Stocks see best September in 71 years
Despite profit-taking, the Dow and S&P 500 stomp on doomsayers who saw continued weakness after a slow summer. Gold slips. AIG moves to shed government involvement.
Updated: 6:20 p.m. ET
Despite a modest decline today, stocks enjoyed a September for all time.
The Dow Jones industrials ($INDU) finished September with a 7.7% gain. The Standard & Poor's 500 Index ($INX) was up 8.8%. Both enjoyed their best September performances since 1939.
The Nasdaq Composite Index ($COMPX) added 12% for the month, its best September since 1998.
Since 1950, September has normally been the weakest month for stocks, but this time it confounded many analysts. They'd confidently expected the market to slide further after a weak August performance because of worries that the economy was about to sink back into recession.
And many who predicted a bad September see a weak October ahead. The economy faces too many head winds in the months ahead to move higher, they argue.
Of particular concern is the health of financial companies. Those with big trading operations -- such as Goldman Sachs (GS), Morgan Stanley (MS) and Bank of America (BAC) -- will report weaker-than-expected profits because of lower volumes.
Plus, the S&P 500 keeps been falling back whenever it his 1,150. Sooner or later, that could turn into a big sellss ignal.
Many regional banks are still trying to dig out of the real-estate bust. States and cities are making big cuts in budgets to cope with declining tax revenues.
But bulls believe the economic data, especially today's reports on jobless claims and Midwest manufacturing, are pointing to a strengthening recovery ahead. Railroad traffic has been quite strong all year.
And many are betting that stocks could rally if Republicans regain control of the House in the November elections.
Friday brings the important national manufacturing report from the Institute for Supply Management and the September sales reports from auto manufacturers. Futures trading suggests that stocks will lower slightly lower.
After the close, Hewlett-Packard (HPQ) named Leo Apotheker as its new CEO, replacing Mark Hurd, who was ousted in August. Apotheker is a former CEO of German software maker SAP (SAP). HP also named former Oracle (ORCL) president Ray Lane as its non-executive chairman. Hurd is now an Oracle co-president.
HP shares were off 2.8% to $40.85 after hours.
|Energy prices -- New York close|
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A big quarter, especially for commodities
The quarter was also strong quarter for stocks, their best since the third quarter of 2009. The Dow was up 10.4%, with the S&P up 10.7% and the Nasdaq adding 12.3.
For the year, the Dow is up 3.45%, with the S&P 500 up 2.34% and the Nasdaq up 4.4%.
If you really wanted to make money in September and the quarter, the place to be was corn, up 16.8%, or heating oil up 22%. For the quarter, wheat and corn paid off for speculators, rising 40% each.
That may surprise gold bugs, who saw prices in New York jump well above 1,300 an ounce. Fact is, gold was up 4.7% in September and 5.1% for the quarter. But gold has jumped more than 19% for the year. Silver is up nearly 30%.
A modest decline after big swings
The Dow finished down 47 points to 10,788. The S&P 500 was off 4 points to 1,141, and the Nasdaq dropped 8 points to 2,369. The Nasdaq-100 Index ($NDX.X), which tracks the largest Nasdaq stocks, dropped 11 points to 1,998, with Apple (AAPL), subtracting 5 points from the index by itself.
Today's market decline was actually fairly broad, with telecommunications, metals and consumer-staples stocks the weakest sectors.
For a brief moment, for those hoping to end September with a big smile, the sell-off looked like it might get quite nasty. The Dow was down enough to cut its gain to less than 7.3%. That would have meant its September gain was only the best since 1954.
The trigger for the selling appears to have been the S&P 500 hitting 1,157, which represented an 18-point gain from Wednesday. Almost immediately, stocks turned south and didn't bottom until the S&P 500 hit 1,136.
At the same time, the dollar suddenly rallied, and commodity prices dropped. Gold, which had hit a new intraday high of $1,317.50 an ounce, sold off to $1,304 before rebounding to $1,309.60, down 70 cents. Silver and copper were lower as well.
Among stocks seeing big moves:
- Apple, down 1.3% to $283.75. The stock is up more than 18% in September alone and had become vulnerable to profit-taking.
- American International Group (AIG), up 4.4% to $39.10. The insurer, once the world's largest, agreed with U.S. regulators to repay its bailout by converting the government's holdings into common shares for sale, a step toward independence.
- McCormick & Co. (MKC), up 2.3% to $42.04. The world's biggest spice seller said it would earn at least $2.57 a share excluding one-time items this year. The Street consensus has been $2.54.
- Comverse Technology (CMVT) up 15.4% to $6.73. Oracle and buyout firms are interested in buying the voice-mail software maker's assets, The Wall Street Journal said. The report added that buyout firms may be more interested in Verint Systems (VRNT), a maker of business analysis software. Verint, 54% owned by Comverse, jumped 14.6% to $29.55.
- Limelight Networks (LLNW), up 6.5% to $5.89. The maker of software that speeds delivery and prevents online problems with Web videos may be poised to rise, CNBC's Jim Cramer said Wednesday on his “Mad Money” program.
- Manitowoc (MTW), up 13.6% to $12.11. The world's biggest manufacturer of overhead cranes will refinance a portion of its term loans with senior unsecured notes. The offering should "materially reduce" concern over potential equity distress, Morgan Stanley said.
Good news leads to strong open
The market rallied strongly at the open, with the Dow up as many as 114 points, thanks to good news on jobless claims and Midwest manufacturing and a better-than-expected revision of gross domestic product in the second quarter.
The Labor Department said the number of initial jobless claims fell by 16,000 to 453,000 during the week ended Sept. 25. Economists surveyed by Reuters had estimated that 460,000 claims were filed.
Midwest manufacturing activity rose unexpectedly this month to 60.4 from 56.7 in August, according to Chicago's Institute for Supply Management. Economists had anticipated a reading of 55.
Meanwhile, the U.S. economy expanded by 1.7% in the second quarter, according to the Commerce Department's third and final estimate. Economists had expected the previous estimate of 1.6%, which was cut from 2.4%, to remain unchanged. Still, growth slowed from a rate of 3.7% in the first quarter.
The strong economic reports trimmed losses in European stocks, which had been falling after Moody's downgraded Spain's credit rating by one notch to Aaa, with a stable outlook, and after Ireland's central bank said a bailout of Anglo Irish Bank could cost $48.3 billion.
Nine of the 30 Dow stocks were higher, led by Boeing (BA), up 0.9% to $66.54. Only 31 Nasdaq-100 stocks in the Nasdaq-100 Index ($NDX.X) were higher, led by Logitech International (LOGI), up 3.5% to $17.43.
|Short hits from the markets -- New York close|
|Thur.||Wed.||Month chg.||YTD chg.|
|13-week Treasury bill||0.15%||0.15%||11.11%||200.00%|
|5-year Treasury note||1.294%||1.287%||-3.58%||-51.82%|
|10-year Treasury note||2.524%||2.506%||1.90%||-34.32%|
|30-year Treasury bond||3.697%||3.691%||4.64%||-20.34%|
|U.S. Dollar Index||78.938||78.905||-4.88%||0.92%|
|(in U.S. $)|
|U.S. $ in pounds||£0.6361||£0.6330||-2.35%||2.90%|
|Euro in dollars||$1.3644||$1.3626||7.61%||-4.80%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.7329||€ 0.7339||-7.07%||5.05%|
|U.S. $ in yen||83.68||83.70||-0.50%||-10.02%|
|U.S. $ in Chinese||6.72||6.68||-1.30%||-1.58%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
If the Dow goes to to 12.5K by December the gold will go to over $2,000.00 per ounce. Mark that down.
As I said last week, if the market keeps going up, gold will go up more. The market is only going up because of easy credit/monetization primarily benefiting financial companies who are propping up the market.
Smart players and central world banks see this and they buy gold.
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