Dow finishes up 10 as traders look to the Fed

The market manages small gains overall, but Apple shares rise on excitement about its new iPhone. Germany's high court approves German participation in the European rescue fund. Zuckerberg's interview helps Facebook shares.

By Charley Blaine Sep 12, 2012 12:07PM
Charley BlaineUpdated: 7:32 p.m. ET

The stock market stumbled to modest gains today ahead of an important Federal Reserve decision and after Germany's top court gave its go-ahead to the eurozone's new rescue fund.

The market was helped by gains in Apple (AAPL), up $9.20 to $669.79, after it introduced a new version of its iPhone and several new versions of its iPod music player. Facebook (FB) moved higher as well.

Several key stocks hit all-time highs, including Costco Wholesale (COST), Panera Bread (PNRA) and insurance giant Travelers Companies (TRV). General Electric (GE) finished at nearly a four-year high. Plus, housing stocks pushed higher, with PulteGroup (PHM) and Lennar (LEN) among the top five performers in the Standard & Poor's 500 Index ($INX).

Crude oil (-CL) and gold (-GC) pulled back after opening higher on news that Christopher Stevens, the U.S. ambassador to Libya, and three others were killed late Tuesday in Benghazi, Libya, by rioters apparently enraged by a film they considered insulting to Islam.

The Dow Jones industrials ($INDU) closed up 10 points to 13,333; the blue chips had been up as many as 50 points just after the open. The Standard & Poor's 500 Index ($INX)  gained 3 points to 1,437. The index hit 1,439.15, its highest intraday price since May 19, 2008. The Nasdaq Composite Index ($COMPX) gained 10 points to 3,114.

Article continues below.
The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks and is heavily influenced by Apple, managed a 7-point gain to 2,792.

The 10-year Treasury yield rose to 1.765% from Tuesday's 1.695%.

Futures trading suggests U.S. stocks will open flat on Thursday.

What's in the new iPhone
A robust Apple media event in San Francisco today generated the usual fawning coverage of the new iPhone features. And the stock did its usual number, rising 13% this quarter on the expectations and falling on the news.

The features include a 4-inch diagonal screen, up from 3.5 inches; an LTE chip so the phone can run on the fastest 4G networks; three microphones instead of one; a battery with longer life between recharges; a faster A6 microprocessor. And, of course, the device is lighter.

Preorders start Friday; the phones will ship on Sept. 21. The iPhone has proved one of the great juggernauts. Sales of the devices totaled nearly $76 billion for the first three quarters of its 2012 fiscal year. Hewlett-Packard's total revenue for its first three quarters was $90.3 billion.

Apple also announced a number of changes to its iPod lineup and to its iTunes store.

A big aerospace deal may be ahead
Airbus parent European Aeronautic Defence & Space (EADSY) and Britain's BAE Systems (BAESY) said they are in advanced merger talks to create the world's largest aerospace-and-defense company, leapfrogging U.S. rivals.

A deal could intensify competition for shrinking defense spending by Western governments and rising military investments in the Mideast and parts of Asia, The Wall Street Journal noted. It also would heighten the competition in commercial jetliners between Airbus and U.S. rival Boeing (BA).

BAE and EADS generated a combined revenue of about $90 billion in 2011. Boeing is currently the world's biggest aerospace company; 2011 sales hit $68.7 billion. The duo's combined military sales of $45.3 billion last year topped those of Lockheed Martin (LMT), now the world's biggest defense company. The European companies' combined market value is $49 billion.

There's some investor skepticism about this deal. While BAE shares were up $2.51 to $23.64 in New York, EADS was off $2.07 to $36.20. Boeing was down 31 cents to $70.96. Lockheed Martin was up 18 cents to $92.42.

Facebook wins some cheers
Facebook shares were up $1.50 to $20.93, its best close since Aug. 15, as investors apparently liked what they heard on Tuesday from CEO Mark Zuckerberg.

Zuckerberg told the TechCrunch blog conference that the company was focused on generating revenue from its mobile applications, a weak link in its business. Very importantly, he suggested the company might build a search engine. It won't be building a smartphone.

Facebook shares are still down 45% from the $38-a-share price generated in its initial public offering in May.

Google (GOOG) dipped slightly to $690.88 on the search-engine comments.

Energy prices -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Crude oil (-CL)

$97.01

$97.17

0.56%

-1.84%
(per barrel)











Heating oil (-HO)

$3.2152

$3.1857

1.10%

10.33%
(per gallon)











Natural gas (-NG)

$3.0630

$2.9920

9.43%

2.48%
(per mil. BTU)











Unleaded gasoline (-RB)

$3.0016

$3.0435

0.97%

12.95%
(per gallon)











Brent crude 

$115.96

$115.40

1.21%

7.99%
(per barrel)











Retail gasoline

$3.8430

$3.8430

0.37%

17.31%
(per gallon; AAA)












A decision that supports the euro
Germany's Federal Constitutional Court ruled that Germany could proceed with its contribution to the European Stability Mechanism. But the court set a number of conditions to its approval. Most important: a requirement for parliamentary approval of any increase in the agreed German contribution of 190 billion euros, or about $240 billion.

A rejection of Germany's role in the ESM might have unleashed new waves of instability on the financial markets and thrown the fitful march toward European integration into question as the architects of the rescue rushed back to the drawing board.

As it was, stocks in Europe were mostly higher in response to the ruling, although indexes in the United Kingdom, Switzerland and the Netherlands were off slightly.

The euro also moved higher and was trading at $1.291, the highest level against the dollar since May 11. The euro has been moving higher against the dollar in expectation of the ruling and is up nearly 7% since bottoming on July 24.

Spotlight shifts to the Fed -- and the fiscal cliff
The ruling now puts the focus on the Federal Reserve. The Federal Open Market Committee, the Fed's policy-making body, is meeting today and Thursday.

Wall Street is betting the Fed will move to add some stimulus to the economy. At the very least, the FOMC is expected to say it expects exceptionally low interest rates to last into 2015. It may also do some asset buying to ensure rates stay low.

But there is a lot of wariness about the idea. The biggest concern is that buying mortgage-backed securities or Treasury bonds won't spur much job creation. But there's no consensus in Congress to do anything for job creation.

The Fed decision will come out at 12:30 p.m. ET Thursday. The Fed will also issue a new set of economic projections at 2 p.m., and Chairman Ben Bernanke will hold a news conference at 2:15 p.m.

Once the Fed makes its decision, people will start looking at the fiscal-cliff problem. That is what happens from a combination of the expiration of the Bush tax cuts and across-the-board cuts required under legislation passed in 2011.

Republicans want tax cuts and spending cuts on everything except defense. Democrats will agree to some spending cuts but higher taxes for the more affluent.

But to get any solution requires new legislation, and House Speaker John Boehner conceded Tuesday nothing much will happen before the election. If the automatic spending cuts kick in, the odds are big for an economic slowdown and maybe even a recession.

Before the Fed starts announcing, the Labor Department releases its weekly report on jobless claims.

Housing stocks lead the market
Housing stocks were the market leaders, even if there was no news. Pulte, up 88 cents to $15.55, was the third-best S&P 500 performer. Lennar, up $1.44 to $34.52, was fifth.

The Philadelphia Housing Sector Index ($HGX), up 5 points to 157, its highest close since January 2008, was the leading index among 44 indexes that Market Dispatches tracks.

Nineteen of the 30 Dow stocks were higher, led by Verizon Communications (VZ), General Electric and Travelers. DuPont (DD) and Bank of America (BAC) were the laggards.

GE's close of $21.89, up 30 cents, was its highest finish since October 2008.

A total of 288 S&P 500 stocks were higher, led by Vulcan Materials (VMC), which may be a merger candidate, and Sears Holdings (SHLD), which spun off several subsidiaries today.

Only 47 Nasdaq-100 stocks were higher, led by Sears and Garmin (GRMN).

The laggards were Monster Beverage (MNST) and Green Mountain Coffee Roasters (GMCR).

Monster, the largest U.S. energy drink maker by sales volume, fell the most in a month after two U.S. senators called for greater regulation of the beverages. Sens. Dick Durbin, D-Ill., and Richard Blumenthal, D-Conn., asked the Food and Drug Administration to look into whether energy drinks qualify as dietary supplements.

Gold falls; oil is mixed
Gold settled down $1.20 to $1,733.70 an ounce. Silver (-SI) was off 27.4 cents to $33.292 an ounce. Copper (-HG) slipped to $3.6925 a pound.

Crude oil in New York settled down 16 cents to $97.01 a barrel. But Brent crude was up 46 cents to $115.86 in London. The gain probably reflects the tensions resulting from the death of Ambassador Stevens.

But the surprise of the day was the relatively muted response of the energy markets to the Libyan attack, Stephen Schork, editor of the Schork Report, told Bloomberg Television this afternoon.

Oil prices reflect about $10 a barrel from the tensions between Iran and Israel over Iran's nuclear program, he said.

Short hits from the markets -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.1000%

0.090%

11.11%

900.00%
5-year Treasury note 

0.696%

0.663%

16.78%

-16.14%
10-year Treasury note

1.765%

1.695%

13.00%

-5.67%
30-year Treasury bond

2.926%

2.846%

9.02%

1.28%
Currencies











U.S. Dollar Index

79.723

79.836

-1.84%

-0.99%
British pound

1.6111

1.6075

1.40%

3.69%
(in U.S. $)

 








U.S. $ in pounds

£0.621

£0.622

-1.38%

-3.56%
Euro in dollars

$1.29

$1.29

2.41%

-0.44%
(in U.S. $)

 








U.S. $ in euros

€ 0.775

€ 0.778

-2.36%

0.44%
U.S. $ in yen 

78.00

77.80

-0.62%

1.17%
U.S. $ in Chinese

6.35

6.33

-0.24%

0.36%
yuan











Canada dollar

$1.024

$1.028

0.99%

4.41%
(in U.S. $)

 








U.S. dollar 

$0.977

$0.973

-0.99%

-4.23%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,733.70

$1,734.90

2.73%

10.65%
(per troy ounce)

 








Copper (-HG)

$3.693

$3.697

6.81%

7.47%
(per pound)

 








Silver (-SI)

$33.2920

$33.5660

5.88%

19.26%
(per troy ounce)

 








Wheat (-ZW)

$8.9000

$8.8375

0.06%

36.35%
(per bushel)

 








Corn (-ZC)

$7.6950

$7.778

-3.78%

19.03%
(per bushel)

 








Cotton 

$0.7333

0.7493

-5.09%

-20.02%
(per pound)

 








Coffee

$1.7750

1.7755

7.74%

-22.71%
(per pound)

 








Crude oil (-CL)

$97.01

$97.17

0.56%

-1.84%
(per barrel)










 

217Comments
Sep 12, 2012 4:16PM
avatar

Market looks to the fed? Other headlines

Blind leading the blind?

Dumb & Dumber?

Lassie come home

 

Sep 12, 2012 4:13PM
avatar
What about the fiscal cliff the Fed is leading us over?
Sep 12, 2012 4:04PM
avatar

All Historians agree the Soviet empire collapsed because they over spent on there military and foreign conquest while letting their infrastructure fall into decay, burring themselves in debt, Romney clearly wants to stay on that course of destruction, more military spending, more taxes on the working class and more wars. I vote for Freedom and Prosperity, I'm voting for a change of course, I'm voting for Obama !

Sep 12, 2012 4:03PM
avatar

MirageGuy

On this mornings discussion you said there have been no tax cuts for the rich in the last 10 years................................................................................................................. seriously?

The Bush tax cuts to capital gains ring a bell?

The bottom 35% have no capital gains and the 36% to 70% have very little so who benefited from this?

Also it was 30 years ago but 75% was the top level income tax what is it now after Ronnie?  That's when the debt really started to spike again for this and many other reasons.

You can argue the merrits of the Bush taxes just don't argue who they are for.

Sep 12, 2012 3:54PM
avatar
Mirage likes to speculate as to what a picture means, but the Recommycans are putting real Soviet style oppression on the American people every day, you can't drive across town without being stopped at a check point and asked for your papers in Arizona, Wisconsin is crushing workers freedoms and rights to collective bargaining, all the Red States are trying to ban all organized labor unions, wire tapping our own citizens, torturing humans and holding them without charges,  strip searches at our Airports, suppressing voters that don't think their way. As Ronald Reagan said " They remind us that where free unions and collective bargaining are forbidden, freedom is lost. They remind us that freedom is never more than one generation away from extinction"  Reagan commenting on Lech Walesa's fight to establish labor unions in Communist Poland.
Sep 12, 2012 3:53PM
Sep 12, 2012 3:50PM
avatar
Obama and his egotistical notion that everything is under "His" control internationally.........So tired of Mr. strutting, egotistical, no hope Obuma!!! Obuma's gotta go in November!!!!!
Sep 12, 2012 3:47PM
avatar
Woodward claims in his new book Obama had recieved an improving economy when elected.  But unfortunately as he explains,  Obama had been beated up so bad on reducing the debt he balked at spending more to keep it going and he actually contributed to the present downturn by being too conservative. 
avatar

Oh man Germany cut the legs out from under free money from the ECB party poopers

 

ECB can only spend the money it has in it's coffers so there goes the bail out of Europe as there is not enough money in the coffers to bail out Greece let alone Spain and Italy.

 

Pretty much when the Federal Reserve is going to keep the printing presses closed tomorrow the stock market is going to dive about 1,000 points

 

We are now headed in a downward spiral folks.

Sep 12, 2012 3:25PM
avatar
And like good little SOCIALISTS the Democrats are....

At their recent "Celebration of Failure", in their so called tribute to naval veterans they pictured the USSR's navy of old.  Not one US ship in the background, but the Socialist navy on display!

I though I was the only one that saw that...  Maybe it's part of the "57 States" plan to be "more flexible" to Russia and the thug Putin....   

You can't make this stuff up...


   
Sep 12, 2012 3:22PM
avatar
Set your watches - 3:00 and down we go........ The ongoing saga of legalized racketeering. This headline is brought to you by - Politicians To Go, LLC (Limited Liability Corruption)
Sep 12, 2012 3:20PM
avatar

A.I.G. paid off,plus 12 billion dollars to government for interest,now if we could get Fannie,Freddie and G.M. to pay up we'd be paid in full Right?

Sep 12, 2012 3:05PM
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That's quite a boost we're seeing ....
Sep 12, 2012 3:03PM
avatar

Okay V_L , What kind of oil is it going to be ?? Better get a lot !! Someones getting pissed.

 

As for the other question:

 

I'm going to have to ask Lefty or Righty..

 

What say you, Lefty ??

Sep 12, 2012 3:02PM
avatar
Eighteen out of 30 Dow stocks were higher, led by JPMorgan Chase. WHO in their right mind would be investing in JPM today? ZERO chance of survival.
Sep 12, 2012 2:58PM
avatar

Psyched Ot.....Yeah that was funny...Will that be 10w-30 or Johnson and Johnson's baby ??

 

And Vicious missing..That was a pretty good explanation of the Federal Reserve or our Central Bank.

Thank you..

Some may choose to understand and learn.

Others may go with ill-conceived notions and fiction.

Sep 12, 2012 2:57PM
avatar

>>>WHEN WAS THE LAST TIME YOU PERVERTS GOT A SERIOUS PIECE OF A$$ ???<<<

 

Oh, c'mon... you have to admit that you set yourself up and left yourself wide open with the "oil my butt" comment!  Everyone's a commedian.

Sep 12, 2012 2:44PM
avatar

"German decision boosts stocks; now on to the Fed"

You wish, huh! Ever hear of unbiased reporting? Look it up!
Sep 12, 2012 2:38PM
avatar
An 'interview' helps FB shares? So the real value went from 0 to......0? Hmm...
Sep 12, 2012 2:28PM
avatar
Hang on a second  . . . weeks and weeks of Europe this, and Germany that, running the market up & down now they have plans in place like everybody wanted and all the market can do is up 26 ????Wait a minute,now it's down to 13 ! ! ! ! GO Europe.Go Germany ! ! !More proof this stock market stuff is a load of crap !!
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