Investors seemed skeptical of all the good economic news today, but the markets eventually climbed higher with solid gains, particularly from financials. ADP reported much stronger-than-expected job gains (perhaps too strong, skeptical analysts said), led by hiring in the service sector; ISM reported a strong increase in activity in the service sector, and the Challenger job cut report showed the fewest announced job cuts since June 2000. The news today made investors all the more eager for Friday’s official employment report to determine if ADP’s good news was an aberration.
The Dow finished higher by 31 points, with 17 of its 30 components higher; the S&P 500 gained six; and the Nasdaq was higher by 20. Advancers led decliners by almost four to three on the NYSE and by about seven to three on the Nasdaq. The prices of Treasuries weakened. Gold futures continued their downward slide, falling $5.10 to close at $1,373.70 an ounce, while the price of crude oil gained 92 cents to settle at $90.30 a barrel.
In Other Business News:
- Job creation in the private sector greatly exceeded expectations in December, according to a report by payroll processor Automatic Data Processing Inc., or ADP. The private sector gained 297,000 jobs in December, much higher than the 100,000 expected by economists. The increase mainly came from service sector jobs, with healthy gains coming from medium- and small-sized businesses.
- The service sector expanded at the fastest rate in four years in December, according to the Institute for Supply Management’s nonmanufacturing index. The index rose from 55 in November to 57.1 in December; a reading above 50 indicates expansion. Particularly strong was the new orders component, which jumped to 63.
- Planned firings by companies dropped 59% in 2010 from 2009, hitting a 13-year low. According to a report by Challenger, Gray & Christmas, Inc., U.S. employers announced 529,973 planned firings last year. Only 32,004 job cuts were announced in December, the lowest level since June 2000.
- Qualcomm Inc. confirmed today that it would acquire Atheros Communications Inc. for $3.1 billion, or $45 a share. Qualcomm said that the acquisition would help it expand its platforms into smartphones and tablet computers. Qualcomm’s shares (QCOM) gained 2%, while Atheros’ (ATHR) rose 1% (after jumping 18% yesterday on rumors of the acquisition).
- Global food prices hit a record high in December, according to the United Nations Food and Agriculture Commission. The monthly index rose 4.3% from November to top the previous high set in June 2008.
On Monday, Apple Inc.’s market cap crossed the $300 billion mark, cementing its place as the second-largest U.S. company behind ExxonMobil. Of course, if Apple executives were relying on their own iPhones to wake them up Tuesday morning to read that fantastic news, they’d probably still be sleeping. The iPhone’s software didn’t handle the switch to a new year too well. Its alarm clock failed to go off for many people (including me), all the while looking very sneakily like it was perfectly set to wake me up early to begin a new year with hope and determination, as I’d resolved to do. Instead, I got some extra sleep.
Regardless of the glitch, it seems Apple is in shape for a huge year of iPhone and iPad sales, with Forrester Research predicting tablet sales of 24 million in 2011. Its competition is heating up, as well. The Consumer Electronics Show—or CES—an annual extravaganza of gadgets and electronic wizardry, started today in Las Vegas. Judging from early rumors coming out of CES, Apple will have more than an alarm glitch to deal with this year, because it looks like up to 100 companies are working on tablet computers, according to USA Today. Toshiba, Vizio, Motorola, and Research in Motion are all reportedly working on tablets for release this year. One reason for the push is Google, which is expected to release a new version of its Android operating system in the second half of the year. Called Honeycomb, it’s supposed to be better suited for tablets—unlike Android, which was designed for smartphones.
Analysts keep raising their estimates for tablet sales because, according to Forrester Research, they keep getting surprised by the many uses consumers are finding for the devices. They’re used for traditional computing, education, sales, and just as often, as “lifestyle” computers to watch YouTube videos and skim Facebook posts. Here in the investment world, financial advisors and sales personnel are keenly interested in them. Ignites, a mutual fund industry publication, said that a story about using iPads in the financial industry was its ninth most-popular story of 2010.
I’m still on the fence on tablet computers (well, I’m in the process of jumping the fence but I got my pant leg caught: I know that I want one, but I don’t know if I want to pay for one yet). That will probably change the second I hold one in my hands and decide I can put off fixing my car’s brakes for a few more months (just kidding; I’ll take it out of my food budget instead).
And since Daily Advantage is interactive now, I can (finally!) put a question to readers: Is this your “Year of the tablet,” as analysts are claiming? Is it all hype or are you intrigued by this new mode of computing?