Week ending 14-Jan-11 major indices rallied this week, with the S&P 500 advancing +1.7% in broad-based gains as fourth quarter earnings reporting season kicked off. Better-than-expected earnings and better-than-feared sovereign debt offerings from Portugal, Italy and Spain helped support the market.
Nine of the 10 of the sectors gained, led by Financials, +3.2%, and energy +3.3%. The resource-related sectors benefited from a 6.7% in oil prices.
Defensive stocks underperformed on a relative basis. Telecom fell -1.6% and utilities rose +0.5%.
The body of U.S. economic data this week continues to paint a picture of economic recovery and that core inflation will remain in check. The stock market had an overall limited reaction to the releases, however. Retail sales topped estimates and inflation was muted, though initial claims were slightly higher than expected.
In earnings news, Alcoa (AA -2.7%) topped estimates and issued better-than-expected guidance.
JPMorgan Chase (JPM +2.5%) reported a 47% increase in net income that topped estimates. The company also said it would like to raise its dividend soon.
Intel (INTC +1.9%) reported better than expected earnings, with net income rising 48% and issued first quarter revenue guidance 7% of the consensus estimate.
In other corporate news, Merck (MRK) plunged after announcing changes related to its clinical studies on cardiovascular medicine Vorapaxar.
Companies continue to seek acquisitions. Some of the more sizeable deals include Duke Energy (DUK +0.6%) buying Progress Energy (PGN +0.1%) in a $13.7