US Stocks: Wednesday's review
27.01.2011, 08:27

US Stocks: Wednesday's review

Stocks finished the session with modest gains, but the Dow failed to hold the 12,000 level, and the S&P never reached 1300. The FOMC interest rate decision and statement was pretty much a non-event. The lone question of how many dissenters there would be on the statement was answered when none of the members voted against the decision.
The major market averages opened mixed, but were soon solidly in positive territory after the better-than-expected New home sales data. New home sales for December increased 17.5% month-over-month to an annualized rate of 329,000 units, a bit above the rate of 300,000 units that had been expected, on average, among economists polled by Briefing.com. Nonetheless, the 17.5% increase comes following the 5.5% gain that occurred in November. 
Energy shares were the leaders all session long as the S&P 500 Energy Index closed higher by 2.1%. Halliburton (HAL 43.40, +3.20) and Baker Hughes (BHI 65.99, +3.67) led the advance as 39 of 41 stocks in the index finished higher. Occidental Petroleum (OXY 96.94, -0.21) lagged following the company's mixed earnings report. The company topped EPS expectations by $0.03 per chare, but missed on revenues. 
Two IPOs began trading today, and both ended the day with solid gains. Nielsen (NLSN 25.00, +2.00) priced its 71.4 million share IPO at $23, above the $20-22 expected range, while Demand Media (DMD 22.61, +5.61) priced an 8.9 million share IPO at $17, vs. expectations for 7.5 million shares at $14-16. 
Shares of Boeing (BA 70.02, -2.22) were under pressure following the company's weaker-than-expected full year 2011 forecast. The company guided earnings of $3.80-$4.00 per share, which is weaker than the consensus estimate of $4.55 per share. The company announced earnings of $1.56 per share (which may not compare) versus the Thomson Reuters consensus of $1.12. Revenues came in soft at $16.55 billion versus the consensus estimate of $17.02 billion. Shares of competitors Lockheed Martin (LMT 78.39, -0.68) and Northrop Grumman (NOC 68.81, -0.70) were weaker on the results. 
Shares of Netflix (NFLX 183.03, -3.71) closed lower ahead of the company's Q4 earnings after the closing bell. The Thomson Reuters consensus is calling for earnings per share of $0.71 and revenues of $597.49 million. Analysts will be focusing on subscriber growth, which arguably the most important metric. The company has previously guided for Q4 total subscriptions to be in the range of 19.0-19.7 million. 
Treasuries ended the day near their worst levels of the session despite a solid $35 billion 5-yr note auction. The results of the auction caused yields to ease off their highest levels of the session, but buying was short-lived as sellers piled on ahead of the FOMC interest rate decision. After some initial buying following the release of the statement, the selling pressure was too great, and yields moved to their highest levels of the day. The 10-yr ended the day higher by nine basis points at 3.419%. The yield curve ended the day steeper, with the 2-10-yr spread running 279.2. 
The dollar index saw some immediate weakness following the FOMC statement, but losses quickly turned to gains before easing back towards the flat line. The pound was the best performing currency all session long, and ended U.S. trading up 85 pips to 1.5900.

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