Markets closed in the green on Thursday after reports of strong sales posted by retailers for January and other positive economic data sparked a rally. However, the gains were limited by mixed earnings reports and worries about the situation in the Egypt.
The Dow Jones Industrial Average rose by 0.17% to close at 12,062.26, recording gains for four consecutive trading sessions. The S&P 500 gained 0.24% to end the day at 1,307.11. The Nasdaq Composite Index rose 0.16% and closed at 2,753.88. On the New York Stock Exchange, breadth of the market was on the positive side as for every 5 stocks that rose, 4 stocks ended in the red. On the New York Stock Exchange, 7.69 billion shares were traded.
Coming to economic news, U.S retail store sales rose 4.8%, returning better than expected results in January. The retail sector’s key gauge, the S&P Retail Index increased 1.28% to 501.93. On the other hand, the Labor Department reported a huge slide in numbers of Initial Claims applicants for the last week of January. Jobless claims had fallen by 42,000, surpassing the 31,000 slide expected by economists. Similarly, Unit Labor Costs, a measure of output for each hour worked also rocketed up 3.6%, the largest surge since 2002. In addition, data from the Institute for Supply Management said the U.S service sector has also witnessed strong growth in January. The index increased 2.3 points to 59.4, its fastest pace since 2005.
On the international front, tensions in Egypt continued to be the major international issue dominating headlines for the past few days and weighing on the minds of investors. Issuing a joint Statement, France, Germany, Britain, Italy and the Spain has condemned attacks on foreign journalists on Egyptian soil. Clashes continued throughout Egypt, as investors looked on patiently at the crisis in both Egypt and the wider Middle East after Yemen became the latest country reporting anti-government protests.
Coming to news of earnings and estimates, shares of Merck & Co (NYSE:MRK) slid 2.7% to $32.90 after the drug maker company reported 2011 forecasted earnings below the Street’s estimates. The company reported a loss in its fourth quarter earnings results and forecasted full year earnings below expectations. The loss was primarily because of earlier reported news of the company closing trials of an experimental heart drug due to safety concerns. The largest U.S chemical company, Dow Chemical (NYSE:DOW) reported fourth quarter earnings results reporting profits of $511 million from $172 million year ago. The shares of the company gained only 0.3% to $36.74 as its results were slightly ahead of economists’ expectations. Breakfast cereal maker, Kellogg’s (NYSE:K), shares increased 4.3% to $52.52 after the company posted fourth quarter earnings results reporting a rise of 7.4% in its earnings figures. CVS Caremark (NYSE:CVS) reported disappointing earnings figures for the fourth quarter. Share prices of the second largest U.S pharmacy chain fell 5% to $32.92.
On a sectoral basis, retail sector stocks led the market rally following strong sales data for January. Share prices of warehouse retailer, Costco Wholesale (NASDAQ:COST) increased 4.5% to $74.03 after its same-store sales rocketed 9%. Sally Beauty Holdings (NYSE:SBH) rocketed up 13.8% to $14.37 after the company reported first quarter earnings beating expectations. The same store sales of Sally (NYSE:SBH) increased 6.8%. Reacting to the news of a possible sell-off, BJ’s Wholesale Club’s (NYSE:BJ) share prices jumped 12.2% to $48.25. Limited Brands (NYSE:LTD) share prices increased 7.4% after the company reported an increase in its same store sales and revised its fourth quarter earnings. Limited (NYSE:LTD) is the parent company of Victoria’s Secret and Bath & Body Works Shares of Zumeiz (NASDAQ:ZUMZ) jumped 3.2% to $24.39 after the speciality sports retailer’s same store sales figures increased by 15%.
BJ’S WHOLESALE (BJ): Free Stock Analysis Report
COSTCO WHOLE CP (COST): Free Stock Analysis Report
CVS CAREMARK CP (CVS): Free Stock Analysis Report
DOW CHEMICAL (DOW): Free Stock Analysis Report
KELLOGG CO (K): Free Stock Analysis Report
LIMITED INC (LTD): Free Stock Analysis Report
MERCK & CO INC (MRK): Free Stock Analysis Report
SALLY BEAUTY CO (SBH): Free Stock Analysis Report
ZUMIEZ INC (ZUMZ): Free Stock Analysis Report
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