MarketView for January 8

Summary

The Street retreated again on Tuesday, as companies started to report results for the fourth quarter. After a 4.3 percent jump in the two sessions around the close of the fiscal cliff negotiations, the S&P has declined a bit due to a lack of catalysts with which to fire up momentum to continue the rally that took the S&P index to five-year highs.

Shares of AT&T fell 1.7 percent to $34.35, making it one of the largest drags on the S&P 500, after the company said it sold more than 10 million smartphones in the quarter. You just cannot keep everyone happy. While this figure exceeded the number sold in the same quarter in 2011, it also means increased costs for the wireless service provider. Providers like AT&T pay hefty subsidies to handset makers so that they can offer discounts to customers who commit to two-year contracts. The drop in the price of  AT&T's shares meant that the S&P telecom services index was the worst performer of the 10 major S&P sectors, down 2.7 percent.

Meanwhile, on a more macro basis, corporate fourth-quarter earnings numbers are expected to exceed the previous quarter's lackluster results, but analyst estimates are down sharply from October. Quarterly earnings are expected to grow by 2.7 percent, according to Thomson Reuters data.

Sears Holdings fell 6.4 percent to $40.16 a day after the company said Chairman Edward Lampert would take over as CEO from Louis D'Ambrosio, who is stepping down due to a family member's health issue. The retailer reported a 1.8 percent decline in quarter-to-date sales at stores open at least a year.

Shares of Yum Brands fell 4.2 percent to $65.04 a day after the KFC parent warned sales in China, its largest market, shrank more than expected in the fourth quarter.

GameStop was one of the worst performers on the S&P 500 as shares slumped 6.3 percent to $23.19 after the video game retailer reported low customer traffic for the holiday season and reduced its guidance.

Shares of Monsanto rose 2.5 percent to $98.42 after reaching a more than four-year high of $99.99. The world's largest seed company raised its earnings outlook for fiscal year 2013 and posted strong first-quarter results.

Approximately 6.19 billion shares changed hands on the three major equity exchanges, a number that was well below the 2012 average of 6.42 billion shares that traded per day.

Alcoa Kicks Off Earnings Season

Alcoa posted a fourth-quarter profit on Tuesday, in line with Wall Street expectations, and handily beat expectations on revenue, helping calm investors' nerves after a rocky 2012. The Company, our largest domestic aluminum producer, expressed cautious optimism that demand for the metal will continue to grow in 2013, helped in part by global growth in the aerospace and construction markets.

"I'm more optimistic that 2013 is a year with upside potential compared to where we came from," Alcoa Chief Executive Klaus Kleinfeld told CNBC on Tuesday. Alcoa rose 1.3 percent in after-hours trading, buoyed by the Company’s turn to profit. Meanwhile, the Street breathed a sigh of relief that the first S&P 500 company to report fourth-quarter results exceeded expectations, with the hope that it was a harbinger of things to come.

Wall Street tends to scrutinize Alcoa's results for hints on where the overall economy is headed, as the company's aluminum products are used in the automotive, appliance and airline industries. The company said it expects global aluminum consumption growth of 7 percent in 2013, up slightly from 6 percent in 2012. Alcoa continues to forecast a doubling of global aluminum demand between 2010 and 2020.

Its earnings were a positive turn for Alcoa, whose core business of mining bauxite and producing aluminum has been hit in recent years by a persistently low metal price. For the fourth quarter, the company reported net income of $242 million, or 21 cents per share, compared with a net loss of $191 million, or 18 cents per share, in the year-ago period. If you excluding one-time items, net income was $64 million, or 6 cents per share, in line with average analysts' expectations of 6 cents a share on revenue of $5.6 billion, according to Thomson Reuters I/B/E/S.

Sales were $5.89 billion, beating analysts' expectations, but down 1.5 percent from the year-ago quarter as the average realized price per ton of aluminum fell slightly. The company's realized price for aluminum fell roughly 11 percent in 2012. Alcoa trimmed costs by 12 percent in the fourth quarter, due in part to fewer restructuring expenses.