Dow jumps 272, biggest gain in a month
The S&P 500 and Nasdaq also surge as banks rally on hopes for stability in Europe. Apple slips on a report it's cut back orders for iPad parts. Gold falls below $1,600. Berkshire Hathaway will buy back shares.
Updated: 8:25 p.m. ET
U.S. stocks surged to big gains today as hopes grew that regulators were building a plan to help stabilize troubled European banks.
The plan involves expanding a rescue fund through bond sales so that the banks can absorb losses expected when and if Greece defaults on its debt.
The Dow Jones industrials ($INDU) were up more than 270 points on the news, their best gain in a month and first close above 11,000 after three days. The one downside to the rally: Volume was quite light. JPMorgan Chase (JPM) was the top performer among the 30 Dow stocks, rising 7% to $31.65.
In addition, Boeing (BA) shares were up 4.2% to $62.01 as the aerospace giant made the first delivery of a 787 Dreamliner today to All Nippon Airways (ALNPY). The plane will fly to Japan on Tuesday and is expected to go into service in February.
Gold (-GC) settled below $1,600 an ounce for the first time since July 21 after the CME Group raised margin requirements on the metal by 21% and 16% on silver (-SI) and a similar amount for copper (-HG).
The Dow closed up 272 points, or 2.5%, to 11,044. The Standard & Poor's 500 Index ($INX) had risen 27 points, or 2.3% to 1,163. The Nasdaq Composite Index ($COMPX) was up 33 points, or 1.4%, to 2,517.
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The market largely shrugged off a report showing new-home sales fell 2.3% from July to a seasonally adjusted 295,000 units in August. The sales rate was the lowest since February but was up 6.1% from a year ago. The inventory was unchanged at 6.6 months.
On Tuesday, the market faces the S&P/Case-Shiller Home Price Index report for July and the Conference Board's September Consumer Confidence Index. Walgreen (WAG) and Jabil Circuit (JBL) are the key earnings reports.
Futures trading suggests that the market will open flat on Tuesday. An issue, raised by Toronto money manager Terry Bedford: Apple, Wynn Resorts (WYNN) and Baidu (BIDU), three of the top momentum plays, were lower in a big rally. That's not a good sign.
Apple drops on iPad concerns, hits Nasdaq
The Nasdaq was held in check for much of the day by weakness in Apple (AAPL), down 0.3% to $403.17, after JPMorgan Securities issued a report saying Apple had cut back orders of parts for iPad tablet devices by some 25%.The shares had been down as much as 3.2%.
Apple's decline trimmed 1 point off the Nasdaq-100 Index ($NDX). The index, which tracks the largest Nasdaq stocks, was up 27 points, or 1.2% to 2,234.
It was the first time Apple has trimmed orders for iPads, Bloomberg News said, and the immediate market reaction was along the lines of "If Apple is cutting iPad production, business must really be in trouble."
But the stock rebounded from a low of $391.30 after several analysts told The Wall Street Journal they didn't believe the report or thought it was only working with a partial set of data. Plus, Deutsche Bank upgraded the stock, projecting big sales from the iPhone 5.
Amazon.com (AMZN) is expected to enter the tablet wars when it introduces a tablet version of its Kindle e-reader on Wednesday.
Amazon shares were up 2.8% to $229.85 after the company said today its online streaming service will offer Fox movies and television shows under a new content deal, as the Internet retailer continues to bolster its presence in Internet video.
| Energy prices -- New York close | ||||||||||||
| Mon. | Fri. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $80.24 | $79.85 | -9.65% | -12.19% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $2.8030 | $2.8059 | -9.11% | 10.19% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $3.7820 | $3.7010 | -6.71% | -14.14% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $2.5284 | $2.5244 | -12.10% | 3.07% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $103.94 | $103.97 | -9.50% | 9.70% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.4930 | $3.5050 | -3.43% | 13.70% | ||||||||
| (per gallon; AAA) | ||||||||||||
Gold continues to struggle
Gold had dropped to as low as $1,535 an ounce in overnight trading but settled in New York at $1,594.80, down $45. Gold is down 13.9% on the month but up 12.2% for the year.
Silver settled down 12.5 cents to $29.98 an ounce. It's down about 28% this month and 3.1% for the year. Copper had recovered its early losses and settled up slightly to $3.283 a pound. It's down 22% this month alone and 26.2% for the year.
The SPDR Gold Shares (GLD) exchange-traded fund was down 1.4% to $156.58. The iShares Silver Trust (SLV) ETF was off 0.7% to $29.77. The ETFs are down 11.3% and 26.4% this month, respectively. The gold ETF is still up 13.6% for 2011; the silver ETF is off 1.4%.
Light sweet crude oil, meanwhile, settled up 39 cents to $80.24 a barrel in New York. It's down 9.7% this month and 12.2% this year. Brent crude was up 90 cents to $104.87.
Retail gasoline was at $3.493 a gallon, according to AAA's Daily Fuel Gauge Report, down 1.2 cents from Sunday. The price is up 13.7% this year but down 12.4% from its May 5 peak of $3.985 a gallon.
The dollar was down slightly against the euro. The 10-year Treasury yield rose to 1.904% from Friday's 1.808%.
Berkshire Hathaway will buy back shares
Berkshire Hathaway (BRK.B) was the second-best S&P 500 performer, up 8.6% to $72.09. The company led by Warren Buffett said it will repurchase shares for as much as 110% of their book value, saying the stock is undervalued after falling 17%.
The shares began the day down about 17% on the year.
The other question about the buyback was this: Given Berkshire's size ($382.7 billion in assets as of June 30), is it running out of deals that can add much to earnings?
The top S&P 500 performer was CONSOL Energy (CNX), up 9% to $37.17. The company said it has sold its royalty interests in a stake in the Marcellus Shale in Pennsylvania and West Virginia to Antero Resources Appalachian Corp. of Denver for $193 million in cash.
Clorox (CLX) declined 4.3% to $66.44 and was the biggest decliner in the S&P 500. Carl Icahn, the bleach maker’s largest investor, withdrew his director slate for the company after concluding that shareholders wouldn’t support the move.
Why the banks are higher
Banks were higher amid speculation that the European Central Bank may restart bond purchases next week and cut interest rates next month.
Deutsche Bank (DB) jumped 12.2% in New York to $35.15. France's Societe Generale (SCGLY) jumped 9.5% to $4.84. Morgan Stanley (MS) climbed 6.5% to $14.61. Goldman Sachs (GS) rose 4.2% to $99.14. Bank of America (BAC) climbed 4.6% to $6.60.
European policymakers are considering expanding a rescue fund known as the European Financial Stability Facility. The move would require approval from Germany, which is a large contributor to the fund. Some officials have proposed that the fund consider buying sovereign debt.
Germany is set to vote Thursday on increasing the EFSF's lending capacity to 440 billion euros ($592 billion U.S.) as well as giving it added powers. German officials and the European Central Bank have been reluctant to let the fund buy debt. Discussions over how best to address Europe's problems could drag on through a meeting among leaders in the Group of 20 in early November.
China, seen as a possible buyer of European debt, sent strong messages in a weekend meeting with the International Monetary Fund that it has a limited risk appetite for additional debt and that it would not bail out Europe.
| Short hits from the markets -- New York close | ||||||||||||
| Mon. | Fri. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.0100% | 0.000% | 0.00% | -91.67% | ||||||||
| 5-year Treasury note | 0.906% | 0.849% | -4.83% | -55.06% | ||||||||
| 10-year Treasury note | 1.904% | 1.808% | -14.16% | -42.39% | ||||||||
| 30-year Treasury bond | 3.002% | 2.871% | -16.43% | -31.18% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 79.063 | 79.228 | 6.59% | -0.28% | ||||||||
| British pound | 1.5540 | 1.5489 | -4.38% | -0.42% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.643 | £0.646 | 4.58% | 0.42% | ||||||||
| Euro in dollars | $1.35 | $1.35 | -6.12% | 0.89% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.741 | € 0.740 | 6.51% | -0.88% | ||||||||
| U.S. $ in yen | 76.63 | 76.58 | -0.15% | -5.82% | ||||||||
| U.S. $ in Chinese | 6.42 | 6.38 | 0.30% | -2.95% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $0.971 | $0.973 | -5.01% | -3.25% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $1.031 | $1.028 | 5.27% | 3.36% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,594.80 | $1,639.80 | -12.93% | 12.20% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $3.283 | $3.280 | -21.92% | -26.17% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $29.9760 | $30.1010 | -28.23% | -3.11% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $6.4825 | $6.4075 | -18.10% | -18.38% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $6.4800 | 6.385 | -15.93% | 4.10% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $0.9843 | 1.0124 | -6.97% | -32.03% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $2.3595 | 2.3145 | -18.14% | -1.89% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $80.24 | $79.85 | -9.65% | -12.19% | ||||||||
| (per barrel) | ||||||||||||
The words from the Fed had remained positive even when they were doing QE1 and QE2. It got more positive as they ended QE2 and did not mention any other problems and forecast recovery. The verbiage stayed rosy as economists talked "soft patch". Then Ben pushes through a statement on keeping rates the same for at least the next two years! A couple members of the Fed objected to this and the rumbling from within began. The verbiage stayed positive though. The situation continued to deteriorate and the talk started about the Fed needing to do more. Some people thought QE3 and I think helicopter Ben wanted to do more than he did but was held back by other members so was only able to do the Twist. I don't think he was happy about only getting to Twist in the wind so the verbiage went really negative to "significant downside risks". Thus stocks are lower and the pressure for more Fed action is mounting so Ben may get his way with QE3 in the near future.
TOTAL MARKET MANIPULATION TODAY...DON'T BE A SUCKER AND GET LURED IN TO BUY BECAUSE THESE GAINS WILL BE DUMPED IN THE NEXT FEW DAYS.
Market makes no sense whatsoever today....DOW up 170, but NASDAQ in RED.
Don't whine if you get fleeced because you THOUGHT you saw bargains...in the last two months bargains have turned into losses!
According to a report on CNN,
The financial problem in Greece cause by years of unrestrained spending, cheap lending and failure to implement financial reforms left Greece badly exposed when the global economic downturn struck.
What have they done?
Hiked taxes on fuel, tobacco and alcohol, raised the retirement age by two years, imposed public sector pay cuts and applied tough new tax evasion regulations.
Seems interesting?
China, seen as a possible buyer of European debt, sent strong messages in a weekend meeting with the International Monetary Fund that it has a limited risk appetite for additional debt and that it would not bail out Europe.
(Reuters) - Euro zone officials are working on ways to magnify the financial firepower of the euro zone's rescue fund to fight a sovereign debt crisis more effectively, a senior European Central Bank policymaker said on Monday.
ECB executive board member Lorenzo Bini Smaghi said in New York that European policymakers had already begun discussing the next steps to quell a crisis that threatens to derail a fragile world economic recovery.
The 440 billion euro rescue fund's assets could be used as collateral to borrow from the ECB, making more money available to stop the crisis spreading, but it was up to European Union governments to decide how to do this, Bini Smaghi said.
"I know that people are thinking about these things. They may not be willing to admit it in the public, but they are thinking about these things," he said, citing U.S. programs used to rescue banks in the 2008-9 financial crisis.
"Initially the TARP was used to buy assets and then it was used to recapitalize the banks and it was used to pay TALF, so I think we are now discussing how to do this, how to leverage the money out of the EFSF in a more innovative and efficient way," he told a conference organized by Medley Advisors.
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[BRIEFING.COM] The major averages ended higher across the board as the S&P 500 advanced 0.8%.
Equities climbed steadily since the opening bell as investors prepared for tomorrow's policy decision from the Federal Reserve. Although chatter in recent weeks has included speculation the Fed would look to taper its asset purchases, today's broad gains suggest investors expect mostly reassuring words from Chairman Bernanke at tomorrow's press conference.
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