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Market Summary ~ Google, energy shares lead market higher

Weakness in General Electric weighs on the Dow, but techs and gains in energy and gold stocks give the market a boost. Eleven Dow stocks report next week, and the Federal Reserve will meet on interest rates.
[Related content: stocks, investments, stock market, financial crisis, economy]
By Charley Blaine

Stocks finished a volatile week mostly higher on Friday, and investors can expect market gyrations to continue again next week.

Because of weakness in General Electric (GE, news, msgs), the Dow Jones industrials were down 45 points, or 0.6%, to 8,078.

But the Dow was not representative of the entire market on Friday.

Technology, financial, energy and commodity stocks pushed the Standard & Poor's 500 Index up 4 points, 0.5%, to 830. The Nasdaq Composite Index was up 12 points, 0.8%, to 1,477. Nearly 300 S&P 500 stocks were higher on the day, along with 62 Nasdaq-100 ($NDX.X) stocks. The index, which tracks the biggest Nasdaq stocks, was up 8 points, 0.7%, to 1,176.

* Get free, real-time stock quotes on MSN Money

Next week, the market will have to digest more than 1,100 earnings reports and a number of important economic reports, including existing- and new-home sales on Monday and Thursday and the first report on gross domestic product on Friday.

Reports are due from 11 Dow companies, including Caterpillar (CAT, news, msgs), DuPont (DD, news, msgs),AT&T (T, news, msgs), Chevron (CVX, news, msgs) and Exxon Mobil (XOM, news, msgs).

In addition, the Federal Reserve's rate-setting body, the Federal Open Market Committee, meets Tuesday and Wednesday. It's expected to leave its key federal funds rate alone. The rate is now basically 0 to 0.25%.

Not a bad day for markets
Friday's close was actually quite positive. The Dow fell down 214 points right after the open after GE reported a 46% profit drop. GE finished the day down 10.8% to $12.03, a new 52-week low, in large part because investors don't see the company maintaining its dividend and AAA credit rating. GE's loss subtracted 11 points from the Dow.

The tech shares started the rebound, thanks to a gain in Google (GOOG, news, msgs). Google's earnings from continuing operations, released late Thursday, were better than expected, and investors shrugged off its $1.1 billion write-down in investments in AOL and Clearwire. The stock was up 6.7% to $327.08, which added 3 points to the Nasdaq-100 Index.

Intel (INTC, news, msgs) was up 2.3% to $13.12, and Microsoft (MSFT, news, msgs) was up 0.5% to $17.20 after dropping to $16.75 early in the session. (Microsoft is the publisher of MSN Money.)

After tech stocks started moving, a rally erupted in gold and energy stocks. Gold jumped 4.3% to $897.70. Since bottoming on Oct. 24, gold is up about 23%.

Crude oil, meanwhile, rose 6.4% to $46.47 as talk grew that oil has bottomed. Futures trading sees gold rising well into the mid-$50s through the year.

Gold stocks were up about 10% overall. Newmont Mining (NEM, news, msgs) was up 8.7% to $44.44.

And, lastly, financial stocks rallied. Bank of America (BAC, news, msgs) and Citigroup (C, news, msgs) were the best performers among the 30 Dow stocks, up 9.3% to $6.24 and 11.6% to $3.47, respectively. The Select Sector SPDR-Financial (XLF, news, msgs) exchange-traded fund, which tracks the financial sector of the S&P 500, was up 3.3% to $8.99.

Caterpillar weighed on the market early in the day after Japanese rival Komatsu cut its 2008-09 forecast by a third, blaming a sudden, steep fall in global demand. Caterpillar shares fell as much as 6% but closed down 4.2% to $35.66.

The company will report fourth-quarter earnings on Monday. Reuters says earnings are expected to fall 14% to $1.29 a share. Revenue is expected to rise 6.5% to $12.1 billion. But Reuters says analysts see revenue falling 8.3% and earnings falling 29% this year.

The market ended the week lower. The Dow was off 2.5% on the week and is off nearly 8% in January. The S&P 500 was off 2.1% for the week and is off 7.9% for the month, with the Nasdaq down 1.6% for the week. It is off 8.6% for the month.

The market ended the week in a mostly gloomy view, with many investors hoping that a big government stimulus package will be enacted by the Presidents Day weekend.

"We're seeing a major reality check by companies who are finally coming to terms with an especially ugly recession," says Edmund Shing, chief equity strategist at bank BNP Paribas.

Street does not cheer GE results
General Electric reported fourth-quarter earnings Friday that matched the Street's expectations.

The company saw earnings fall 44% to 37 cents a share on revenue of $46.2 billion. But the earnings included $1.38 billion in tax benefits.GE's CEO Jeffrey Immelt showed investors Friday that the company can sustain the important losses suffered by its finance unit and still both pay a dividend and maintain its "AAA" credit rating.

The company result's include $1.5 billion in charges and write-downs.

"We expect 2009 to be extremely difficult," Immelt said in a press release. "However, we have taken strong actions to prepare the company, including strengthening cash flow and liquidity; managing costs; taking restructuring charges; intensifying risk mitigation; accelerating cycle of management reviews; and protecting revenue."

But Standard & Poor's has lowered its credit outlook on GE to negative, and that means it risks losing the "AAA" rating in the next two years. GE's stock has lost more than 20% of its value this month.
Pfizer could make $60 billion deal with Wyeth
The world's largest pharmaceuticals company, Pfizer (PFE, news, msgs), is set to make a $60 billion deal with Wyeth (WYE, news, msgs), The Wall Street Journal reported Friday.

Wyeth shares were up 7.8% to $41.85 on the report.A merger between the two drug makers would create a $75 billion pharmaceuticals giant with many successful product lines.

Both companies have products whose patents will expire in the coming year, and that makes consolidation a logical step, analysts say. There are also considerable operating cost savings that the two companies could enjoy.

But the two companies have been dithering in discussions of a merger for nearly two years. They're said to be close now, but they might just go on talking. Pfizer was down 2.4% to $16.80.
Fiat-Chrysler deal under pressure
Mounting financial problems could put the accord between Fiat (FIATY, news, msgs) and Chrysler in jeopardy, The Wall Street Journal reported Friday.

Fiat reported terrible results on Thursday: Profit was down 71%, sales are slowing and the company may need to borrow as much as $6.4 billion to stay in business.

* Top Stocks Blog: Why the Fiat-Chrysler deal works

Chrysler, meanwhile, has offered a raft of incentives to its dealers in an effort to get sales moving again. These incentives are costly and will hurt Chrysler's margins.

Chrysler needs an additional $3 billion in government rescue funds if the deal with Fiat is to go through. But there is growing opposition to the deal in Congress because the agreement would permit Fiat, which would initially obtain a 35% stake in Chrysler in exchange for a technology upgrade, to eventually gain full control of the company without any payment.

Some lawmakers are worried that the U.S. government could find itself financing a foreign automaker.
Xerox faces pain in the year ahead
Xerox posted disappointing results Friday, and the outlook for company in the coming year isn't bright.

Shares fell 7.4% to $7.03 Friday.Fourth-quarter net income dropped to $1 million or break-even per share, compared with $382 million or $0.41 a share a year ago.

Demand for printers and copiers is slowing, and companies need to replace them even less often than they do computers.

And sales of printer cartridges and similar "post-purchase" products are not helping to compensate for the drop in machine sales.

Xerox is restructuring, trying to save $200 million this year.
Crude's fall hurts Schlumberger
In theory, earnings from oil services giant Schlumberger had to be disappointing: 95 cents a share on revenue of $6.87 billion. Analysts had expected earnings of $1.06 per share and revenue of $7.08 billion. The company expects to cut 5,000 jobs worldwide.

But the stock was up 10.3% to $41.09 because the company’s news wasn’t as bad as expected, analyst Bill Herbert of Simmons & Co. International in Houston, told Bloomberg News. "Because this wasn’t the quarter that was prophesying the end of the world, it’s causing people to rethink their pessimism," he said.

Like all oil producers, Schlumberger has been hurt by the plunge in the price of oil, which has fallen from $147 per barrel in July to $42.20 per barrel Friday. The company has also seen its budget for exploration cut by 40%.

Schlumberger reacted in the first week in January by cutting its work force by 5%. But the stock has been downgraded by a series of analysts who don't see much short-term hope for oil producers, at least until the price of crude goes up again.
Thain leaves Bank of America
Former Merrill Lynch CEO John Thain has resigned from Bank of America (BAC, news, msgs) at the request of Chief Executive Ken Lewis.

Thain's standing at the banking giant deteriorated quickly after reports he rushed out billions of dollars in bonuses to Merrill Lynch employees in his final days as CEO there, while the brokerage was suffering huge losses and just before Bank of America took it over.

In addition, Thain, who had become a vice chairman of Bank of America and head of its wealth management and investment banking divisions after the merger, must take the blame for the scope of the $15.34 billion fourth-quarter losses at Merrill from toxic assets and bad mortgage debt.

These losses soured B of A's results announcement last week and drove the bank to get help from the Treasury. Shareholders were livid when they learned that the fourth-quarter dividend was a penny a share.

One shareholder is suing the bank for allegedly mishandling the Merrill acquisition. There are fears that the bank may have to be nationalized.

Brian Moynihan, the bank's general counsel, will replace Thain.
Stocks fall in Asia and Europe
Asian stocks fell sharply Friday after Sony (SNE, news, msgs) forecast its first annual loss in 14 years.

The Nikkei 225 Index ($JP:N225) plunged 3.8%, the MSCI Asia Pacific Index lost 2.6%, and Hong Kong's Hang Seng Index ($HSIX) declined 0.6%.

In Europe, sentiment was chilled by a series of poor corporate earnings reports.

The Dow Jones Stoxx 600 Index lost 1.8%, the FTSE Eurofirst Index was down 1.5%, and London's FTSE 100 Index ($GB:UKX) was flat on the day.

Andrew Rosenbaum contributed to this report.

[*~1Best~*]

Market Insider: The Week Ahead

Posted By: Patti Domm | Executive Editor
CNBC.com
| 23 Jan 2009 | 07:20 PM ET

More bad earnings news and dismal economic reports could steamroll stocks in the week ahead, but the market may gain some traction if it appears the Obama Administration is making progress with programs to help the economy.

The first look at fourth quarter GDP, which should show a severe contraction; new data on the real estate market, and a two-day Fed meeting are on the agenda in the week ahead, along with earnings from about a quarter of the S&P 500.

The House of Representatives is expected to take up the $825 billion fiscal stimulus program mid week, but the markets enter the week fixated on the idea that the Obama Administration could unveil a new financial rescue plan, using remaining funds from the Troubled Asset Relief Program (TARP).

The first half of the TARP has been used to inject capital into financial institutions, but there is a growing consensus that the second half could be used to form a "bad" bank, or aggregator bank to hold banks' toxic assets. Monday's Senate vote on Timothy Geithner's nomination as Treasury Secretary is also important, as it's the Treasury Secretary position that has orchestrated the financial markets rescue.

"As the crisis keeps unfolding, the bigger problem is businesses, that are viable, that need the money, aren't going to see any of it coming out of these banks." said Rick Schottenfeld, chairman of Schottenfeld Group.

"I do believe the Administration will bring with it another plan. We're at this inflection point where if something doesn't get done soon, the economy is going to worsen and we're going to see lows," Schottenfeld said on CNBC's "Closing Bell" Friday.

From 'Fast Money':
# Investors Putting Money Into a Time-Honored Asset

Stocks in the past week suffered from a rash of bad earnings news but more so from a major sell off and lack of confidence in financial stocks. The Standard and Poor's financial sector lost 7 percent in a week of wild trading.

"The days the financial sector gets obliterated are the days the market gets obliterated. The days when it catches its breath, the market comes back" said Bill Stone of PNC.

A new plan for "TARP is one of the most important things, so people can start making decisions," he said.
Market Mayhem

The major indices, however, managed to hold key support levels, above the November lows. The Dow lost 2.5 percent for the week to 8077, and the S&P 500 closed off 2.1 percent, at 831. The Nasdaq was off 3.4 percent to 1477.

Traders are watching to see if these important levels will hold, but some technicians believe the lows could be broken. That would be 7552 on the Dow and 752 on the S&P. John Roque, of Nataxis Bleichrolder is one of those. He points to the Paris CAC and Italian MIB 30, two indices that have now made new lows. He said the world is no longer decoupled, and "If they've made new lows, I should pay attention." Roque said his S&P target is 680.

The dollar, meanwhile, marched higher against the euro and sterling, which hit lows not seen since the 1980s. The dollar was 2.3 percent higher against the euro, at $1.2985, and down 1.9 percent against the yen, in the past week.

More From CNBC.com
# Get After-the-Bell Dow 30 Quotes
# Credit Spreads and Libor Data
# Futures and Pre-Market Data
# Currency Data


Brian Dolan, chief currency strategist at Forex.com, said he sees a scenario where the dollar might reverse course in the coming week. He said a weekend meeting called by President Barack Obama on the economy could result in some news on the TARP. "The risk now is things improve sentiment-wise. You get a rebound in stocks and fall off in the dollar," said Dolan.

"Something is clearly coming down the pike," said RBS Greenwich chief economist Stephen Stanley of the possibility of an announcement on TARP. "It feels like the Treasury, or Administration is going to take the lead on that. It kind of feels like at this point we're waiting for the Administration to decide what to propose," he said.

Stanley said though that he thinks the fiscal stimulus program, expected to reach the House floor this week, is not likely to do much for economy, and it could be a case of too much, too late. "Paint me one of those skeptics. I just don't think it's going to have a huge impact on the economy, partly in the way it's going to be structured. Most of what's in the package is not particularly stimulative for the economy. They are using it as a way to get a lot of stuff in that they wanted to get done, but couldn't because of the budget process," he said.

Econorama

Stanley expects the fourth quarter to show a contraction of 4 percent, when GDP is reported Friday, though many economists see it shrinking by 5 percent or more. His first quarter forecast is negative 4.2 percent. "If the fourth quarter plays out the way we expect, and our guess is the first quarter is probably the last one that has one of these huge GDP drops, it plays back to my skepticism on stimulus. So my guess is the economy will be in much better shape in the fall or summer of the year," he said.

Another big event in the week ahead is the Fed's two-day meeting, starting Tuesday. "I think it's going to be the quietest Fed meeting in recent history. They're not going to do do anything on rates, and I don't think any major initiatives or new programs will be coming out with the FOMC announcement. They'd be coming out separately," he said.

From 'Mad Money':
# Cramer's Call on Apple, Schlumberger, Google, Citigroup and More

He expects the real estate data, starting Monday with existing home sales, to show continued weakness, particularly when Thursday's new home sales are reported..

The housing data also includes the S&P Case-Shiller home price index Tuesday. Readings on the consumer are also expected, with consumer confidence Tuesday and consumer sentiment Friday.

On Monday, leading indicators are released. Durable goods and weekly jobless claims are reported Thursday. The employment cost index and Chicago purchasing managers are reported Friday.

Earnings Central

Industrials, telecoms, drug companies and financials are among the many companies reporting in the week ahead. On Monday, Dow components Caterpillar, American Express and McDonald's are expected to report. Reporting Tuesday are Eaton, Halliburton, Kimberly Clark, Tyson Foods and Texas Instruments. Verizon, Bristol-Myers Squibb, Hershey, Valero, U.S. Steel, EMC, Norfolk Southern and Siemens. See more below chart.

Wednesday's reports include AT&T, Boeing, Pfizer, Wells Fargo, General Dynamics and Starbucks. 3M, Eli Lilly, Royal Dutch Shell, Colgate-Palmolive, Ericsson, International Paper, Amazon.com and Altria report Thursday.

Big oil reports Friday with releases from Exxon and Chevron. Procter and Gamble, Honeywell and Gannett also report that day.


Questions? Comments? [e-mail]
© 2009 CNBC.com

URL: http://www.cnbc.com/id/28819089/

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1Best Market Comments: Markets closed above pivotal supports: DOW 8000, SPX 817, Nasdaq 1455, and Qs 28

$COMPX 1477.29 11.80 0.81%
$INDU 8077.56 -45.24 -0.56%
$INX 831.95 4.45 0.54%

Markets remained in a trading range during the Obama Inauguration week. We have Geithner confirmation hearing on Mon, the Fed Tues and the announcement on Wed, 1/4 of SPX earning reports, and heavy eco news for the week as shown on the Economic calendar.

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=35055705

Obama Admin is working hard to revive our economy while market sentiment is quite pessimistic. My reading of major market price actions are mixed; however, as noted before, we have a good chance that markets will trade up based on economic bounce with the economic stimulus program.

Daily price actions show a potential C&H formation if the pivotal supports are held, and could develop into Inv H&S formation market bounce with the 1/20 CIT speculation. While we could see market bounce to upside to develop Inv H&S formation, breaking below the noted pivotal supports negates my anticipation of the market bounce, rather to retest the recent lows.

Worse cases are regressively breaking the pivotal supports, retesting the 11/21 low, and trading to lower/low supports – e.g. SPX 741, SPX 700 +/-. The SPX long term chart is in the iBox and have shown long term analysis in the previous posts.

Good luck,

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