Stocks Gain on Corporate Earnings, Real Estate

By Franklin Yu
Epoch Times Staff

NEW YORK—Stock markets in the United States capped a four-day gain streak with another positive session last Friday, buoyed by steady earnings and encouraging economic reports.

The Dow Jones Industrial Average finished Jan. 20 with a gain of 96 points, or 0.76 percent. The S&P 500 Index posted a modest increase of 0.88 points, or 0.07 percent, while the Nasdaq Composite Index lost 1.6 points, or 0.06 percent.

In the last week, which was shortened due to Martin Luther King Jr.’s birthday, all three major indices gained more than 2 percent. Stocks overall are off to a good start in 2012, with the Dow up 4.1 percent since Jan. 1, the S&P 500 higher by 4.6 percent, and the Nasdaq gaining a whopping 7 percent.

Earnings Steady

Nine out of 10 S&P sectors were in the black last Friday, and the CBOE Volatility Index (VIX), the stock market’s fear gauge, declined to 18.

Three of the biggest technology firms posted impressive fourth-quarter earnings, which were released Friday.

Chipmaker Intel Corp. said that net income rose 6 percent to $3.4 billion in the latest quarter, which beat analysts’ expectations. Topline revenues increased by 21 percent compared with the same quarter last year.

The company said all business lines reported better results, especially in emerging markets, which saw sales soar due to lower prices.

Intel CFO Stacy Smith, in a conference call with analysts, said to expect growth in the current year in the “high single digits.”

International Business Machines Co. (IBM) last Thursday posted fourth-quarter profits exceeding expectations, crediting higher sales of software and other services. Its shares (NYSE: IBM) rose 4 percent last Friday.

Microsoft Corp. shares (Nasdaq: MSFT) also jumped on higher profits—on sales of Xbox 360 gaming console and its Office productivity software.

General Electric Co. (GE) reported 39 cents in earnings per share, which was better than expectations, however its $38 billion in quarterly revenues fell shy of estimates.

In general, there have been fewer knockout earnings announcements. However, analysts say that steadily positive growth bodes well for the U.S. economy, coupled with better employment and real estate growth.

Housing Market Rebounding?

There are signs that the real estate sector may be rebounding, if sales figures at the end of last year are any indication.

The National Association of Realtors (NAR) said last Friday that December 2011 existing home sales gained 5 percent, to a seasonally adjusted figure of 4.61 million sales. Those numbers are the best since early 2011.

“Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market,” said Lawrence Yun, the chief economist at NAR.

The data comes in at a time of record-low mortgage rates, and homebuilders have also indicated that business may pick up in the near future. Information from Freddie Mac indicates that average 30-year fixed rate stood at 3.96 percent in December, a record low.