Stocks rise to kick off key week

Wall Street braces for tomorrow's elections and Wednesday's Fed announcement. US manufacturing and construction spending grow. AIG plans to repay $37 billion in bailout funds.

By TheStreet Staff Nov 1, 2010 8:03AM

TheStreetBy Melinda Peer, TheStreet

 

Update at 2:08 p.m. ET

 

Stocks were gaining as strong global manufacturing reports brightened market sentiment a day before elections and two days before an expected announcement from the Federal Reserve regarding efforts to boost the economy.

 

At 2:08 p.m. ET, the Dow Jones Industrial Average ($INDU) was up by 47 points, or 0.4%, at 11,165. The S&P 500 ($INX) was up by 4.4 points, or 0.4%, at 1,188. The Nasdaq ($COMPX) was rising by 3.4 points, or 0.1%, at 2,511.

 

Investors are looking ahead to midterm elections tomorrow and the conclusion of the Federal Open Market Committee’s two-day meeting on Wednesday afternoon. The Federal Reserve is expected to announce plans to buy bonds to boost the economy. Investors have been concerned that the reported size of the asset purchases won't be large enough.

 

”The Fed has to play their hand wisely because they don’t want to send the wrong message with too much stimulus because that could suggest that the market is much weaker than people thought," said Scott Rostan, founder and principal at Training The Street. "But if they don’t make it large enough, then people will doubt whether it will make any difference.”

 

The Institute for Supply Management said its manufacturing index rose to 56.9 in October from 54.4 in September. Economists had expected the index to fall to 53.6, according to Briefing.com.

 

The Commerce Department said construction spending rose 0.5% in September, compared to projections for a decline of 0.5%, according to Briefing.com. Spending dropped 0.2% in August.

The energy sector got a lift from strong manufacturing data while consumer cyclical stocks showed the weakest performance. IBM (IBM), Kraft Foods (KFT) and Alcoa (AA) were the Dow's biggest losers, while Intel (INTC), Microsoft (MSFT) and Pfizer (PFE) had the strongest gains.

 

M&T Bank (MTB) agreed to acquire Wilmington Trust (WL) in an all-stock transaction valued at $351 million. Shares of M&T advanced 3.5% to $77.35 while Wilmington’s stock plunged 42.2% to $4.11.

 

American International Group (AIG) said it will repay $37 billion in bailout funds after it sold assets to raise money. AIG sold Alico to MetLife (MET) for $16.2 billion on Monday, and the company raised $20.5 billion last month by offering AIA Group shares on the Hong Kong Stock Exchange. AIG’s stock was shedding 1.2% to $41.51.

 

Shares of Ambac Financial Group (ABK) were losing 54% to 38 cents after the company said in a regulatory filing it will file for Chapter 11 by the end of the year if it can’t restructure through a pre-arranged bankruptcy, according to The Wall Street Journal.

 

EXCO Resources (XCO) said Chief Executive Douglas Miller offered to buy the shares of the company he doesn’t already own for $20.50 a share, a 38% premium over its Friday closing price. The shares were jumping 33% to $19.67.

 

McKesson (MCK) said it will buy cancer treatment company U.S. Oncology for $2.16 billion. McKesson shares were climbing 1.7% to $67.11.

 

Shares of Baker Hughes (BHI) were gaining 5.2% to $48.81 after the company beat estimates with third-quarter earnings of 59 cents a share on sales of $4.08 billion. Analysts had expected a profit of 47 cents a share on sales of $3.8 billion.

 

Shares of network security company Fortinet (FTNT) were jumping 15% to $34.37 on IBM takeover speculation spurred by a Bloomberg report.

 

The U.S. manufacturing and construction reports follow new data that said China's manufacturing industry grew in October as infrastructure spending increased. The report boosted Hong Kong's Hang Seng, which surged 2.4%. The FTSE in London increased 0.3%, and the DAX in Frankfurt was gaining 0.1%.

 

Personal incomes unexpectedly fell in September, dropping 0.1% after rising 0.4% in August, according to the Bureau of Economic Analysis. Personal spending rose 0.2%, compared with growth of 0.5% in the prior month. Economists had anticipated a 0.3% increase in income and a 0.4% uptick in spending, according to Briefing.com.

 

PNC Chief Economist Stuart Hoffman said weaker-than-expected personal income was consistent with September's weak labor market. "September payroll employment fell by 95,000 as the last big slug of temporary census workers were let go and local governments also shed employees," he wrote in a note.

 

In commodity markets, crude oil for December delivery was adding $2.01 at $83.44 a barrel. The December gold contract was falling by $5 to $1,352.60 an ounce.

 

The dollar was trading lower against a basket of currencies, with the dollar index down by 0.3%. The benchmark 10-year Treasury note was strengthening 2/32, diluting the yield to 2.598%.

 

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97Comments
Nov 1, 2010 1:22PM
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Tomorrows Election is simple...

 

We are either going to vote for 2 wars continuing, massive new spending and entitlements, massive borrowing, inflation, huge tax increases or we are going to vote to SLASH government spending, tax cuts and JOBS.   The choice really is that simple....

 

Pick One...

Nov 1, 2010 10:03AM
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That is wonderful economic news that China's manufacturing increased.  That will keep our ports very busy as the US receives all these new products.  Hopefully the laid-off US manufacturing employees can find a job handling the imports from China....maybe stocking them on Wal Mart shelves
Nov 1, 2010 1:24PM
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Deklen, the Dumbocrats are the party of spend, tax and borrow...  Not to mention Jefferson Davis and slavery. 

 

Tomorrow we will get real hope and change...   and a repeal of the entire Socialist Obuma agenda, or at least a complete de-funding of it...

Nov 1, 2010 12:18PM
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And saying you knew a Sugar Daddy would bail you out as the cause of the housing mess rather than deregulation doesn't really help much
Tumbleweed:

The primary cause of the housing situation was:

1) Government promises to financially back up Fannie and Freddie (this encouraged poor risk decisions by lenders)

2) Government pressure on lenders to make loans to unqualified borrowers with the decision being solely based on government's political/philosophical leanings and not on sound business sense.

3) Artificially low Fed interest rates which generated a bunch of capital that flowed into the real estate market.  If rates would have been at at true market levels, there wouldn't have been such a misallocation of this capital.

Tumbleweed, I hear people say "deregulation" caused this, but they never identify "what deregulation" nor list how it caused the problems.  

Please list the specific deregulation and how it caused the problem. 
Nov 1, 2010 10:10AM
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Well,  I was going to comment about the economy, but I see the discussion has already been subverted this morning.

I encourage everyone to go out and vote tomorrow.  I don't care who you vote for, just please go vote.  I would also encourage everyone to vote for the candidate that best reflects your views and values, regardless of which party they are affiliated with or whether or not they are an incumbent.  Instead of voting for the "lesser of two evils" or voting AGAINST a candidate or party, I suggest you vote your conscience and vote FOR a candidate.  If you agree most with the communist candidate, vote for them.  If you agree most with the libertarian candidate, vote for them.   If the (R) or the (D) candidate best reflects your views and values, by all means, cast your vote for them.  However, please don't just vote for (Ds) or (Rs) just because that's the way you've always done it or because you think those are the only viable options. 

Big changes are needed to fix the mess we are in.  These changes need to start at the voting booth and we, as an electorate need to change the way we vote.  We can differ and debate about the best way to fix things and how to get our city/state/country on the right track.  But regardless of what solutions you believe are needed or necessary, please go vote tomorrow and please vote your conscience.
Nov 1, 2010 1:11PM
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George Bush. Dick Cheney. Donald Rumsfeld. Paul Wolfowitz. Karl Rove. Condolezza Rice. George Tenent. Iraq war. WMD. Slam Dunk. Yellowcake. Stock market crash. Budget surplus to huge deficit. War costs off budget. Let's privatize Social Security. Financial meltdown. KBR. Halliburton. "Bring it on". "Mission Accomplished".

     How soon we forget.  Get out and vote.

Nov 1, 2010 12:24PM
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It is sad how the democratic party has tried on several occasions to get an African American to drop out of a race in order to promote one of their favored white candidates. 

The Florida situation is appalling.  They should be applauding the African American candidate being on the ballot.  However the dems are so afraid of a conservative Hispanic minority candidate winning that they will sacrifice another minority in the process.

Sad.     
Nov 1, 2010 10:07AM
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Why is Wall Street Celebrating over the increase in China's manufacturing?  If they are manufacturing more, that means we are manufacturing less!  That is like Wendy's and Burger King celebrating because McDonalds is making more hamburgers due to more customers at their restaurants.  Or Target celebrating because Wal Mart had increased same store sales.  Does this make any sense?  What am I missing?
Nov 1, 2010 3:59PM
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It's really not rocket surgery.

or brain science

Nov 1, 2010 1:43PM
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You must mean the wars the fearless hypocrite said he would end in 6 months...  or the prison on Cuba...

 

Perhaps it is Oduma's belief in 57 states, maybe he can visit the other 7....

 

Kaybe it his 860 Billion stimulus whis cost almost as much as W's wars.   But at least with W's wars we created some jobs and maybe, just maybe we did some good in the world, by getting rid of that mass murderer Sadaam...

 

But Odumba has added 3.34 Trillion to the debt, and created a far bigger mess...  Good luck with your future, you can send in your 20K he spent anytime...  At least W gave us $600 directly. 

 

Vote the Donkeys out of suffer through the Depression.

 

Real hope and change start tomorrow, with 60-80 unemplpyed Donkeys on the national level, and 1,000's more on the state and local levels...

 

 

Nov 1, 2010 10:16AM
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Jimpopper  We have gone from 6600 to 11,230. Just pumpin no dumpin!!
Nov 1, 2010 9:59AM
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holy pump and dump!! The pumpers are working overtime while main street looks for a job.Baring teeth
Nov 1, 2010 12:30PM
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 Lets do what China is doing lol yes lets become communists and pay slave labor. Actually lets tariff their products as much as they do ours lets start stealing their manufacturing like they have ours. Lets get our government and corporations to realize a fair wage will do more for our country than shipping everything out. Oh wait that would mean giving up greed, supporting the American people not your own pocket book and power. That would mean keeping the tax breaks for the rich so they can keep more money instead of maybe passing it on because they'd just have to pay taxes on it anyway. Oh wait isn't there something out there called job killing taxes lol Yeah there's the big political lie taxes never kill jobs hoarding money when you don't have to pay taxes on it and ruining the economy that kills jobs. How long do they think this stock market can manage when no jobs are being created yet.
Nov 1, 2010 11:52AM
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Puuullleeezzzz.  More election time fodder.
The country is still in the toilet.
Until the banks start lending those HUGE piles of
cash WE gave them at like 0% interest back to us at a reasonable rate, nothing for us is going to get better, plain and simple.  There's no freaking
jobs, cause nobody can get a loan to start a business and nobody's spending, cept the wealthy and the housing market is still sh_t just about everywhere.  At least my friends spread out across the whole country are saying this and I see it ED.
Food, medical and energy going up and wages going
down.  Yeah, things are really picking up.  BS!!!


Nov 2, 2010 11:33PM
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ONNN,load up as chips get strong 4th quarter.
Nov 2, 2010 3:28PM
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Enjoy the Election,

 

Deklen, you are liberal socialist, who doe snot care who he steals from...

 

Nov 2, 2010 10:13AM
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Yes,

 

The Republicans freed the slaves.  Most Democrats thought that was a huge mistake. 

 

Theodore Roosevelt created the National Parks.

 

The failures of the Democrat party are far easier to name...

 

The giant pyramid scheme called Social Security...

The nanny welfare state they created...

Medicare/Medicaid, which drove healthczare costs from 2% of GDP to 11%+

The democrats constant and unending to transform us into a socialist country...

The democrat party's "no money down' housing mess...

Obama driving Unemployment from 7.1% to 9.6% and trying to keep it there via massive removal of money from the private sector to fund democrat party paybacks (er, stimulus)...

Obama adding 3.4 Trillion to the debt in less than 2 years...

 

Nov 2, 2010 8:59AM
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I realize that America is a nation of elitist scumbags who want to tell everyone how to live and want to spend your money, because they think they are smarter than you...

 

- thats why CNN and the other arms of the Donkey party are becoming unemployed today...

 

62+ House and 9 Senators...and at least another 1000 Donkeys nationwide...

 

And hopefully in 2012 another 10 Senators and the Dumbest President ever...

Nov 2, 2010 6:01AM
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mixing good bourbon with coke is just wrong is so many ways...

 

to steal a now oftten used phrase...."Man Up"...

Nov 1, 2010 10:16PM
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