CLOSING BELL

Dow 10725.43  +115.78, Nasdaq 2320.40  +32.41, S&P 1150.23  +14.20 

Today’s rally pushed stocks to a new 52 week high.  Stocks opened today in mixed fashion, but soon the buying kicked in and today’s advance remained broad based and strong into the close.

Health care was today’s best performer; +2.0%.  The thought is that a Republican election win to the vacant Massachusetts Senate seat could stall health care reform.  Companies benefiting today are: United Health Care (UNH) 34.98 +1.05, +3.11% Johnson & Johnson (JNJ) 65.49 +0.79, +1.22% Quest Diagnostics (DGX) 61.95 +1.36, +2.26%.

Tech was another strong source of support for the stock market. The Tech sector climbed +1.6% as IBM (IBM) 134.14, +2.36 hit a fresh 52-week high ahead of its quarterly announcement.  After the market closed the company beat both their earnings and revenue estimates.

The dollar had a gain of 0.5% today on worries that the U.K.’s AAA debt rating could be lowered.

Advancing Sectors: Health Care +2.0%, Tech +1.6%, Materials +1.6%, Telecom +1.5%, Utilities +1.2%, Consumer Discretionary +1.2%, Financial +1.1%, Industrials +0.9%, Energy +0.9%, Consumer Staples +0.6%

Declining Sectors: (None)

MIDDAY LUNCH

Dow 10710.85  +101.22, Nasdaq 2315.39  +27.40 at 2315.39, S&P 1147.51  +11.48 

Stocks are trading higher and gains are broad based today.  This is in spite of stronger dollar, which is up +0.5% against other currencies.  In recent months a stronger dollar has caused the market to sell off.

Stocks opened today in mixed fashion after Citigroup (C) 3.52 +10 reported losses in line with estimates, this set financials lower, but the sector has since rebounded to a 1.0% gain.

Health care is today’s best performer; it is currently up +2.1%.  The thought is that a Republican election win to the vacant Massachusetts Senate seat could stall health care reform.  Managed care providers have also rallied to a +4.1% gain.  Companies benefiting today are: United Health Care (UNH) 65.09 +1.23, +3.67% Johnson & Johnson (JNJ) 65.43 +0.87, +1.33% and Quest Diagnostics (DGX) 61.61 +1.36, +2.26%

Tyco International (TYC) 38.01, +0.47 announced plans to acquire Brink's Home Security Holdings (CFL) 41.36, +9.93 for roughly $2.0 billion. The company also issued upside guidance.

Treasuries are fractionally lower, the benchmark 10-year Note is down just six ticks to keep its yield below 3.70%. Meanwhile, the 30-year Bond is down just one tick so that it yields just above 4.58%.

MORNING COFFEE

Berkshire Shares To Split.  Berkshire Hathaway (BRK.A/BRK.B) is expected to approve a 50-to-1 share split of its Class B shares tomorrow. The move will bring the share price down to around $65 from Friday's $3,247, making it likely that trading volume will increase and potentially opening up the stock for inclusion in the S&P 500.

India Blames China For Cyber Attack. Indian officials said there was an attempted cyber-attack on Indian government computers, and that Chinese hackers are likely to blame. Chinese officials said such claims "are entirely without basis." This comes on the heals of similar attacks against Google (GOOG) and twenty other US companies.

U.K. Faces Lower Debt Rating.  Standard Life, one of the U.K.'s largest money-management firms  warned that the U.K.'s triple-A rating is "extremely vulnerable" and the economic and political situation is "highly toxic." Earlier this month, Pimco said there's an 80% chance of a U.K. downgrade unless the government changes its deficit reduction plans.

Kraft and Cadbury Come To Terms.  Kraft (KFT) announced a recommended deal to buy Cadbury (CBY) for £11.9 billion ($19.4 billion), or 840 pence per share, in addition to a 10 pence dividend.   Cadbury board members have unanimously recommended to shareholders to accept the offer.

Earnings releases today: 

Citigroup (C) estimates -$0.33, yr ago -$1.72

TD Ameritrade (AMTD) estimates $0.26, yr ago $0.31

Upgrades:

Xilinx  (XLNX) RBC Capital Mkts upgraded the company from Sector Perform to Outperform and raised their target price from $28.00 to $32.00.

McDonalds (MCD) Credit Suisse upgraded the company from Neutral to Outperform and raised their target price from $69.00 to $71.00.

U.S. Steel (X) Deutsche Bank upgraded the company from Hold to Buy and raised their target price from $44.00 to $77.00.

·         Futures: Dow -0.2%. S&P flat. Nasdaq flat. Crude +0.2% to $78.15. Gold+0.7% to $1,138.40.

·         Asia, Nikkei -0.8% to 10,765. Hang Seng +1% to 21,678. Shanghai+0.3% to 3,247. BSE -0.9% to 17,486.

·         Europe at midday, London -1%. Paris -0.9%. Frankfurt -1%.

CLOSING BELL

Dow 10609.65  -100.90, Nasdaq 2287.99  -28.75, S&P 1136.03  -12.43

The bears took over today and gave stocks their worst lost in four weeks.  The lose today came dispite better than expected earnings reports from Intel (INTC) 20.80 -0.68, -3.17% and JPMorgan Chase (JPM) 43.68 –1.01, -2.26%.

The latest batch of economic data did little for the market. December's Consumer Price Index (CPI) increased +0.1% month-over-month, which was a slightly lower increase than the +0.2% monthly increase that many economists had forecast.  The core rate which excludes food and energy, increased +0.1% month-over-month, as expected.

Industrial production in December increased +0.6%, as expected. Capacity utilization for December came in at 72.0%, which is on par with the 71.8% utilization rate that many had come to expect.

The preliminary January Consumer Sentiment Survey from University of Michigan came in at 72.8, which was slightly below the expected reading of 74.0.

There was major weakness in banks today, the lose that bank stocks posted today caused the Financial sector to decline -2.0% making it the worst performing sector.

The stronger dollar today didn’t help stocks.  The dollar was higher on rumors that German Chancellor Angela Merkel is going to resign and continued concerns over Greece’s financial health .

U.S. markets will be closed this coming Monday in observance of Martin Luther King Jr. Day. However, next week has more than 100 companies scheduled to report their latest quarterly results.


Advancing Sectors: (None)


Declining Sectors: Financials -2.0%, Telecom -1.4%, Tech -1.3%, Industrials -1.2%, Materials -1.1%, Consumer Discretionary -0.9%, Energy -0.8%, Consumer Staples -0.7%, Utilities -0.6%, Health Care -0.4%

MORNING COFFEE

Intel (INTC) posted better than expected quarterly results yesterday after the market close. earnings of +$0.40 beating estimates of only +$0.30 per share. Revenues rose +28% to $10.6 billion. Chief Financial Officer Stacey Smith said in an interview. “My expectation for 2010 is that we’re going to see robust unit growth.” “The consumer segments of the market will stay pretty strong, and I do believe we are going to see a resurgence in PC client sales.”

Obama Attacks Banks.  As expected, President Obama announced his plans for a bank levy (Tax) yesterday, which will bring in at least $90 billion from 50 top financial firms over the next ten years. The President in a speech spoke of "obscene bonuses" "twisted logic," and said "we want our money back, and we're going to get it." The problem is most of the firms have already paid back TARP, plus interest and the ones not included in the new levy (Tax) are the one that have not paid it back, General Motors and Chrysler.

Sartwood vs. Hilton.  Starwood Hotels (HOT) stepped up its lawsuit against Hilton Worldwide, adding new allegations to a lawsuit filed last April over corporate-espionage charges. Starwood claims Hilton stole over 100,000 sensitive documents and used them to pursue a rival to Starwood's successful "W" hotel chain. The newest allegations say that Hilton's misconduct reached the highest level of Hilton's management, including its CEO Christopher Nassetta.

Chancellor Merkel To Resign.  German officials are denying rumors that German Chancellor Angela Merkel is going to resign.  The Euro is being heavily sold off and was recently down -0.8% vs. the dollar.

Unions Are Exempt From Tax.  Yesterday, Union leaders announced that the White House and Unions have agreed to an exemption of the 40% tax on Cadillac health insurance plans for union members and government employees.

JPMorgan (JPM): reported Q4 EPS of +$0.74 beating estimates by +$0.13 on revenue of $23.16 billion vs. $26.8 billion. In a statement the company said "Though these results showed improvement, we acknowledge that they fell short of both an adequate return on capital and the firm’s earnings potential... While we are seeing some stability in delinquencies, consumer credit costs remain high, and weak employment and home prices persist. Accordingly, we remain cautious."

Economic reports to be released today are: CPI, Empire Manufacturing Survey, Capacity Utilization, Industrial Production and  Michigan Sentiment

Upgrades: Comerica (CMA) BMO Capital Markets changed their rating from Market Perform to Outperform.

 Intel (INTC) ThinkEquity changed their rating from Hold to Buy with a target price of $25.00.

Downgrades: Paychex (PAYX) Janney Mntgmy Scott changed their rating from Hold to Sell.

Coverage Initiated: Xilinx (XLNX) Broadpoint AmTech Research initiated coverage with a Buy rating and target price of $30.00

Coverage Reiterated/Price Target Changed: Intel (INTC) Credit Suisse reiterated their Outperform rating and changed their target price from $27.00 to $30.00.           

·         Futures at 7:00: Dow -0.4% to 10620. S&P -0.5% to 1139. Nasdaq -0.5%.

30-year Tsy +0.19% to 117-00. 10-year +0.15%.
March crude -0.7% to $79.33. Gold -0.8% to $1,133.50.
Euro -0.9% vs. dollar. Yen +0.3%. Pound -0.2%.

·         Asia: Nikkei +0.7% to 10982.1. Hang Seng -0.3% to 21654. Shanghai+0.3% to 3224. BSE -0.2% to 17554.

·         Europe at midday: FTSE +0.1% to 5505. CAC -0.5% to 3998. DAX -0.6% to 5955.

CLOSING BELL

Dow 10710.55  +29.78, Nasdaq 2316.74  +8.84, S&P 1148.46  +2.78

Despite the unimpressive economic data released today the markets were able to post small gains for the day. Conviction continues to appear questionable, as fewer than 1 billion shares traded hands on the NYSE once again.

Traders showed little reaction to news that advance retail sales for December decreased -0.3%, when economist had expected a +0.5% increase.  Sales less autos decreased -0.2%, which was also worse than the +0.3% increase that many had expected. Some attributed the drop to the previous month's +1.8% spike in retail sales and +1.9% jump in sales less autos.  These numbers will be watched closely going forward to see if the recovery is petering out.

Initial jobless claims for the week ended January 9 came in higher than expected with a  week-over-week increase of 11,000, but continuing claims retreated more than expected. The street was expecting an increase of only 3,000.

Intel (INTC) 21.48, +0.52 provided leadership to the tech sector ahead of its latest quarterly report. After the market close the company reported earnings of +$0.40 beating estimates of only +$0.03 per share. Revenues rose +28% to $10.6 billion.  Chief Financial Officer Stacey Smith said in an interview. “My expectation for 2010 is that we’re going to see robust unit growth.” “The consumer segments of the market will stay pretty strong, and I do believe we are going to see a resurgence in PC client sales.”

Tech finished the session with a +0.7% gain, but other semiconductor stocks slipped -0.6%, collectively.

Continued weakness in AT&T (T) 26.19, -0.45 and Verizon (VZ) 31.22, -0.65 took telecom down -1.8%. Telecom stocks are now down -5.1% since the start of the year, worse than any other sector.

Still, strength among health care, tech, and financials, the three largest sectors by market weight, lifted the broader market to a modest gain, which marked its seventh advance in eight sessions.

Advancing Sectors: Health care +0.8%, Tech +0.7%, Financials +0.6%, Energy +0.2%


Declining Sectors: Telecom -1.8%, Materials -1.0%, Utilities -0.3%, Industrials -0.1%, Consumer Staples -0.1%

Unchanged: Consumer Staples

MIDDAY LUNCH

Dow 10704.50  +23.73, Nasdaq 2314.80  +6.90, S&P 1147.02  +1.34 

The markets are currently trading higher but on little conviction. 

Intel (INTC) 21.33, +0.37, is scheduled to report its quarterly results after the closing bell, has led the tech sector to a +0.6% gain.  Although, the Philadelphia Semiconductor Index (SOX) 356.21, -2.88 is off -0.8%.

The Treasury will auction 30-year Bonds today. Many are curious if demand will be as strong as it was for yesterday’s 10-year Notes auction.

Initial jobless claims for the week ended January 9 came in higher than expected with a  week-over-week increase of 11,000, but continuing claims retreated more than expected. The street was expecting an increase of only 3,000.

After 13 consecutive months of contraction, business inventories expanded by a revised +0.4% in October. The expansion continued into November as inventories rose another + 0.4% for the month.  The growth was slightly above the consensus estimate of a +0.3% increase.

Retail sales came in well below expectations, declining -0.3% in December after strong upwardly revised +1.8% growth in November.  The consensus expected retail sales to increase +0.5%.

Upgrades & Downgrades

Google (GOOG) 591.06 +3.97, Barclays Capital reiterated their Overweight rating and changed their price target from 620.00 to 675.00.

Ford Motor (F) 11.68 0.00, Argus reiterated their Buy rating and changed their price target from 10.00 to 15.00.

MORNING COFFEE

China Keeps Censoring. China is calling Google's (GOOG) bluff, and has shown no signs of altering its censorship policy despite Google's threat to pull out of the country. U.S. government officials have been wary of taking sides because of concerns the case could further damage already-tense U.S.-China relations, and tech rivals, despite some ongoing concerns about doing business in China, have failed to follow Google’s lead.

Foreclosures Hit Record High.  More than 2.8 million homeowners received a foreclosure notice in 2009, representing one in 45 households and setting a new record.  2009 saw +21% more foreclosures than there were in 2008, and more than double those from 2007. Despite the jump in foreclosures, home repossessions rose just +1.1% from 2008.

California Downgraded.  S&P downgraded California to A-minus with a negative outlook, as the state continues to face a multibillion-dollar budget gap and federal help seems increasingly unlikely. It now costs more to insure California municipal debt against default than to insure bonds issued by Kazakhstan.

Debt To Cause Dollar Crisis.  Having completed a two-year study, the Committee on the Fiscal Future of the United States is warning that a dollar crisis is likely unless the government raises taxes or cuts spending to drastically rein in its debt.

Economic data to be released today include: Initial claims (Consensus 436K), Continuing claims (Consensus 4750K), Retail sales (Consensus 0.5%), Retail sales ex-auto (Consensus 0.3%), Export prices ex-ag (Consensus NA), Export prices ex-oil (Consensus NA).

Sealy (ZZ) reported earnings of $0.02 which beat estimates by $0.01 on revenue of $332M +2% vs. $309 million.

Intel (INTC) is scheduled to report earnings after the close today.  Wall Street estimates are for the company to report earnings of $0.03 per share.

·      

   Futures: Dow flat. S&P -0.05%. Nasdaq -0.2%. Crude +0.2% to $79.81. Gold +0.2% to $1,138.50.

·   

   Asia, Nikkei +1.6% to 10,908. Hang Seng -0.15% to 21,717. Shanghai+1.35% to 3,216. BSE +0.4% to 17,585.

·  Europe at midday, London +0.4%. Paris +0.3%. Frankfurt +0.4%.