Will President Obama’s call for tax cuts and a spending freeze in the State of the Union address push the Dow Jones Average above the 12,000 level today? Maybe the Fed statement this afternoon after its first meeting of the year will do the trick. My money is on the market going above that level during the trading session.
The key question will be whether we stay on the trend line that we have been on since late August 2010 or take a pause. The market was around this level in mid-2008 when it was attempting to size up the extent of the economic downturn ahead. But now we are clearly looking up, having endured the Great Recession and the recovery afterwards.
Over the coming months, the market’s move will be reflecting the economic outlook. If the economic growth momentum takes hold, as appears likely, and translates into sustainable labor-market gains, then don’t be surprised if the Dow Jones Index heads toward the next higher milestone.
Over the coming days, however, we will remain fixated on the fourth-quarter earnings announcements. And announcements this morning were less than uplifting.
Yahoo’s results were in-line, but the guidance was weak. Boeing beat on EPS, but missed on revenue, and gave a weaker than expected guidance. Conoco-Phillips came ahead of expectations. But Valero, the largest independent refiner, came up short. Occidental Petroleum only modestly beat EPS expectations, while Hess missed. Among the oil consuming industries, we had US Airways and United-Continental report better-than-expected results.
Sheraz Mian
P.S. What is Zacks Ahead of Wall Street? To find out more about Zacks Ahead of Wall Street, click here.
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