstein Research analyst Toni Sacconaghi -- and for the time being, investors have bought into the idea. This is something of a dead-cat bounce for HP. It's tough to argue that the business is healthy, so I'd approach the stock with caution.
Intel (NASDAQ: INTC ) was the second biggest winner on the Dow, gaining 4% this week. Holiday PC sales fell 6.4% in 2012, but Microsoft (NASDAQ: MSFT ) announced that it had sold 60 million Windows 8 licenses as of Jan. 8. This was a strange holiday season for the PC, with consumers tepid about the new Windows operating system, which hurt Intel as a result. But the coming quarters may not be so bad: Helping Intel was an announcement that Lenovo will sell a smartphone based on Intel's latest chip. Smartphones are an untapped market for Intel, so any wins on that front would be big news.
Merck (NYSE: MRK ) was up 3% this week, and investors were buying bad news on Friday. The company began recalling Tredaptive, a drug that was supposed to raise "good" cholesterol.The product is relatively small, generating less than $20 million of sales, so the news didn't dissuade investors from buying this week. With a 11.7 forward P/E ratio and a 4% dividend yield, the stock is still trading in a reasonable range in a steady health-care field.
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