A new trend has developed in the past week: The stock market will rise in early trading, but will not be able to hold on to gains for long, as worries over whether the government will be able to reach a budget deal quickly drag stocks down by midday. And so the pattern was repeated today.
“Every investor now is a cliff watcher. The focus here is not on earnings, the Federal Reserve, or oil prices, it’s all about the fiscal cliff,” Alan Skrainka, chief investment officer at Cornerstone Wealth Management, told MarketWatch
“So let’s hope we see some progress on the negotiations front; until then, we’re seeing a modest correction, justified by the uncertainties in Washington,” he continued.
The Dow Jones Industrial Average
(INDEXDJX:.DJI) was down 0.37% to 12,708.35 points as of 12:01 p.m. EST.
After reporting robust earnings, Cisco Systems
(NASDAQ:CSCO) unsurprisingly led the day’s Dow winners list, surging 6.46% to $17.94. The company “surprised virtually every analyst following the company by handily beating top and bottom-line estimates,” Fred Dickson, chief investment strategist at Davidson, told MarketWatch
For its fiscal first quarter, Cisco posted adjusted earnings of $2.6 billion, or $0.48 per share, on revenue of $11.9 billion. Analysts surveyed by FactSet had expected adjusted earnings of $0.46 per share on revenue of $11.78 billion.
Cisco’s strong results helped to prop up competitors such as Hewlett-Packard
(NYSE:HPQ), which advanced 1.07% to $13.28, and Juniper Networks
(NYSE:JNPR), which increased 3.40% to $17.94.
Dow financials were hit hard today, with Bank of America
(NYSE:BAC) sliding 1.88% to $9.15 and JPMorgan
(NYSE:JPM) dropping 1.32% to $39.51. American Express
(NYSE:AXP) dipped 0.77% to $54.32. The bellwether Financial Select Sector SPDR ETF
(NYSEARCA:XLF), which tracks all financial stocks in the S&P 500, declined 0.62% to $15.32.
(NYSE:HD) returned some of the large gains made yesterday, retreating 1.81% to $62.23. Shares of the company were downgraded to Hold from Buy by Gabelli, who says that “the housing recovery is now mostly priced in the current valuation,” so there is little upside left.
Gabelli adds that the additional revenue coming from Superstorm Sandy will not exceed that of Hurricane Irene.
“Management expects Hurricane Sandy sales benefit to match that of Irene, which had $15 billion in damages, and generated $360 million in incremental sales for HD,” said Gabelli in its research note.
No positions in stocks mentioned.
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