Weekly Market Recap: Dow Jones Industrial Average Bucks the Markets Rallies

DJIA 12,660 S&P 500 1,316 Nasdaq 2,816 Gold 1,737 Oil 99

The Nasdaq (NASDAQ:QQQ) and S&P 500 (NYSEARCA:SPY) managed to settle in the green this week, although the Dow Jones Industrial Average (NYSEARCA:DIA) was hit by some weaker than expected earnings reports. On the commodities front, Oil (NYSEARCA:USO) added one dollar and Gold (NYSEARCA:GLD) loved the Fed’s new extended free money policy.

Trending Now: Thanks, Bank of America!

Now, for our analysis of the 12 reasons markets moved this week (Emily was sick Thursday, so there was no recap):

Monday

Markets closed up on Wall Street today: Dow -0.09%, S&P +0.05%, Nasdaq -0.09%, Oil +1.47%, Gold +0.81%.

On the commodities front, Oil (NYSE:USO) rose slightly to $99.78 a barrel. Precious metals were also up, with Gold (NYSE:GLD) rising to $1,677.50 an ounce while Silver (NYSE:SLV) rose 1.93% to settle at $32.29.

Hot Feature: With Friends Like These Does Gold Need an Official QE3?

Today’s markets were up because:

1) Greece. Greek debt talks are said to be progressing, but so far officials have not announced a deal to cut debt — a key condition for Greece to receive additional bailout funds from the European Union and International Monetary Fund. At issue is an agreement to write down the value of Greek bonds owned by the private sector by 50 percent. Without the bailout money, there is little doubt that Greece will be unable to make the 14 billion-euro payment it owes on bonds that will reach full maturity on March 20, in which case Greece would enter into a disorderly default.

2) Fed. With no major economic news today, and few major companies slated to report quarterly results, all three major indexes hovered around breakeven throughout most of the day. While Europe will remain in focus, particularly Greece, this week will be busy with U.S economic news as the Federal Open Market Committee meets. The Federal Reserve plans to introduce changes to its communications policies to the public following its two-day meeting, a move that would make it easier for the central bank to push through another round of asset purchases later this year. The government also releases its first estimate of fourth-quarter economic growth on Friday.

3) Oil and gas. Oil and gas companies were among the day’s biggest gainers after Chesapeake Energy (NYSE:CHK) announced it would cut natural gas production in order to drive up prices. NRG Energy (NYSE:NRG) and Consol Energy (NYSE:CNX) added around 3 percent, Chesapeake Energy and Cabot Oil and Gas (NYSE:COG) were up more than 6 percent, and Southwestern Energy (NYSE:SWN) jumped more than 10 percent.

BONUS: EU Adopts Iranian Oil Sanctions

Tuesday

Markets closed down on Wall Street today: Dow -0.26%, S&P -0.10%, Nasdaq +0.09%, Oil -0.44%, Gold -0.77%.

On the commodities front, Oil (NYSE:USO) fell to $99.14 a barrel. Precious metals were also down, with Gold (NYSE:GLD) falling to $1,665.30 an ounce while Silver (NYSE:SLV) fell 0.91% to settle at $31.98.

Hot Feature: Obama Will Push for Tax Reform in State of the Union Address

Today’s markets were down because:

1) Greece. Negotiations with Greece’s private bondholders reached a stalemate today after euro-zone finance ministers rejected their latest proposal. Private investors in Greek debt are demanding a coupon of at least four percent on new, longer-dated bonds to be issued in exchange for their existing Greek holdings if they are also to accept a 50 percent writedown on the nominal value of their debt holdings. But Greece says it is not prepared to pay a coupon of more than 3.5 percent, and euro-zone finance ministers backed that position at a meeting in Brussels on Monday, raising the risk of Greek default as the heavily indebted nation hurtles toward a 14.5 billion-euro bond redemption in March.

2) IMF. The International Monetary Fund warned on Tuesday that the ongoing European debt crisis is casting a shadow on the economic outlook for most of the world as it lowered its growth forecasts for all but one country: the United States. The IMF now expects the global economy to grow 3.3 percent in 2012, according to an update to its World Economic Outlook, down from a 4 percent September projection, while its forecast for U.S. growth remains at 1.8 percent in 2012. According to a separate IMF report, Europe’s sovereign debt crisis and banking problems are posing increased risks to the global financial system, and euro governments must do more to stabilize public finances and prevent a deeper credit freeze in the banking sector.

3) Earnings. While Europe remains the primary area of concern for investors, its is now the height of earnings season, and good or bad quarterly reports also have their effect on the markets, though it might not be so broad. Dow components Verizon (NYSE:VZ), McDonald’s (NYSE:MCD), and Travelers Cos. (NYSE:TRV) were all dragging on stocks today after reporting disappointing earnings, while Johnson & Johnson (NYSE:JNJ) was flat after its earnings report. After the bell today, tech heavyweights Apple (NASDAQ:AAPL) and Yahoo (NASDAQ:YHOO) will announce their results.

BONUS: Fed Expected to Set Inflation Target, Hold Interest Rates Near Zero Into 2014

Wednesday

Markets closed up on Wall Street today: Dow +0.66%, S&P +0.87%, Nasdaq +1.14%, Oil +0.85%, Gold +2.79%.

On the commodities front, Oil (NYSE:USO) climbed to $99.79 a barrel. Precious metals were also up, with Gold (NYSE:GLD) rising to $1,710.90 an ounce while Silver (NYSE:SLV) climbed 4.10% to settle at $33.29.

Hot Feature:  Obama Pushes Tax Reform, Job Training in State of the Union

Today’s markets were up because:

1) Europe. European leaders are meeting in Davos, Switzerland, where the World Economic Forum kicked off today with a keynote speech by German Chancellor Angela Merkel, in which she suggested the European Union and the United States pursue a free trade deal to grow industry. Merkel reiterated her commitment to the euro, particularly to a fiscal compact that would hold euro states accountable to the group for their budgets so as to avoid the profligacy that set off the debt crisis in the first place. However, the leader of the euro’s largest economy batted away appeals from the International Monetary Fund and many others to increase the size of the fund created to help weaker euro-zone nations struggling under the burden of their government debt.

2) Fed. After a morning slump, stocks moved higher in the afternoon following the report by the Federal Open Market Committee and comments by Federal Reserve Chairman Ben Bernanke. Fed policymakers announced their decision today not to increase its benchmark interest rate until at least late 2014, extending an earlier commitment to keep record-low rates through mid-2013. The decision leaves the door open for further bond buying to stimulate the economy, though officials have resisted further purchases for fear it would raise the risk of high inflation later. The Fed also offered a better outlook for prices that will allow it more room to keep rates low.

3) Apple. The Nasdaq climbed higher today after Apple (NASDAQ:AAPL) reported the best quarter ever for a tech company. Apple doubled profit and revenue year-over-year in the last quarter, earning more money in the Q1 2012 than the entire company was worth just eight years ago. Apple saw more than twice the profits of Microsoft (NASDAQ:MSFT) or Walmart (NYSE:WMT), while Apple’s profits exceeded Google’s (NASDAQ:GOOG) entire revenue for the quarter. Apple shares closed the day at $446.66 after climbing 6.24 percent in regular trading today.

BONUS: Pending Home Sales Declined 3.5% in December

Friday

Markets closed mixed on Wall Street today: Dow -0.58%, S&P -0.16%, Nasdaq +0.4%, Oil -0.13%, Gold +0.64%.

On the commodities front, Oil (NYSE:USO) fell slightly to $99.57 a barrel. Precious metals rose with Gold (NYSE:GLD) climbing to $1,737 an ounce while Silver (NYSE:SLV) climbed 0.4% to settle at $33.9.

Hot Feature: Leaked: Facebook Revenue and Operating Profit.

Today’s markets were mixed because:

1) GDP. The Commerce Department’s monthly report on the U.S. gross domestic product showed the economy to have grown in the three months ended in December at its fastest pace since the second quarter of 2010, but a strong rebuilding of stocks by businesses and weak spending on capital goods signaled an impending slowdown in early 2012. While the U.S. economy grew at a 2.8 percent annual rate, it was slower than the 3.0 percent rate analysts had expected, and excluding inventories, the economy grew just 0.8 percent in the fourth quarter, a sharp step down from the previous quarter’s 3.2 percent pace.

2) Greece. As the Greek government continues talks with private creditors on restructuring its debt, its bailout lenders — the European Union, International Monetary Fund, and European Central Bank — are asking Greece to push through more budget cuts and implement a series of long-agreed austerity measures before they will release a 130-billion euro bailout package the struggling country desperately needs if it is to avoid a disorderly default when a 14 billion-euro debt payments comes due on March 20. Without an agreement with private creditors, Greece also jeopardizes its access to bailout funds, without which it would be next to impossible for the country to avoid default.

3) Earnings. Chevron (NYSE:CVX) was the worst-performing stock on the Dow today after the company posted its biggest drop in quarterly earnings in two years, widely missing Wall Street’s estimates. Procter & Gamble (NYSE:PG) was also a big decliner on the blue chip index after the company lowered its outlook for the year. DeVry (NYSE:DV) led the S&P 500’s slide after announcing that earnings plunged 90 percent in the last quarter as the for profit educator’s undergraduate enrollment continued to decline. Starbucks (NASDAQ:SBUX) weighed on the Nasdaq after issuing an underwhelming profit outlook, while Ford (NYSE:F) shares declined after earnings missed forecasts.

BONUS: With Friends Like These Does Gold Need an Official QE3?

To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com