Dow makes big turnaround, gains 129

Updated: 9:20 p.m. ET

When stocks slumped on Tuesday, with the Dow Jones industrials ($INDU) falling 165 points, the initial betting was something like, "Well, so much for that rally."

And a lovely rally it was. Through Monday, the Dow had risen 11.6% since a low of 9,986 on Aug. 26. That's the kind of gain that takes a year to develop.

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The rally may not be done yet. The market recovered most of its Tuesday losses today, thanks to a falling dollar that boosted commodity prices, especially crude oil. Plus, there were strong earnings from Wells Fargo (WFC), Boeing (BA), Manpower (MAN), Delta Air Lines (DAL) and others.

That promotes the idea that the economy really is growing. So, too, did the Federal Reserve's Beige Book report, which saw "modest growth."

The Dow closed up 129 points, or 1.2%, to 11,108, about 35 points below Monday's close. The Standard & Poor's 500 Index ($INX) jumped 12 points, or 1.1%, to 1,178, about seven points below Monday's close. The Nasdaq Composite Index ($COMPX) added 20 points, or 0.8%, to 2,457, 25 points from Monday's close.

After the close, shares of eBay (EBAY) and Netflix (NFLX) rose sharply after both reported better-than-expected​ quarterly results. EBay shares were up 7.3% to $27.54 after hours from a regular close of $25.66. Netflix shares jumped 9% to $166.90; the regular close was $153.15.

Futures trading suggests today's momentum will continue Thursday. It's another big day of earnings, with five Dow components reporting: American Express (AXP), AT&T (T), Caterpillar (CAT), McDonald's (MCD) and Travelers Companies (TRV).

Also on tap: Amazon.com (AMZN), Union Pacific (UNP), Eli Lilly (LLY) and United Parcel Service (UPS).

Among today's movers:

• Boston Scientific (BSX), up 5.5% to $6.30, the second-largest gainer among S&P 500 stocks. The maker of heart devices reported third-quarter profit that topped analysts’ estimates. Sales of its key heart-rhythm devices matched the upper range of analysts’ estimates.
• Stryker (SYK), up 1% to $50.57. The maker of artificial body parts and hospital equipment said it expects to earn as much as $3.30 a share in 2010. The Street estimate had been $3.26 a share.
• Yahoo (YHOO), up 2% to $15.80. The Web portal reported third-quarter net income of 29 cents a share including a 13-cent-a-share gain from the sale of its HotJobs site. That beat the consensus estimate of 15 cents.
• Marshall & Ilsley (MI), down 10.2% to $6.24. Wisconsin’s largest bank posted a loss excluding some items of 32 cents a share in the third quarter, 27% wider than the average loss estimate by analysts, Bloomberg News said.
• Intuitive Surgical (ISRG), down 7% to $259.45. The surgical-system maker reported third-quarter revenue of $344.4 million, below the $349.9 million average analyst estimate.

The dollar was a big reason for the market's overall gain, falling 1.6% against the euro, 1% against the British pound and 0.4% against the yen. A falling dollar boosts commodity prices and commodity stocks and stocks of companies that generate large portions of their sales outside the United States.

Gold settled up $8.20 to $1,344.20 an ounce. Crude oil for December delivery added $2.38, or 3%, to $82.54 a barrel. Crude fell below $80 on Tuesday.

With those gains, Freeport-McMoRan Copper & Gold (FCX) was up 2.8% to $95.35. U.S. Steel (X) added 1.3% to $43.08. Caterpillar, which does huge amounts of business outside the United States, was up 2.3% to $80.32.

Because of oil's gains, Chevron (CVX) was up 1.5% to $84.02, and oil-and-gas producer Apache (APA) added 1.2% to $103.40.

Twenty-seven of the 30 Dow stocks were higher, along with 85 stocks in the Nasdaq-100 Index ($NDX.X), which tracks the largest Nasdaq stocks. The index was up 16 points, or 0.8%, to 2,086.

Energy prices -- New York close
			Wed.			Tues.			Month chg.			YTD chg.
Crude oil			$82.54			$80.16			3.21%			4.01%
(per barrel)
Heating oil			$2.2548			$2.1893			-7.59%			6.58%
(per gallon)
Natural gas			$3.5390			$3.5130			-8.60%			-36.49%
(per mil. BTU)
Unleaded gasoline			$2.0826			$2.0483			1.85%			1.45%
(per gallon)
Retail gasoline			$2.8310			$2.8290			5.28%			7.28%
(per gallon; AAA)

What does a modest recovery look like?
Like this, according to the Federal Reserve today.

The Fed's Beige Book report saw continued expansion of manufacturing; orders are going up.  Nonfinancial services were seeing stable demand. Sales of new or used vehicles were steady or rising.

Consumer spending was steady. But, the report said, spending "remained price-sensitive, and purchases were mostly limited to necessities and nondiscretionary items."

There was growing investment in information systems to boost productivity. There were reports of increasing demand for loans.

But real estate remained weak. Overall home sales were sluggish or declining and below year-ago levels.

Rental rates continued to decline for most commercial properties. The one exception was the apartment sector, where higher leasing activity led to fewer concessions, most notably in Manhattan, the report said.

The conventional wisdom is that the report, which came out at 2 p.m. ET, boosted the market. But the Dow peaked with a 174-point gain 30 minutes after the report's release and then gave up a quarter of the gain by the close.

Boeing leads the Dow; airlines earnings jump
The leader of the Dow stocks was Boeing, up 3.4% to $71.36. Boeing boosted its profit forecast to as much as $4 a share because of an improved outlook in the commercial airplane business. Prior guidance had been $3.50 to $3.80 a share.

The company reported third-quarter profit of $837 million, or $1.12 a share, beating analysts’ average estimate of $1.07. Boeing reported a loss of $1.6 billion a year ago, in part because of labor unrest and delays in production of its 787 Dreamliner.

Revenue of $17 billion was up 2% from a year ago.

Let us linger a bit on airplanes. The airlines all had good results, in large because they're seeing rising business traffic. Business travel is how an airline makes money because it's booked on short notice, when fares are highest.

American Airlines parent AMR (AMR) shares were up 12.6% to $7.34. The carrier earned its first quarterly profit in two years. The company earned $143 million, or 39 cents a share. Per-share earnings beat the Street estimate of 32 cents and were up from a loss $1.26 a share a year ago.

Delta Air Lines (DAL) reported quarterly earnings of $929 million, or $1.10 a share, excluding special items. Analysts had estimated 94 cents. Revenue rose 18% to $9 billion. Analysts had estimated $8.8 billion. Delta shares were up 10.9% to $12.97.

US Airways (LCC) was up 7.4% to $10.84. Its $240 million profit was a record for the airline in the July-to-September period, traditionally the industry's busiest.

Apple shares resume their climb
Apple (AAPL) was up 0.3% to $310.43 this afternoon after unveiling a host of new features for its Macintosh line of computers, including a new operating system that will be available next year.

Apple sold 13.6 million of its personal computers in fiscal 2010, which ended in September, up more than 30% and far outpacing the overall market.

The company said Macs now have a 21% share of the U.S. personal-computer market.

Wells Fargo leads the financials
After Tuesday's drubbing, the financial sector needed some good news. It got it from Wells Fargo.

The big West Coast bank saw shares jump 4.3% to $25.60. The company earned $3.34 billion in the September quarter on revenue of $20.9 billion. Earnings of 60 cents a share beat the Street estimate of 55 cents. Revenue was slightly below the Reuters estimate of $20.95 billion.

US Bancorp (USB) reported record revenue of $4.6 billion and topped profit expectations with earnings of 45 cents a share. The shares were flat at $22.83.

Things weren't so rosy among brokerages, whose revenues have been hit by lower trading volumes.

Morgan Stanley (MS) posted a third-quarter loss of $91 million from a year-earlier profit. Income from continuing operations fell to 5 cents a share from 50 cents last year, falling short of the 15-cent estimate of analysts. Morgan Stanley shares were flat at $25.38.

Piper Jaffray (PJC) reported a 24% decline in third-quarter net income but topped analysts' estimates on strong revenue from advisory services and municipal financing. Piper Jaffray shares were up 0.6% at $29.90.

Bank of America (BAC) shares continued to struggle because of its mortgage problems. Shares were off 0.4% at $11.75.

Short hits from the markets -- New York close
			Wed.			Tues.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.130%			0.140%			-13.33%			160.00%
5-year Treasury note			1.090%			1.097%			-15.77%			-59.42%
10-year Treasury note			2.470%			2.475%			-2.14%			-35.73%
30-year Treasury bond			3.727%			3.727%			0.81%			-19.69%
Currencies
U.S. Dollar Index			77.414			78.421			-1.93%			-1.03%
British pound			$1.5843			$1.5711			0.78%			-2.06%
(in U.S. $)
U.S. $ in pounds			£0.6312			£0.6365			-0.77%			2.10%
Euro in dollars			$1.3953			$1.3748			2.15%			-2.65%
(in U.S. $)
U.S. $ in euros			€ 0.7167			€ 0.7274			-2.10%			2.72%
U.S. $ in yen			81.30			81.59			-2.85%			-12.58%
U.S. $ in Chinese			6.68			6.64			-0.63%			-2.20%
yuan
Canada dollar			$0.978			$0.969			0.66%			2.87%
(in U.S. $)
U.S. dollar			$1.023			$1.032			-0.65%			-2.79%
(in Canadian $)
Commodities
Gold			$1,344.20			$1,336.00			2.64%			22.62%
(per troy ounce)
Copper			$3.7935			$3.7575			3.89%			13.36%
(per pound)
Silver			$23.8640			$23.7800			9.36%			41.67%
(per troy ounce)
Wheat			$6.8300			$6.7150			1.34%			26.13%
(per bushel)
Corn			$5.7350			$5.4600			15.68%			38.36%
(per bushel)
Crude oil			$82.54			$80.16			3.21%			4.01%
(per barrel)