Wednesday, February 16, 2011

Sidesway Consolidation For Dow Jones, 17-02-2011

On Wall Street, the Dow Jones up 61 points on positive economic and earnings data.

After falling 46 pts in two days, the Dow rebounded with a 61-point gain to 12288 amid improving earnings (Dell, Comcast and etc) and M&A deal in the pharmaceutical sector as French drugmaker Sanofi-aventis agreed to buy Genzyme, a biotech company for US$20 billion in cash.

Sentiment was also boosted by a solid Jan housing starts of 596k (consensus: 520k) and a more positive outlook from Fed. Federal Reserve officials were slightly more optimistic about the U.S. economic outlook, but not enough to call an early end to their $600 billion bond-buying program. Minutes of the Fed's policy-setting meeting Jan. 25-26 showed the Federal Open Market Committee (FOMC) expect U.S. GDP to increase between 3.4% and 3.9% this year compares with a November 2010 prediction the economy would expand between 3.0% and 3.6% in 2011. Though the economy looks a bit stronger, the FOMC expects the unemployment rate to remain at a high level between 8.8% and 9.0% at the end of 2011, even after January's decline to 9.0%.

The S&P 500 has finally doubled from its March 2009 low and the major U.S. stock averages are gaining solid ground. However, the geopolitical worries cast a shadow over a morning of strong gains that came after an encouraging package of corporate earnings, strong housing starts and takeover news. A more upbeat assessment on the economy by the Federal Reserve added to the generally positive tone.

Sidesway Consolidation For Dow Jones
DowJones17-02-2011

Source: StocksChart.com

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