Dow up 128 as strong earnings boost stocks

Updated: 11:49 p.m. ET

Stocks enjoyed their biggest rally in a month today, thanks to decent earnings from Goldman Sachs (GS), UnitedHealth Group (UNH) and Johnson & Johnson (JNJ).

At the same time, Vikram Pandit's resignation as CEO of Citigroup (C) startled many on Wall Street, especially as news reports suggested that his departure came as the result of conflict with his board over pay and strategic issues. Michael Corbat, who had been Citigroup's CEO for Europe, the Middle East and Africa, was named the new CEO. Citigroup shares were up 59 cents to $37.25, not far from their 52-week high of $38.40.

After the close, shares of both IBM (IBM) and Intel (INTC) moved lower as the initial take on earnings reports disappointed.

Futures trading suggests a modestly lower open on Wednesday. Trading in Standard & Poor's 500 Index ($INX) futures appeared to dip during the debate between President Barack Obama and former Massachusetts Gov. Mitt Romney. Trading on Intrade, the Irish web site that lets investors speculate on possible election outcomes, saw prices rise on the odds Obama will reelection -- suggesting traders, at least, thought the president came out on top in the clash.

The Dow Jones industrials ($INDU) closed up 128 points to 13,552; the blue chips had been up as many as 132 points in the early afternoon. The S&P 500 was up 15 points to 1,455, and the Nasdaq Composite Index ($COMPX) gained 37 points to 3,101. The Dow's gain was its third straight and biggest since Sept. 13. The gains for the S&P 500 and Nasdaq were their second in a row.

Article continues below.The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, climbed 39 points to 2,778. Apple (AAPL), the biggest influence in the index, had gained $15.03 to $649.79.

The two-day gains for the major averages were their best since Sept. 13-14. The Dow finished within 50 points of their closing high for the year; the  S&P 500 was about 5 points below its 2012 high.

The market had a solid rally on Monday, with the Dow closing up 95 points, the S&P 500 up 12 points and the Nasdaq up 20 points. For the year, the Dow is up 10.8%, with the S&P 500 up 15.6% and the Nasdaq up 18.9%.

Meanwhile, confidence among homebuilders hit a six-month high, suggesting that the housing market is continuing to recover. But the National Association of Home Builders/Wells Fargo builder sentiment index was only at 41, suggesting builders believe conditions are still not strong. Homebuilder shares were mostly lower.

Investors face another big day of earnings on Wednesday. American Express (AXP), Bank of America (BAC), Morgan Stanley (MS), Northern Trust (NTRS) and Halliburton (HAL) are among companies scheduled to report quarterly results.

The Commerce Department will report on September housing starts and building permits and the latest week of crude-oil inventories.

Intel, IBM results don't impress
Intel, up 62 cents to $22.35, had been the top-performer of the 30 Dow stocks during the regular session, but shares were down 79 cents, or 3.5%, to $21.56 after hours after rising 62 cents to $22.35 in regular trading.

The company reported $3 billion in net profit and earnings of 58 cents per share, down from $3.47 billion, or 65 cents, a year ago. After one-time items, the earnings were 60 cents a share, better than the expected 50 cents. Revenue was $14.2 billion, up from $13.2 a year ago. Its gross

For the fourth quarter, the company expects revenue of $13.6 billion, slightly less than the Street estimate of $13.7 billion, and lower gross profit margins, a key profitability measure. The company expects to trim operations of factories producing older-generation chips, reflecting the weak personal-computer business. The PC business is weakening even in China.

IBM shares were off $7.05, or 3.3%, to $203.95 after rising $2.07 to $211 in regular trading. Earnings were $3.62 a share, slightly better than the consensus estimate of $3.61. Revenue, however, was $24.7 billion, less than the expected $24.7 billion. Customers put off spending on big ticket items, and a stronger dollar for much of the quarter hurt the company's top line.

IBM expects to earn $15.10 a share in the fourth quarter. Analysts have been projecting $15.15. North American revenue was off 4% to $10.4 billion in the quarter, with European revenue down 9%.

Shares of railroad giant CSX (CSX) were up 27 cents, or 1.3%, to $21.90 after hours as it reported good growth in its export coal and automotive businesses.  In regular trading, the shares were up 18 cents to $21.63.

Net income at CSX fell 2% to $455 million from $464 million a year ago. Earnings were up slightly to 44 cents a share (based on a smaller number of shares outstanding), but analysts were expecting 47 cents. 

Energy prices -- New York close
			Tues.			Mon.			Month chg.			YTD chg.
Crude oil (-CL)			$92.09			$91.85			-0.11%			-6.82%
(per barrel)
Heating oil (-HO)			$3.1985			$3.2091			1.24%			9.76%
(per gallon)
Natural gas (-NG)			$3.4370			$3.4860			3.52%			14.99%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.8453			$2.8503			-2.56%			7.07%
(per gallon)
Brent crude			$115.07			$115.80			0.39%			7.16%
(per barrel)
Retail gasoline			$3.7730			$3.7870			-0.37%			15.17%
(per gallon; AAA)

J&J, United and Goldman cheer Street
Johnson & Johnson shares finished up 95 cents to $69.55. UnitedHealth shares dropped 61 cents to $56.88. Both companies raised their full-year profit guidance, but UnitedHealth warned that it faced "a considerable challenge" in meeting analysts' estimates for next year.

Johnson & Johnson shares are up 6% this year; UnitedHealth, which joined the Dow last month, is up 12.2%.

Goldman Sachs shares were down $1.28 to $123.22. The decline came even as the investment bank boosted its dividend to 50 cents a share from 46 cents as earnings, which beat Street estimates, and revenue more than doubled. Goldman shares are up 38.4% this year.

Coca-Cola (KO) shares were off 23 cents to $37.90 after the company said revenue outside the United States was challenged by soft economies.

Pandit leaves Citigroup; his legacy depends
There were, as noted, a number of reports suggesting Vikram Pandit quit as CEO of the nation's largest bank after battling with his board. He denied he was forced out, saying his leaving was his idea. But John Havens, the banking giant's president and chief operating officer under Pandit, quit at the same time. That's a sure signal of some dispute.

To be sure, anyone who has held Citigroup since the fall of 2007 can't be too happy. The stock is down 89% from when Pandit was named CEO. But since March 2, 2009, when the shares bottomed after the 2008 crash, the stock is up 209%.

The company has been shrinking since the crash as non-performing assets have been sold off, and there were some embarrassing issues.

There was a shareholder revolt over executive pay, a rejection by the Federal Reserve of a plan to buy back more stock and an arbitration decision over the value of a brokerage joint venture with Morgan Stanley (MS) that forced Citigroup to take a $2.9 billion write-down.

In addition, Pandit received $165 million for his low-performing hedge fund, which was purchased by Citigroup in 2007. The fund has since been shuttered. In 2012, Citigroup shareholders voted in favor of a non-binding measure to reject a $15 million pay package for Pandit.

Factory output; higher gas prices stoke CPI
Factory output -- the production factories, mines and utilities -- rose 0.4% in September after a 1.4% decline in August that was the biggest since March 2009, the Federal Reserve reported today.

Consumer prices rose 0.6% in September as the cost of gasoline surged, but October may be more benign. Gasoline prices have been falling fairly steadily since mid-September.

Pump prices slip; gold and crude oil move up
The national average retail price was $3.773 a gallon today, according to AAA's Daily Fuel Gauge Report. That was down from Monday's $3.787 and $3.871 on Sept. 14.

Crude oil (-CL) in New York settled up 25 cents to $92.01 a barrel. Brent crude, a prime determinant of retail gasoline prices, was down 76 cents to $115.04.

Gold (-GC) settled up $8.70 to $1,746.30 an ounce. Silver (-SI) ended up 21.6 cents to $32.959 an ounce. Copper (-HG) was off slightly to $3.70 a pound.

The dollar was lower against major currencies. The 10-year Treasury yield rose to 1.72% from Monday's 1.663%.

A broad rally for stocks
All of the 10 sectors of the S&P 500 were higher today, with materials, energy and technology stocks the leaders.

Intel, Caterpillar (CAT) and United Technologies (UTX) were the Dow leaders, with UnitedHealth Group (UNH), Verizon Communications (VZ) and Coca-Cola the laggards.

First Solar (FSLR), Murphy Oil (MUR) and Fossil (FOSL) were the top S&P 500 performers. PNC Financial (PNC), Regions Financial (RF) and advertising conglomerate Omnicom Group (OMC) were the laggards.

Fossil and Mattel (MAT) were the Nasdaq-100 leaders; Fastenal (FAST) and O'Reilly Automotive (ORLY) were the laggards.

Short hits from the markets -- New York close
			Tues.			Mon.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0900%			0.100%			0.00%			800.00%
5-year Treasury note			0.692%			0.660%			9.84%			-16.63%
10-year Treasury note			1.720%			1.663%			5.07%			-8.07%
30-year Treasury bond			2.915%			2.843%			-3.86%			0.90%
Currencies
U.S. Dollar Index			79.464			79.806			-0.70%			-1.31%
British pound			1.6106			1.6080			-0.34%			3.66%
(in U.S. $)
U.S. $ in pounds			£0.621			£0.622			0.34%			-3.53%
Euro in dollars			$1.30			$1.30			1.41%			0.60%
(in U.S. $)
U.S. $ in euros			€ 0.767			€ 0.772			-1.39%			-0.60%
U.S. $ in yen			79.05			78.70			1.39%			2.53%
U.S. $ in Chinese			6.29			6.27			0.09%			-0.62%
yuan
Canada dollar			$0.000			$1.020			-100.00%			-100.00%
(in U.S. $)
U.S. dollar			$0.986			$0.981			0.22%			-3.37%
(in Canadian $)
Commodities
Gold (-GC)			$1,746.30			$1,737.600			-1.56%			11.46%
(per troy ounce)
Copper (-HG)			$3.700			$3.702			-1.54%			7.68%
(per pound)
Silver (-SI)			$32.9590			$32.743			-4.68%			18.07%
(per troy ounce)
Wheat (-ZW)			$8.4775			$8.483			-6.07%			29.87%
(per bushel)
Corn (-ZC)			$7.3825			$7.373			-2.38%			14.19%
(per bushel)
Cotton			$0.7486			$0.723			5.96%			-18.35%
(per pound)
Coffee			$1.6280			$1.609			-6.17%			-29.11%
(per pound)
Crude oil (-CL)			$92.09			$91.850			-0.11%			-6.82%
(per barrel)