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Stocks seesaw ahead of earnings barrage

By Julianne Pepitone, staff reporter
January 14, 2011: 11:06 AM ET

NEW YORK (CNNMoney) — U.S. stocks flip-flopped on either side fo breakeven Friday as investors shrugged off lackluster economic data, and shifted focus to next week’s avalanche of corporate reports.

The Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) were all up 0.2%. about 90 minutes into the session.

“The market’s moves are extraordinary, considering this morning’s economic reports were not good,” said Keith Springer, head of Springer Financial Advisors.” Both inflation and retail sales rose in December, according to separate Commerce Department reports.

Meanwhile, JPMorgan Chase (JOM), which reported strong earnings before the opening bell, and American Express (AXP, Fortune 500) were leading the Dow in percentage increases, while JetBlue (JBLU) was the biggest loser.

“JPMorgan is a precursor to stellar earnings next week, and that’s what’s really driving markets now,” Springer added.

Stocks are overbought right now, and the market is due for a correction, Springer said. But rather than moving sharply lower, the market is “resting” by merely moving sideways.

Those daily pullbacks are actually good signs that the market is keeping itself in check. Stocks ended lower Thursday in a quiet session.

Companies: Before the opening bell, JPMorgan Chase reported a 47% jump in fourth-quarter earnings to $4.8 billion, or $1.12 per share. That beat the 99 cents per share forecast by analysts.

The investment bank also bolstered its reserves for mortgage-related legal expenses for the second straight quarter. The stock edged up 0.2% in the early going.

“JPMorgan investors are really looking for a dividend — that’s what’s going to move the stock,” Springer said.

Coinstar (CSTR), which owns the $1 DVD rental kiosk company Redbox, reported profits and sales that missed expectations after the closing bell Thursday. Shares of the company tumbled 24% in morning trading.

After the market close Thursday, Intel (INTC, Fortune 500) reported the best fourth-quarter earnings in company history — both the chipmaker’s revenue and profit set new records. Intel’s shares were down about 0.7% at the open.

World markets: European stocks were down in late trading. Britain’s FTSE 100 slipped 0.7%, the DAX in Germany fell 0.3% and France’s CAC 40 edged down 0.1%.

China’s central bank said Friday it will raise the reserve requirement ratio for the nation’s banks by half a percentage point. The move came after the government hiked reserve requirements six times last year, as the nation attempts to combat inflation.

Asian markets ended mixed. The Shanghai Composite tumbled 1.3% and Japan’s Nikkei fell 0.9%, while the Hang Seng in Hong Kong ticked up 0.2%.

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Economy: Before the opening bell, the government reported that both inflation and retail sales rose last month, but neither reading was strong enough to lift markets.

The Commerce Department’s Consumer Price Index, a key measure of consumer inflation, rose 0.5% in December after inching up 0.1% in the previous month.

Core CPI edged up 0.1%, after rising the same amount in November. The increase was in line with estimates.

Separately, the Commerce Department said retail sales increased 0.6% in December, following a rise of 0.8% in November. Sales were expected to have gained 0.7%. Sales excluding autos rose 0.4%, after jumping 1.2% in the previous month. That missed the 0.6% gain economists had forecast.

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The Federal Reserve said industrial production rose 0.8% December. Capacity utilization is expected to have risen to 76% in December, from 75.4% the previous month.

Currencies and commodities: The dollar fell against the British pound, but rose versus the euro and the Japanese yen.

Oil for February delivery slipped 65 cents to $90.65 a barrel.

Gold futures for February delivery slumped $20.60 to $1,366.40 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 3.32% from 3.31% late Thursday.


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