Stocks recover as IMF throws Europe a lifeline

The IMF offers assistance to debt-laden eurozone countries. The US lowers its third quarter gross domestic product estimate. Major agencies maintain their US debt ratings despite the failure of deficit reduction talks. Gold and oil prices recover.

By TheStreet Staff Nov 22, 2011 8:36AM

TheStreetImage: Wall Street sign (© Corbis/SuperStock)By Andrea Tse

 

Updated at 1:21 p.m. ET

 

U.S. stocks were rising Tuesday after the International Monetary Fund revealed a new six-month liquidity line to support eurozone countries hurting from the debt crisis.

 

The Dow Jones Industrial Average ($INDU) was rising 5.7 points at 11,553. The S&P 500 ($INX) was gaining 3.6 points at 1,196, and the Nasdaq ($COMPX) was rising 10.8 points, or 0.4%, at 2,534.

 

“Stocks are trying to rally back on this news,” said Marc Pado, strategist with Cantor Fitzgerald.

 

The Bureau of Economic Analysis said its second estimate of U.S. gross domestic product growth for the third quarter came in at 2%, down from the previous estimate of 2.5%. A poll of economists by Reuters expected a 2.5% annualized growth rate. 

 

Although many investors were discouraged by the data, Pado said, “don’t forget that the economic data is still decent. The GDP revision was almost exclusively ‘inventories.’ This is very important.”

 

“The revision was GDP of 2% dragged down by -1.55% in inventories, which would have otherwise been 3.55%. This is just pushing off the inventory rebuild to the fourth-quarter, which should now see GDP at 3% to 3.5% annualized growth,” Pado said.

 

Lou Brien, a market strategist at DRW Trading, is focusing on the daily technical movements of the S&P 500, paying particular attention to Monday’s low of slightly more than 1,183. He says the index’s 50% decline to its early October low is just a fraction of a point above that Monday low. “For today, it will be of great interest to see if this level trades once again and to see if this holds or if it is broken; if the latter is the case it could bring in more selling.”

 

The weaker-than-expected GDP estimate comes a day after a special congressional committee

failed to come up with a plan to reduce the U.S. deficit by $1.2 trillion over a decade. The impasse will likely trigger automatic spending cuts split evenly between defense and domestic spending. Stocks closed down sharply on Monday, kicking off a shortened trading week, as deficit cuts raised a new set of concerns for Wall Street.

 

In describing Washington and the deficit, T. Rowe Price chairman and chief investment officer Brian Rogers says “there's a lack of foresight, there's a lack of responsibility … and also a lack of courage.”

 

Standard & Poor’s and Moody’s reaffirmed their views on America's creditworthiness. S&P maintained its AA-plus rating for U.S. long-term debt with a negative outlook, after downgrading the country from the pristine AAA rating on Aug. 5. Moody’s said its AAA rating with a negative outlook remains unchanged. Fitch Ratings will finalize its U.S. credit rating review next week.

 

Post continues below.

 

Minutes of the Federal Open Market Committee’s meeting on Nov. 2 on the benchmark interest rate will be released at 2 pm ET. The markets will parse the minutes for signs of discussions on more quantitative easing.

 

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The Dow’s biggest decliners were Hewlett-Packard (HPQ), Boeing (BA) and United Technologies (UTX). Bank of America (BAC), Procter & Gamble (PG) and Chevron (CVX) led gains.

 

Trading volume was light ahead of the Thanksgiving holiday weekend. About 1.4 billion shares changed hands on the New York Stock Exchange and about 727 million on the Nasdaq.

 

In corporate news, Campbell Soup's (CPB) first-quarter sales fell 1% to $2.16 billion because of a decrease in promotional spending and a drop in volume. Campbell Soup's first-quarter earnings fell to $265 million from $279 million a year ago. The company’s per-share earnings of 82 cents a share topped analysts' estimates of 79 cents. Shares were tumbling 5%.

 

Hewlett-Packard (HPQ), the computer and printer maker, said fiscal fourth-quarter earnings fell from a year earlier but still topped Wall Street's expectations. HP said adjusted earnings per share fell 12% from last year to $1.17 per share. Adjusted net revenue for the quarter ended in October dropped 3% to $32.3 billion. Analysts were expecting profit of $1.13 a share on sales of $32 billion. HP shares were falling 2.8% to $26.10.


Netflix (NFLX) is raising an additional $200 million in capital through the sale of zero coupon convertible notes. Technology Crossover Ventures will be buying the notes, and has the right to nominate one person Netflix's board. The stock was falling 2.1% to $72.89.

 

Hormel Foods (HRL) said fiscal fourth-quarter profit fell 3%. The maker of Spam said net income fell to $117.3 million, or 43 cents a share, from $121.1 million, or 45 cents, last year. Analysts were expecting a profit of 42 cents a share.  Sales rose 2% percent to $2.1 billion. Hormel provided an outlook for 2012 above analysts' expectations. Shares were rising 1.6% to $29.31.

 

Brocade Communications (BRCD) blew past Wall Street's expectations in its fiscal fourth quarter. The networking equipment company reported adjusted earnings of $79 million, or 16 cents a share, for the three months ended Oct. 29. Revenue was $550 million, up 9% on a sequential basis but virtually flat from last year. Analysts were calling for a profit of 10 cents a share in the latest quarter on revenue of $527.4 million. Shares were spiking 12.5% to $5.04.

 

The December gold contract was rising $22.60 to $1,701.20 an ounce. January crude oil futures were rising $1.29 to $98.22 a barrel.

 

The U.S. dollar was falling against a basket of currencies, with the U.S. dollar index down 0.258%. The 10-year Treasury was down 7/32, raising the yield to 1.977%.

 

London's FTSE lost 0.3%, while Germany's DAX fell 1.2%. Overnight, Asian stocks closed mixed. Japan's Nikkei fell 0.4%, and Hong Kong's Hang Seng rose 0.1%.

291Comments
Nov 22, 2011 9:33AM
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Back to vote all congressmen out of office, except mine, because he/she brings the bacon home.

BINGO.  There in lies the exact problem.  Everybody is all up set and angry.... but always want someone else to do the dirty work.  it's always someone else's guy that's the problem.  Never yours.  And we wonder how we got here......

Face it folks.  WE are to blame.  It's ALL our faults. 

If we don't stop doing the same things over and over and over, how can we expect a different result?

INSANITY.
Nov 22, 2011 11:12AM
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All politicians love this Dem vs. Rep bickering because it distracts us from the fact that they're all the same. They may promise different things to "the American people" but they serve their financial masters.  Best business venture today: a handbasket factory for the trip they put us on.
Nov 22, 2011 11:54AM
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"OIL PRICES RECOVER!?! " WTF are you out of your mind!? They are so incredibly INFLATED by the oil speculator WHO KNOW that the real price should be about 65-75 a barrel , EVEN OPEC says so!!! ANY MOron buying in now gets what he deserves...OUR resident prick speculator, announced last week he mostly sold out at 100 and WILL BE WAITING to buy back in around 80!! STOP OIL SPECULATION NOW!! Before it destroys are economy!! WRITE/ EMAIL your legislators and DEMAND they regulate this!! Make only the companies that actually use fuel the ones who bid and prices would be CUT IN HALF OVER NITE!! THEY DRIVE GAS prices up which effects EVERYTHING! ESPECIALLY FOOD PRICES!! DOUBT most of you ACTUALLY go shopping...or ELSE YOU WOULD realize this GREEDY profiteering is destroying our ECONOMY!!
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Hmmm

The answer to why this recovery never seemed like a real recovery.

If cutting a little bit off government spending is going to reduce the GDP growth dramatically then all our GDP growth for the past 4 years has been a lie. It is merely a reflection of the government pumping even more useless money into the system. And we do not even do it in a good manner. Most of the money went to pay state and local retired people's pensions. 

The Chinese on the other hand are going to pump $1 trillion dollars into more manufacturing and construction jobs and really boost their economy up even more. 

It seems like the US has chosen a road that will led to total self destruction.
Nov 22, 2011 10:18AM
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The dowl will continus it's up and downs and in 2012-2013 I believe the bottom will fall out and we will have around 50% unimployment

The day the Democrats took over was not January 22nd 2009, it was actually January 3rd 2007,   the day the Democrats took over the House of Representatives and the Senate, at the very start of the 110th Congress.

 

 

 

The Democratic Party controlled a majority in both chambers for the first time since the end of the 103rd Congress in 1995.

For those who are listening to the liberals propagating the fallacy that everything is "Bush's Fault", think about this:

January 3rd, 2007 , the day the Democrats took over the Senate and the Congress:

The DOW Jones closed at 12,621.77

The GDP for the previous quarter was 3.5% The Unemployment rate was 4.6% George Bush's Economic policies SET A RECORD of 52 STRAIGHT MONTHS of JOB CREATION!

 

 

Remember that day...

January 3rd, 2007 was the day that   Barney   Frank took over the House Financial Services Committee and Chris Dodd took over the Senate Banking Committee.

The economic meltdown that happened 15 months later   was in what part of the economy?

BANKING AND FINANCIAL SERVICES!

THANK YOU DEMOCRATS   (especially   Barney   ) for taking us from 13,000 DOW, 3.5 GDP and 4.6% Unemployment...to this CRISIS by (among MANY other things) dumping 5-6 TRILLION Dollars of toxic loans on the economy from YOUR Fannie Mae and Freddie Mac FIASCOES!

(BTW:   Bush asked Congress 17 TIMES to stop Fannie & Freddie -starting in 2001 because it was financially risky for the US economy).   Barney   blocked it and called it a "Chicken Little Philosophy" (and the sky did fall!) And who took the THIRD highest pay-off from Fannie Mae AND Freddie Mac? OBAMA And who fought against reform of Fannie and Freddie?

OBAMA and the Democrat Congress, especially   BARNEY !!!!

 

 

So when someone tries to blame Bush...

REMEMBER JANUARY 3rd, 2007.... THE DAY THE DEMOCRATS TOOK OVER!"

Bush may have been in the car but the Democrats were in charge of the gas pedal and steering wheel they were driving the economy into the ditch. Budgets do not come from the White House. They come from Congress and the party that controlled Congress since January 2007 is the Democratic Party.

Furthermore, the   Democrats controlled the budget process for 2008 & 2009 as well as 2010 & 2011.

 

 

 

In that first year, they had to contend with George Bush, which caused them to compromise on spending, when Bush somewhat belatedly got tough on spending increases.

 

 

 

For 2009 though, Nancy Pelosi & Harry Reid bypassed George Bush entirely, passing continuing resolutions to keep government running until Barack Obama could take office. At that time, they passed a massive omnibus spending bill to complete the 2009 budget .

 

 

 

 

And   where was Barack Obama during this time?   He was a member of that very Congress that passed all of these massive spending bills, and he signed the omnibus bill as President to complete 2009. Let's remember what the deficits looked like during that period: If the Democrats inherited any deficit, it was the 2007 deficit, the last of the Republican budgets. That deficit was the lowest in five years, and the fourth straight decline in deficit spending. After that, Democrats in Congress took control of spending, and that includes Barack Obama, who voted for the budgets.

 

 

 

 

If Obama inherited anything, he inherited it from himself .

In a nutshell, what Obama is saying is "I inherited a deficit that I voted for, and then I voted to expand that deficit four-fold since January 20th."

Nov 22, 2011 12:24PM
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HEY guys and gals, you want to know WHY the Cons-Gress and the Senile-Senate CAN'T PUT THEIR ACT TOGETHER............​.

IT IS BECAUSE YOU HAVE ELECTED MORONS...SCHOLARS AND INTELLECTS WHO HAVE NO CLUE ABOUT RUNNING A BUSINESS period.

Hope you learn from it and do the right thing at next elections...........​.

Nov 22, 2011 11:05AM
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USA Government at it's best, Giving us the wrong numbers week after week and then revising them week after week. The stock market is a playing field for the inside trading that's allowed by the congress. Once again we should vote them out and just replace them with good old USA citizens with daily problems that every majority faces and we will get a solution.
Nov 22, 2011 10:02AM
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IT IS TIME TO SCREW THE CRIMINAL BANKING CARTEL AS THEY SCREW US = 100 MILLION AMERICANS NOT PAYING THEIR MORTGAGES OR CREDIT CARDS= HAPPY HOLIDAYS TO THE TO BIG TO FAIL  !!!
Nov 22, 2011 1:41PM
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THE GREAT DEPRESSION CONTINUES THERE NEVER WAS A RECOVERY
Nov 22, 2011 11:29AM
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MF GLOBAL TRUSTEE NOW SAYS  2 BILLION DOLLARS OF INVESTORS MONEY MISSING ? SCREW THE AMERICAN PEOPLE OVER AND OVER AGAIN !  JON CORZINE HE IS ABOVE THE LAW ? ARREST AND TRY AND IMPRISON CORZINE FOR CRIMES AGAINST THE PEOPLE OF THE UNITED STATES OF AMERICA !!
Nov 22, 2011 9:09AM
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Because of 12 idiots it penalizes millions of people!!!
Nov 22, 2011 11:43AM
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If we go back to the root cause of the problems we're having, what do we find? Greenspan and the FED.

 

The cure, as Congress sees it, cut Social Security and increase taxes. The funny thing is, Congress has their own special Social Security, quite different from yours or mine. Much better than ours too. Don't these people work for us? 

 

Contact your Senator and Rep. and tell them to save money by cutting their system and dumping the money into the regular system. No exemption or special cases. If they don't like it, TOUGH.  

Nov 22, 2011 10:43AM
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deklen,

 

Your poll on taxing everyone doesn't ask the question very fairly.  Nearly everyone in this country favors some sort of progressivity in the tax code.  The question is "how much?".

 

Count me among those who believe that everyone should have some skin in the game.

 

As for those who like to cite SS & Medicare taxes as being sufficient taxation for half the population:  YOU CAN'T HAVE IT BOTH WAYS.

 

That is, if paying SS & Medicare (both extremely progressive taxes, once you consider the benefits) entitles you to SS & Medicare, then fine.  What are you contributing to the rest of the government?  If they don't entitle you to SS & Medicare, then let's scrap those systems and make new ones.  Medicare is unsustainable - let's cap the benefits now and listen to all the howling.  Let's turn SS into a simple welfare program and see what happens to public support for it.

 

Obviously, almost no one would favor those suggestions.  Therefore, one can quite fairly say that half the people have no skin in the game.  Let the poor pay some income tax, too.

Nov 22, 2011 11:21AM
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M T...  Sort of like Democrats trying to destroy the country by insisting we raise taxes to support their cherished marxist aims?  

We do not need new taxes, EXCEPT to pay down the debt.   And that means NO NEW TAXES until the budget is balanced, and then those new taxes must be used EXCLUSIVELY to pay down the debt, and no current debt payments can be redirected to other spending either...

Her is the Republican deal...  Balance the budget by cutting spending, then RAISE taxes to pay off the debt only.    And if taxes must be raised, RAISE them on EVERYONE EQUALLY.

I know Donkeys believe some are more equal than others, and therefore someone else should pay, but not them...
Nov 22, 2011 10:43AM
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It is interesting, that some Americans are eager to accept Obama and the democrats desire to increase our debt., with handouts/gifts. It is also interesting, that Pres Obama promises to give gifts to the poor, but at the same time, he has given gifts to the wealthy/big industry, whom are now going bankrupt. I would rather see the creation of jobs, so that all Americans can be self sufficient, BECAUSE.... handouts/help/aid whatever they  might be called, also come with BIG GOVERNMENT, AND CONTROL BY GOVERNMENT. We need not be taxed more, we need Americans keep their own money by working, and controlling their /our own lives. No big government control! President Obama appears to want control over Americans. Vote for change in 2012. Pres Obama, does not know how to lead this country.
Nov 22, 2011 11:11AM
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GE posted a 15 BILLION sollar profit...paid 0 TAXES.....salyndra recieved 500 million and now are bankrupt..and oh.the 1100 people working there for that bogus stimulus money? all will be paid 13k+ for compensation, health insurance and job re training..didnt get that with my company when they went belly up//...all ****
Nov 22, 2011 10:09AM
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I can't (or don't want to) imagine what the foreign press has viewed our latest debacle.  If 12 of oursupposedly best and brightest congress people couldn't find 120 billion cut from a 3.7 trillion budget, and we are doing better than they are - what hope is left.

45 minutes ago opening futures looked mixed.
Now opening futures look down.

Actually just looks like another week.
Nov 22, 2011 10:22AM
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This is really simple, even a democrat should be able to understand it...

 

STOP SPENDING more than you take in.   Notice I didn't say one word about what you spend it on.   I am the first one to say we need massive cuts in Defense spending in more than any other area.  

 

But we cannot continue down this Donkey path to bankruptcy.  We must slash SPENDING.

 

We can raise taxes to PAY OFF the DEBT, but ZERO new spending.  

 

Someone needs to tell '57 states' and his socialist minions, that you cannot TAX, BORROW, DEBASE and SPEND your way to propserity...

Nov 22, 2011 9:37AM
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OUCH!!!  I did not expect this:

A second reading of  Q3 GDP was shaved down dramatically to 2%. This comes from a prior reading of 2.5% GDP growth.

Too bad it doesn't matter.....

Nov 22, 2011 11:14AM
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deklen,

 

It was a compromise so the Repubs wouldn't screw the unemployed?

 

Just how could the Republicans screw the unemployed?  Is there some inalienable right to be paid by the government not to work for two years?  If so, where's my money?  I'll promise not to work for it.

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