Dow Inches to 2008 High, Nasdaq at New Peak in a Decade

Bikram Pandey
07 Feb, 2012
New York City

U.S. stocks traded higher as investors focused on the earnings from global corporations Yum Brands, Becton Dixon, Coca-Cola and Arcelor Mittal. The merger agreement between Glencore and Xstrata received lukewarm reception from minority shareholders.

[R]5:05 PM New York – U.S. stocks traded higher as investors focused on the earnings from global corporations Yum Brands, Becton Dixon, Coca-Cola and Arcelor Mittal. The merger agreement between Glencore and Xstrata received lukewarm reception from minority shareholders. Oil inched higher as tensions in the Middle East escalated.[/R]

The U.S. market eked out small gains as indexes inch towards highs last seen four years ago in a cautious trading as world markets focused on Greek negotiations and comments from the Fed Chairman Bernanke.

The Dow Jones Industrial Average of 30 stocks reached the highs last seen in May of 2008 and is only 9% away from its all time peak of 13,895.63 and climbed more than 40% from its recent low of 7,608.92 in January 2009. The S&P 500 index is also less than 215 points from its previous peak in 2009 and the Nasdaq closed at a new high in the last eleven years.

The Dow, though the oldest index is largely relegated by most institutional money managers as too narrow and irrelevant and most investors focus on broader indexes that track wider markets.

Oil inched higher as tensions rose in the Middle East and Iran work on another round of middlemen to circumvent new and tighter restrictions imposed by the U.S. most analysts believe the new sanctions will have impact on Iran but the nation has still lot of wiggle room to continue trading with Asia, Africa and several nations in Europe.

U.S. consumer borrowing increased by $19.3 billion to $2.5 trillion in December as the demand for student and auto loans increase. The credit expanded in November by $20.4 billion and two monthly increase in a row was the largest since the increases in October and November of 2001.

In earnings news, Coca-Cola quarterly earnings slumped 71% but volume of beverage sold in China increased at the faster pace than estimated. Fourth quarter volumes increased 10% in China and 5% in Japan.

Toyota Motor Corporation reported after the close in Tokyo trading nine month net income declined 57.5% to 162 billion yen or $2.12 billion and revenues fell 10% to 12.88 trillion yen.

The global auto maker also estimated worldwide unit sale of 7.41 million to March, 30,000 units higher than its December forecast and estimated revenues in the full-year period of 18.3 trillion yen.

In other earnings news, Yum! Brands Inc gained after it reported 30% increase in quarterly profit and for all of 2011 increased 14%. Becton Dixon edged lower after the company cuts its 2012 net profit outlook to $5.70 a share from the previous estimate of $5.85 a share.

European markets edged lower after Greece sold €812.5 million of 6-month bills at lower yields. Glencore and Xstrata reached an agreement to create a $90 billion natural resources group. ArcelorMittal quarterly loss widened.

German production declined, Norwegian manufacturing production rose and French trade deficit increased in December. Swiss foreign exchange reserves drop and Swedish deficit was higher than expected in January.

The UK indexes slid and crude oil was in focus as the European markets turned cautious as Greek negotiations dragged on. Retail sales in the United Kingdom eased in January. BP quarterly net soared 38% and GlaxoSmithKline swung to profit.

Stocks in Japan traded sideways after Japan Tobacco lifted its annual outlook and Dainippon Screen Manufacturing indicated weak orders in the current quarter. After the close, Toyota Motor reported better than expected unit sales and rising revenues.

Reserve Bank of Australia left its key lending rate on hold as the mining sector revs up for capital spending and inflation remains within the target range. The Australian dollar rose and traders set expectations for $1.10 level. Cochlear jumped on lower than expected annual loss.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond increased to 1.96% and 30-year bond rose to 3.14%.

The U.S. dollar traded down 0.9% to $1.324 to one euro and edged up against the Japanese yen at 76.76.

Immediate delivery futures of Texas crude oil rose $1.58 to $98.49 a barrel and futures of natural gas fell 7 cents to $2.48 per mbtu and gasoline price increased 0.04 cents to 292.8 cents a gallon.

In metals trading, copper decreased 0.20 cents to $3.86 per pound, gold increased $24.30 to $1,749.20 per ounce and silver added 48 cents to $34.22.