S&P 500 tops 1,400 as optimism grows
The Dow gains 51 points as decent earnings and hope for a European debt solution give markets a boost. Fossil and Chesapeake Energy are big gainers. Disney earnings beat estimates. Oil jumps, but gold dips.
Updated: 9:03 p.m. ETStocks finished higher today for the third straight session but, like Monday, lost some steam toward the close on hopes for a roadmap to end Europe's debt crisis and more easing by the Federal Reserve and other central banks.
The rally pushed the Standard & Poor's 500 Index ($INX) to its first close above 1,400 since May 3. The Nasdaq Composite Index ($COMPX) closed above 3,000 for the first time since May 3.
Energy stocks, buoyed by crude oil nearing $94 in New York, and industrial shares led the market. The market also was cheered by strong earnings from watch-and-accessories retailer Fossil (FOSL) and drugstore chain CVS Caremark (CVS) and stronger-than-expected production guidance from natural gas producer Chesapeake Energy (CHK).
But results from Walt Disney (DIS) appeared to disappoint investors. The entertainment giant reported earnings of $1.01 a share, up from 78 cents a year ago and ahead of the Street estimate of 93 cents a share. Revenue, up 4% from a year ago to $11.09 billion, missed the Street estimate of $11.3 billion. Shares were off 63 cents to $49.18 after hours after rising 16 cents to $49.81 in regular trading.
The Dow Jones Industrial Average ($INDU) closed up 51 points to 13,169 and ended the day 110 points below its its post-2008-09 crash high -- 13,279.32 -- set on May 1. The S&P 500 gained 7 points to 1,401. The Nasdaq was up 26 points to 3,016. The index had briefly topped 3,000 on Monday for the first time since May 4.
Article continues below. Meanwhile, the Nasdaq-100 Index ($NDX) was up 23 points to 2,717. Apple (AAPL), the largest influence on the Nasdaq-100, was off $1.64 to $620.91.
The surge, which some are calling the Draghi rally, began July 26 when Mario Draghi, the president of the European Central Bank, said he would do "whatever it takes" to save the euro. The S&P 500 is up about 4.7% since then, with the Dow up 3.9%. The Nasdaq is up 5.7%.
The big questions about this rally are how long can it last and what does it mean.
The short answer is that the rally will last until the domestic economic data goes sour or the sense that Draghi may be able to marshall enough support among the 17 eurozone nations -- but especially Germany -- fades away.
The economic fundamentals in Europe are weak, especially in Italy, Spain and Greece. The U.S. fundamentals aren't great, but they aren't awful. But the fiscal cliff is a big worry. The New York Times reported today that many businesses are concerned enough that Congress may do nothing about fiscal policy, allowing tax rates to rise along with sizable spending cuts.
What the rally means is that many traders may be willing to entertain the idea that the world may not end this fall -- and that cooler heads will find away to mitigate the effects of the fiscal cliff.
The government will report on labor productivity and crude oil inventories on Wednesday. The big earnings reports are department store operator Macy's (M), fashion retailer Ralph Lauren (RL) and media giant News Corp. (NWSA).
Futures trading suggests a modestly lower open for stocks on Wednesday.
Do not weep for Disney
The stock is up nearly 33% this year and is the second-best performer among the 30 Dow stocks after Bank of America (BAC), which is up 38%.
Disney had a strong quarter. The action film "The Avengers" has grossed more than $1.46 billion since its April release and is the world's top-performing film this year and third-best ever.
The filmed entertainment business saw operating profit jump from $49 million to $313 million.
The company had revenue gains in all its businesses except its interactive business. Its parks-and-resorts business saw revenue jump 9% to $3.44 billion. Operating profit was up 21% from a year ago.
Part of the gain was due to domestic growth, but it also benefited from Japan's recovery from the March 2011 earthquake, which shut down the Tokyo Disney Resort. When reopened, the resort struggled.
Crude oil nears $94 a barrel
Crude oil (-CL) settled up $2.27 to $93.67 a barrel in New York. Brent crude added $2.52 to $111.46 in London.. Natural gas (-NG) was up 5.6 cents to $2.94 per million British thermal units. The price of natural gas is up 5% this quarter after jumping nearly a third in the second quarter.
Worries about oil supplies from Iraq and Mexico were supporting prices, and a fire at Chevron's (CVX) Richmond, Calif., refinery briefly boosted wholesale gasoline futures above $3 a gallon before they settled at $2.998 a gallon.
Energy stocks moved higher. Anadarko Petroleum (APC) was $2.31 to $70.53. Exxon Mobil (XOM) was up 47 cents to $87.92. Chevron was up 64 cents to $111.95.
Gold (-GC) settled down $3.40 to $1,612.80 an ounce. Silver (-SI) and copper (-HG) were higher.
Interest rates were higher, with the 10-year Treasury yield rising to 1.628% from 1.558% on Monday. The dollar was lower against major currencies.
| Energy prices -- New York close | ||||||||||||
| Tues. | Mon. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $93.67 | $92.20 | 10.25% | -5.22% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $2.9980 | $2.9409 | 10.63% | 2.88% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $2.9640 | $2.9080 | 4.96% | -0.84% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $2.9913 | $2.9222 | 13.66% | 12.56% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $111.46 | $108.94 | 14.52% | 4.30% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.6340 | $3.6190 | 8.90% | 10.93% | ||||||||
| (per gallon; AAA) | ||||||||||||
A Fed president helps move markets
The market took a cue in part from Federal Reserve Bank of Boston President Eric Rosengren. In interviews with The Wall Street Journal and CNBC, he called for an aggressive, open-ended bond-buying program that the central bank would continue until economic growth picks up and unemployment starts falling again.
Rosengren's decision to speak out "is a sign of the momentum building inside the Fed for a new phase of action," the Journal said today.
A bond-buying program, which gets the admittedly wonky nickname quantitative easing, would aim to drive down long-term interest rates, drive up stocks and push down the value of the dollar, which many officials believe would spur activity.
There has been open hostility to the idea among other presidents of the 12 Federal Reserve banks who worry about more inflation and a sense the Fed is trying to manipulate the November election.
Fossil and Chesapeake are among top performers
Fossil shares jumped $21.98 to $91.77 after the company projected 2012 adjusted profit above expectations. It was the top performer among S&P 500 companies.
Chesapeake Energy, up $1.67 to $19.37, was the second-best S&P 500 performer thanks to its bullish forecasts on production and asset sales. CEO Aubrey McClendon predicted that natural gas prices were at the start of a new uptrend after bottoming at $1.84 per million British thermal units this spring.
Pfizer (PFE) and Johnson & Johnson (JNJ) were down 52 cents to $23.74 and 55 cents to $68.29, respectively. The companies said late Monday they were halting most efforts at devising an Alzheimer’s drug following a second trial failure.
Standard Chartered Bank (SCBFF), the big British bank, was off $3.18 to $19.22 in New York after New York state's top banking regulator threatened to strip the London company of its license to do business there, alleging that a unit illegally handled at least $250 billion in transactions with Iranian entities. The British shares fell 244.37 pence, or 16.7%, to 1,225.63. The company has lost about 25% of its market value in two days.
Chip stocks rise on a Goldman upgrade
Freescale (FSL), LSI (LSI) and Applied Materials (AMAT) were the leaders in a big rally in chip stocks after Goldman Sachs upgraded the companies.
Goldman argued that the downside to Freescale's estimates is limited given soft guidance and a lean supply chain, and (more importantly for peers) the firm expects earnings to be "up significantly" in 2013 and 2014 thanks to a new chip industry up cycle.
Also moving higher: Micron Technology (MU), NXP Semiconductors (NXPI), Marvell Technology (MRVL) and Atmel (ATML).
The hot stocks make a comeback
A number of beat-up momentum stocks are running hot after their summer of discontent, with investors apparently setting their tolerance for risk a bit higher without any clear-cut catalysts, Seeking Alpha noted.
Favored momentum stocks Chipotle (CMG), Tesla Motors (TSLA), Lululemon (LULU), Deckers (DECK) and Green Mountain Coffee Roasters (GMCR) showed outsized gains this afternoon.
| Short hits from the markets -- New York close | ||||||||||||
| Tues. | Mon. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.0900% | 0.080% | -10.00% | 800.00% | ||||||||
| 5-year Treasury note | 0.703% | 0.647% | 17.36% | -15.30% | ||||||||
| 10-year Treasury note | 1.623% | 1.558% | -2.17% | -13.25% | ||||||||
| 30-year Treasury bond | 2.716% | 2.646% | -1.70% | -5.99% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 82.25 | 82.302 | 0.61% | 2.15% | ||||||||
| British pound | 1.5649 | 1.5605 | -0.34% | 0.72% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.639 | £0.641 | 0.35% | -0.71% | ||||||||
| Euro in dollars | $1.24 | $1.24 | -1.63% | -4.16% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.805 | € 0.806 | 1.65% | 4.34% | ||||||||
| U.S. $ in yen | 78.80 | 78.26 | -1.18% | 2.21% | ||||||||
| U.S. $ in Chinese | 6.39 | 6.37 | 0.29% | 1.03% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $1.003 | $1.000 | 2.12% | 2.26% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $0.998 | $1.000 | -2.06% | -2.21% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,612.80 | $1,616.20 | 0.54% | 2.94% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $3.441 | $3.389 | -1.60% | 0.13% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $28.0860 | $27.8630 | 1.72% | 0.61% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $8.8900 | $8.9325 | 17.40% | 36.19% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $8.0050 | $8.050 | 26.11% | 23.82% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $0.7540 | 0.7572 | 5.71% | -17.76% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $1.7265 | $ | 1.755 | 1.14% | -24.82% | |||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $93.67 | $92.20 | 10.25% | -5.22% | ||||||||
| (per barrel) | ||||||||||||
HOPE!!
I HOPE I win the lottery but I won't.
I HOPE gas prices go down but they won't.
I HOPE everyone on Wall Street loses their a** but they won't.
HOPE is destroying America!! Why don't these so called smart people base things on facts and not HOPE? Why is everything on Wall Street UNEXPECTED? I thought only smart people worked there? We the American people are suffering because of these STUPID people causing prices to go up on everything so we can't help the economy by spending money on other things besides food and gas. They tried a little experiment by dropping the gas prices to see if people would spend more, guess what, we don't have it to spend you bunch of jackassses. I'm not saying Romney will be the answer but we sure as h*** have to get that clown Obama out of office. He has destroyed this country beyond repair. Don't tell me he can't do anything about gas and oil prices either, just as soon as he mentioned about a investigation the prices dropped a lot. I can't understand our Government letting people get by with what they do, they are just as crooked as the rest of them. We need to clean house in DC and put some honest people that will help the middle class because we are what makes this country. Come on America, don't sit around and take this crap anymore, let's get back to the way it was when we were #1. We were built by God fearing people not a bunch of cheating liars like we have now.
Another FED quote, another 100 points. I feel like a sucker for not being in the market but all it will take is a negative FED quote and it will all collapse. The gains are entirely contingent on statements by a few people that have nothing whatsoever to do with the actual companies you are buying and selling in the market.
How many Central Bank officials are there, hundreds? Any one of them can make a statement on any given day that will cause the markets to go up or down by billions. It's too easy to fix that game.
I know some people are making alot of money right now but to me, it sure feels like the Tech Bubble did. Only worse.
So what is easing? It's the Federal Reserve and other central banks lending, and in many instances GIVING cash to major commercial banks in order to keep cash flowing and thus stimulating the economy. Where does this money come from??? Debt issued by the fed reserve in the form of treasury notes, or other debt instruments issued by other central bank. Right now the US buys over half of its own debt. How is that????? We print more cash!! Wake up America, your cash is being diluted! It’s the greatest toy the Democrats ever had, a tax with X% capacity. Evita tried the same scam with Argentina and the end result was people purchasing loafs of bread with wheelbarrows full of cash. When will we realize that the answer to massive debt is NOT stacking up more? When will we stop leveraging our futures for the entitlements we elect today?
Please! Get your proverbial heads out of your as.! This is all a con...we are headed to total
economic disaster...stimulus or not....not to mention cultural disaster. Noone invests other than 401K's and what is put into pension plans that are being destroyed right now, both! There is no "optimism"..this is all contrived BS. No volume, devalued dollar and the the crisis overseas that is growing not diminishing. You all cannot be that dam. dumb! We are a "nanny" nation now and this will not improve! What are some of you smokin'!
The guys at the FED are pretty smart so I'm sure they know we are screwed. They are just trying to make the landing as soft as possible. There WILL be a landing and it will be at a lower standard of living than we have been enjoying. If they can make the process slow and gradual, people might not notice that they have lost as much. A slow landing also allows the big boys time to position themselves to remain in control as things contract. At the altitude where the FED flys, stability is the goal.
We are all being taxed by currency devaluation and the funds are going to back to the banks to cover what they lost in the housing bubble. Plain and simple. When the banks have made back what they lost, they will cash out and the market will drop back to where it should be. Your money will be worth 50% less but the average citizen will have no idea how they were screwed. It won't be a fair process, even for the banks. Some will do better than others but overall, all the money they lost in the housing bubble will be recovered. In real terms, the economy will still be the same size but wealth will be taken from the public and given back to the system. So, in effect, all that money Joe made when he sold that house to Bob in 06 will get called back in. Joe will still be better off than Bob but they will have both paid the tax.
This theory assumes there is a goal and an end game in all this monetary craziness. Maybe there's nothing going on but politics and knee jerk reactions. I hope they are smarter than that.
Now the real question for this investment page. How can the little guy profit from all this?
Another fire prices jump !!! WOW ! ANY ONE AREADING PAPER OR WATCHING NEWS would have known it was going to raise prices even if someone farted in nigeria gas goes up even though what' s in the tanks was cheaper !!!!! They goe up fast but go down A penny when they fall
BUT there is no eveidence of GOUGING EVER ( FOUND). MORE WASTED MONEY IVESTIGATING WHY?? MAYBE SOMEONE NEEDS TO INVESTIGATE THE INVESTIGATORS?? WITHOUT IT COSTING US WITH WHAT THEY GET TO RUN THEIR OFFICE SHOULD BE ENOUGH TO PAY FOR IT' SINCE THEY DO NOT HAVE TO PAY FOR THEIR HEALTH CARE ??
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