MarketView for February 13

Summary

It was an uneventful day on Wall Street on Wednesday, with share prices mostly flat in light volume as investors remained cautious after the S&P 500 index briefly hit its highest intraday level since November 2007. The S&P 500 was buoyed by General Electric after Comcast said it will buy from GE the part of NBC Universal it did not already own for $16.7 billion. At the same time, Comcast's stock hit its highest point since 1999 before closing up 3 percent at $40.13. GE ended the day up 3.6 percent to close at $23.39.

The S&P 500 is up 6.6 percent so far this year, partly due to stronger-than-expected corporate earnings and a better economic outlook. The Dow Jones Industrial Average is about 1 percent away from an all-time intraday high, reached in October 2007.

Volume has been weak in recent days with the S&P moving sideways around 1,520. The index is about 3 percent away from closing at a record high. The S&P gained 12 percent in the first three months of 2012.

Deere, the world's largest farm equipment maker, forecast a modest increase in sales this year despite the prospect of the largest corn crop in U.S. history. The forecast fell short of analysts' expectations, sending shares of Deere down 3.5 percent to $90.68.

In extended trading, shares of Cisco Systems fell 2 percent after it posted results.

Dr Pepper Snapple fell 5.8 percent to $42.69 after it forecast profit for the current year below analysts' estimates.

Cliffs Natural Resources lost a fifth of its market value a day after the miner reported a quarterly loss and slashed its dividend by 76 percent. Its shares fell 20 percent to 429.29.

According to the latest Thomson Reuters data, of the 364 companies in the S&P 500 that have reported results, 70.3 percent have exceeded analysts' expectations, above a 62 percent average since 1994 and 65 percent over the past four quarters.

About 5.9 billion shares changed hands on the three major equity exchanges, a number that was below the daily average in February last year of 6.94 billion shares.

Amazon Higher 

Amazon saw its share price move up more than 4 percent on Tuesday after an analyst note fueled optimism about the company's Kindle e-book business. The e-book market is a lot bigger than previously thought, and owners of Kindle e-readers and tablets are reading more e-books, Morgan Stanley's Scott Devitt, a leading Internet and e-commerce analyst, told investors in the research note.

Devitt estimated worldwide e-book unit sales of 859 million in 2012, up considerably from a previous estimate of 567 million. With almost 45 percent of the e-book market, Amazon likely sold 383 million e-books last year, compared with an earlier estimate of 252 million, the analyst added.

Amazon's broader strategy is to sell mobile devices at or near cost and make money when consumers use the gadgets to buy digital content, including e-books, music, videos, apps and games.

Devitt wrote on Wednesday that the strategy may be working with e-books, one of Amazon's oldest digital categories.

"We initially assumed that early adopters of eReader devices would be avid readers and, therefore, the marginal buyer would read less," Devitt wrote.

However, data from a recent Amazon presentation show that consumers who bought a Kindle in 2011 read 4.6 times more e-books, on average, in the 12 months following their gadget purchase, compared with the 12 months before getting the device, the analyst noted.

Similar data from 2008 show consumers reading e-books 2.6 times as much after their Kindle device purchase, on average, according to Devitt.

The success of Amazon's Kindle business is important because it is more profitable than some of the company's other operations, Devitt said.

The Kindle business, which includes the gadgets and related digital content sales, generated about 11 percent of Amazon's sales last year and 34 percent of the company's consolidated segment operating income, or CSOI, Devitt estimated. The CSOI is a closely watched measure of Amazon's profitability.