Dow up 81 as stocks see late-day surge

The S&P 500 and Nasdaq move into the black for 2010. Growth in Chinese industrial production and strength from banks firm the market. Oil tops $77. Microsoft sees a big late-day jump.

By Charley Blaine Sep 13, 2010 1:44PM
Charley BlaineUpdated: 8:34 p.m. ET

Stocks surged in the last hour of trading to their eighth gain in the last 10 sessions on news of strong growth from China and relief that new global bank capital rules won't be as onerous as expected.

The Standard & Poor's 500 Index ($INX) and the Nasdaq Composite Index ($COMPX) ended the day ahead on the year for the first time since early August, joining the Dow Jones Industrial Average ($INDU), which moved into the black on Friday.
Helping the market: Bloomberg News said Microsoft (MSFT) might sell bonds to pay for dividends and buy back shares; Microsoft was up 5.2% to $25.11. (Microsoft is the publisher of MSN Money.)

In addition, many on Wall Street were buying stock generally on hopes that Republicans might gain control of Congress.

The Dow closed up 81 points, or 0.8%, to 10,544, its highest close since Aug. 10. The S&P 500 was up 12 points, or 1.1%, to 1,122, its best close since Aug. 9, and the Nasdaq added 43 points, or 1.9%, to 2,286.

In addition to Microsoft, the market was helped by:
  • General Electric (GE) rose 1.7% to $16.25. GE gets more than 50% of its revenue outside the United States and should be a beneficiary of China's strength.
  • Zions Bancorp (ZION) rose 7.4% to $21.31 because the new so-called Basel rules give banks until 2019 to meet tough new capital requirements.
  • Xerox (XRX) jumped 7.7% to $9.81. Barron's said shares of the copy-machine company may double as it pushes into data processing, analysis and storage.
  • Cognex (CGNX) rose 8.1% to $22.23. The maker of mechanical vision systems that monitor manufacturing is cheap and a stock worth buying, Jim Cramer said on his “Mad Money” program Friday.
Thanks to the news from China, crude oil settled up 74 cents to $77.19. Gold rose 60 cents to $1,247.10 an ounce at the close in New York.

Interest rates were lower, with the 10-year Treasury yield falling to 2.741% from 2.795% on Friday. The dollar was lower against major currencies.

Energy prices -- New York close
 

Mon.

Fri.

Month chg.

YTD chg.
Crude oil 

$77.19

$76.45

7.33%

-2.73%
(per barrel)











Heating oil

$2.1227

$2.1044

6.58%

0.34%
(per gallon)











Natural gas 

$3.9380

$3.8830

3.20%

-29.33%
(per mil. BTU)











Unleaded gasoline

$1.9078

$1.9148

6.63%

-3.52%
(per gallon)











Retail gasoline

$2.7090

$2.6990

1.20%

2.65%
(per gallon; AAA)












September rally pushes on
The rally has pushed the Dow up about 5.3% for the month, with the S&P 500 up 6.9%, and the Nasdaq up 8.1%. 

In addition, the Dow, S&P 500 and Nasdaq are now trading above their simple 200-day moving averages for the first time in a month. Normally, that's a signal of investor confidence but only if an index can stay above those levels.

Traders are going to be watching closely to see if the S&P 500 can get over 1,130, its high in June and again in August. (You can see the chart of those highs here.)

Bulls will argue that the economy is starting to show new signs of strength. (Jim Cramer is one.) They will be tested Tuesday with the Commerce Department's report on retail sales and fiscal-second-quarter earnings from electronics retailer Best Buy (BBY).

Bears will argue the banks are being propped up by regulators who won't force them to write down their real-estate portfolios and the dismal employment situation.

Financials power the rally
Financial stocks have been the big drivers for the September rally. The Philadelphia Banking Index ($BKX), up 3.1% today to 48, is up 10.4% for the month.

The sector was one of two catalysts for today's rally as the Basel Committee on Banking Supervision reached its Sunday compromise that more than doubles capital requirements for banks while giving them until 2019 to meet buffer requirements to withstand future stress.

The new rules boost the minimum common equity capital standard to 4.5% from 2%, along with a capital conservation buffer of 2.5% to withstand future stress. The new standards will, however, be phased in between 2015 and 2019, a longer-than-expected period to adjust to the new rules.

The practical effect on depositors in this country is probably nil. For borrowers, it's not clear. The big worry is that the new rules will make it harder to get loans.

But for investors, assuming U.S. regulators adopt the rules, the effect should make banks more stable. Combine that with the longer period of time to meet the new standards, and you have the ingredients for today's bank rally.

Among bank shares, JPMorgan Chase (JPM) was the second-best performer among the 30 Dow stocks, up 3.4% to $41.12, with Bank of America (BAC) sixth, up 3% to $13.95. Wells Fargo (WFC) was up 2.9% to $26.50. Fifth Third Bancorp (FITB) added 3.5% to $12.51.

Metals stocks move up on China news

The materials and capital-goods sectors also got a lift from the Chinese economic data.


Freeport-McMoRan Copper & Gold (FCX) was up 3.1% to $81.78. U.S. Steel (X) added 1.8% to $48.31. Dow component Alcoa (AA) added 3.1% to $11.52.


China's industrial production grew 13.9% in August, while retail sales rose 18.4%. The data helped to ease concerns that Chinese economic growth slowing. The Shanghai Composite Index moved up 0.9% to 26.89. Japan's Nikkei-225 Index ($JP:N225) rose 0.9% to 9,322. 


European stocks rallied after the European Commission predicted the European Union's economy would grow 1.7% this year instead of 0.9%. Britain's FTSE-100 Index ($GB:UKX) added 1.2% to 5,566., while Germany's DAX Index ($DE:DAX) gained 0.8% to 6,262. 


Twenty-four of the 30 Dow stocks were higher, led by Microsoft, along with 83 stocks in the Nasdaq-100 Index ($NDX.X). The index, which tracks the largest Nasdaq stocks, was up 29 points, or 1.6%, to 1,916.


Intel (INTC) was up 3.3% today to $18.56 after the company said its new "Sandy Bridge" core processors will be available next year. These will put include processing and graphic capabilities in a single chip.


Chips also were stronger after market research firm Gartner said semiconductor capital equipment spending will more than double this year from 2009 but will slow in 2011.


The Philadelphia Semiconductor Index ($SOX) rose 3.4% to 327, with Micron Technology (MU) the leader, up 8.3%.


2 deals on a Monday
Hewlett-Packard (HPQ) will acquire security software maker ArcSight (ARST) for $1.5 billion. Hewlett-Packard shares closed up 0.2% to $38.28. ArcSight shares soared 25.1% to $43.91.

 

Dollar Thrifty Automotive Group (DTG) agreed to be acquired by Hertz (HTZ) after Hertz raised its offer to $50 a share in cash and stock, or $1.43 billion. Dollar Thrifty shares rose 5.4% to $50.58. Hertz shares were up 7.9% at $10.84.

 

Google (GOOG) was set to conduct a two-day trial of live video programming on YouTube, which if successful could signal the biggest push into the era of live streaming on the Internet. Its shares were gaining 1.3% to $482.27.

 

BP (BP) told Citigroup analysts that it expects legal claims to be less than the $20 billion it set aside for the Gulf oil-spill disaster, Bloomberg reported. The stock traded slightly higher at $38.35.

 

Washington Post (WPO) shares fell 0.8% to $375.88 after a Department of Education report showed default rates of for-profit schools rose to 11.6% from 11%, sparking concerns about the health of the Post's largest division, Kaplan Education. The Post has disputed the report, pointing out that it serves "non-traditional" students.


Genzyme (GENZ) agreed to sell its genetic-testing unit for $925 million in cash to Laboratory Corp. of America (LH). Genzyme shares were off 0.7% at $70.29, while Laboratory Corp. shares dropped 4.7% at $73.05.


Nokia (NOK) said the head of its mobile business unit, Anssi Vanjoki, is resigning, just days after it appointed its new chief executive. Nokia was up 1.9% to $10.13 in New York.


Material from The Street.com was incorporated into this post.


Short hits from the markets -- New York close
 
  Mon.

Fri.

Month chg.

YTD chg.
Treasury yields




 





13-week Treasury bill

0.135%

0.135%

0.00%

170.00%
5-year Treasury note 

1.507%

1.583%

12.30%

-43.89%
10-year Treasury note

2.741%

2.795%

10.66%

-28.68%
30-year Treasury bond

3.842%

3.873%

8.75%

-17.22%
Currencies







 

 
U.S. Dollar Index

82.150

83.016

-1.01%

5.02%
British pound

$1.5408

$1.5363

0.37%

-4.75%
(in U.S. $)











U.S. $ in pounds

£0.6490

£0.6509

-0.37%

4.98%
Euro in dollars

$1.2837

$1.2713

1.25%

-10.44%
(in U.S. $)











U.S. $ in euros

€ 0.7790

€ 0.7866

-1.23%

11.65%
U.S. $ in yen 

84.10

84.17

0.00%

-9.57%
Canada dollar

$0.973

$0.967

3.74%

2.37%
(in U.S. $)











U.S. dollar 

$1.027

$1.034

-3.67%

-2.39%
(in Canadian $)











Commodities

 

 

 

 
Gold

$1,247.10

$1,246.50

-0.26%

13.77%
(per troy ounce)











Copper

$3.4790

$3.4065

3.51%

3.96%
(per pound)











Silver

$20.141

$19.8450

3.88%

19.63%
(per troy ounce)











Wheat 

$7.4500

$7.3675

14.18%

37.58%
(per bushel)











Corn

$4.8350

$4.7825

13.90%

16.65%
(per bushel)











Crude oil 

$77.19

$76.45

7.33%

-2.73%
(per barrel)










 
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[BRIEFING.COM] The stock market is experiencing one of its worst days in some time.  Every Dow component is lower at this time and every sector is sporting a loss of at least 1.0%.  The A/D line at the NYSE favors decliners by a 10-to-1 margin.

We acknowledged many of the reasons in our midday summary why the market is doing so poorly.  We won't rehash them here, only we'll add that today is peculiar because there isn't a rotation within the stock market to ... More


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