Dow up 78 as Bernanke vows Fed aid if needed
The Fed chairman is worried about Europe and the 'fiscal cliff' but avoids saying how the central bank may boost the economy. Mattel and Coca-Cola lead a rebound from an early pullback. Intel shares rise on 2nd-quarter results. Crude oil rises.
Updated: 9 p.m. ETStocks slumped in the morning but rallied solidly in the afternoon even as Federal Reserve Chairman Ben Bernanke didn't give Wall Street what it wanted: anything resembling specifics on when the Fed might start a new round of stimulus.
Investors started to buy stocks when the Fed boss told the Senate Banking Committee that he didn't rule out taking action if the economy doesn't start to improve in the next few months. That pushed the dollar lower against the euro.
Mattel (MAT), Coca-Cola (KO) and Goldman Sachs (GS) finshed higher after earnings either cheered or didn't depress investors. Walt Disney (DIS) briefly hit an all-time high after an upgrade and closed up $1.49 to $49.35.
Second-quarter results from Intel (INTC) were a touch ahead of estimates. Shares slipped after hours as the company said it is worried about the global economy going forward.
The Dow Jones industrials ($INDU) closed up 78 points to 12,806. The blue chips had been up as many as 102 points and down as many as 82 points during the session. The Standard & Poor's 500 Index ($INX) was up 10 points to 1,364, and the Nasdaq Composite Index ($COMPX) had gained 13 points to 2,910. The Nasdaq-100 Index ($NDX) was up 15 points to 2,592.
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Apple (AAPL), the biggest influence on the Nasdaq-100, was up 3 cents to $606.94.
The market faces another big day on Wednesday. Results are due from Bank of America (BAC), IBM (IBM) and eBay (EBAY). The government will report on housing starts and crude oil inventories.
The Federal Reserve will release its Beige Book report, its widely viewed narrative look at the economy.
There's some skepticism among futures traders that the today's rally can hold up. Trading suggests a modestly lower open on Thursday.
Intel results don't impress; Yahoo results hold up
Intel earned 54 cents a share, unchanged from a year ago and ahead of the Street estimate of 52 cents. Revenue was $13.5 billion, up 3.6% from a year ago but off slightly from the Street estimate of $3.56 billion.
For the year, the company sees between 3% and 5% year over year, down from the prior expectation for high single-digit growth.
Intel shares climbed 25 cents to $25.38 in regular trading and were off 28 cents, or 1.1%, after hours.
Yahoo, meanwhile, said it earned 27 cents a share in the second quarter, up from 18 cents a year ago and 4 cents a share ahead of estimates. The results exclude $127 million in restructuring costs. Revenue was $1.08 billion, little changed from a year ago and below Street estimates of $1.09 billion.
Shares were up 4 cents after hours to $15.64.
The shares had slipped 5 cents to $15.60 in regular trading, despite the excitement about naming former Google executive Marissa Mayer as its new CEO. Mayer joined the company today.
CSX shares gain after hours
Meanwhile, railroad company CSX (CSX) said it earned 49 cents a share in the quarter, 3 cents ahead of estimates. Revenue of $3.01 billion was flat from a year ago and $40 million less than expected.
Revenue didn't move because lower volumes of coal meant for utilities offset growth in export coal shipments, intermodal traffic and automotive shipping.
Shares were up 21 cents to $23 after hours after closing up 20 cents to $22.79 in regular trading.
Crude oil gains as the dollar falls
Crude oil (-CL) in New York was higher ahead of the Bernanke appearance before the Senate Banking Committee. But after a droop with the disappointment over Bernanke's testimony, oil rebounded.
Crude settled at $89.22 a a barrel, up 79 cents. Brent crude was up 36 cents to $103.73. The national average retail price of gasoline was $3.406 a gallon, the highest price since June 25, according to AAA's Daily Fuel Gauge Report.
Gold (-GC) settled off $2.10 to $1,589.50 an ounce. Silver (-SI) and copper (-HG) were lower as well.
Interest rates were higher, with the 10-year Treasury yield hitting 1.501% from 1.464% on Monday. The dollar was higher against major currencies.
| Energy prices -- New York close | ||||||||||||
| Tues. | Mon. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $89.22 | $88.43 | 5.01% | -9.72% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $2.8422 | $2.8277 | 4.88% | -2.47% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $2.7960 | $2.8010 | -0.99% | -6.46% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $2.8450 | $2.8547 | 8.10% | 7.06% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $104.00 | $103.37 | 6.34% | -3.15% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.4060 | $3.3960 | 1.58% | 3.97% | ||||||||
| (per gallon; AAA) | ||||||||||||
Bernanke's worries about Europe grow
Many Fed watchers said the central bank could try a new round of stimulus in the fall. In addition, investors seemed cheered by the largest increase in homebuilders' confidence in more than five years and relatively decent corporate earnings.
But the crazy thing about the market's reaction to Ben Bernanke testimony is that he said nothing he hadn't said before about what the Fed might do. He said the Fed would act if needed.
Bernanke offered senators a somber view of the domestic and global economy. The European debt crisis, if allowed to fester, could be a big drag on the U.S. economy, he said. And he added that the "fiscal cliff" that Congress faces at the end of the year -- tax increases and big spending cuts -- could result in thousands of job losses and a mild recession at the least. Cutting the national unemployment rate -- now 8.2% -- will likely be "frustratingly slow."
But when it came to what the Fed could do to boost the economy, all Bernanke would say is that the central bank will "have to consider additional steps" if the economy doesn't pick up.
The Fed's statement after its June 19-20 meeting said it "is prepared to take further action as appropriate" on the economy.
What was new was Bernanke's deepening concerns about the fiscal cliff and its potential to cause a recession and Europe.
"We appear to be in a muddling-through type of environment," he said. Europe needs to make a lot of structural and institutional changes, such as creating a banking union. That will take time, and, he added, "It appears to be something that could go on for quite a while, unfortunately."
The Bernanke testimony will be repeated on Wednesday.
Coca-Cola says emerging markets offset Europe
Coca-Cola reported a higher-than-expected quarterly profit on Tuesday, as rising consumption of its drinks in emerging markets offset declines in Europe. Shares rose $1.21 to $77.69.
Goldman Sachs' quarterly profit fell 12% as investment income plunged. That reflects the pressures Goldman faces as demand for its services remains tepid and markets fluctuate wildly.
The investment house has already scaled back its risk-taking, even before new regulations take effect limiting bets with its own money, and, in the current market, Goldman has grown even more conservative. It announced a new round of cost-cutting. Shares, however, were up 30 cents to $97.98.
Why Disney and Mattel had their big moves
Walt Disney was the performer among the 30 Dow stocks after Bank of America/Merrill Lynch Jessica Reif Cohen said estimates for the 2013 fiscal year may be too low. The year starts in September. She sees stronger-than-expected growth in Disney's theme parks, film and interactive business and its cable networks.
Disney was followed by pharmaceutical giants Pfizer (PFE) and Merck (MRK). Twenty-six Dow stocks were higher.
Mattel (MAT) was the top S&P 500 stock as higher prices pushed second-quarter profit higher. The shares were up $2.93 to $33.97. Nabors Industries (NBR) was second. State Street (STT) and audio-chip maker Broadcom (BRCM) were the laggards. A total of 392 stocks in the index were higher.
Mattel was also the top Nasdaq-100 stock, followed by Seagate Technology (STX), up 73 cents to $26.77, and O'Reilly Automotive (ORLY), up $1.94 to $92.53. Ctrip.com International (CTRP) and Broadcom were the laggards. Seventy-three stocks in the index were higher.
| Short hits from the markets -- New York close | ||||||||||||
| Tues. | Mon. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.0900% | 0.090% | 12.50% | 800.00% | ||||||||
| 5-year Treasury note | 0.618% | 0.595% | -15.23% | -25.54% | ||||||||
| 10-year Treasury note | 1.501% | 1.464% | -9.52% | -19.78% | ||||||||
| 30-year Treasury bond | 2.595% | 2.548% | -6.08% | -10.18% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 83.168 | 83.218 | 1.73% | 3.29% | ||||||||
| British pound | 1.5645 | 1.5640 | -0.38% | 0.69% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.639 | £0.639 | 0.38% | -0.68% | ||||||||
| Euro in dollars | $1.23 | $1.23 | -2.71% | -5.22% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.814 | € 0.815 | 2.79% | 5.51% | ||||||||
| U.S. $ in yen | 79.18 | 78.86 | -0.71% | 2.69% | ||||||||
| U.S. $ in Chinese | 6.39 | 6.38 | 0.36% | 1.09% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $0.987 | $0.986 | 0.49% | 0.63% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $1.014 | $1.014 | -0.49% | -0.64% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,589.50 | $1,591.60 | -0.92% | 1.45% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $3.456 | $3.485 | -1.17% | 0.57% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $27.3160 | $27.3210 | -1.07% | -2.15% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $8.8500 | $8.8450 | 16.87% | 35.58% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $7.7125 | $7.725 | 21.50% | 19.30% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $0.7105 | 0.733 | -0.39% | -22.50% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $1.8185 | 1.8395 | 6.53% | -20.81% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $89.22 | $88.43 | 5.01% | -9.72% | ||||||||
| (per barrel) | ||||||||||||
Tumble said:
"A good analogy would be that Bush tossed our economy overboard in waters 10,000 feet deep with a ball and chain on it and the GOP, the perpetrators, have the chutzpah to blame Obama for taking so long to swim back up to the surface"
Uh, Actually, it is more like Obama is using a nuclear powered submarine to race to the bottom of the ocean.
Bush made plenty of mistakes and the bailouts were one in my opinion. It is certainly fair to give Bush some level of blame for some of our economic predicament. However, to act as if Obama has actually done anything at all, to improve anything is hilarious. He hasn't. Give Bush his blame, but please don't act like any improvements have been made.
In reality, if you disliked Bush's policies, then you should really, really dislike Obama's. Because Obama's economic policies have really just been Bush's policies on steroids.
Gas is on the rise again.Looked like it may go down to a level that we might schedule a vacation. They sure as hell won't be seeing that money. SCREW THEM!!! It is obvious that the average American isn't in the equation when it comes to this. People expect a politician to speak up but they soon forget we pay for their gas too so what the hell do they care. Just one of the PERKS they say ................GO FIGURE!!!!!!!!
Replace All Incumbent Politicians................ R.A.I.P. THEM BACK!!!!!!!!!!!!
Gregaryous said:
"They cannot field a viable candidate for the White House, so they have directed their attention to obstructing sound econmomic policy in order to run the President out of Washington."
Greg:
Seriously? Why don't you point out to us what "sound economic policy" Repubs are blocking.
I don't want to make this a Dem/Repub argument, but if you are going to claim that "some group is blocking sound economic policy" then you at least should be able to point out "what the sound economic policy is."
I have seen "no sound economic policy" in years from the federal government. Obama isn't doing anything different than what Bush did in his last couple of years, except that Obama is doubling down on Bush's failed stragtegy.
psyched:
I was obviously speaking from "how things are supposed to be." You see, we have this thing called "the Constitution" that is supposed to prevent government from "just taking property." Also, things like eminent domain require "due process."
If we are at a place, or moving in the direction of a place where "government can just do all of those things you listed" with impunity, then I certainly hope that you are against that. That is certainly not the country that I aspire to live in.
Our country was founded on the idea that "we are a free people" and that "we will decide how much power and authority to give our government" in order to benefit us.
I certainly hope that you don't ascribe to the idea that "all authority eminates from government and that government decides how much to give us."
If so, you subsribe to the "French Revolution" model and not the "American Revolution" model.
Gary M,
I don't think any Pols are required to release anything such as tax records, birth certs., or college transcripts. But it allows the voters to better know the candidates. I brought up POTUS transcritps because many have asked for them, but he will not allow their release. Similar to his B.C. Why the mystery about his grades particularly when the left continues to ridicule Bush for his smarts (or lack there of), but his grades surpassed the Clinton's and Kerry's! Obviously none of the national pols are dopes even if often we think they are.
>>>Obama isn't doing anything different than what Bush did in his last couple of years, except that Obama is doubling down on Bush's failed stragtegy. <<<
Well, sort of. He is in favor raising taxes, and as far as capital gains is concerned, I would agree with an increase. Some say that would discourage investment in equities, but honeslty, why would anyone invest in them now, regardless of the tax rate... the returns are very low.
I say, let's stop being the world's policeman. That would destablize the rest of the panet and make the US the safe investment haven that it once was.
Tumbleweed said:
"Defense budget stimulus is okay but Medicare stimulus is not? Circulating dollars circulate regardless of the source."
Ah, Tumble, the issue is "what is the federal government authorized to spend money on?" The reason that people don't complain about defense spending is because "the Constitution authorized federal spending for a national military."
People may argue about "how much should be spent on defense" but not about "whether it should be spent."
With many, many other federal expenditures the issue is not "how much should be spent" but rather "should any be spent at all?"
That is the issue, in a nutshell. Today, the federal government is spending hundreds of billions in areas where it has no business and no legal authority to be involved at all.
We don't need to reduce spending in these areas, we need to eliminate it completely.
Charity by definition should not be social engineering. You give someone something because your heart says it is good. Sometimes your heart feels good when you give but what you give and how you give it ends up hurting the person you intended to help. So if our govenment decides it feels good taking from the rich and giving to the poor that is good? What if our govenment decides taking from the rich and giving to the poor is for votes. Is this good? The person still recieves the same amount. If the heart never intended any good but intended that the individual would then be more inclined to vote a certain way is this good? The reality of unintended consequences. We have had fifty years of unintended consequences since the inception of the Great Society. Perhaps we need to reevaluate the role of Government and sharing of public money? Is our governement pumping money into this market to maintain individual shareholder wealth in order to get votes good? Hmmm
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