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Welcome Back to 9000; Dow Sets New '09 High
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Matt Egan
FOXBusiness
Wall Street's recovery hit another landmark on Thursday as the Dow surged above the 9000 level to fresh eight-month highs and the Nasdaq Composite rallied for the 12th day in a row amid encouraging signs from the housing market and the latest earnings beats.
Today's Markets
The Dow Jones Industrial Average rose 188.03 points, or 2.12%, to 9069.29, the Standard & Poor's 500 added 22.22 points, or 2.33%, to 976.29 and the Nasdaq Composite picked up 47.22 points, or 2.45%, to 1973.60. The consumer-friendly FOX 50 gained 13.49 points, or 1.92%, to 716.88.
Thursday's triple-digit surge was fueled by the third-straight increase in existing-home sales to the highest level since October and another round of better-than-expected quarterly results from bellwether companies AT&T (T) and 3M (MMM).
“You are getting little building blocks of evidence that there is a recovery on the way,” said Richard Sparks, equity analyst at Schaeffer’s Investment Research.
It's been a long road back to the psychologically-important 9000 level for the Dow, which plummeted as low as 6469 in March amid fears of a depression and financial collapse. But signs the economy is stabilizing and the easing of the credit crisis sent stocks soaring off multi-year lows in March. After a brief correction, the Dow has surged more than 900 points in just eight sessions amid a stellar start to earnings season.
“The good new is we’re up 40% off the lows. The bad news is we were at Dow 9000 in January and we all know what happened after that,” said Craig Peckham, equity trading strategist at Jefferies & Co. “What feels different this time around is this is happening against the backdrop of clear, fundamental performance from Corporate America that’s coming out ahead of expectations.”
The Dow settled at its highest level since Oct. 5 and eclipsed the 9000 level for the first time since Jan. 6. The index was led higher by Alcoa (AA), DuPont (DD) and 3M, which beat the Street. McDonald's (MCD), which reported in-line quarterly results, was the only blue-chip stock down more than 1%.
Capping off its longest win streak since 1992, the Nasdaq Composite jumped more than 2% and settled at its highest level since October. Intuitive Surgical (ISRG) and Celgene (CELG) were the biggest percentage gainers on the Nasdaq 100 after they posted positive results.
“It’s a freight train. You can’t get in front of it,” said Frank Davis, director of sales and trading at LEK Securities. “It’s sort of like turning the Queen Mary. I thought it would’ve turned down already but it hasn’t. There’s no fundamental reason for it to stay up.”
Dan Greenhaus, equity analyst at Miller Tabak, echoed that sentiment, saying. “I’m a little confused. I don’t really know that a sustained equity rally is warranted given the potential for slow, muted growth in the United States."
But it was economic news that fueled the latest rally as stocks soared after the National Association of Realtors said existing-home sales rose 3.6% to 4.89 million units in June, the third straight monthly increase and the highest level since October. Economists had forecasted a more modest increase to 4.84 million units. Home builders like Lennar (LEN) and Hovnanian (HOV) closed sharply higher on the data.
Earnings Season Stays Hot
The latest earnings beats were headlined by 3M, AT&T and Ford (F), which joined a chorus of bellwethers demonstrating Corporate America’s ability to offset slumping sales by slashing costs.
But 3M made the biggest splash as the manufacturing bellwether posted a significantly better-than-expected adjusted-profit of $1.20 per share. The company offset a 15% decline in revenue by slashing jobs. 3M also boosted its revenue forecast and the lower end of its profit target.
“Equities are rallying on the belief that when the top-line growth emerges, it will translate to a greater degree in the bottom line because expenses have been trimmed,” said Greenhaus.
Underscoring the flight to stocks, the bond market sold off Thursday, pushing the yield on the 10-year Treasury to the highest level since June 24.
Despite the huge gains on Wall Street over the past two weeks, the bears continue to contend the rally is based on sticks.
“It’s real but not based on ‘reality,'” said Joe Saluzzi, co-head of trading at Themis Trading. “The economy is still a mess but the momentum driven, high-frequency traders continue to bust the shorts.”
In the commodity markets, crude oil rallied for the sixth day of the last seven, following the stock market higher. Crude settled up $1.76 a barrel, or 2.69%, to $67.16 -- the highest level since July 1.
Data Dump
The Labor Department said initial jobless claims rose by 30,000 last week to 554,000. Economists had expected claims to have risen by 43,000. Continuing claims, which are filed by individuals on the unemployment roles for more than a week, fell by 88,000 to 6.2 million -- the lowest level in three months.
Corporate Movers
AT&T (T) posted a better-than-expected profit of 54 cents share on a 0.4% decline in revenue to $30.7 billion. The company was helped by 1.4 million new wireless subscribers, including 2.4 million Apple (AAPL) iPhones during the quarter, which contributed to a 37.2% rise in wireless data revenues.
Ford (F) broke a string of four-straight quarterly losses thanks to debt restructuring. Excluding one-time items, Ford posted a loss of 21 cents a share, significantly better than the 49 cents analysts expected. Ford’s cash-burn rate slowed to $1 billion, leaving it with $21 billion in short-term liquidity.
McDonald’s (MCD) said its second-quarter net tumbled 8% but its adjusted-earnings of 97 cents per share matched the Street’s view. The fast food giant’s revenue slumped 7% on currency fluctuations even as its same-store sales rose 4.8% worldwide.
Bristol-Myers Squibb (BMY) beat the Street with non-GAAP earnings of 56 cents a share, topping estimates by 9 cents. The drug giant’s revenue climbed by a better-than-expected 3% thanks to a jump in sales of drugs like Plavix. Separately, Bristol unveiled plans to acquire biotech company Medarex (MEDX) for $2.4 billion.
UPS (UPS) posted an in-line profit of 44 cents per share excluding items. However, the shipping giant forecasted a worse-than-expected profit for the third quarter.
PNC (PNC) suffered an 87% plunge in net income amid soaring credit losses. The regional bank’s adjusted-profit of 34 cents per share missed estimates by 10 cents but its revenue almost doubled to $3.99 billion.
Fifth Third Bancorp (FITB) swung to a second-quarter profit on a one-time gain but posted a smaller-than-expected adjusted-loss of 27 cents per share. The regional bank’s loan-loss set asides rose 45% from a year ago to $1.04 billion, reflecting continued credit losses.
New York Times Co. (NYT) surprised the Street with an 84% jump in net income on a tax benefit. The newspaper publisher's second-quarter adjusted-profit of 8 cents per share beat the Street. Reflecting the tough times in the newspaper industry, revenue tumbled by a worse-than-expected 21% to $584.5 million.
Hershey (HSY) reported an adjusted-profit of 43 cents a share as its revenue rose 6% to $1.17 billion. The chocolate maker also boosted its full-year earnings and sales guidance, sending its shares 4% higher.
Philip Morris (PM) said its second-quarter profit slid 8.6% thanks to the stronger dollar but the tobacco giant’s adjusted-profit of 83 cents per share exceeded estimates. Philip Morris also upgraded its 2009 earnings guidance, forecasting profits matching or exceeding expectations.
Raytheon (RYN) posted a 15% jump in second-quarter profit as its revenue grew 4.3%. The defense contractor, which also boosted its full-year guidance, posted an adjusted-profit of $1.24 per share, topping estimates by 11 cents.
Jet Blue (JBLU) swung to its second consecutive quarterly profit, posting better-than-expected earnings of 7 cents a share. The airline was hurt by slumping demand as its revenue slid 6.1% to $807 million.
Celgene (CELG) matched the Street's expectations with an adjusted-profit of 46 cents per share thanks to sales growth of its blood cancer drugs. The biotech company's revenue rose by a better-than-expected 10% to $628.7 million.
Xerox (XRX) posted a 35% decline in quarterly profit but the company's EPS of 16 cents beat the Street by a nickel. The company offset an 18% plunge in second-quarter revenue by trimming costs. Xerox issued a disappointing forecast for the current quarter.
Global Markets
European markets closed in the green for the ninth consecutive day. London's FTSE 100 rose 1.47% to 4559.80, France's CAC 40 jumped 2.08% to 3373.72 and Germany's DAX gained 2.45% to 5247.28 -- a new 2009 high.
In Asia, Japan's Nikkei 225 gained 0.72% to 9792.94, Hong Kong's Hang Seng jumped 2.96% to 19817.70 and China's Shanghai Composite advanced 0.97% to 3328.49.
Welcome Back to 9000; Dow Sets New '09 High
ShareThis * Respond to Editor * Print
Matt Egan
FOXBusiness
Wall Street's recovery hit another landmark on Thursday as the Dow surged above the 9000 level to fresh eight-month highs and the Nasdaq Composite rallied for the 12th day in a row amid encouraging signs from the housing market and the latest earnings beats.
Today's Markets
The Dow Jones Industrial Average rose 188.03 points, or 2.12%, to 9069.29, the Standard & Poor's 500 added 22.22 points, or 2.33%, to 976.29 and the Nasdaq Composite picked up 47.22 points, or 2.45%, to 1973.60. The consumer-friendly FOX 50 gained 13.49 points, or 1.92%, to 716.88.
Thursday's triple-digit surge was fueled by the third-straight increase in existing-home sales to the highest level since October and another round of better-than-expected quarterly results from bellwether companies AT&T (T) and 3M (MMM).
“You are getting little building blocks of evidence that there is a recovery on the way,” said Richard Sparks, equity analyst at Schaeffer’s Investment Research.
It's been a long road back to the psychologically-important 9000 level for the Dow, which plummeted as low as 6469 in March amid fears of a depression and financial collapse. But signs the economy is stabilizing and the easing of the credit crisis sent stocks soaring off multi-year lows in March. After a brief correction, the Dow has surged more than 900 points in just eight sessions amid a stellar start to earnings season.
“The good new is we’re up 40% off the lows. The bad news is we were at Dow 9000 in January and we all know what happened after that,” said Craig Peckham, equity trading strategist at Jefferies & Co. “What feels different this time around is this is happening against the backdrop of clear, fundamental performance from Corporate America that’s coming out ahead of expectations.”
The Dow settled at its highest level since Oct. 5 and eclipsed the 9000 level for the first time since Jan. 6. The index was led higher by Alcoa (AA), DuPont (DD) and 3M, which beat the Street. McDonald's (MCD), which reported in-line quarterly results, was the only blue-chip stock down more than 1%.
Capping off its longest win streak since 1992, the Nasdaq Composite jumped more than 2% and settled at its highest level since October. Intuitive Surgical (ISRG) and Celgene (CELG) were the biggest percentage gainers on the Nasdaq 100 after they posted positive results.
“It’s a freight train. You can’t get in front of it,” said Frank Davis, director of sales and trading at LEK Securities. “It’s sort of like turning the Queen Mary. I thought it would’ve turned down already but it hasn’t. There’s no fundamental reason for it to stay up.”
Dan Greenhaus, equity analyst at Miller Tabak, echoed that sentiment, saying. “I’m a little confused. I don’t really know that a sustained equity rally is warranted given the potential for slow, muted growth in the United States."
But it was economic news that fueled the latest rally as stocks soared after the National Association of Realtors said existing-home sales rose 3.6% to 4.89 million units in June, the third straight monthly increase and the highest level since October. Economists had forecasted a more modest increase to 4.84 million units. Home builders like Lennar (LEN) and Hovnanian (HOV) closed sharply higher on the data.
Earnings Season Stays Hot
The latest earnings beats were headlined by 3M, AT&T and Ford (F), which joined a chorus of bellwethers demonstrating Corporate America’s ability to offset slumping sales by slashing costs.
But 3M made the biggest splash as the manufacturing bellwether posted a significantly better-than-expected adjusted-profit of $1.20 per share. The company offset a 15% decline in revenue by slashing jobs. 3M also boosted its revenue forecast and the lower end of its profit target.
“Equities are rallying on the belief that when the top-line growth emerges, it will translate to a greater degree in the bottom line because expenses have been trimmed,” said Greenhaus.
Underscoring the flight to stocks, the bond market sold off Thursday, pushing the yield on the 10-year Treasury to the highest level since June 24.
Despite the huge gains on Wall Street over the past two weeks, the bears continue to contend the rally is based on sticks.
“It’s real but not based on ‘reality,'” said Joe Saluzzi, co-head of trading at Themis Trading. “The economy is still a mess but the momentum driven, high-frequency traders continue to bust the shorts.”
In the commodity markets, crude oil rallied for the sixth day of the last seven, following the stock market higher. Crude settled up $1.76 a barrel, or 2.69%, to $67.16 -- the highest level since July 1.
Data Dump
The Labor Department said initial jobless claims rose by 30,000 last week to 554,000. Economists had expected claims to have risen by 43,000. Continuing claims, which are filed by individuals on the unemployment roles for more than a week, fell by 88,000 to 6.2 million -- the lowest level in three months.
Corporate Movers
AT&T (T) posted a better-than-expected profit of 54 cents share on a 0.4% decline in revenue to $30.7 billion. The company was helped by 1.4 million new wireless subscribers, including 2.4 million Apple (AAPL) iPhones during the quarter, which contributed to a 37.2% rise in wireless data revenues.
Ford (F) broke a string of four-straight quarterly losses thanks to debt restructuring. Excluding one-time items, Ford posted a loss of 21 cents a share, significantly better than the 49 cents analysts expected. Ford’s cash-burn rate slowed to $1 billion, leaving it with $21 billion in short-term liquidity.
McDonald’s (MCD) said its second-quarter net tumbled 8% but its adjusted-earnings of 97 cents per share matched the Street’s view. The fast food giant’s revenue slumped 7% on currency fluctuations even as its same-store sales rose 4.8% worldwide.
Bristol-Myers Squibb (BMY) beat the Street with non-GAAP earnings of 56 cents a share, topping estimates by 9 cents. The drug giant’s revenue climbed by a better-than-expected 3% thanks to a jump in sales of drugs like Plavix. Separately, Bristol unveiled plans to acquire biotech company Medarex (MEDX) for $2.4 billion.
UPS (UPS) posted an in-line profit of 44 cents per share excluding items. However, the shipping giant forecasted a worse-than-expected profit for the third quarter.
PNC (PNC) suffered an 87% plunge in net income amid soaring credit losses. The regional bank’s adjusted-profit of 34 cents per share missed estimates by 10 cents but its revenue almost doubled to $3.99 billion.
Fifth Third Bancorp (FITB) swung to a second-quarter profit on a one-time gain but posted a smaller-than-expected adjusted-loss of 27 cents per share. The regional bank’s loan-loss set asides rose 45% from a year ago to $1.04 billion, reflecting continued credit losses.
New York Times Co. (NYT) surprised the Street with an 84% jump in net income on a tax benefit. The newspaper publisher's second-quarter adjusted-profit of 8 cents per share beat the Street. Reflecting the tough times in the newspaper industry, revenue tumbled by a worse-than-expected 21% to $584.5 million.
Hershey (HSY) reported an adjusted-profit of 43 cents a share as its revenue rose 6% to $1.17 billion. The chocolate maker also boosted its full-year earnings and sales guidance, sending its shares 4% higher.
Philip Morris (PM) said its second-quarter profit slid 8.6% thanks to the stronger dollar but the tobacco giant’s adjusted-profit of 83 cents per share exceeded estimates. Philip Morris also upgraded its 2009 earnings guidance, forecasting profits matching or exceeding expectations.
Raytheon (RYN) posted a 15% jump in second-quarter profit as its revenue grew 4.3%. The defense contractor, which also boosted its full-year guidance, posted an adjusted-profit of $1.24 per share, topping estimates by 11 cents.
Jet Blue (JBLU) swung to its second consecutive quarterly profit, posting better-than-expected earnings of 7 cents a share. The airline was hurt by slumping demand as its revenue slid 6.1% to $807 million.
Celgene (CELG) matched the Street's expectations with an adjusted-profit of 46 cents per share thanks to sales growth of its blood cancer drugs. The biotech company's revenue rose by a better-than-expected 10% to $628.7 million.
Xerox (XRX) posted a 35% decline in quarterly profit but the company's EPS of 16 cents beat the Street by a nickel. The company offset an 18% plunge in second-quarter revenue by trimming costs. Xerox issued a disappointing forecast for the current quarter.
Global Markets
European markets closed in the green for the ninth consecutive day. London's FTSE 100 rose 1.47% to 4559.80, France's CAC 40 jumped 2.08% to 3373.72 and Germany's DAX gained 2.45% to 5247.28 -- a new 2009 high.
In Asia, Japan's Nikkei 225 gained 0.72% to 9792.94, Hong Kong's Hang Seng jumped 2.96% to 19817.70 and China's Shanghai Composite advanced 0.97% to 3328.49.
