2012 Stock Predictions and Outlook
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NEW YORK ( TheStreet) -- Major U.S. equity indices approached highs for the year Friday and extended gains on signs the U.S. economy is performing better than expected. The consumer sentiment index from the University of Michigan's August report came in at 73.6, a three month-high, versus the consensus estimate of 72.4. Leading economic indicators jumped 0.4% in July after a 0.2% dip in the previous month. Investors were encouraged by European stocks, which increased on expectations the continent's debt problem is contained. The Dow Jones Industrial Average rose 25 points, or 0.2%, to 13,275, within 5 points of its 2012 closing peak. The blue-chip index gained 0.5% for the week. "We continue to be long term, reasonably bullish on equities, and specifically in areas where we think some bigger game changes will occur in the next decade," said Leo Kelly, managing director at HighTower's Kelly Wealth Management. "The problem is short term; there's an enormous amount of uncertainty." Breadth within the Dow was negative with losers ahead of winners, 16 to 14. The biggest percentage gainers were Bank of America ( BAC), Caterpillar ( CAT), Travelers Companies ( TRV) and United Technologies ( UTX). Caterpillar gained 1.6% after the construction-machinery maker reported that heavy equipment sales at its global dealers sped up in the three months through July. Merck ( MRK), Pfizer ( PFE) and Intel ( INTC) were among the Dow's losers. The S&P 500 added 3 points to close at 1,418. The benchmark index's 2012 closing high, in April, is 1,419. The index finished the week up 0.9%. The Nasdaq finished up 14 points, or 0.5%, to 3,077. It ticked up 1.8% for the week. The strongest sectors in the broad market were consumer cyclicals, financials, technology and capital goods. The weakest sectors were basic materials, healthcare, consumer staples and utilities. Volume came in at 2.9 billion on the New York Stock Exchange and 1.62 billion on the Nasdaq. U.S. stocks jumped Thursday on evidence that the housing industry, which has been in a four-year recession, is coming to life. German Chancellor Angela Merkel's reiteration of European Central Bank President Mario Draghi's vow to do whatever is necessary to save the euro also buoyed stocks, pushing major equity averages to their biggest gains in nearly two weeks. Ten-year Spanish government bond yields were falling sharply Friday on expectations of eventual ECB intervention. Kelly Wealth Management's Leo Kelly said he is encouraged by the recent housing data. It looks like "the beginnings of a turn back
with some of the housing data here recently: including home prices, and we just got some good numbers on housing permits. Although, housing starts were not as good as we had hoped." "If you look at the collection of data over the last several months, clearly what we're seeing is housing stabilizing and actually starting to turn up. That has a terrific impact on the economy." September crude oil futures climbed 41 cents to settle at $96.01 a barrel and December gold futures settled up 20 cents to $1619.40 an ounce. The benchmark 10-year Treasury was up 6/32, diluting the yield to 1.817%. The greenback was trading up 0.19%, according to the dollar index. The FTSE in London closed up 0.31% and the DAX in Germany settled up 0.64%. The Hong Kong Hang Seng index closed up 0.77% and the Nikkei in Japan settled up 0.77%. On the corporate front, Apple ( AAPL) shares rose 1.9% after Jefferies reiterated a "buy" rating on the stock and lifted its price target to $900 from $800. The firm said it believes the iPad Mini has already gone into production, a rumor unconfirmed by Apple. Earlier in the session, the stock reached a new all-time high of $645.49.
Branded food products company J.M. Smucker ( SJM) reported first-quarter results that beat Wall Street expectations as price reductions helped lure customers back in. Shares popped 5.1%. Athletic apparels company Foot Locker ( FL) posted second-quarter net income that increased by 59% and results that exceeded Wall Street expectations, largely thanks to stronger sales, better cost controls and a small tax-related benefit. Shares rose 1.7%. Teen retailer Gap ( GPS) raised its full-year earnings outlook in afterhours trading Thursday. Shares added 4.8% Friday. Clothing retailer Aeropostale ( ARO) gave a softer-than-expected third-quarter earnings guidance for the current quarter after the bell. Shares declined 11.1%. Ann Taylor ( ANN) reported a stronger-than-expected rise in second-quarter earnings as the women's apparel retailer saw sales grow broadly. The company has raised its full-year forecast. Shares finished up 20.4%. Marvell Technology ( MRVL) shares plunged 14.2% after the chipmaker posted weaker-than-expected quarterly results and outlook amid lower PC and smartphone demand and stiff competition in the Chinese market.
-- Written by Andrea Tse in New York. >To contact the writer of this article, click here: Andrea Tse.