Stock indexes hold on to support amid congestion

ISM Data Offers Further Encouragement

The market rally picked up once again following the 10:00 a.m. ET economic data on Wednesday morning. According to the Institute for Supply Management, business at U.S. manufacturers expanded in January at its fastest pace in eight months.

Additionally, construction spending was up 1.5% in December.

The rally out of the morning data was not as extreme as seen in premarket trade following the European open. While the premarket congestion was long enough to allow for a breakout, it was not enough to fully correct from the earlier gains, making it difficult for the market to mount another push higher with the same momentum. Nevertheless, the move was still impressive point-wise and the indices managed one of the strongest sessions of the year-to-date.

Slowing momentum allowed the market to break its uptrend channel mid-day, resulting in a pullback into the closing bell. The S&P 500 and Dow Jones Ind. Average experienced a stronger correction than the Nasdaq, which has continued to outperform throughout the year. While the S&P 500 and Dow both pulled back to 20-day moving average support this week, the Nasdaq has yet to do more than test its 10-day moving average this year.

S&P 500 (Figure 2)

Index Wrap-up

The Dow Jones Industrial Average ($DJI) ended the day on Wednesday with a gain of 83.55 points, or 0.66%, and closed at 12,716.46. Twenty-seven of the Dow's thirty index components posted a gain. The top performers were Bank of America (BAC) (+3.23%), Hewlett-Packard (HPQ) (+2.79%), and United Technologies Corp. (UTX) (+2.39%). The top only shares posting a loss were McDonald's (MCD) (-0.66%), Johnson & Johnson (JNJ) (-0.33%), and Chevron Corp. (CVX) (-0.32%).

The S&P 500 ($SPX) finished the session with a gain of 11.67 points, or 0.89%, and closed at 1,324.08. Out of the index's ten industry groups, the strongest were the financials (+1.7%), industrials (+1.1%), and materials (+1.1%). There were no declining industry groups. The top individual percentage performer in the index was Whirlpool (WHR), which rose 13.48% after it raised its 2012 earnings guidance. WHR was followed by strong performances in Marathon Pete. Corp. (MPC) (+9.58%), and Broadcom Corp. (BRCM) (+8.09%). BRCM also raised its earnings guidance for the year. The top decliner was (AMZN) (-7.70%) after raising concerns that it would post a loss in the first quarter after missing estimates last quarter. Other top decliners were CH Robinson Worldwide (CHRW) (-7.02%) and Southwestern Energy Co. (SWN) (-2.34%).

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