How the “Unexpected” Rallied Today’s Dow

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As earnings season gets firmly under way, "expectations" mean quite a lot to the stock market. Accordingly, the news today that housing starts in December were markedly higher than expected drove the entire market up, and the Dow Jones Industrial Average (DJINDICES: ^DJI  ) ended 84 points higher, locking in gains of 0.63%, to close the day at 13,596. 

Leading the Dow by virtue of a twisted form of "only on Wall Street" logic, chip maker Intel (NASDAQ: INTC  ) jumped 2.6%, as bulls expected today's earnings to be higher than expected. The after-hours announcement from Intel -- while beating forecasts -- didn't do so by "enough." After the bell, the stock gave up all its gains from the day, and then some, as profits plummeted 27% for the quarter. Intel did fall slightly short on revenue, but not by much.

Encouraged by positive housing numbers -- housing starts jumped 12.1% in December -- home-improvement retailer Home Depot (NYSE: HD  ) joined Intel atop the Dow Thursday, rising 1.9%. The steadily-improving real estate market is part of the reason that Home Depot stock was the Dow's biggest support in 2012, accounting for more than 17% of the index's yearly 886-point gains -- 151.31/886.58 -- from the S&P 500 Dow Jones Year in Review Adobe file sent out the other day. 

Bank of America (NYSE: BAC  ) , which jumped 2% yesterday in another case of heightened pre-earnings expectations, bit the dust, falling 4.2% today. It turns out that hopeful signs yesterday from industry peers that investment banking profits would surge failed to fully materialize, at least to the extent where they eclipsed the massive, multi-billion dollar writedowns that the bank took as a result of crisis-era mortgage lending.

Elsewhere in the markets, Chipotle Mexican Grill (NYSE: CMG  ) stock mounted a comeback from its dreadful 5.5% drop yesterday. Today's 3.3% rebound indicated confidence in Chipotle's newly announced decision to possibly increase prices in mid-2013, passing on the rising food costs investors worried about Wednesday to the consumer.

Today's earnings results serve to reinforce the fact that, while Intel's dominance in the PC microprocessor arena is almost unmatched, that market is maturing. This puts Intel in a precarious situation longer term if it can't find new avenues for growth. In this premium research report on Intel, our analyst runs through all of the key topics investors should understand about the chip giant. Better yet, you'll continue to receive updates for an entire year. Click here now to learn more.

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  • Report this Comment On January 18, 2013, at 1:10 AM, gmcleod752 wrote:

    Regarding raising food prices. It won't matter if you raise them, keep them the same, or lower them. Us 15% tax bracket folks are not going to have the money anyway.

    For 2013, we have cut out of our budget, "Nights out in Town going to Restaurants", along with movies, Cable TV, Phone Service, Smart Phones, Clothes, Shoes, and meats. Sorry, but we deemed those items to be a luxury.

    Given that we are going to suffer from about $8K more out of pocket due to Obamacare and payroll taxes up 2%.

    Breaks down like this

    $720 more per year in payroll taxes.

    From $150 per month to $300 per month for doubling of the health insurance premium.

    From $1500 per year to $3000 per year increase in the deductible.

    and From 90% Insurance payout to 80% Payout.

    We figured that's $8K more out of our Measly $36K gross paychecks.

    So don't count on us to by a damn thing extra above the minimum for 2013. We are lucky that we own our home and have no car payments and I am able to maintain the cars and the house.

    And guess what, we are doing much better than all our neighbors. I'm lucky, I can fill up my motorcycle once per month and go have a picnic somewhere within 180 mile round trip from the house. That's the cheapest entertainment we can do.

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DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

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Related Tickers

9/27/2016 4:00 PM
BAC $15.29 Up +0.20 +1.33%
Bank of America CAPS Rating: ****
CMG $418.95 Down -0.93 -0.22%
Chipotle Mexican G… CAPS Rating: ****
HD $126.82 Up +1.37 +1.09%
Home Depot CAPS Rating: ****
INTC $37.18 Up +0.53 +1.45%
Intel CAPS Rating: ****