Mr. Market to January: Let the good times keep rolling. The second trading day of 2012 saw two of three major indices up, while gold stayed above $1,600 an ounce and oil sat at $103 a barrel. For those who subscribe to "the January effect," the belief that a positive first month of an election year bodes well for the remaining 11 months, these first days are important. In fact, going back to 1945 a strong January has predicted solid annual market returns 86% of the time.
With that in mind, it is encouraging that not even negative news emanating from the E.U. could rattle the Dow Jones Industrial Average (INDEX: ^DJI) into a negative day, as it ended up 21 points. The S&P 500 also closed up but managed a meager 0.02% gain. The Nasdaq ended up down by an even more meager margin, 0.01%.
The good times didn't keep rolling for everyone, though. Inside the Dow, the single biggest decliner was Verizon (NYSE: VZ), down 1.3% on news that the company doubled iPhone sales in the fourth quarter but suffered a 6% reduction in gross margins, largely because of the discounts the company offered with smartphones. CFO Fran Shammo also denied that Verizon has any interest in buying Netflix (Nasdaq: NFLX), claiming that if anything, the company was looking for revenue-sharing partnerships. Netflix shares were up 11%, however, on increased speculation that other tech giants might be interested in acquiring the company.
Rounding out our bottom three we have Wal-Mart (NYSE: WMT) and Pfizer (NYSE: PFE). Despite no news, Wal-Mart gave away all of its gains from yesterday, falling 1% to less than $60 a share. Pfizer declined 0.9%, where the only company-specific news was a $45 million verdict against the company and the loss of an executive to Illumina. Perhaps better feelings about the overall markets are causing money to move out of health-care stocks and into less defensive categories.
All told, it appears the market is continuing a positive trend to kick off the year. It's worth watching with a close eye to see how the market closes this week and this month -- and to see whether past trends remain true.
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