2012 Stock Predictions and Outlook
|Your one-stop shop for 2012 stock recommendations and market predictions. |
S&P 500 tacked on 3 points, or 0.2%, to close at 1358. The index had dropped in five of the preceding six sessions and scraped a two-month low of 1343 in intraday action on Wednesday. The Nasdaq lost a point at 2933.64.
Breadth within the Dow was positive with 19 of the index's 30 components finishing higher. The biggest percentage gainers among the blue chips included Chevron ( CVX), Home Depot ( HD), Pfizer ( PFE) and Travelers ( TRV). Cisco, by far, was the worst performer within the Dow, losing more than 10%,after the networking giant forecast earnings of 44 to 46 cents a share for the July-ending quarter with year-over-year revenue growth anticipated at 2% to 5%. Analysts were calling for a profit of 49 cents a share in the fourth quarter on revenue of $11.99 billion, which implied 7% growth. In the broader market, winners outpaced losers by a ratio of 1.9-to-1 ratio on the New York Stock Exchange and 1.4 to 1 on the Nasdaq. On a sector basis, technology and capital goods underperformed, while financials, conglomerates and basic materials gained. Evan Nowack, managing director at HighTower's Leventhal Group, said that traders have been enjoying the volatility that's defining the markets of late. "I think mostly this is the traders having fun," he said. "They want volatility; every day when the market goes up, goes up, goes up, there's not a lot of opportunity for these guys to play the short side, play the long side and move the market."
Stocks were driven lower Wednesday by persistent worries about the stability of Spain's banking system and Greece's future in the eurozone, but cut losses towards the end of the session on the confirmation that Greece would be receiving its next round of aid from Europe's bailout fund. The European Financial Stability Facility has decided to release €4.2 billion ($5.4 billion) of a €5.2 billion loan program. The EFSF plans on releasing the rest of the €1 billion over time. Meanwhile, Greece showed signs of progress towards forming a government. Fotis Kouvelis, the leader of smaller leftist party Democratic Left, broke ranks with the leftist Syriza party, in a sign that it might be more open to forming an alliance with the Socialists and the conservative New Democracy parties. A euro relief rally ensued, with the currency rebounding from a three-month low Thursday. London's FTSE rose 0.25% and the DAX in Germany climbed 0.7%. In Spain, the government effectively nationalized the country's fourth-largest bank, Bankia, as the banking system there remains awash in toxic assets from the fallout of a building and property market crash in 2008. Spain government officials say it will do more on Friday to bolster the troubled banks. On Thursday, the markets were also provided with some relief after initial jobless claims for the week ended May 5 fell by 1,000 to a seasonally adjusted 367,000 from the previous week's upwardly revised figure of 368,000, according to the Labor Department. Economists had expected jobless claims of 369,000. The four-week moving average was 379,000, down 5,250 from the previous week's average of 384,250. Andrew Wilkinson, chief economic strategist at Miller Tabak, is taking a conservative position on the jobs data. "We will need to see further consistency in the weekly data before we can revert to a positive tone on the labor market," he said.
Dan Greenhaus, chief global strategist at BTIG, concurred, saying that if the data is repeated or improves a bit throughout May, the pace of job creation could accelerate to more normal levels of between 150,000 and 200,000. "Nonetheless, that level of job creation is really quite tepid," he said. Meanwhile, the Commerce Department reported that the March trade gap increased to a greater-than-expected $51.8 billion, up from $45.4 billion in February. Economists expected the trade gap to grow to $50 billion. "The wider trade gap is a GDP negative; however the prior was revised down a bit so some offset there," said David Ader, a bond strategist with CRT Group. In other U.S. headlines, Federal Reserve Chairman Ben Bernanke, during a speech at a conference sponsored by the Chicago Federal Reserve Bank, said that bank lending is improving and the banking system is become healthier and more resilient. He also said that credit conditions have been improving in many ways, but remain tight in areas such as mortgages and commercial real estate. The benchmark 10-year Treasury fell 5/32, raising the yield to 1.888%. The greenback was down 0.03%, according to the dollar index. In other corporate news, retailer Kohl's ( KSS) reported Thursday first-quarter net income of $154 million, or 63 cents a share, down from year-earlier earnings of $201 million, or 69 cents a share, but ahead of Wall Street's estimate for a profit of 61 cents a share. But the department store operator forecast earnings of 96 cents to $1.02 a share for the second quarter, below the average estimate of analysts polled by Thomson Reuters for a profit of $1.13 a share, and the stock dipped 4.3%. Priceline.com ( PCLN), the online travel reservation company, reported mixed quarterly results on Wednesday and provided soft guidance. Priceline earned $4.28 a share in the quarter, topping analysts' estimates of $3.95 a share, but revenue of $1.037 billion was shy of expectations. For the second quarter ending in June, Priceline forecast non-GAAP earnings of $7.20 to $7.40 a share; analysts are calling for profit of $7.37 a share. The stock closed lower by more than 5%. Monster Beverage ( MNST), the energy drink maker, on Wednesday reported strong first-quarter results. For the three months ended March 31, the company reported earnings of $76.1 million, or 41 cents a share, as sales rose 27.5% to $454.6 million. The average estimate of analysts called for a profit of 38 cents a share in the quarter on sales of $447.1 million. The shares rose more than 9%. In commodity markets, the June crude oil contract rose 27 cents to settle at $97.08 a barrel. June gold futures gained $1.60 to settle at $1,595.80 an ounce.
Earlier In Asia, the Hang Seng Index in Hong Kong finished down 0.5% on weak trade data out of China. Japan's Nikkei average fell 0.4%. China's headline import number unexpectedly stalled in April and exports were soft, stoking worries that demand in the second largest economy was slowing. -- Written by Andrea Tse and Shanthi Bharatwaj in New York. >To contact the writer of this article, click here: Andrea Tse.