Stocks regain some of Tuesday's losses

Updated: 7:43 p.m. ET

 

Stocks stumbled to modest gains today after the Federal Reserve saw "widespread signs" of a decelerating economy and President Obama said he wouldn't budge on letting the 2001 and 2003 tax breaks for the most affluent expire at the end of the year.

The rally saw the Dow Jones industrials ($INDU) move up as many as 86 points after Tuesday's worries about European debt problems eased. But the blue-chip index faded after the Fed's Beige Book report was released and the president spoke.

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The Dow closed up 46 points to 10,387. Today's rally regained more than 43% of Tuesday's 107-point loss. The Standard & Poor's 500 Index ($INX) topped 1,100 several times during the session but closed at 1,099, up 7 points. The Nasdaq Composite Index ($COMPX) rose 20 points to 2,229.

Stocks making big moves today included:

• Goldman Sachs (GS) rose 1.6% to $147.54 and an additional 0.2% to $147.85 after hours. The Wall Street Journal said Goldman has agreed to a fine of nearly 20 million pounds, or $31 million, from a probe of its marketing practices for mortgage securities that soured.
  
• Green Mountain Coffee Roasters (GMCR), up 7.6% to $33.58. The company will boost prices by as much as 15%, starting Oct. 11, to cope with a 41% increase in world coffee prices since June.  
•  Phillips-Van Heusen (PVH) rose 7.1% to $54.07. The  clothing maker expects to earn as much as $3.80 a share, excluding one-time items. Earlier guidance: $3.65 at most.
• Craft Brewers Alliance (HOOK), brewer of Red Hook and Widmer beers in the Pacific Northwest, was up 6.6% to $7.62 on speculation that Anheuser Busch Inbev (BUD) may be readying a buyout bid. Anheuser rose 2.4% to $55.65.
  
• Hewlett-Packard (HPQ) was off 2.8% to $38.81 after UBS cuts its rating on the stock from "buy" to neutral."
• Women's clothing retailer Talbots (TLB) fell 1.3% to $10.97 after falling as much as 10%. Talbot's sees fiscal-third-quarter earnings after one-time items of 22 cents to 28 cents a share. Analysts were looking at 30 cents.

Futures trading suggests a modestly higher open for U.S. stocks on Thursday.

After today's close came the disclosure that convenience store chain 7-Eleven has offered $40 a share, or $2.03 billion, to acquire smaller rival Casey's General Stores (CASY). 
 
The 7-Eleven offer tops the $38.50 per share offered by Canadian convenience-store giant Alimentation Couche-Tard, which has waged a hostile battle to takeover Casey's.

Casey's was up 0.9% to $43.13 in regular trading and an additional 0.4% to $443.30 after hours.

Energy prices -- New York close
			Wed.			Tues.			Month chg.			YTD chg.
Crude oil			$74.67			$74.09			-5.42%			-5.91%
(per barrel)
Heating oil			$2.0817			$2.0743			-0.31%			-1.60%
(per gallon)
Natural gas			$3.8140			$3.8520			-22.53%			-31.55%
(per mil. BTU)
Unleaded gasoline			$1.9078			$1.9148			-8.62%			-5.53%
(per gallon)
Retail gasoline			$2.6800			$2.6820			-2.23%			1.55%
(per gallon; AAA)

Why the rally nearly fizzled
The rally faded as the Fed's Beige Book report, a narrative snapshot of the economy, acknowledged that the economy most definitely hit a soft patch this summer.

A big problem, the report said, was continued stress in the housing sector after the expiration of the homebuyer tax credit at the end of June. That prompted a slowdown in construction activity as well.

While growth was uniformly moderate in Western states, there was stress along the Atlantic seaboard and in parts of the Midwest. Consumer spending was stable but cautious, the report said. Manufacturing was continuing to expand.

The market also seemed to react negatively to President Obama's vow that he won't compromise on tax breaks for the most affluent also affected the market.

But investors found cheer in Portugal and Poland. Both countries were able to sell bonds at lower-than-expected yields with larger-than expected demand.

That boosted European stocks, and the rally spread across the Atlantic. Later, it helped an auction of U.S. Treasury notes.

Financial, industrial, materials and energy stocks were the big leaders today.

JPMorgan Chase (JPM) was the Dow leader, up 2.2% to $39.12. Alcoa (AA) was next, up 1.9% to $11.07, followed by Boeing (BA), up 1.7% to $64.50 and Caterpillar (CAT), up 1.5% to $70.74.

Energy shares rose as crude oil moved up 58 cents to $74.67 a barrel. Exxon Mobil (XOM) was up 0.3% to $60.75. Chevron (CVX) added 0.3% to $77.25.

BP (BP) was up 3.2% to $38.37, after an upgrade from Fitch Investors.

BP released a report today saying the big Gulf of Mexico spill was due to a perfect storm of errors from its staff and others including drilling contractor Transocean (RIG) and Halliburton (HAL).

Transocean, which was up 1.3% to $53.74 thanks to an "outperform" upgrade from Wells Fargo Advisors, called the BP report "self-serving."

The rally came as  many companies are taking advantage of record-low interest rates to refinance their debt.

In two straight days, investment-grade issuance has topped $30 billion. Hewlett-Packard, Home Depot (HD), Aon (AON), France Telecom (FTE) and even Freddie Mac (FMCC) have tapped the market. A Dow Jones report said supply this month could be in the range of $75 billion to $100 billion. That would be similar to the $99 billion in corporate debt sold in September 2009.

Aetna and others boost health premiums
Health insurer Aetna (AET) was up 1.8% to $29.07. The Wall Street Journal said today that Aetna and others plan to raise premiums for some Americans in coming weeks as a direct result of the health overhaul.

The increases will complicate Democrats' efforts to trumpet their signature achievement before the midterm elections.

Along with Aetna, some BlueCross BlueShield plans and other smaller carriers have asked for premium increases of 1% to 9% to pay for extra benefits required under the law, according to filings with state regulators.

These and other insurers say Congress's landmark refashioning of U.S. health coverage, which passed in March after a brutal fight, is causing them to pass on more costs to consumers than Democrats predicted.

A decent rally; gold drifts lower
Gold slipped $1.80 to $1,257.50 an ounce as the European situation eased.

Interest rates were high as the stock rally pulled money from bonds. The 10-year Treasury yield was at 2.654% from $2.609% on Tuesday. The dollar was lower against major currencies.

The Treasury sold $21 billion in 10-year notes at a yield of 2.67%. The bid-to-cover ratio, a measure of investor demand, was 3.21, compared with a recent 3.38. Indirect bidders took 54.7% of the sale, compared with a recent 40%.

Twenty-five of the 30 Dow stocks were higher, along with 87 Nasdaq-100 ($NDX.X) stocks. The index was up 24 points to 1,880.

Apple (AAPL) was up 2% to $262.92 after UBS analyst Maynard Um this morning repeated his "buy" rating on the stock. He lifted his price target on the stock to $350, from $340, Barrons said.

Short hits from the markets -- New York close
			Wed.			Tues.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.130%			0.120%			-3.70%			160.00%
5-year Treasury note			1.454%			1.407%			8.35%			-45.87%
10-year Treasury note			2.654%			2.609%			7.15%			-30.94%
30-year Treasury bond			3.723%			3.669%			5.38%			-19.78%
Currencies
U.S. Dollar Index			82.580			82.844			1.13%			5.57%
British pound			$1.5473			$1.5361			-1.39%			-4.35%
(in U.S. $)
U.S. $ in pounds			£0.6463			£0.6510			1.41%			4.55%
Euro in dollars			$1.2723			$1.2687			-2.54%			-11.23%
(in U.S. $)
U.S. $ in euros			€ 0.7860			€ 0.7882			2.61%			12.66%
U.S. $ in yen			84.10			83.75			-2.94%			-9.57%
Canada dollar			$0.964			$0.955			-0.82%			1.40%
(in U.S. $)
U.S. dollar			$1.038			$1.047			0.90%			-1.38%
(in Canadian $)
Commodities
Gold			$1,257.50			$1,259.30			6.41%			14.71%
(per troy ounce)
Copper			$3.5005			$3.4705			5.71%			4.60%
(per pound)
Silver			$20.0090			$19.9140			11.14%			18.78%
(per troy ounce)
Wheat			$7.1100			$7.3525			2.56%			31.30%
(per bushel)
Corn			$4.6250			$4.6625			17.76%			11.58%
(per bushel)
Crude oil			$74.67			$74.09			-5.42%			-5.91%
(per barrel)