Earning season kicks off with a bang at Wall Street

Indices register huge weekly gains

Earning reports started trickling in during the course of the week that ended on Friday, 17 July, 2009. IBM and JP Morgan Chase delivered strong earning surprises during the week. Better than expected reports also came in from other big names like GE, Intel, and Bank of America. Dow registered gains for all the days of the week. The week's economic data took a backseat to the earnings reports

For the week, The Dow Jones Industrial Average ended higher by 597.42 points at 8,743.94. The Nasdaq Composite Index, ended higher by 130.58 points at 1,886.61. S&P 500 ended higher by 61.25 points at 940.38.

The bullish tone for the week was set on Monday itself, when influential analyst Meredith Whitney raised her rating on Goldman Sachs ahead of its earnings report to Buy from Neutral

Among other major names that announced earnings, Dow components Johnson & Johnson and Goldman Sachs announced upside earnings results for the latest quarter. Intel strongly beat Wall Street's estimates. The company also issued an upward third quarter guidance.

Among economic reports for the week, Retail Sales and Industrial Production reports both showed end demand remains generally weak. Granted total retail sales were up 0.6% versus May, but when gasoline, autos, and building materials sales were excluded, they were down for the fourth straight month. That is notable because this core retail sales figure is used by the government in computing GDP.

Industrial production declined -0.4% in June. That was the 17th decline in the last 18 months.

Initial claims fell noticeably for the second straight week while continuing claims plunged by 642,000 to 6.273 million. That marked the biggest drop ever in continuing claims. In fact, it was so big that few people (including us) believed it. Nonetheless, the headlines themselves didn't hurt at all the way the market behaved in the past week.

The minutes from the Federal Open Market Committee meeting in June were released during the week. The Fed remains concerned over the labor market, but it has raised its forecast for the economy for 2009 to 2010.

In the US market on Friday, 17 July, 2009, even as participants digested earnings reports from several widely held companies stocks traded listlessly within a narrow trading range of just seven points. However, the sideways action did help the S&P 500 succeed in making its first weekly advance in more than one month.

The Dow Jones Industrial Average ended higher by 32 points at 8,743.34. The Nasdaq Composite Index, ended higher by 1.5 points at 1,886.03. S&P 500 ended lower by 0.36 points at 940.4.

The Commerce Department in US reported on Friday that home-building starts rose 3.6% to an annual rate of 582,000, the highest since November, 2008. Building permits, a sign of future construction, jumped the most in a year.

Tech was the session's best performing sector. It advanced 1% amid follow-through buying. The sector's strength started early this week when a thoroughly impressive report from Intel attracted buyers.

Strong housing report boosted crude prices and the same ended higher on Friday, 17 July, 2009. Prices also registered substantial gains for the week. On Friday, crude-oil futures for light sweet crude for August delivery closed at $63.56/barrel (higher by $1.54 or 2.5%). For the week, crude ended higher by 6.1%.

In the currency market on Friday, the dollar fell against its counterparts. The dollar index fell by 1% for the week.

For the year 2009, Dow is down by 0.4%. The Nasdaq and S&P 500 are up by 19.6% and 4.1% respectively.