Dow up 128 as strong earnings boost stocks

But IBM and Intel results disappoint. Goldman Sachs and Johnson & Johnson results cheer Wall Street. Citigroup's Vikram Pandit abruptly resigns as CEO after a board conflict. Consumer prices rise along with gas prices.

By Charley Blaine Oct 16, 2012 12:52PM
Charley BlaineUpdated: 11:49 p.m. ET

Stocks enjoyed their biggest rally in a month today, thanks to decent earnings from Goldman Sachs (GS), UnitedHealth Group (UNH) and Johnson & Johnson (JNJ).

At the same time, Vikram Pandit's resignation as CEO of Citigroup (C) startled many on Wall Street, especially as news reports suggested that his departure came as the result of conflict with his board over pay and strategic issues. Michael Corbat, who had been Citigroup's CEO for Europe, the Middle East and Africa, was named the new CEO. Citigroup shares were up 59 cents to $37.25, not far from their 52-week high of $38.40.

After the close, shares of both IBM (IBM) and Intel (INTC) moved lower as the initial take on earnings reports disappointed.

Futures trading suggests a modestly lower open on Wednesday. Trading in Standard & Poor's 500 Index ($INX) futures appeared to dip during the debate between President Barack Obama and former Massachusetts Gov. Mitt Romney. Trading on Intrade, the Irish web site that lets investors speculate on possible election outcomes, saw prices rise on the odds Obama will reelection -- suggesting traders, at least, thought the president came out on top in the clash.

The Dow Jones industrials ($INDU) closed up 128 points to 13,552; the blue chips had been up as many as 132 points in the early afternoon. The S&P 500 was up 15 points to 1,455, and the Nasdaq Composite Index ($COMPX) gained 37 points to 3,101. The Dow's gain was its third straight and biggest since Sept. 13. The gains for the S&P 500 and Nasdaq were their second in a row.

Article continues below.
The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, climbed 39 points to 2,778. Apple (AAPL), the biggest influence in the index, had gained $15.03 to $649.79.

The two-day gains for the major averages were their best since Sept. 13-14. The Dow finished within 50 points of their closing high for the year; the  S&P 500 was about 5 points below its 2012 high.

The market had a solid rally on Monday, with the Dow closing up 95 points, the S&P 500 up 12 points and the Nasdaq up 20 points. For the year, the Dow is up 10.8%, with the S&P 500 up 15.6% and the Nasdaq up 18.9%.

Meanwhile, confidence among homebuilders hit a six-month high, suggesting that the housing market is continuing to recover. But the National Association of Home Builders/Wells Fargo builder sentiment index was only at 41, suggesting builders believe conditions are still not strong. Homebuilder shares were mostly lower.

Investors face another big day of earnings on Wednesday. American Express (AXP), Bank of America (BAC), Morgan Stanley (MS), Northern Trust (NTRS) and Halliburton (HAL) are among companies scheduled to report quarterly results.

The Commerce Department will report on September housing starts and building permits and the latest week of crude-oil inventories.

Intel, IBM results don't impress
Intel, up 62 cents to $22.35, had been the top-performer of the 30 Dow stocks during the regular session, but shares were down 79 cents, or 3.5%, to $21.56 after hours after rising 62 cents to $22.35 in regular trading.

The company reported $3 billion in net profit and earnings of 58 cents per share, down from $3.47 billion, or 65 cents, a year ago. After one-time items, the earnings were 60 cents a share, better than the expected 50 cents. Revenue was $14.2 billion, up from $13.2 a year ago. Its gross

For the fourth quarter, the company expects revenue of $13.6 billion, slightly less than the Street estimate of $13.7 billion, and lower gross profit margins, a key profitability measure. The company expects to trim operations of factories producing older-generation chips, reflecting the weak personal-computer business. The PC business is weakening even in China.

IBM shares were off $7.05, or 3.3%, to $203.95 after rising $2.07 to $211 in regular trading. Earnings were $3.62 a share, slightly better than the consensus estimate of $3.61. Revenue, however, was $24.7 billion, less than the expected $24.7 billion. Customers put off spending on big ticket items, and a stronger dollar for much of the quarter hurt the company's top line.

IBM expects to earn $15.10 a share in the fourth quarter. Analysts have been projecting $15.15. North American revenue was off 4% to $10.4 billion in the quarter, with European revenue down 9%.

Shares of railroad giant CSX (CSX) were up 27 cents, or 1.3%, to $21.90 after hours as it reported good growth in its export coal and automotive businesses.  In regular trading, the shares were up 18 cents to $21.63.

Net income at CSX fell 2% to $455 million from $464 million a year ago. Earnings were up slightly to 44 cents a share (based on a smaller number of shares outstanding), but analysts were expecting 47 cents. 

Energy prices -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Crude oil (-CL)

$92.09

$91.85

-0.11%

-6.82%
(per barrel)











Heating oil (-HO)

$3.1985

$3.2091

1.24%

9.76%
(per gallon)











Natural gas (-NG)

$3.4370

$3.4860

3.52%

14.99%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.8453

$2.8503

-2.56%

7.07%
(per gallon)











Brent crude 

$115.07

$115.80

0.39%

7.16%
(per barrel)











Retail gasoline

$3.7730

$3.7870

-0.37%

15.17%
(per gallon; AAA)












J&J, United and Goldman cheer Street
Johnson & Johnson shares finished up 95 cents to $69.55. UnitedHealth shares dropped 61 cents to $56.88. Both companies raised their full-year profit guidance, but UnitedHealth warned that it faced "a considerable challenge" in meeting analysts' estimates for next year.

Johnson & Johnson shares are up 6% this year; UnitedHealth, which joined the Dow last month, is up 12.2%.

Goldman Sachs shares were down $1.28 to $123.22. The decline came even as the investment bank boosted its dividend to 50 cents a share from 46 cents as earnings, which beat Street estimates, and revenue more than doubled. Goldman shares are up 38.4% this year.

Coca-Cola
(KO) shares were off 23 cents to $37.90 after the company said revenue outside the United States was challenged by soft economies.

Pandit leaves Citigroup; his legacy depends
There were, as noted, a number of reports suggesting Vikram Pandit quit as CEO of the nation's largest bank after battling with his board. He denied he was forced out, saying his leaving was his idea. But John Havens, the banking giant's president and chief operating officer under Pandit, quit at the same time. That's a sure signal of some dispute.

To be sure, anyone who has held Citigroup since the fall of 2007 can't be too happy. The stock is down 89% from when Pandit was named CEO. But since March 2, 2009, when the shares bottomed after the 2008 crash, the stock is up 209%.

The company has been shrinking since the crash as non-performing assets have been sold off, and there were some embarrassing issues.

There was a shareholder revolt over executive pay, a rejection by the Federal Reserve of a plan to buy back more stock and an arbitration decision over the value of a brokerage joint venture with Morgan Stanley (MS) that forced Citigroup to take a $2.9 billion write-down.

In addition, Pandit received $165 million for his low-performing hedge fund, which was purchased by Citigroup in 2007. The fund has since been shuttered. In 2012, Citigroup shareholders voted in favor of a non-binding measure to reject a $15 million pay package for Pandit.

Factory output; higher gas prices stoke CPI
Factory output -- the production factories, mines and utilities -- rose 0.4% in September after a 1.4% decline in August that was the biggest since March 2009, the Federal Reserve reported today.

Consumer prices rose 0.6% in September as the cost of gasoline surged, but October may be more benign. Gasoline prices have been falling fairly steadily since mid-September.

Pump prices slip; gold and crude oil move up
The national average retail price was $3.773 a gallon today, according to AAA's Daily Fuel Gauge Report. That was down from Monday's $3.787 and $3.871 on Sept. 14.

Crude oil (-CL) in New York settled up 25 cents to $92.01 a barrel. Brent crude, a prime determinant of retail gasoline prices, was down 76 cents to $115.04.

Gold (-GC) settled up $8.70 to $1,746.30 an ounce. Silver (-SI) ended up 21.6 cents to $32.959 an ounce. Copper (-HG) was off slightly to $3.70 a pound.

The dollar was lower against major currencies. The 10-year Treasury yield rose to 1.72% from Monday's 1.663%.

A broad rally for stocks
All of the 10 sectors of the S&P 500 were higher today, with materials, energy and technology stocks the leaders.

Intel, Caterpillar (CAT) and United Technologies (UTX) were the Dow leaders, with UnitedHealth Group (UNH), Verizon Communications (VZ) and Coca-Cola the laggards.

First Solar (FSLR), Murphy Oil (MUR) and Fossil (FOSL) were the top S&P 500 performers. PNC Financial (PNC), Regions Financial (RF) and advertising conglomerate Omnicom Group (OMC) were the laggards.

Fossil and Mattel (MAT) were the Nasdaq-100 leaders; Fastenal (FAST) and O'Reilly Automotive (ORLY) were the laggards.

Short hits from the markets -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0900%

0.100%

0.00%

800.00%
5-year Treasury note 

0.692%

0.660%

9.84%

-16.63%
10-year Treasury note

1.720%

1.663%

5.07%

-8.07%
30-year Treasury bond

2.915%

2.843%

-3.86%

0.90%
Currencies











U.S. Dollar Index

79.464

79.806

-0.70%

-1.31%
British pound

1.6106

1.6080

-0.34%

3.66%
(in U.S. $)

 








U.S. $ in pounds

£0.621

£0.622

0.34%

-3.53%
Euro in dollars

$1.30

$1.30

1.41%

0.60%
(in U.S. $)

 








U.S. $ in euros

€ 0.767

€ 0.772

-1.39%

-0.60%
U.S. $ in yen 

79.05

78.70

1.39%

2.53%
U.S. $ in Chinese

6.29

6.27

0.09%

-0.62%
yuan











Canada dollar

$0.000

$1.020

-100.00%

-100.00%
(in U.S. $)

 








U.S. dollar 

$0.986

$0.981

0.22%

-3.37%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,746.30

$1,737.600

-1.56%

11.46%
(per troy ounce)

 








Copper (-HG)

$3.700

$3.702

-1.54%

7.68%
(per pound)

 








Silver (-SI)

$32.9590

$32.743

-4.68%

18.07%
(per troy ounce)

 








Wheat (-ZW)

$8.4775

$8.483

-6.07%

29.87%
(per bushel)

 








Corn (-ZC)

$7.3825

$7.373

-2.38%

14.19%
(per bushel)

 








Cotton 

$0.7486

$0.723

5.96%

-18.35%
(per pound)

 








Coffee

$1.6280

$1.609

-6.17%

-29.11%
(per pound)

 








Crude oil (-CL)

$92.09

$91.850

-0.11%

-6.82%
(per barrel)










 

453Comments
Oct 16, 2012 1:24PM
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GOLDMAN SACHS EARNINGS BLOW PAST FORECAST ! WE ARE GOLDMAN SACHS! WE RULE THE WORLD=WE ARE ABOVE THE LAW=WE WILL SCREW THE SMALL INVESTOR=PROFIT AND GREED IS OUR MOTTO ! WE OWN THE UNITED STATES GOVERNMENT !
Oct 16, 2012 3:08PM
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$787,000,000,000.00 in stimulus and we have a 1.3% GDP. That's criminal. If that kind of money was allocated directly to businesses to hire and expand in the US, we would have a 6% GDP and less than %5 unemployment. 
Oct 16, 2012 2:33PM
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By Patrick Caddell

Published October 15, 2012 | 


Radio talk show host and Fox News contributor Laura Ingraham was right when she confronted New York Times political reporter Jeff Zeleny on the set of "Fox News Sunday" this weekend:

"I would hope that the New York Times, as they camped outside of Scooter Libby’s house during the whole Valerie Plame thing -- are you guys camped out of the Susan Rice residence?” She said, “This is ridiculous and I think the press is partly culpable here.”

And she wasn’t alone in voicing that sentiment. Fox News' Brit Hume agreed with Ingraham during the same roundtable discussion on the program Sunday.

"I do think Laura’s made a good point. It shouldn’t be up to the campaign and candidates to try to get to the bottom of this before Election Day. This should be a job for all the good investigative reporters in the media to be out on this story, investigative teams such as they are should be all over this. This does have, it seems to me, an extremely strong scent of cover-up and it does looks like that it was engineered in some way. There’s just something about those five appearances on a Sunday with a story that they had to know was off base. That doesn’t smell right and ought to be exposed."

Both Ingraham and Hume are 100 percent right. Yet, if you look at the front page of the New York Times on Monday morning (view front page here), Libya is nowhere to be found. Yet, the Benghazi attack on 9/11 that killed our ambassador and three others was the topic of every Sunday talk show this weekend.

The New York Times still thinks of itself as "the paper of record"; it’s the one paper every network newscast consults on a daily basis. So why isn't Libya on the front page Monday morning?



Read more: 
Oct 16, 2012 2:20PM
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I agree with GUS.....go Obama go.
PLEASE, just GO!
Oct 16, 2012 2:05PM
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Would we not be better served just 'stimulating' the PEOPLE by giving them their own money back, rather than have Obama give it to his special interest groups to piss away?  Solyndra, A123, and hosts of others were just wasted money.

We would have been better served if these companies took the money and then paid their shareholders special dividends.

Obama's first stimulus  was 860 billion, or about 2800 / person or $11,200 / family.  Did you get 11,200 from Obama?  If you didn't you probably SHOULD vote against him, as you most likely will receive a payment book for that amount soon.   

Considering he has spent over 6 trillion now ($77,900 / family) over the last 6 years  MORE than we have taken in, If you didn't get your share, you should be OUTRAGED!

Maybe democrats are too stupid to spend their money and need government help, but Republican's are not that stupid....
Oct 16, 2012 2:27PM
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Here is why California is bankrupt

Orange County Register, October 15th, 2012

Unions representing public workers in California have remarkable success achieving their desired outcomes for California ballot propositions—call it success by defeat. In some instances unions have outspent adversaries in California’s initiative process 8 to 1. This may come as no shock for those of us who live in the Golden State especially considering the well-entrenched power of unions here, but the rate of success unions have had in the initiative process is not only surprising, but staggering.

Reviewing more than 30 years of data, a new study by the Manhattan Institute found that since 1980, public employee unions have been successful in defeating 75 percent of the ballot initiatives they opposed and have won in 50 percent of the initiatives they supported. That means unions possess an uncanny record when it comes to playing defense, “using initiative campaigns to block proposals that threaten their interests.” And when on offense they get what they want half of the time, a record that would make any special interest group in the country envious.

The Manhattan Institute study release is well timed as public employee unions in California have invested heavily in the passage of Prop 30, Governor Jerry Brown’s initiative that would increase the state’s sales tax and also the state income tax for some earners. Conversely, unions are actively opposing Prop 32, which would stop unions and corporations from making direct contributions to legislators and change the way they would collect money for political spending.

Oct 16, 2012 1:46PM
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Rome wrote: Let's get serious and act against this company ... if it is crooked, it should be investigated ... by the Attorney General, the SEC, even Obama (if he has the guts).

 

There's no "if" about it. GS is as crooked as Lombard Street in San Francisco. Don't expect any sanctions from the US Govn't; where will the "regulators" go to find lucrative employment after their govn't stints?

And this is not a Dems vs Repubs thing; it has been going on since Glass Stegall was neutered.

 

Oct 16, 2012 3:10PM
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Since the market has Bendover covering it's backside, it's like gambling with someone elses money.  They continue to manipulate it up and down so they can buy and sell taking short term profits.  They really don't care about the long term effects.

They say short term spending is up......well we all know we're paying more for groceries and gas which matches the total increase. 

I don't know about the rest of you, but I'm so tired of all the lies.

Oct 16, 2012 2:40PM
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2007 - unemployemnt was 4.9% and right before a DEMOCRATIC congress was elected, we had 50+ straight weeks of growth.


But yeah, no jobs were created......horse sh*t.
Oct 16, 2012 1:58PM
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URENA          U.S. STRIKE FORCE ON STANBY       DRONES ARE FIRED AND READY

TOMAHAWKS ARE IN WARM UP MODE

this next war will be courtesy of OBAMA for POLITICAL GAIN    LOL
Oct 16, 2012 2:12PM
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Obama pumps TRILLIONS into FRAUD STREET

this balloon will also burst

$ 40,000,000,000.00 per month courtesy of the FED
Oct 16, 2012 2:38PM
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What if we’ve already had an October surprise in this campaign, in September, and the mainstream media are failing to follow up? An issue becomes a real issue only if enough people give it the attention it’s due.

Many people in the diplomatic and intelligence communities say that the Obama administration, behind the scenes, is in complete disarray in the aftermath of al-Qaeda’s attack on the U.S. consulate in Libya that killed Ambassador Chris Stevens and three other Americans. That tension burst into the open during last Thursday’s debate, when Vice President Joe Biden said the administration “did not know” that U.S. personnel in Libya had made repeated requests for more security before the September 11 attack. “We did not know they wanted more security there,” Biden claimed.

That directly contradicted sworn testimony given by several officials just the day before, during a House Oversight Committee hearing. Lt. Colonel Andrew Wood, who led a 16-member security team in Libya for six months, testified: “We felt great frustration that those requests were ignored or just never met.” Wood’s team was ordered by the State Department to leave Libya in August, about a month before the terrorist assault.

After the debate, Obama-administration officials knew that Biden’s statement was untenable, so they explained that by “we” — the “we” who were in the dark about security concerns — Biden meant only two people: himself and President Obama. 

Oct 16, 2012 1:34PM
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Let's get serious and act against this company ... if it is crooked, it should be investigated ... by the Attorney General, the SEC, even Obama (if he has the guts).
Oct 16, 2012 2:13PM
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I"m beginning to hate the IRS...  First they say I underpaid $15K in 2007.  So fine, I pay it.  Then I get a letter saying that I overpaid $10K in 2008, and that I should request a check.  Then I get a third letter saying that they applied the overpayment of 2008 to the underpayment of 2007, and that I owe 5K...  I'm about to fly over to Kansas City to see if Homer Simpson is working on my account.
Oct 16, 2012 2:43PM
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What happened to the AM market dispatches?  They went to Top Stocks for awhile, but even that has stopped.  Wonder if it had anything to do with the AM message boards so close to the election?  Wouldn't be a surprise to see them come back after this whole mess is temporarily settled.

What's the deal with all the early voting?  Even Obama himself is going to vote a couple weeks early.  Not sure when Romney will cast his ballot.  There was early voting in 08 and a little in 04, just seems so much more widespread now, and IMO, it's just stupid.  A couple of decades ago, you never voted early and if you wanted an absentee ballot, you had to have a good reason, like you'd be out of the country or were having major surgery or something.  Now,  anyone and everyone can request an absentee ballot for any reason at all and cast their vote whenever the hell they feel like it.  Or they can just show up to a polling place a month early to cast their ballot.    This just doesn't seem right.  We have a national election day for a reason, and that's when voters should cast their ballots.  Voting is a civic duty and maybe we should start treating it that way again, instead of trying to make it as convenient as possible.

Stocks roar again today, but as long as interest rates remain below the rate of inflation, there's no foundation for this bull run.  When people can go back to making 6% on a 24 month CD, we'll see more realistic stock valuations.

Oct 16, 2012 3:28PM
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Thumbs up if you think it was criminal the way the administration spent taxpayer money on green jobs? $38,000,000,000 that created 3545 jobs @ $4,853,000 per job. This is far worse than the crappy jobs bill. What about some real jobs and not this trickle down government B.S. we tax payers are getting hosed with.
Oct 16, 2012 2:47PM
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oops!! electric car battery company filed for bankruptcy, hmmm bankruptcy, a word used constantly these past 3.6yrs now isn't it, oh btw you wind power supporters get this, wind power turbines are responsible for more bald eagle deaths than anything else combined, not to mention people getting killed by giant ice blocks shearing off the blades and crashing thru windshields!! God you idiot libs are responsible for such horrific problems, making up lies about man-made global warming when there is no such thing and never was, thousands of emails proving leftwing looney scientists outright lied about it, not even just fudging numbers, they outright lied about global warming to further an insane leftwing looney agenda to control and perpetuate fear mongering, now that lying pig witch hillary clinton taking 'responsiblity' for the benghazi fiasco, please!!!! there's gotta be a special place in hell for you pigs!!

 

btw noticed lots of Romney/Ryan lawn signs here in Brookyn, NY, Dyker hghts and bay ridge area, just came from PA yesterday and this time I saw 37 Romney/Ryan signs, was 16 last wk when I was there, Doylestown twnshp, drove around the area a little more and there's not a SINGLE obama sign anywhere, hmmm, fancy that, thought osama had a lock on PA?? hell didn't see any signs for obama going thru jersey!!  hmm, oh, right, that's just more leftwing looney media wishfull thinking, quite the change from 2008, BIG TIME!!!

Oct 16, 2012 2:22PM
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Another day, another handful of lies about from the White House about Libya.
Oct 16, 2012 2:03PM
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OBUMMER will have his tail between his legs AGAIN after the debate!!!!!
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you gotta love Bernanke and the QE3 or is it QE4 now??? monies

 

however Chinese has decided that the yuan is going to be the world currency in the next five years so bye bye Bernanke being able to print monies and hello Chinese masters.

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