Tuesday, October 12, 2010

Wall St flat as earnings eyed, Fed boost priced in

NEW YORK: U.S. stocks drifted in the lightest trading volume of the year on Monday, Oct 11 as few dared to place bets ahead of key companies' results later this week.

Expectations the Federal Reserve will flood markets with even more cash have been fully priced in to the market, so investors are now focused on third-quarter earnings season, with Intel Corp scheduled for Tuesday.

"Trading will be light until we get more numbers, but if companies follow Alcoa and come out with positive surprises, that could add fuel to this rally," said King Lip, chief investment officer of Baker Avenue Asset Management in San Francisco.

Last Friday's unexpectedly weak payroll report underlined the weakness in some areas of the economy, and increased the expectation that the U.S. central bank will bolster the recovery with a second round of quantitative easing, or QE2.

Some kind of Fed stimulus "is priced in, and I think now the market's waiting for earnings reports to get some hard evidence on how the economy is doing," said Giri Cherukuri, head trader at OakBrook Investments in Lisle, Illinois.

Three Dow components -- Intel, JPMorgan Chase & Co and General Electric Co -- are scheduled to release quarterly results this week.

The Dow Jones industrial average edged up 3.63 points, or 0.03 percent, to 11,010.11. The Standard & Poor's 500 Index inched up just 0.15 of a point, or 0.01 percent, to 1,165.30. The Nasdaq Composite Index gained 0.42 of a point, or 0.02 percent, to 2,402.33.

About 5.5 billion shares traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq -- the lightest volume so far in 2010.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 6 to 5. The reverse trend took hold on the Nasdaq, where about seven stocks fell for every six that rose.

Apple Inc's shares hit an all-time high of $297.24 in intraday trading before closing up 0.4 percent at $295.36.

Chesapeake Energy rose 1.1 percent to $23.30 after China's top offshore oil producer, CNOOC Ltd, agreed to pay $1.1 billion for a stake in a U.S. shale oil and gas field, testing the U.S. political climate for the first time since its 2005 failed bid for Unocal.

Specialty children's apparel company Gymboree Corp surged 22.4 percent to $64.83 after it agreed to sell itself to Bain Capital, a private equity firm, for $1.8 billion.

The dollar index rose 0.23 percent despite bets on the Fed injecting more cash into the economy as the greenback's decline seemed overextended. However, sentiment on the U.S. currency remained bearish.

The 30-day correlation between the S&P 500 and the dollar index has held below -0.8 since late August and was at -0.88, meaning that of late, a weaker dollar has translated into higher stock prices. - Reuters


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