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YOUR FRIENDS' ACTIVITY

    Stocks open strong on hopes for Europe, earnings

    By DANIEL WAGNER | Associated Press – Tue, Jan 10, 2012

    Stocks shot up in early trading Tuesday after European markets rallied and corporate bellwether Alcoa predicted stronger demand in 2012.

    European markets soared after Fitch Ratings said it will not downgrade France's debt this year. A downgrade for France could scuttle the region's financial rescue efforts. A European bailout fund depends on the sterling credit ratings of France and Germany to borrow at cheap rates. Benchmark indexes in France and Germany gained more than 2 percent.

    Alcoa's fourth-quarter revenue exceeded analysts' expectations, raising traders' hopes for strong earnings announcements in the coming weeks. CEO Klaus Kleinfeld predicted late Monday that global aluminum demand will increase 7 percent in 2012. Alcoa's quarterly report marks the unofficial start of U.S. corporate earnings season.

    The Dow Jones industrial average rose 107 points, or 0.9 percent, to 12,500 as of 10:10 a.m. Eastern time. The Standard & Poor's 500 index added 15, or 1.2 percent, to 1,295. The Nasdaq composite index gained 34, or 1.3 percent, to 2,710.

    The gains were spread across all 10 industry groups in the S&P 500. All but three of the 30 stocks in the Dow increased.

    Tiffany & Co. plunged 11 percent, the most in the S&P 500 index. The jewelry retailer cut its forecast for full-year profit and said sales growth weakened in the U.S. and Europe during the holiday season.

    The U.S. economy appeared to strengthen in recent weeks. A series of positive reports on hiring, manufacturing and consumer sentiment eased fears that Europe will drag the U.S. into another recession.

    Traders hope the brighter outlook will boost corporate earnings results, which are due to be announced over the next few weeks. As the job market improves and consumers grow more willing to spend, companies might enjoy stronger consumer demand. Household spending is a crucial motor of economic growth.

    Dutch electronics giant Royal Philips Electronics NV kicked off corporate Europe's earnings season by warning that its fourth-quarter profit was worse than expected due to a weak European market.

    Asian markets closed modestly higher thanks to improving economic data out of the U.S. The optimism was tempered by news that China's import growth decelerated sharply in December. It was the latest signal that the world's second-largest economy is cooling off.

    Among companies making big moves:

    — Cirrus Logic Inc., which makes audio chips, jumped 14 percent. The company said it expects to report a 28 percent gain in revenue for the final three months of the year, well above its previous forecast and analysts' expectations.

    — Emulex Corp. jumped 7 percent after raising its quarterly earnings forecast. The data-storage and networking company said it had recovered more quickly than expected from supply problems related to massive flooding in Thailand.

    — WebMD Health Corp. plunged 30 percent. The healthcare information website said it has given up looking for a buyer, its CEO Wayne T. Gattinella has resigned, and it expects earnings to drop this year. WebMD provides health and benefits information to employees at 121 companies and health plans.

    ___

    Follow Daniel Wagner at www.twitter.com/wagnerreports .

     

    2 comments

    • One Nation Underwater
      One Nation Underwater  •  4 mths ago
      "At the starts of the fourth quarter, the outlook for the U.S. economy was looking dire," said Robert Keiser, a vice president on the research team at S&P Capital IQ Global Markets Intelligence, noting that job creation was low and manufacturing activity was cratering.

      "Things have improved over the last few months, but we're still referring to the current economy as a high risk environment," Keiser added. "And we'll be in an elevated risk environment for many years to come, meaning that the economy will be much more vulnerable to shocks and surprises."

      In addition to sub-par economic growth and activity, experts cite Europe's ongoing debt crisis as a major driver of uncertainty and a risk to the global financial system.

      Amid the mounting worries, analysts have been lowering their expectations for corporate financial results and companies have been downgrading their forecasts too.

      Another concerning sign: of the 26 S&P 500 companies that have already delivered fourth-quarter results, only 50% have managed to top expectations, which is significantly lower than normal. For the four prior quarters, around 70% of the S&P 500 companies reported earnings above forecasts.
      • D.
        D. 4 mths ago
        Yesterdays news: The American nationa debt now equals its total earning power GDP. Yep. And the interest on that 15 trillion dollar debt cannot be paid fast enough unless the entire country grows at 6 % from now on. Of course, you do not hear the criminal bureaucrats admit to bankrupting the country. They just shoot missles cause it makes them appear to be important.
    • Old Dog Lady
      Old Dog Lady  •  Wichita, Kansas  •  4 mths ago
      ALL RIGHT, another excuse for the FRIGGIN' OIL SPECULATORS to rape and rob the average citizen. I say average because our US GOV OFFICIALS are helping the FRIGGIN' SPECULATORS do it!!! They are getting their money and most of their expenses are paid by US!!!! EMAIL your reps and DEMAND they repeal the OIL FUTURES ACT OF 2000!!!!
      • Nell
        Nell 4 mths ago
        So if you were buying a commodity, and you thought it's supply might be interrupted, you would continue to sell your product that contains the commodity for the same price, and wait for the commodity price to actually jump. You have no understanding of cash flow.
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