Dow up 101 as stocks rise on stimulus hopes
Stocks rebound from early lows after Fed Chairman Bernanke says the central bank can do more to boost the economy. Hopes build for a European rescue package. Crude oil and gold drop. Amazon rises on Kindle speculation.
Updated: 11:14 p.m. ET, SaturdayStocks rallied today on renewed hopes for more help for the economy from the Federal Reserve and speculation that the European Central Bank will step in to help ailing European economies.
The Dow Jones industrials ($INDU) enjoyed their best daily performance in three weeks, despite a weak report on durable-goods orders and some disappointing earnings.
The catalyst for the rally was Fed Chairman Ben Bernanke's assertion to Rep. Darrell Issa, R-Calif., that there is "scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery."
At the same time, there was more speculation that the European Central Bank was considering "band targets" for yields on a program to buy eurozone bonds and prop up ailing governments, especially Italy and Spain. Under such a scenario, the ECB would buy bonds of eurozone nations at a preset range of yields, Reuters said.
Monday's market get a boost if Apple's (AAPL) shares rise in regular trading after a San Jose, Calif., jury awarded the company $1.05 billion jury award in a patent case with Samsung Electronics. Apple rose sharply in after-hours trading after the verdict was announced.
The Dow closed up 101 points to 13,158. The Standard & Poor's 500 Index ($INX) gained 9 points to 1,411, and the Nasdaq Composite Index ($COMPX) gained 16 points to 3,070.
Article continues below. The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, gained 16 points to 2,778. The gain came despite Apple (AAPL), the largest influence on the index. The stock saw a gain of nearly $7 in the morning slip to 59 cents at $663.22.
The Dow's gain was its largest since Aug. 3, when it jumped 217 points. The gains for the S&P 500 and Nasdaq were their best since Aug. 16. The Dow ended the week less than 1% below its 2012 closing high of 13,279, set on May 1. The S&P 500 is about 0.5% below its 2012 closing high of 1,419.04, set on April 2. The Nasdaq is 1.7% under its 2012 high of 3,122.57, set on March 26.
Even with a higher market today, the major indexes saw their first weekly declines after six weeks of gains. The Dow fell 0.9% for the week, with the S&P 500 down 0.5% and the Nasdaq off 0.2%.
The picture for the month is far more pleasant. The Dow is up 1.2%, while the S&P 500 has gained 2.4% and the Nasdaq up 4.5%. For the year, the Dow is up 7.7%. The S&P 500 is sporting a 12.3% gain, with the Nasdaq up 17.9%.
The market's gains today came on weak volume. Trading volume on the floor of the New York Stock Exchange was 514 million shares; about 1 billion shares has been the daily norm in the last year or so.
Volume may actually be weaker next week, in spite of the Federal Reserve retreat in Jackson Hole, Wyo. That's because it's the week before the Labor Day weekend, and many investors will head to the beach.
| Markets for the week | ||||||||||||
| 8/24/2012 | 8/17/2012 | % chg. | YTD chg. | |||||||||
| Dow Industrials | 13,159.02 | 13,275.20 | -0.88% | 7.71% | ||||||||
| S&P 500 | 1,411.68 | 1,418.16 | -0.46% | 12.25% | ||||||||
| Nasdaq | 3,070.73 | 3,076.59 | -0.19% | 17.87% | ||||||||
| Russell 2000 | 809.83 | 819.89 | -1.23% | 9.30% | ||||||||
| Crude oil | $96.15 | $96.01 | 0.15% | -2.71% | ||||||||
| (per barrel) | 0.00 | 0.00 | 0.00% | 0.00% | ||||||||
| U.S. Dollar Index | 81.60 | 82.66 | -1.28% | 1.34% | ||||||||
| 10-yr. Treasury | 1.68% | 1.82% | -7.60% | -10.32% | ||||||||
| Gold | $1,672.90 | 1,619.40 | 3.30% | 6.77% | ||||||||
Crude oil, gold end lower
Crude oil (-CL) was higher for much of the day on hopes for Fed stimulus and worries about the Middle East, but late selling pushed the price slower, settling at $96.15 a barrel, down 12 cents. Brent crude was off $1.79 to $113.22 a barrel.
The national average price of gasoline, however, was up slightly to $3.73 from $3.718 on Thursday.
The 10-year Treasury yield rose to 1.678% from Thursday's 1.666%. The dollar was higher against major currencies.
Gold (-GC) settled down all of 10 cents to $1,670.70 an ounce. Silver (-SI) was up 16.5 cents to $30.621 an ounce. Copper (-HG) settled off 0.9 cents to $3.4835 a pound.
| Energy prices -- New York close (updated) | ||||||||||||
| Fri. | Thur. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $96.15 | $96.27 | 9.19% | -2.71% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $3.1187 | $3.1412 | 9.50% | 7.02% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $2.7020 | $2.8020 | -15.80% | -9.60% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $2.9105 | $2.9484 | 4.91% | 9.52% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $113.59 | $115.01 | 8.26% | 5.78% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.7300 | $3.7180 | 6.57% | 13.86% | ||||||||
| (per gallon; AAA) | ||||||||||||
The risks to the market in the weeks ahead
The risks to those gains are considerable, if only because the gains since June are so large, and many analysts see the risks of a market decline rising.
There's worry that Greece's and Spain's problems won't get neatly solved. The European Central Bank meets Sept. 6 but probably won't announce a program to buy up debt of eurozone nations.
Details of the bond-buying plan today were sketchy and not likely to be fleshed out until the Sept. 6 meeting in Brussels. Even then, the program might get blown up if a German court says Germany can't participate in the program. A ruling is expected on Sept. 12.
Despite all the speculation today, the Federal Reserve may disappoint and not do a new round of so-called quantitative easing -- the buying of Treasury securities to ensure more cash in the economy. While Bernanke thinks the Fed can do more, there are divisions in the central bank that could derail any stimulus plans.
A big signal of where the Fed is headed will come in a week when Bernanke speaks on Aug. 31 at the Fed's annual retreat in Jackson Hole, Wyo. A day later, ECB President Mario Draghi also speaks and may get more attention than Bernanke.
And what promises to be a bitterly fought U.S. election campaign will be in full swing.
It's a quiet winning day, with emphasis on winning
Twenty-six of the 30 Dow stocks were higher, led by Verizon Communications (VZ) and American Express (AXP). The laggards were Intel (INTC) and Hewlett-Packard (HPQ). Those two, however, fell just 0.5% and 0.3%, respectively.
Meanwhile, 396 S&P 500 stocks were higher, led by Watson Pharmaceuticals (WPI), oil-and-gas driiller QEP Resources (QEP) and NetApp (NTAP), the maker of data-storage equipment. Autodesk (ADSK), Best Buy (BBY) and Adobe Systems (ADBE) were the laggards.
NetApp and Sears Holdings (SHLD) were the Nasdaq-100 leaders. Autodesk and Adobe were the laggards. Seventy-seven Nasdaq stocks were higher.
Autodesk, down $5.58 to $30.13, was today's poster-child for how Europe is affecting U.S. companies. Autodesk missed Street estimates for sales and earnings and guided lower for its fiscal third quarter. Weak sales in Southern Europe for the maker of design-and-engineering software wasn't a surprise. But an abrupt drop-off in sales in Central Europe was a big surprise, CEO Carl Bass said on today's conference call. There was also weakness in India and Brazil.
Amazon.com (AMZN) was up $4.54 to $245.74 on speculation it will introduce a new version of its Kindle Fire tablet on Sept. 6.
Eli Lilly (LLY) said solanezumab, a highly anticipated potential treatment for Alzheimer's disease, failed to reach its set goals in either of two Phase 3 studies. But shares were up $1.46 to $43.86 after pooled data from both studies showed signs of the drug slowing cognitive decline overall in patients with mild-to-moderate cases.
Salesforce.com (CRM) rose $1.77 to $148.54. Fiscal-second-quarter earnings topped analyst estimates, but its outlooks for the third quarter and full year were below estimates.
Aruba Networks (ARUN) surged $2.44 to $19.36 after the mobile network company reported fiscal-fourth-quarter earnings and revenue that beat estimates.
A busy week ahead for the economy
While next week will see light trading, the week is, in fact, a busy week for economic reports.
- Monday: Germany's IFO Index of business confidence, an early indicator of current conditions and business expectations.
- Tuesday: S&P/Case-Shiller home-price index and and the Conference Board's Consumer Confidence report for August.
- Wednesday: Gross Domestic Product for the second quarter, first revision, and the Federal Reserve's Beige Book report on the economy.
- Thursday: Government reports on jobless claims and personal income and spending.
- Friday: Bernanke speech in Jackson Hole; Chicago Purchasing Managers Index.
- Saturday: ECB president Mario Draghi speech in Jackson Hole.
Key earnings are due from Tiffany (TIF) on Monday; H.J. Heinz (HNZ) and Credit Agricole (CRARY) on Tuesday; Joy Global (JOY) and TiVO (TIVO) on Wednesday: Toronto Dominion Bank (TD) and Zumiez (ZUMZ) on Thursday.
| Short hits from the markets -- New York close (updated) | ||||||||||||
| Fri. | Thur. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.0900% | 0.100% | -10.00% | 800.00% | ||||||||
| 5-year Treasury note | 0.704% | 0.687% | 17.53% | -15.18% | ||||||||
| 10-year Treasury note | 1.678% | 1.666% | 12.47% | -10.32% | ||||||||
| 30-year Treasury bond | 2.792% | 2.780% | 8.34% | -3.36% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 81.603 | 81.359 | -1.34% | 1.34% | ||||||||
| British pound | 1.5813 | 1.5865 | 0.84% | 1.77% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.632 | £0.630 | -0.83% | -1.74% | ||||||||
| Euro in dollars | $1.25 | $1.26 | 1.80% | -3.36% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.799 | € 0.796 | -1.77% | 3.47% | ||||||||
| U.S. $ in yen | 78.86 | 78.54 | 0.95% | 2.29% | ||||||||
| U.S. $ in Chinese | 6.38 | 6.35 | 0.33% | 0.84% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $1.009 | $1.007 | 1.24% | 2.90% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $0.991 | $0.993 | -1.15% | -2.82% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,670.70 | $1,670.60 | 3.74% | 6.63% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $3.484 | $3.493 | 1.93% | 1.38% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $30.6210 | $30.4560 | 9.70% | 9.69% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $8.8850 | $8.9475 | 0.03% | 36.12% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $8.0850 | $8.148 | 0.40% | 25.06% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $0.7521 | 0.768 | 5.42% | -17.96% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $1.6290 | 1.6185 | -6.59% | -29.07% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $96.15 | $96.27 | 9.19% | -2.71% | ||||||||
| (per barrel) | ||||||||||||
Real inflation is running above 8%. Inflation eats up consumer spending power and reduces employment. We need deflation not inflation. A deflationary 1/2% to 0% inflation is where we need to be. The fed needs to reduce the money supply, not more stimulus.
I have feeling the fed knows this and there will be no more stimulus.
"Fed Chairman Bernanke says the Fed can do more to boost the economy."
Oh, really, Ben Dover Bernanke?? Didn't you just tell Congress back in January of this year that the Fed had run out of 'solutions' and that they would be able to do little more to help the economy? Sorry, but something doesn't sound right about this. There's SOMETHING going on with the Fed and I doubt that it's good.
I have contracted to numerous gov't entities and every one of them have an annual retreat where they send most of thier "civil servant" managers off to some "fairy land" location at the tax payors expense.
I don't care if you are Dem., GOP, Lib., Ind., white, black, yellow, red, etc., etc. This is a HUGE waste of tax payor money. This, along with every gov't employees pension needs to be phased out.
They can "retreat" to thier corporate conference rooms and as for thier pension plans, they can invest into a retirement account like everyone else.
It is a shame, I mean disgrace, most of the posts on these forums deal with fingerpointing between Dems & GOPs. Who cares how the gov't put America in this mess. Don't dwell on the past. The real question is how do we, the majority, get these idiots out of our lives (and office) without stealing our tax dollars (by collecting pensions).
I have nothing against unions. They can do whatever they want if thier voting majority agrees. The FACT is no government can be run like a union using tax money to fund retirement plans while the beneficiaries never invested in thier own plans.
Vote for me and I'll balance the budget, ACTUALLY reduce the deficit (not fudge numbers), and get the economy heading in the right direction. The only folks who will NOT like it will be the government employees and elected officials.......... :-) P.S. Have a nice day!!
"Fed Chairman Bernanke says the Fed can do more to boost the economy."
Wasn't it just a few months ago that Bernanke indicated that there wasn't a whole lot more the Fed could do, and that it would be up to congress to make changes beneficial to the economy?
The truth is The Fed can't "boost the economy". If the actions of the Fed could do that, then it would have already happened. We're still in the tank. What the action of the Fed does do is boost the prices of stocks by throwing money at the markets to create false demand.
But you have to remember, in Bernanke's world, the stock market and the economy are one in the same. He doesn't seem to understand that there is another economy outside of the stock market.
That economy is the one the rest of the real world has to deal with; the one where there has been over 8% unemployment for over 40 months, and the one where real people are concerned about the money Bernanke is spending that their kids and grandkids will have to pay back.
Thanks uncle Ben. Thanks a lot.
GET READY FOR HYPERINFLATION!!!! But first, they want the market to look good artificially because it will only help the President's reelection bid, but the end result of pumping Monopoly money into the market is inflation, which hurts the middle class and the poor. Nice going guys, hurt the people you claim you want to help! It's criminally insidious.
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