Sam Collins

Earnings Hold the Key to Market's Next Move

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Yesterday, the S&P 500 (SPX) poked above the 1,100 mark for the first time since last October, as stocks advanced on a broad front. And, despite low volume, 25 of the Dow Jones Industrial Average's (DJI) 30 stocks gained ground.

Some of the gains were in anticipation of earnings that were set to be reported today or later this week, like Caterpillar (CAT), up 6.1%, and American Express (AXP), up 2.26%. Caterpillar reported better-than-expected earnings today, and American Express reports on Thursday. 

Others gained on earnings improvements reported yesterday, like Gannett Co. (GCI), up 8.15%, and Texas Instruments (TXN), up 3.38%. Both companies reported better-than-expected Q3 earnings.

A weaker U.S. dollar drove commodities and commodities-based stocks higher. The dollar was off 0.3% against a basket of currencies and closed just a fraction above its 12-month low.

U.S. homebuilders' confidence fell in October, seemingly in anticipation of the expiration of the tax credit for new homes at the end of November.

At the close, the Dow was up 96 points to 10,092, the S&P 500 gained 10 points to 1,098, and the Nasdaq (NASD) rose 20 points to 2,176. 

The Big Board traded just 1.1 billion shares with advancers ahead of decliners by 11-to-4. And the Nasdaq's volume was down, too, trading just 559 million shares. Advancers on Nasdaq were ahead by just under 2-to-1.

November crude oil gained $1.08, closing at $79.61 a barrel, for its eighth straight gain, on optimism over an economic recovery and another day of losses for the dollar. The Energy Select Sector SPDR (XLE) gained 77 cents, closing at $59.76, after making a new recovery high at $59.99.  

December gold rose $6.50 to close at $1,058.10 an ounce, and the PHLX Gold/Silver Index (XAU) closed at $178.05, up $1.55.

What the Markets Are Saying

Even though one of the market's leading sectors, technology, has lagged recently, that's due more to a focus on the energy and materials sectors, the rise in commodities prices and a fall in the dollar, than a lack of earnings performance. 

After the close yesterday, Apple (AAPL) posted a 47% increase in fiscal Q4 earnings as sales of iPhones and Mac computers set new records. The company reported earnings of $1.82 a share versus analysts' estimates of $1.42. This blowout of the estimates drove the stock to an after-hours gain of 8.2% and could raise the tide of many technology stocks today.