Whether it was attributable to renewed speculation that Greece is edging close to a debt agreement or several strong economic data points courtesy of the U.S., stocks surged to their highest levels of 2012. Hopefully, it was more attributable to the U.S. than Europe. Maybe I am biased, but think the U.S. is a bit more reliable these days.
My opinion aside, the facts are the Dow Jones Industrial Average notched its third triple-digit up day of 2012. The S&P 500 jumped to its highest close in almost 10 months and the Nasdaq is just one or two good days away from 3000.
As I said, hopefully today's bullish action can be pinned on the U.S. and it very well could be. In economic news, the producer price index rose 0.1% in January following 0.1% drop in December, but that was still far better than 0.4% increase economists expected. Excluding volatile food and energy prices, the core index rose 0.4%, more than the 0.2% economists forecast. However, that was not the best news.
Weekly jobless claims fell by 13,000 to 348,000, easily surpassing the 365,000 new claims economists were expecting. That was the fourth drop in the past five weeks and the less volatile four-week moving average fell to 365,250. That is the fifth straight week the four-week moving average has declined. The average has fallen nearly 13 percent in the last year, according to the New York Times.
The Commerce Department said housing starts rose to a seasonally adjusted annual rate of 699,000 homes last month, a 1.5% jump from December's reading, providing further evidence the U.S. residential real estate market is improving.
The rally was widespread, touching every sector, but there were a few laggards here and there. It probably was not that much of a surprise that 29 of the Dow's 30 components were higher today, nor was it too surprising that the one that closed in the red was Kraft (KFT). This was a risk on day after all.
To that end, there were a couple of noteworthy disappointments from the oil sector. Exxon Mobil (XOM) and Chevron (CVX) certainly chipped in toward the Dow's triple-digit jump, but ConocoPhillips (COP), the third-largest U.S. oil company, was down almost 1% today. The company announced the sale of its Vietnam operations for $1.3 billion. That news should not have caught anyone by surprise because Conoco has pledged to sell billions of dollars in non-essential assets over the next few years and that cash will likely be used for dividends, buybacks or increased oil production.
Near as I can surmise, the stock may have been down because financier Carl Icahn mentioned Conoco as a possible suitor CVR Energy (CVI). Icahn is doing with CVR what he most recently did with Clorox (CLX) and that is make a tender offer for the company himself with the hopes of prompting another suitor to get in the game.
Staying with oil disappointments, there is the case of Apache (APA), the second-largest of the U.S. independent oil and gas producers. Apache shares finished slightly lower, and I emphasize slightly, after the company reported a 75% increase in fourth-quarter profits. The company ended 2011 with proven reserves of 3 billion barrels of oil equivalent, up 1 percent from 2010, according to the Associated Press.
I am going to go out on a limb here and say this was just some moderate profit-taking. The stock is up about 19% year-to-date and if the average analyst price target of almost $130 proves accurate, there is still a lot of upside in this stock.
There was plenty of upside in Itron (ITRI) today. The provider of products and services for the global energy and water markets surged more than 20% on volume that was nearly 10 times the daily average after forecasting 2012 EPS of $3.80-$4.20 on revenue of $2.1-$2.3 billion. Analysts were expecting full-year earnings of $4.10 on a revenue of $2.37 billion. The company posted a fourth-quarter loss of $55 million, or $1.35 a share, compared with a profit of $27 million, or 65 cents a share, a year earlier. On an adjusted basis, company earned $1.19 a share as revenue climbed 4% to $642.5 million. Analysts expected EPS of 99 cents a share on a revenue of $582.14 million.
Give the Nasdaq some credit. The composite was up 1.51% and the Nasdaq 100 was up 1.42% and those sporty gains with Apple (AAPL) gaining ''just'' 0.9%. It was another volatile day for Apple shares, and that is saying something because this is a volatile stock to begin with. The shares traded in a range of $18 today and volume was more than 2.5 times the daily average. I saw a lot folks on Twitter yesterday saying they caught Apple short from $519-$520 and rode it below $500. Right...
Anyway, the path of least resistance with Apple is higher for the simple reason that there is no good reason to sell this stock beyond the belief it is overbought.
That sentiment cannot be extended to Amazon (AMZN), which was down 2.5% today, making the Nasdaq's jump all the more impressive. Morgan Stanley pared its rating on Amazon to equal weight today, citing risks from, you guessed it, Apple. I am sure this should have been an issue months ago when Amazon said they were going to challenge Apple in the tablet market, but better late than never.
Amazon might yet making something of its battle with Apple and if there is a company that can, I would put Amazon on the short list, but it also must be acknowledged that while Nasdaq is trading near its highest levels in a over a decade, Amazon could be back at its 52-week low with just a couple more bad days.
In news about what I would call ''Lazarus stocks,'' General Motors (GM) gained almost 9% after the company said it earned $7.6 billion in 2011. That is a record for the U.S. auto giant and it comes just a couple of years after the company was basically a ward of Uncle Sam. GM said it might have a hard topping that record this year, but the company did say its share of the global auto market will at least remain steady. Uncle Sam still owns 26.5% of GM.
Looking at the charts, as I mentioned earlier this week, only once in the past dozen or so attempts to crack 1350 has the S&P 500 been successful. Well, it was once prior to today. Today's stopping point was 1358, putting the index above the bullish 1355 area. It would be constructive if 1345-1355 turned into new support as the S&P 500 attempts to make its way to 1375.
S&P 500 Chart
The Dow is now less than 100 points away from 13,000. Just over 13,000 is some old uptrend resistance. Lost in all the hyperbole about AAPL being a $500 stock is that as IBM approaches $200, that is excellent news for the Dow. Oh, and here CAT is right near new 52-week highs. And imagine if CVX realizes the average price target of roughly $120. Support is 12,5000.
I have already discussed the Nasdaq at length, but this is an increasingly bullish chart that may only find resistance at 3000 and only because of the psychological impact of that number. I know everyone is talking about AAPL, GOOG, AMZN, PCLN, etc. However, I would diminish the impact biotech can have on the Nasdaq going forward. Keep an eye on IBB and FBT.
A positive close on Friday, particularly one that came on somewhat decent volume, could really ignite this rally because as I mentioned earlier this week, the day before and the day after President's Day are usually down days for stocks. I am cautious only because of the three-day weekend and if bad news courtesy of Greece arrives on Sunday or Monday, the result could be ugly come Tuesday. Enjoy the long weekend.