Stocks rally for a 3rd straight week
The September rally pushes the Dow up 13, despite a report showing consumers continue to be gloomy. Irish debt fears weigh on markets. Gold briefly tops $1,280.
Unless you're a bear, you can go home happy. Sort of. Stocks finished higher today -- barely -- despite consumer fears about the economy and worries about European debt woes. The finish meant the major averages enjoyed their third straight weekly gain, the longest streak since midsummer.
The gains were helped in part by a solid day for technology stocks, especially Oracle (ORCL) and Texas Instruments (TXN). And even a bit of good news from office-furniture-maker Herman Miller (MLHR).
Dow Jones industrials ($INDU) finished up 13 points to 10,608. The Standard & Poor's 500 Index ($INX) added 1 point to 1,126. The Nasdaq Composite Index ($COMPX) was up 12 points to 2,316, mostly because of Oracle and Research In Motion.
Stocks seeing large amounts of activity include:
- Massey Energy (MEE), down 7.5% to $29.94, the worst performance of an S&P 500 stock. The coal producer forecast a third-quarter operating loss and expects 2010 operating results at the low end of projections.
- Student Loan Corp. (STU), up 41.2% to $29.87, the biggest gain among stocks in the Russell 2000 Index ($RUT.X). Majority-owned by Citigroup (C), the company agreed to be bought by Discover Financial Services (DFS) for $30 a share.
- SLM Corp. (SLM), up 4.5% to $11.72. The company will buy $28 billion of securitized federal student loans and related assets from Student Loan Corp.
- Brinker International (EAT), down 6.2% to $17.65. The operator of Chili’s and Maggiano’s restaurants said Chief Financial Officer Charles Sonsteby is leaving Oct. 1 to a job with a private retail company.
- Novell (NOVL), up 1.2% to $6.12. Enterprise software company is apparently in late-stage talks with at least two buyers -- including VMware (VMW) -- to sell the company in separate pieces, The Wall Street Journal said. VMware shares were up 5 cents to $84.81.
But Ireland and Portugal were also a factor, due to banks and government debt. There's a lot of money betting that Irish bank problems could be getting worse and that the governments will need help fixing the problem.
As a result, the cost to protect bond holders against a default on Irish debt hit a record today and helped push European stocks lower.
More important for U.S. investors, the Thomson Reuters/University of Michigan Consumer Sentiment Index fell from 68.9 in August to 66.6. It suggests, according to Capital Economics, that consumers see a second recession coming because expectations were weak. Taxes are a big problem, the index suggested, especially among consumers earning $75,000 or more a year.
The report basically ended hopes for a strong day built on the earnings results late Thursday from Oracle and Research In Motion (RIMM).
Because of the uncertainty, gold finished at a new closing high, settling at $1,277.50 an ounce, up $3.70. It had reached as high as $1,284.40 an ounce. There's talk it will top $1,300 soon.
Crude oil was off 91 cents to $73.66 as concerns about the economy and global supply glut persist. Energy shares were mostly lower, with Dow component Chevron (CVX) off 0.8% to $78.46.
Big banks slipped after the Securities and Exchange Commission proposed curbing so-called "window dressing" practices. These would include selling securities for brief periods of time to reduce debt levels and then buying them back again. Window-dressing is widely believed to a reason Lehman Bros. was able to stave off failure for months.
JPMorgan Chase (JPM) fell 2.3% to $40.06. Goldman Sachs (GS) was off 0.8% to $150.98.
Interest rates were lower, with the 10-year Treasury yield falling to 2.746% from 2.759% on Thursday. The dollar was down slightly against major currencies.
|Markets for the week|
|9/17/2010||9/10/2010||% chg.||YTD chg.|
|U.S. Dollar Index||81.64||82.70||-1.3%||4.4%|
|(per troy ounce)|
The winning streak continues
The Dow was up 1.4% as it stretched its weekly winning streak to three. The S&P 500 added 1.4%, with the Nasdaq rising 3.3%.
The Dow is up 5.9% for the month, with the S&P 500 sporting a 7.3% gain and the Nasdaq a 9.5% gain. If those gains hold, September would be the best month for the Dow since July and the strongest for the S&P 500 since July 2009. The Nasdaq's gain would be its best since April 2009.
There is concern about how much momentum the market has.
A key concern: Soon after today's open, the S&P 500 topped 1,130, its highs in June and August right after the open today, and promptly fell back.
Daily gains have been relatively small this week, a signal that investor enthusiasm may be waning.
Oracle jumps big; Research In Motion fades
Oracle and Research In Motion were up 8.4% to $27.48 and 0.5% to $46.72, respectively, after reporting better-than-expected earnings.
Texas Instruments was up 3% to $25.72 after announcing a dividend increase and a $7.5 billion stock buyback.
Those were good gains that gave technology fans something to cheer about.
But Research In Motion faded badly during the day, from a high of $48.74 at the open to $46.72. Investors concluded that sales gains in the fiscal-second for Research In Motion were trumped by lower-than-expected new subscriptions.
"The split appears due to where you want to focus your attention," David Berman wrote for the Globe and Mail in Toronto. "If near-term earnings suggest that RIM is more than capable of holding its ground against competition from Apple's (AAPL) iPhone, then RIM looks like an awfully tempting buy right now." But, he added, "some analysts continue to focus on net new subscribers, which came in below expectations and suggest that RIM is having a tough time attracting new fans."
Herman Miller's surprise
Herman Miller was interesting because of what the results may be saying about the economy. Fiscal-first-quarter sales were up 17.5% to $380.7 million. Net income nearly doubled to $16.1 million, and earnings per share were up 57% to 22 cents.
Better: Orders were up 22% to $393.8 million.
Admittedly, this doesn't bring Miller back to the glory days of 2007, when revenue hit $2 billion. That may be why a 4% gain at the open melted to a 0.3% gain to $18.45 at the close.
But the results, the orders and the 8% growth in its backlog suggest there is some stirring going on in Corporate America and in Corporate Global.
North American sales were up 15.4% to $311 million; orders were up 22%. International sales were up 40% to $58.7 million; new orders were up 33%.
One could argue this is a fluke. But Steelcase (SCS), one of Herman Miller's top rivals, reports results after Wednesday's close. Miller shares are up 18.6% this year; Steelcase is up 7.1%.
|Energy prices -- New York close|
|Fri.||Thur.||Month chg.||YTD chg.|
|(per mil. BTU)|
|(per gallon; AAA)|
Consumer prices up slightly
Prices consumers pay for goods and services rose 0.3% in August after a similar increase in July, the Labor Department said.
Excluding volatile food and energy prices, the core rate was unchanged, coming in slightly lower than the increase of 0.1% that economists had expected. In July, the core rate rose 0.1%.
Only 13 of the 30 Dow stocks were higher, but 57 Nasdaq-100 ($NDX.X) stocks were showing gains, led by Oracle. The index was up 8 points to 1,956.
Gainers were ahead of decliners 1.4-to-1 on the New York Stock Exchange and Nasdaq.
Hewlett-Packard (HPQ) was the Dow laggard, down 3% to $39.14. Bloomberg News said the company is close to picking a successor to Mark Hurd as CEO. The odds apparently favor an internal candidate.
Johnson & Johnson (JNJ), which owns nearly 18% of Dutch biotech company Crucell (CRXL), will acquire the rest of the company for $2.3 billion. Johnson & Johnson shares were up 0.5% to $61.57. Crucell shares were soaring 55.9% to $32.02.
Material from The Street.com was included in this post.
|Short hits from the markets -- New York close|
|Fri.||Thur.||Month chg.||YTD chg.|
|13-week Treasury bill||0.145%||0.150%||7.41%||190.00%|
|5-year Treasury note||1.440%||1.462%||7.30%||-46.39%|
|10-year Treasury note||2.746%||2.759%||10.86%||-28.55%|
|30-year Treasury bond||3.911%||3.923%||10.70%||-15.73%|
|U.S. Dollar Index||81.641||81.501||-1.63%||4.37%|
|(in U.S. $)|
|U.S. $ in pounds||£0.6390||£0.6398||-1.90%||3.36%|
|Euro in dollars||$1.3055||$1.3079||2.96%||-8.92%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.7660||€ 0.7646||-2.88%||9.79%|
|U.S. $ in yen||85.75||85.80||1.96%||-7.80%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
This post now contains the correct closing prices for wheat and corn.
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[BRIEFING.COM] S&P futures vs fair value: +11.80. Nasdaq futures vs fair value: +6.00. The stock market is on track to begin today's session on a higher note following a better-than-expected nonfarm payrolls report for February (175K actual, 163K Briefing.com consensus). The S&P 500 futures trade 12 points above fair value with the bulk of the gain coming after the jobs report.
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