Dow makes big turnaround, gains 129

Stocks rebound from Tuesday's drubbing. Boeing, Wells Fargo and airlines report strong results. Commodities rally on a falling dollar. The Fed's Beige Book sees 'modest growth.'

By Charley Blaine Oct 20, 2010 2:12PM
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.
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)










 
20Comments
Oct 20, 2010 3:42PM
avatar
Mr. Blaine, do you take us all for a bunch of ignorant fools? The stock market has become irrelevant as an economic indicator. All it has become is a game played by the rich. Sell off make money, buy low, wait for the next sell off to make money. And how is the price of gas going up a good thing? Where in all of this do you see the economy as really growing? Cause last time I looked the unemployment is still 9.6%. Instead of looking at the stock market get out on the streets of America and find out what REAL Americans are dealing with. It isn't Wall Street!!!!
Oct 20, 2010 5:35PM
avatar
Yesterday's pullback has nearly been erased. Singapore has raised interest rates along with the Chinese. The dollar is back on its inexorable march to zero value.
Oct 20, 2010 4:21PM
avatar
Yeah, I saw an interview with some big whig at the NYSE and he said 80% of all trades are flash trades.  These aren't just computer executed trades like using E-trade, no these are specifically flash trades, something the regular folks don't have access to. 

E-Trade reported that client stock trades are down 38% year over year.  Chuck Schwabb reported their trades are down 20% year over year.

Individual investors have been pulling money out of the markets for quite sometime and continue to do so, and yet the indices continue to rise...
Oct 20, 2010 6:44PM
avatar
Consumer spending was steady. But, the report said, spending "remained price-sensitive, and purchases were mostly limited to necessities and nondiscretionary items."
This was from the Fed Beige book, now could some one answer a couple of questions for me?  If consumers are only buying "basics" and consumer spending is 70% of GDP where is the purchasing power for growth?   We know from the 2008 gasoline gouge that speculators ran the cost of gasoline up and helped fuel the consumer collapse.  If each time gasoline goes up 10 cents a gallon it takes $1 away from consumer spending, where is the money going to to come from with 18% REAL unemployment in this economy?   
Oct 20, 2010 6:23PM
avatar
The country is choking on all the oil and gasoline inventories we have and the price of gas keeps climbing.  Businesses have lower revenues but increasing profits.  It can't keep going this way.  By December or January, the house of cards will come tumbling down.
Oct 20, 2010 4:27PM
avatar
Thanks to a falling dollar they were able to make profits. I don't know if I should laugh or vomit. These are the true Jedi masters, with their uncanny ability to manipulate the market and the people. Since when is inflation driven by a turd of a dollar a good thing. No real demand + devalued currency = hustleflation. 
Oct 20, 2010 4:16PM
avatar

That shiney green arrow only appears to be pointing "UP" because we're all flat on our backs.  Ouch!

Everything is relative.  Just ask Bernie Maddoff.

Oct 20, 2010 3:56PM
avatar

both of you guys posting here are paranoid.

 

do you really think there is some big conspiracy going on? 

 

Get real.

Oct 21, 2010 1:57PM
Oct 20, 2010 3:50PM
avatar
don't be decieved oboma was out of the white house yesterday. what people are seeing is the bernie madoff funds slipped back in the market. money is worth nothing if it can't be spent. that much currency did not evaporate! the people that played in  that scam when it was not illegal are not going to give it up. I have alway's heard greed will destroy itself.
Oct 20, 2010 3:41PM
avatar

Here it is 20 minutes to closing and the greedy one are starting to sell. Capitalist Pigs!

Oct 21, 2010 8:22AM
avatar
Dow 12k by X-mas, 14K by next summer. The economy is recovering. The multi-national corporations are growing again, earnings are up. Enjoy the next 10 years Smile.  Then the --it hits the fan with the baby boomer generation retiring, crash around 2020, long way off. So take the time to enjoy the new recovery. Happy days are here again (no disrespect to Tom Bosley).
Oct 20, 2010 11:46PM
avatar
IGNORE HIM AND HOPEFULLY HE WILL GO AWAY!!!
Oct 20, 2010 11:24PM
avatar
Lostonearth is a troll.  I don't believe the story. He is just looking to stir people up.
Oct 20, 2010 9:25PM
avatar
I see that LostOnEarth is one of Obama's permanent socialist welfare families on the Democrats dole.  With people with work ethics like this they are nothing more than baby factories.  Europe is moving away from socialism, Obama and the Democrat welfare society.  Problem is that with the economically ignorant like LostOnEarth is that they don't understand how much hidden taxes they really pay and Obama will stick it to them even more.  Have a nice day.
Oct 20, 2010 7:40PM
avatar

mfwic,

So how much smaller is you fingertip dollar going to be tomorrow?Thinking

Or maybe you should us a pin head!!! (This is not meant as a  reference to Bernanke but to a needle)Wink

Oct 20, 2010 8:16PM
avatar

multiple personalities of the stock market. Control, your own destiny.Secret telling

 

Refinance your home for 3.75% rate for 15 years and demand no points and no origination fees.Party

 

Pay off your debt with cash you get back and get off their grid.Smile

Oct 20, 2010 4:10PM
avatar

WOOOOOOOOOO  HOOOOOOOOOOOO

 

Image: Green up arrow (© Sergey Sundikov/Alamy)

 

they brought out the big shiny green arrow.......i am soooooooooo so so sooooooooo  relieved! keep em comin and don't stop Martini glassOpen-mouthedMartini glass

Oct 20, 2010 8:25PM
avatar

My wife, 3 kids and I just got a Sec. 8 rent to own home. It's a 2 story brick home with 4 bedrooms, 2 baths, 2 car garage and with a big front and back yard too. It's 2000 sq.ft. Our total monthly payment = ZERO (0) MONEY. We are both on SSDI and never have to fill out income tax returns either. AHHHH..... LIFE IS GOOD! Open-mouthed

Oct 20, 2010 4:04PM
avatar
Let's try this non-scientific polling-thingy one more time, OK?  Here's how it works:  Let's all assume that we're constituents of Congressman BARNEY FRANK in Massachusetts.  If the election were held today, vote a "Thumbs-up" if you'd like to see him re-elected or a "Thumbs-down" if you'd like to see him thrown out of office.  It couldn't be simpler or clearer.  UP or DOWN?
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[BRIEFING.COM] The headlines generally favored Tuesday being another good day for the stock market.  Instead, it was just a mixed day with modest point changes on either side of the unchanged mark for the major indices.

For the most part, the stock market was a sideshow.  The main trading events were seen in the commodity and Treasury markets, both of which saw some decent-sized losses within their respective complex.

Dollar strength was at the heart of the weakness in ... More


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