Dow closes higher for fifth straight week

The blue chips end up 23 points as a great October continues. The S&P 500 and Nasdaq rise for a fourth week. Gold and crude oil drift lower. Higher prices boost Chevron profits. Weak sales force Whirlpool to lay off 5,000. Merck earnings rise.

By Charley Blaine Oct 28, 2011 1:45PM
Charley BlaineUpdated: 11:30 p.m. ET

Perhaps it's OK that stocks were up modestly at best today. It's been a great week -- and an even better month -- for investors.

The Dow Jones industrials ($INDU) are looking at their best month in 24 years and their best October ever. The Standard & Poor's 500 Index ($INX) is enjoying its best month in 37 years and its 10th-best month since 1928. The Nasdaq Composite's ($COMPX) comparisons are more modest: the best month and October since 2002.

And all this despite worries that the U.S. economy is about to sink into a recession, that Europe's financial system is near collapse, and that China's economy is about to become ordinary in its growth.

As to why stocks didn't really move much, it may simply have been that, as the dust settled from Thursday's huge rally, investors, analysts and economists are starting to look more realistically at matters.

The Dow closed up 23 points to 12,231. The S&P 500 finished with a tiny gain to 1,285, and the Nasdaq slipped 1 point to 2,737.

Article continues below.
Seventeen of the 30 Dow stocks were higher, led by Hewlett-Packard (HPQ), which said late Thursday it won't be spinning off its computer business. The shares were up 3.5% to $27.94. We should also note that the shares are up more than 21% since Sept. 22, the day the company ousted then-CEO Leo Apotheker, the architect of the plan to get rid of the PC business.


Meanwhile, 96 S&P 500 stocks were higher, led by CBRE Group (CBG), formerly CB Richard Ellis, the commercial real-estate company, up 10.9% to $18.98, and advertising giant Interpublic Group (IPG), up 11.2% to $9.92.

Fifty-one stocks in the Nasdaq-100 Index ($NDX.X) were higher, led by Green Mountain Coffee Roasters (GMCR), up 8.5% to $70.99. The index closed up 1 point to 2,401.


The Dow was up 3.6% for the week, its fifth straight weekly gain. The S&P 500 and Nasdaq were up 3.8%, with the Nasdaq-100 Index up 2.8%. Each was up for a fourth straight week.


For the year, the Dow is up 5.7%, not bad when you consider it was down 8% on Oct. 3. The S&P is up 2.2% for the year with the Nasdaq up 3.2%.


Since the market's intraday lows on Oct. 4, the Dow is up 17.6%, with the S&P 500 up 19.6% and the Nasdaq up 19.1%.


Markets for the week



10/28/2011

10/21/2011

% chg.

YTD chg.
Dow Industrials

12,231.11

11,808.79

3.58%

5.65%
S&P 500

1,285.08

1,238.25

3.78%

2.18%
Nasdaq 

2,737.15

2,637.46

3.78%

3.18%
Russell 2000

761.01

712.42

6.82%

-2.89%
Crude oil 

$93.32

$87.40

6.77%

2.12%
(per barrel)











U.S. Dollar Index 

75.22

76.63

-1.84%

-5.14%
10-yr. Treasury

2.31%

2.20%

4.68%

-30.23%
Gold

$1,747.20

1,636.10

6.79%

22.92%


A quiet day for commodities

The quiet day governed commodity markets. Light sweet crude oil (-CL) settled down 64 cents to $93.32 a barrel. Brent crude is off $2.09 to $109.99 a barrel.

Gold (-GC) settled down 50 cents to $1,747.20 an ounce, silver (-SI) was up 17.6 cents to $35.288 an ounce, and copper (-HG) is up 1.4 cents to $3.706 a pound.


The dollar was higher against the euro and other currencies. Interest rates drifted lower; the 10-year Treasury yield fell to 2.306% from Thursday's 2.395%. But the yield is up substantially from Sept. 30, when it closed at 1.924%.


How good an October are we talking about?

To begin, all of the Dow stocks are showing gains for the month, led by Caterpillar (CAT), up nearly 31%. The laggard: Coca-Cola (KO), up about 1.8%. 


Nearly all Nasdaq-100 stocks are showing gains, led by hard-drive maker Seagate Technology (STX) and mining-equipment maker Joy Global (JOYG), up 59% and 45%, respectively. The index is up 12%.


Apple (AAPL) has risen 6% despite Steve Jobs' passing but in part because of the iPhone 4S. The Nasdaq-100 laggard is Netflix (NFLX), down 26%.


More than 470 S&P 500 stocks are higher, led by Nabors Industries (NBR), up 53%, oil refiner Valero (VLO), up 49%, and Goodyear Tire & Rubber (GT), up 46%. Netflix is the laggard, followed by solar-panel maker First Solar (FSLR), down 17% for the month, and  Hospira (HSP), down 16%. 


Why did stocks rally so sharply? Probably because they'd been sold down so much -- worse than the economic fundamentals justified.


A month ago, only 14% of stocks surveyed by Barchart.com were selling above their 200-day moving averages, an important measure of investor confidence. That level has risen to 41%. 


Whether the momentum can continue is hard to say. The European debt deal is only beginning to get close scrutiny, and there are worries that plan can't be executed. Greece's economy is in a deep recession. It's not clear if banks will really accept a 50% write-down on their Greek bond holdings. 


Moreover, the rise in stock prices has been accompanied by an increase in oil prices; light sweet crude oil has jumped 17.8%. Copper has jumped 17.6%. Corn's up 11%.


The domestic economy is growing but not robustly, and it is not clear how much of a drag more austerity in the government sector will prove to be. We'll know in the first quarter of 2012.


Energy prices -- New York close



Fri.

Thur.

Month chg.

YTD chg.
Crude oil (-CL)

$93.32

$93.96

17.83%

2.12%
(per barrel)











Heating oil (-HO)

$3.0664

$3.1037

10.33%

20.55%
(per gallon)











Natural gas (-NG)

$3.9230

$3.7640

7.01%

-10.94%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.6461

$2.7072

4.26%

7.86%
(per gallon)











Brent crude 

$109.91

$112.08

6.96%

16.00%
(per barrel)











Retail gasoline

$3.4480

$3.4440

0.09%

12.24%
(per gallon; AAA)












Spending up, but confidence is lacking
There has been some contradictory economic news. Consumer spending increased in September, the government said today, although incomes were relatively flat.

The University of Michigan's Consumer Sentiment showed a small gain in overall confidence. But there's little confidence incomes will improve, and 57% of all consumers judged current economic policies unfavorably. That was the highest proportion ever recorded.

Whirlpool's grim earnings report
You could see that consumer wariness in the one earnings report: Whirlpool (WHR). Shares were down 14.3% to $51.80 after the company cut its profit forecast by 30% and said it would lay off 5,000 workers.

Demand for major appliances in the U.S., Whirlpool's largest market, has fallen back to the "recessionary levels" of 2009, CEO Jeff Fettig said. Whirlpool's shipments in North America may drop as much as 5% this year, down from an original forecast of as much as a 2% gain, the company said. European sales also were hurt.

"Consumers are trading down to lower price points, housing is still dead, and the consumer is still stressed," analyst Jeffrey Sprague, of Vertical Research Partners, told Bloomberg News. Reduced demand is affecting a range of big-ticket appliances, from air conditioners to fridges.

Whirlpool, which generates about half its revenue outside North America, shipped fewer appliances to every region except Asia in the third quarter.

Chevron has strong results
Chevron (CVX) shares rose 0.6% to $109.64; its $109.99 high on the day was 2 cents below its 52-week high, set on Thursday. The oil giant reported its biggest quarterly profit in three years, outperforming other major oil companies. Rising crude prices and proceeds from the sale of a refinery made up for a slump in production.

Chevron said its third-quarter profit more than doubled to $7.83 billion, or $3.92 a share, from $3.77 billion, or $1.87, a year earlier. Excluding a gain from the sale of a Welsh refinery, the per-share result was 22 cents more than the Street estimate.

Chevron quit the European oil-refining market in August when it sold the U.K. refinery and related assets to Valero Energy (VLO). The deal resulted in a $500 million gain. Production fell to the equivalent of 2.6 million barrels of oil a day, from 2.74 million for the same period last year. Sales rose 30% to $64.4 billion.


In other news, pharmaceuticals giant Merck (MRK) shares rose 2.3% to $35.11. The company beat profit expectations for the third quarter, posting earnings excluding items of $2.91 billion, or 94 cents a share. That was up from $2.65 billion, or 85 cents a share, a year ago. Revenue was up 8% to $12 billion. Merck expects to see revenue growth for the year in the mid-single-digits range.

Advanced Micro Devices  (AMD) rose 7.2% to $5.94. The second-largest maker of semiconductors for personal computers forecast sales that may top some analysts' estimates, citing laptop demand in emerging markets.

Baidu  (BIDU) rose 4.5% to $144.62. China's biggest Internet company by market value said third-quarter profit rose 80% to 1.88 billion yuan ($296 million) to beat analysts' estimates as revenue from search-engine advertising surged.

Goodyear Tire & Rubber (GT) jumped 4.9% to $14.84. The largest U.S. tiremaker said third- quarter profit excluding one-time items was 72 cents a share, exceeding the 26-cent average analysts' estimates, helped by higher prices.


Barnes & Noble (BKS) rose 4.7% to $12 after The Digital Reader's sources confirmed the company will ship the next-gen version of the Nook Color on Nov. 7, a week before Amazon.com (AMZN) begins shipping the Kindle Fire. Barnes & Noble shares have strongly underperformed the S&P 500 since Amazon's September Kindle announcements. Amazon.com was still up 5.1% to $217.32.


Tesla Motors (TSLA) rose 3.9% to $29.87 after CEO Elon Musk told Bloomberg TV his company has sold out next year's 6,500-unit production run for its Model S sedan. Tesla, which has posted losses ever since it went public, should turn a profit in 2013, he said.


Short hits from the markets -- New York close



Fri.

Thur.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0100%

0.010%

-50.00%

-91.67%
5-year Treasury note 

1.119%

1.202%

15.96%

-44.49%
10-year Treasury note

2.306%

2.395%

19.85%

-30.23%
30-year Treasury bond

3.352%

3.446%

14.76%

-23.15%
Currencies











U.S. Dollar Index

75.216

75.011

-4.88%

-5.14%
British pound

1.6124

1.6108

3.50%

3.32%
(in U.S. $)











U.S. $ in pounds

£0.620

£0.621

-3.38%

-3.21%
Euro in dollars

$1.42

$1.42

6.27%

5.98%
(in U.S. $)











U.S. $ in euros

€ 0.705

€ 0.705

-5.90%

-5.65%
U.S. $ in yen 

75.73

75.97

-1.82%

-6.93%
U.S. $ in Chinese

6.35

6.36

-0.37%

-3.93%
yuan











Canada dollar

$1.008

$1.009

5.55%

0.45%
(in U.S. $)











U.S. dollar 

$0.992

$0.991

-5.26%

-0.52%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,747.20

$1,747.70

7.70%

22.92%
(per troy ounce)











Copper (-HG)

$3.706

$3.692

17.58%

-16.66%
(per pound)











Silver (-SI)

$35.2880

$35.1120

17.30%

14.06%
(per troy ounce)











Wheat (-ZW)

$6.4450

$6.4400

5.79%

-18.85%
(per bushel)











Corn (-ZC)

$6.5500

$6.52

10.55%

5.22%
(per bushel)











Cotton 

$1.0437

1.0432

4.17%

-27.93%
(per pound)











Coffee

$2.3855

2.3775

4.22%

-0.81%
(per pound)











Crude oil (-CL)

$93.32

$93.96

17.83%

2.12%
(per barrel)










 
27Comments
Oct 28, 2011 4:03PM
avatar
For the DOW to go from 11,474 to 73,000 in 12 years, it would have to grow at over 16% every year. No banker would promise that rate of return or only a fool would believe one that did.
Oct 28, 2011 4:50PM
avatar

The fraud will continue until it no longer can.

Each passing day is a day closer.

Oct 28, 2011 4:31PM
avatar
Gee, Chevron making billions in profits for just the quarter and cutting production.  Isn' t it time for the Feds to re-start the price gouging investigation again?  The easiest way to bring down the price of gasoline in America is to institute an 80% surcharge on any oil company that makes more than $2.5 billion per quarter in profit.  The proceeds of the surcharge would be used to buy down the price of gasoline.for consumers.  Based on the latest earnings of just the top 5 oil companies, the surcharge would equate to about $22 billion, JUST for one quarter.  I believe you could buy down a significant amount of the price of gas with over $20 billion per quarter.
Oct 28, 2011 4:11PM
avatar

This whole WS HYPE is all about them crooks at WS getting their Bonuses this year... As ,longest they have their money they don't care about the "little" guy

 

Gangster Pack

Oct 28, 2011 4:27PM
avatar

Looking at the way things are going on Wall Street, one would think that this country is in an economic boom. As a lot of us know, this is not the reality of what is going on in mainstreet America. They are living in their dream world and are ignoring what hardships they are creating for people. Sooner or later, the big bubble will burst once again, and they will come down off their high horses.

Oct 28, 2011 3:28PM
avatar

Stapler

The best washers are now foreign made.
Perhaps we need to do what they did in China a number of years ago.  Take upper managers outside, shoot them and appoint successors on the spot?
Oct 28, 2011 4:03PM
avatar
Just enter your...: You keep talking about Dow 73,000 and not only 8% return but 8% above inflation and I don't understand why you think these numbers make any sense.  If you went back to July of 1932 when the Dow was at 41.22 (even starting at a very low point) and then did an 8% return without factoring in inflation and compounded the interest daily you would have a Dow of 22,884 today.  Why are we not at 22,884 today?  Because an 8% return would be very much on the high end.  Whoever told you to expect 8% above inflation lied to you.  Perhaps they worked in a boiler room and you were their mark.  Where would the money come from in order to create an 8% return above inflation across the board for the entire stock market?  Does it involve magic?  If the stock market as a whole was 8% above inflation then inflation would go much higher shortly thereafter and thus the market would no longer be 8% above inflation.  I am glad that these people did not tell you that you could beat inflation by 100% because then the stock market would have to be closer to a googol and I am sure you would actually write it with all 100 zeros! 
Oct 28, 2011 3:46PM
avatar
xcite: In a capitalistic society there is always some accountability because if they don't perform as they should they lose market share and that is what is happening.  Whirlpool is increasingly being made out of the USA too and when something is made out of the USA I start caring less about whether the company is technically an American or foreign company.  Either way the company is helping out foreign citizens and not us.  It is amazing to me that we the people and our elected officials allow these companies to send our jobs over seas. 
Oct 28, 2011 4:07PM
avatar

Active, still have one more Monday in October AND IT'S HALLOWEENVampire batVampire batVampire batVampire bat

After I finish posting, I'm selling. Just to scaryWink

Oct 28, 2011 4:39PM
avatar

"design to cost" (ie:  cheap) rules come down from upper management.  before a product is designed these wizards define a "price point" that a product needs to sell for. 

 

"need" being a funny word coming from these wizards. 

 

take that price point, subtract the middle markup(s), company overhead, manufacturing labor, and see the resulting raw material to actually manufacture the detail parts. 

 

commonly the engineer is faced with a "huh?" comment no one hears. 

 

with these management wizards directing the budget remaining for their products - THEIR REPUTATION - you get what you get. 

 

recall all the formerly good products and see their value today and all you can do is point to such wonderful MBA management styles. 

 

the originators of most of these products and companies STARTED by designing a really good product, sought really good manufacturing methods, and figured out the final selling price of a really good product.

 

it ain't done that way anymore folks! 

 

The best washers are now foreign made.
Perhaps we need to do what they did in China a number of years ago.  Take upper managers outside, shoot them and appoint successors on the spot?
Oct 28, 2011 4:19PM
avatar

Thinking wellll,

 

"That would mean the DOW would have to be 73,000 today to realize the dream Wall Street bankers were promising people back 12 years."

 

at 2 percent inflation, less a 3 percent average annual dividend yield, and thus a 7 percent net asset value return - the actual math puts the DOW at 25,842 (new calculator needed?)

 

the 8 percent "promised" is the long-term amount for the TOTAL stock market including the mid-caps and small-caps - better asset allocation is required and a longer time horizon like thirty years

 

finally, we must get back the stock market wealth in effect stolen by the 1 percent due to personal and corporate tax welfare for the rich past 30 years, and retrieve the trillions being hoarded overseas

 

good post - questionable math ..... Computer 

Oct 28, 2011 4:54PM
avatar
Dow closes higher for a 5th straight week

 

wooooooooooooooo hoooooooooooooooooooooooooo

 

$22.56......................NOBAMA2012 CELEBRATING BY GIVING AWAY MORE MONEY TO DEADBEATS!!Surprised

Oct 28, 2011 5:17PM
avatar

Over the past 200 years (previous to 2000) the compound annual real (inflation adjusted) return on a diversified portfolio of common stocks (USA) has been nearly 7%.

 

It is best to let it go at that than try to get too specific, since there have been terrible periods and extremely good ones but taken as a whole (compounded annually) 7% is great. Of course, you could have cashed out in a good period or worse a bad one with wildly different views of the market.

 

Just being lucky is also an important element in how well you did or will do in the market.

Oct 28, 2011 2:16PM
avatar
Whirlpool is no match for LG and Samsung.  The best washers are now foreign made.  They are more efficient, have less parts that can break, and last longer.  I love to buy American but when it comes to washers we stink and even "American" washers are not really American.  Maytag stinks too.  The Maytag repairman having nothing to do is a huge lie.  Good luck trying to get one of them to come out!
Oct 28, 2011 7:00PM
avatar
We are getting closer to getting our 2010 gains back!! A couple of Thursday rallies and we will claim a gain in 2011.
Oct 28, 2011 4:44PM
avatar
I wonder if the net effect of fuel costs doubling would be positive or negative for America?  We all know that when we spend more on gas we spend less on other things however, if fuel costs were doubled perhaps it would make more sense for low priced products to be made in America rather than overseas.  Textiles and anything that costs less than $20 while taking up a decent amount of space might be made here again.  This would create jobs and be great for those Americans that would have jobs again and those people would then want to spend their paychecks and that would create jobs.  It would hurt the big companies that would have to decide between paying more for fuel or paying more in order to hire American workers and it would hurt the stockholders of those companies (in the beginning) but if it brought back the economy then those companies would have increased profits by way of increased consumption rather than a decrease in expenses.  I think a doubling of fuel costs would be a net positive for America (especially blue collar America).  What do you all think?
Oct 28, 2011 2:54PM
avatar
Volker,
Glad to see you know your literature. 
I just feel (and feel is very much what is directing this market) that the July Euro repair and subsequent market drop is similar to this set up.  Of course every one can do as they wish.
Heck, just today millions of shares are being sold to those that want to invest in this upward trend.  Those are being sold by those that are satisfied with a profit and see the time is right to collect profit.
Thanks for noticin'.
Oct 28, 2011 7:10PM
avatar
Dununder-- I didn't  Hear about Obama giving money to the Tea Party, where did you see that article?Surprised
Oct 28, 2011 2:43PM
avatar
Just give it a bit, they'll come rolling back. This was a knee-jerk reaction to European hoped-for deal-making. When it doesn't come off, or is vastly changed before it happens, and even then it's time to need something bigger, then the bloom will come off the rose.
Oct 28, 2011 4:18PM
avatar
I am Glad I got out today .sorry for you guy that waited,
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