Fourth-quarter corporate earnings began on a positive note and lifted benchmarks on Wednesday. Benchmarks finished in the green following two back-to-back days of losses as investors were hesitant to take positions before the start of the fourth-quarter earnings season. The health care sector emerged as the biggest gainer whereas the utilities sector was the major loser among the S&P 500 industry groups.
The Dow Jones Industrial Average (:DJI) gained 0.5% to close the day at 13,390.51. The Standard & Poor 500 (S&P 500) added 0.3% to finish yesterday’s trading session at 1,461.02. The tech-laden Nasdaq Composite Index surged 0.5% to end at 3,105.81.The fear-gauge CBOE Volatility Index (:VIX) gained 1.4% to settle at 13.81. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.10 billion shares, lower than the 2012 daily average of 6.42 billion shares. Advancing stocks easily outpaced decliners on the NYSE; as for 66% stocks that fell, only 30% moved lower.
Stocks declined during the first two trading days of the week as investors remained concerned ahead of the fourth quarter earnings season. But positive earnings reports helped benchmarks add some points. Markets received a boost in the previous week, following a resolution to the Fiscal Cliff and a positive labor department report. These factors pushed the S&P 500 to its highest level since 2007. But now investors will focus on corporate results.
Alcoa Inc. (NYSE:AA) was the first Dow component to report its earnings after Tuesday’s closing bell. The company’s fourth-quarter earnings were in line with the Street’s estimates while revenue came in above analysts’ estimates. The company also predicted stronger global demand for aluminum in 2013. Investors were eagerly awaiting Alcoa’s quarterly results and its demand forecast as construction and manufacturing industries use the aluminum made by Alcoa. Despite its positive quarterly results and outlook, company shares fell 0.2%.
Helen of Troy Limited (NASDAQ:HELE) jumped 2.7% after the company reported its third-quarter results. The company said net profit in the third-quarter increased by 15%. Meanwhile, Seagate Technology PLC (NASDAQ:STX) surged 6.6% after the company’s second-quarter revenue estimate exceeded the Street’s estimates. On the other hand Apollo Group Inc (NASDAQ:APOL) plunged 7.8% after the University of Phoenix revealed that lower than expected students signed up for the third quarter. The company has also reduced its profit outlook for 2013.
According to analyst estimates, earnings will come in above the previous quarter’s paltry growth of 0.1%. But current estimates for the fourth-quarter corporate results are well below their October’s estimates. Data from Thomson Reuters believes earnings and revenues in the fourth quarter have grown 1.9%. Market experts are expecting issues like Hurricane Sandy, the Presidential elections and the turmoil over the Fiscal Cliff to spring many surprises during earnings season.
The health care sector was the biggest gainer among the S&P 500 industry groups and the Health Care SPDR (XLV) gained 1.1%. Stocks such as Abbott Laboratories (NYSE:ABT), Bristol Myers Squibb Co. (NYSE:BMY), Merck & Co., Inc. (NYSE:MRK), Watson Pharmaceuticals, Inc. (NYSE:WPI) and Pfizer Inc. (NYSE:PFE) added 0.7%, 0.6%, 1.0%, 0.9% and 1.7%, respectively.
The utilities sector was the major loser among the S&P 500 industry groups and the Utilities SPDR (XLU) lost 0.2%. Stocks such as Exelon Corporation (NYSE:EXC), NextEra Energy, Inc. (NYSE:NEE), The Southern Company (NYSE:SO), Public Service Enterprise Group Inc. (NYSE:PEG) and NRG Energy Inc (NYSE:NRG) lost 1.3%, 0.7%, 0.5%, 1.2% and 0.4%, respectively.
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