S&P 500 at 5-Year High, Nasdaq Nears 10-Year Peak

Bikram Pandey
17 Jan, 2013
New York City

Market averages in New York reached to a five-year high on the economic optimism and better than expected earnings. Banks reported sharp fall in earnings and new batch of regulatory charges. BlackRock and EBay rose on earnings. Home builders advanced to a 5-year high.

[R]2:45 PM, New York – Market averages in New York reached to a five-year high on the economic optimism and better than expected earnings. Banks reported sharp fall in earnings and new batch of regulatory charges. BlackRock and EBay rose on earnings. Home builders advanced to a 5-year high.[/R]

Market indexes in New York and Europe traded higher after the latest data on housing market and unemployment pointed to steady economic recovery.

The Dow, the narrow index that tracks large 30 companies in America, rose to a five-year high and the broader S&P 500 index gained to the highest level last seen in December 2007.

In the U.S. economic news, weekly unemployment claims filed in the last week declined by 37,000 after adjusting for seasonality to 335,000, the lowest since January 2008. The Labor Department said the weekly decline was the largest since February 2010.

In addition, the Commerce Department said housing starts increased 12.1% in December to annual rate of 954,000, the highest since June 2008. Home builders surged to a new high in the last five years after the release of the housing report.

A regional report focused in the Philadelphia region showed an unexpected contraction in manufacturing in January. The contraction highlighted the worries that across the board government spending cuts may contribute to the economic slowdown.

On the earnings front, Bank of America Corp ((BAC)) declined 4% after the bank reported 63% decline in quarterly profit of $732 million or 3 cents a share and revenues declined 25% to $18.7 billion.

Citigroup Inc ((C)) declined 3.3% to $41.06 after the global bank reported fourth quarter net income increased to $1.2 billion or 38 cents a share compared to $956 million or 31 cents a share in the quarter a year ago. The bank also reported a surprise charge of $1 billion linked to various regulatory inquiries.

EBay Inc gained more than 3% after the company reported higher earnings and its PayPal unit added most customers in a quarter. The company also expanded its efforts to customers shopping from mobile devices and tablets.

Dell Inc gained 1.5% on the speculation that the third largest PC maker is close to finalizing its deal to go private through a deal put together by Silver Lake Management LLC with the help of $15 billion in financing. Bank of America, Credit Suisse, Barclays and Royal Bank of Canada are part of loan syndicate.

European markets recovered from the morning slide after the wave optimism linked to the U.S. economic data. In the domestic economic news, construction output in the euro zone declined at a slower pace in November from October. Leading economic conditions index in Spain showed an improvement for the third month. IMF released the next tranche for Portugal.

Rio Tinto ((RIO)) declined 1.7% after the company eased out its chief executive Tom Albanese because of a $14 billion write-down on aluminum and coal assets he led to acquire at the peak of the markets in 2007 and 2011.

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond closed up to 1.89% and on 30-year bond edged up to 3.09%.

The U.S. dollar inched lower to $1.337 to a euro and increased against the Japanese yen to 89.41 yen.

Immediate delivery futures of Texas crude oil increased $1.37 to $95.61 a barrel and Brent crude gained $1.43 to $110.61, futures of natural gas increased 9 cents to $3.53 per mbtu and gasoline traded up 4.76 to 276.89 cents a gallon.

In metals trading, gold increased $6.70 to $1,690.10 per ounce and silver gained 27 cents to $31.81 and copper closed up 5.85 cents to $3.66 a pound.