Dow up 85 as Cisco, housing give stocks a boost

Cisco Systems' earnings cheer tech investors. An IBM deal also excites the market. Building permits hit a 4-year high. Wal-Mart and Ross Stores results disappoint. Facebook hits a new low. Jobless claims are flat.

By Charley Blaine Aug 16, 2012 12:27PM
Charley BlaineUpdated: 6:20 p.m. ET

Stocks moved solidly higher today, and the major averages flirted with hitting new highs for the year as decent earnings from Cisco Systems (CSCO) boosted technology stocks and building permits hit a four-year high.

Cisco reported better-than-expected earnings late Wednesday and boosted its dividend. While business conditions in Europe overall are a mess, CEO John Chambers said, business in Asia and North America is reasonably strong. The report pushed shares up $1.67 to $19.02. Its percentage gain was the largest since Aug. 11, 2011.

Building permits hit a seasonally adjusted annual rate of 812,000 in July, the best level since August 2008. Permits were up 6.8% from June and 29.5% from July 2011. Housing starts were off slightly. Homebuilding shares were higher. So were shares of housing-related stocks, including Whirlpool (WHR), La-Z-Boy (LZB), Bed Bath & Beyond (BBBY) and Masco (MAS). Jobless claims of 366,000 this week were up slightly from a  week ago.

Facebook (FB) shares did not participate in the rally. Instead, they briefly hit a new low of $19.69 before finishing at $19.87, down $1.33 on the day. Lock-up rules expired today, and some 271 million shares were eligible to be traded. Lock-up rules are put in place to prevent early investors from selling their positions as soon as a company goes public. Another 1.2 billion shares will get unlocked by next spring.

Profit-taking trimmed some of the rally's froth. The Dow Jones industrials ($INDU) closed up 85 points to 13,250, its best gain since jumping 217 points on Aug. 3. The blue chips had been up as many as 105 points. The Standard & Poor's 500 Index ($INX) gained 10 points to 1,416, and the Nasdaq Composite Index ($COMPX) rose 31 points to 3,062.

Article continues below.
The Nasdaq-100 Index ($NDX) gained 33 points to 2,768.

Volume, however, was light. New York Stock Exchange volume is just 322 million shares. Average daily trading volume so far in August is the lowest since December 2007.

You can see the the volume decline in Apple (AAPL). Its five-day average volume as of Wednesday was 9.2 million shares, compared with nearly 35 million shares in late April and 26 million shares over the five trading days ended Aug. 15, 2011.

After the close, shares of Gap (GPS) were up 66 cents, or 1.9%, after the company reported a better-than-expected 29% gain in earnings. The company again raised its full-year earnings view to $1.95 to $2 a share from its May view of $1.78 to $1.83 a share.

Market could be up again for the week
With today's gains, the Dow is up 0.3% for the week, with the S&P 500 up 0.7% and the Nasdaq up 1.4%. If the gains hold, they would be the sixth straight for the Dow and S&P 500 and fifth straight for the Nasdaq.

Since the market bottom on June 4, the Dow is up 9.5% with the S&P 500 up 10.8% and the Nasdaq 11.5%.

The Dow is up 8.5% for the year, with the S&P 500 up 12.6% and the Nasdaq up 17.6%.

Foot Locker (FL) and J.M. Smucker (SJM) are the key earnings reports on Friday. The Conference Board releases its July report on leading economic indicators. The University of Michigan reports on consumer confidence.

Futures tradings suggests stocks will open modestly higher.

Apple signals interest in cable
Apple, the biggest influence on the Nasdaq-100, closed up $5.51 to $636.34 today, within $8 of its all-time intraday high of $644, set on April 10.

One reason for Apple's gain: The company is in talks with some of the biggest U.S. cable operators about letting consumers use an Apple device as a set-top box for live television and other content.

The talks represent Apple's most ambitious crack at infiltrating the living room after years of trying, The Wall Street Journal said.

Energy prices -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Crude oil (-CL)

$95.60

$94.33

8.56%

-3.27%
(per barrel)











Heating oil (-HO)

$3.1229

$3.0852

9.65%

7.16%
(per gallon)











Natural gas (-NG)

$2.7240

$2.7480

-15.11%

-8.87%
(per mil. BTU)











Unleaded gasoline (-RB)

$3.0832

$3.0840

11.13%

16.02%
(per gallon)











Brent crude 

$116.90

$116.25

11.42%

8.87%
(per barrel)











Retail gasoline

$3.7100

$3.7090

6.00%

13.25%
(per gallon; AAA)












Cisco and IBM gains are 36% of Dow's total
Cisco's gain added nearly 13 points to the Dow. As it reported fiscal-fourth-quarter earnings late Wednesday, the network-equipment maker also unveiled a plan to raise its quarterly dividend by 75% to 14 cents a share.

And it vowed to use 50% of its free cash flow for dividends and to buy back shares. Cisco was the top percentage gainer among stocks in the Dow, the S&P 500 and the Nasdaq-100 indexes.

IBM (IBM) was up $2.44 to $200.84, its first close above $200 since May 11. The gain added roughly 18 points to the Dow.

IBM was up after announcing it was buying flash-memory provider Texas Memory Systems for an undisclosed sum, as the technology heavyweight looks to boost its storage offerings. Texas Memory, founded in 1978, makes what are called solid-state storage drives.

Unlike hard-disk drives that rely on spinning disks and robotic arms, solid-state systems are based on flash or random-access memory that can provide significantly faster access to data while consuming less power.

Sterne Agee said the deal is important for a number of reasons, including:

  • The market for flash has become important enough that IBM wants its own intellectual property in the space.
  • It may force a storage provider line EMC (EMC) to consider an acquisition of a player in flash memory such as Fusion-io (FIO). Fusion-io shares were up $2.15 to $28.41.
Wal-Mart holds the Dow back
Wal-Mart Stores (WMT) was the big weight on the Dow, falling $2.30 to $72.15 as fiscal-second-quarter revenue of $113.5 billion was less than expected. Earnings of $1.19 were a penny better than estimates. The stock-price decline subtracted nearly 19 points from the Dow.

Earnings that also disappointed investors came from Ross Stores (ROST) and Dollar Tree (DLTR).

Ross said profits were up 23% from a year ago, and revenue was up 12% to $2.34 billion, but its guidance for the fiscal third quarter and the full years were lower than expected.

Dollar Tree reported 51 cents a share in earnings, a penny less than expected. Revenue was up 10.5% to $1.7 billion, but analysts had expected $1.77 billion. Shares fell 89 cents to $49.11 and were falling further after hours.

Game-maker Electronic Arts (EA) rose 72 cents to $13.81 on a New York Post report that the company's management was exploring selling the company. The Post said the company had been approached by private-equity giants KKR and Providence Equity Partners about a potential deal.

Twenty-three Dow stocks were higher, with Home Depot (HD) and Microsoft (MSFT) trailing Cisco. The laggards were Wal-Mart, McDonald's (MCD) and Merck (MRK).

After Cisco, Sears Holdings (SHLD) and PulteGroup (PHM) were the top S&P 500 performers. Agilent Technologies (A), drug-maker Perrigo (PRGO) and Sprint Nextel (S) were the laggards.

Agilent, which supplies bio-analytical and electronic measurement tools to the communications, electronics, life sciences and chemical analysis industries, reported disappointing fiscal-third quarter results, and cut estimates for the year.

Sears Holdings and Electronic Arts were the top Nasdaq-100 stocks after Cisco. Perrigo and and Gilead Sciences (GILD) were the laggards.

Crude oil tops $95 a barrel; gold moves higher
Light sweet crude oil (-CL) was in New York was up 97 cents to $95.30 a barrel. Brent crude, the benchmark North Sea oil, gained a penny to $116.24 a barrel.

Gold (-GC) settled up $12.60 to $1,619.20 an ounce. Silver (-SI) was up 40 cents to $28.212 an ounce. Copper (-HG) added 3.3 cents to $3.3825 a pound.

Interest rates were higher, with the 10-year Treasury yield reaching 1.836% from 1.805% on Wednesday. The dollar was lower against major currencies.

The 10-year yield is at its highest level since May 11 and is up nearly a quarter this month alone. One possible catalyst for the gain, at least according to CNBC's Rick Santell, is the vow of Mario Draghi, president of the European Central Bank, to do whatever it takes to save the euro. German Chancellor Angela Merkel, visiting Canada today, made a similar vow.

Short hits from the markets -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0800%

0.090%

-20.00%

700.00%
5-year Treasury note 

0.816%

0.795%

36.23%

-1.69%
10-year Treasury note

1.836%

1.805%

23.06%

-1.87%
30-year Treasury bond

2.956%

2.914%

14.71%

2.32%
Currencies











U.S. Dollar Index

82.417

82.711

-0.35%

2.35%
British pound

1.5746

1.5686

0.41%

1.34%
(in U.S. $)

 








U.S. $ in pounds

£0.635

£0.637

-0.41%

-1.32%
Euro in dollars

$1.24

$1.23

0.53%

-4.56%
(in U.S. $)

 








U.S. $ in euros

€ 0.809

€ 0.814

-0.53%

4.78%
U.S. $ in yen 

79.43

78.98

1.67%

3.02%
U.S. $ in Chinese

6.39

6.36

0.47%

0.98%
yuan











Canada dollar

$1.014

$1.011

1.74%

3.40%
(in U.S. $)

 








U.S. dollar 

$0.986

$0.989

-1.64%

-3.29%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,619.20

$1,606.60

0.54%

3.34%
(per troy ounce)

 








Copper (-HG)

$3.383

$3.350

-1.02%

-1.56%
(per pound)

 








Silver (-SI)

$28.2120

$27.8120

1.07%

1.06%
(per troy ounce)

 








Wheat (-ZW)

$8.8175

$8.6625

-0.73%

35.08%
(per bushel)

 








Corn (-ZC)

$8.0750

$8.040

0.28%

24.90%
(per bushel)

 








Cotton 

$0.7259

0.7311

1.75%

-20.82%
(per pound)

 








Coffee

$1.6180

1.6495

-7.22%

-29.54%
(per pound)

 








Crude oil (-CL)

$95.60

$94.33

8.56%

-3.27%
(per barrel)










 

184Comments
Aug 16, 2012 2:50PM
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Gas went up at the local station 12 cents over night. Bastards.
Aug 16, 2012 2:07PM
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First installment of Libtard Hypocrite of the day -

Rosie O'Donnell. Seems ol' Rosie does not think "the little people" should be able to defend themselves. She thinks that no private citizen should ever own a gun. Unless of coarse, it's HER PERSONAL BODY GUARD. Who is always packing when guarding MS o'Donnell.

 So, here's to you Real Man of Genuis Rosie O, you are the Libtard Hypocrite of the day


Tune into tomorrow for Alec "Capital One" Baldwin.
Aug 16, 2012 4:55PM
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All anyone can do is guess what is going on with the market or the government. You can bet neither wants you to know the truth about what is really going on. TRANSPARENCY is something that will never be allowed in either one. This country has long been SOLD OUT and the working AMERICANS are the ones who have to pay the consequence for it while CROOKED politicians live a life of luxury in a empire protected and exempt from the hardships emposed on AMERICANS. Blame whoever you like because both sides are equally at fault and the division and blame game is what they thrive on to keep you away from the real issue that they all are CROOKS and are not working for the AMERICAN people any longer. The government of this country is nothing but a JOKE!!!!!!!
Aug 16, 2012 2:12PM
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Illegals are lining up for their free s**t. Now is a good time to grab them and send them back to their country of origin.
Aug 16, 2012 2:00PM
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"Cisco, Housing Give Stocks a Boost"

 

Until tomorrow or next week when the next headline will read something like "European Worries Take Stocks Down"

Aug 16, 2012 2:16PM
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building permits? really? In most towns you need a building permit to do ANYTHING to an existing building. Add a sink...building permit.... replace your A/C....building permit.....Add an awning....building permit.

Has almost ZERO to do with new construction.

There is no new construction going on other than track homes that are being sold at current market price, which just makes it harder for under water mortgage holders to sell their house. 
Aug 16, 2012 12:58PM
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Spammer traffic on this site is getting unreal. It is better than some of the opinions shared in the comments however. Little facts, just a lot of personal opinion or emotion.
Aug 16, 2012 10:11PM
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I used to post on this forum...but it's nothing but crap BS spam
Aug 16, 2012 1:59PM
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They (Romney and Ryan) will put us back with chains

and

They will chain the Stock Market.............BIDEN IS SAYING

 

This guy is a disgrace to Presidency of the United States and it shows the total arrogance which Obama is nurturing with Hate campaign ads.

 

Aug 17, 2012 8:48AM
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Hey think....

WHY should voting be made easier?.....you dumb A$$..  Showing a picture of yourself to PROVE who you are is no burden or serious price to pay for the privilege to vote.  The blood shed for that privilege was not spent to make it EASY!   Every swing dick that's legally entitled to vote CAN VOTE with a little effort on their part to prove eligibility.

I'm DAMN proud to call myself a man who supports RESTRICTING those who DON'T quallify from the voter rolls.

Aug 16, 2012 9:16PM
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Last month it was reported that the wealth of the average Canadian was greater than the wealth of the average American for the first time in history.

 

With our private sector constantly being burdened to feed the ever growing  leviathan that is our government and to bow to it's rule. We will find ourselves being eclipsed in living standards and in personal wealth by one nation after another

 

In the not too distant future mothers in China will remind their children that there are children starving in America in the effort to get their children to eat their vegetables. Those starving children will be your grandchildren.

 

WAKE UP

Aug 16, 2012 4:08PM
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I've only got three words to say to you guys:

 

America

Jesus

and Freedom...

Aug 16, 2012 4:51PM
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AAA needs to keep their mouth shut about gas prices,every time they open their mouth it goes up,so shut up,the price of gas is to high for no reason

Aug 16, 2012 3:25PM
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You can't measure anything with building permits alone, they expire if contruction does not begin within the time specified on the permit.  When will the number of expired permits be available?
Aug 16, 2012 4:29PM
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5;00 a gallon , i cant even afford 3;50 how would they expect me to pay , im using my credit cards now, but they are almost maxed out. when they do max out , i will file for bankrupts' . " why not " the bank's,s did it and the government gave them a loan. when i do it , they will take my house. so i will Waite till oct, to do that so they cant put me out till april. then you will have one more person .OUT IN THE STREET.....
Aug 16, 2012 12:58PM
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I think wall street is gambling on QE3. Look at gold lately? It's going up, which it always does in the anticipation of another round of QE.
Aug 16, 2012 4:37PM
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you can not justify the price of gas , im might have to cancel my car insurance ,just to by gas for a car i can no longer drive, because i cant afford the gas, ,i would gladly walk to work but it,s 20 mil, away. so i have to brake the law , in order to get a pay check that i cant offord to work for. e.t.c  ooooooo   boy,,,,,
Aug 16, 2012 1:54PM
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What? Building permit? have you ever heard of renovation and additions? Tha'ts the same ole banter of MSN Money. I guess Charile thought he could slip one in on us. Tomorrows Friday?
Aug 16, 2012 1:15PM
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Yes, been selling some metal as of late - looks to be growing legs again. The market is over bought and is addicted to even a comment about easing,..

P.S. Sorros quietly bought back in last month after bashing metals earlier in the year. That's how he plays the game.
avatar

Bernanke just called and said he wants off the roller coaster ride. He doesn't know if he is suppose to print $15 billion or $15 trillion dollars tonight for the banks to inject into the equities market tomorrow.

 

Says he has had enough being a printer.

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