Although investors appeared hesitant and positioned themselves ahead of corporate earnings reports, the Dow Jones industrial average inched closer to the 10,000-level before some afternoon weariness saw indexes sinking sharply. At the end of the session that was characterized by slow trading, the Dow managed to notch up some gains to remain in contention for the 10,000 mark – a level it last breached nearly a fortnight after Lehman’s fateful collapse in September 2008.
The Dow Jones industrial average, which rose as high as 9931.82 points in the morning, gained 20 points to close at 9885.80. The broad S&P 500 index rose 4.70 points, or 0.44%, to close at 1,076.19 and the tech-heavy Nasdaq ended the day little changed. Bond markets were closed for the Columbus Day holiday. On the New York Stock Exchange, 16 stocks were higher in price for every 14 that fell.
Eight of the ten S&P500 sectors finished higher in yesterday’s session. Oil and gas shares led the gainers, adding 1.2% following a 2.1% rise in crude prices to $73.55, its highest since August 24. DJIA components Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) rose 1.3% and 1.2%, respectively.
Meanwhile, equity prices appear to be taking into consideration upside surprises in last quarter’s numbers. The National Association for Business Economics’ survey of its members showed majority believed the recovery has begun, but concerns remain over federal debt and rising unemployment. Nevertheless, the greenback’s decline is expected to help results of multinational firms with significant overseas exposure.
Also, news emerging from the geopolitical front appears to be less motivating as the head of Homeland Security noted Al-Qaeda members likely within US borders and North Korea reportedly shot off five missiles off its east coast; the reports said the country is preparing to fire more. Although stocks have had their steepest rally in more than 70 years, doubts remain over an exit strategy from simulative policies amid increasing unemployment levels and housing worries.
Black & Decker (NYSE:BDK) jumped 7.6% Monday after the company’s raised its third quarter earnings guidance to 91 cents a share from 35- 45 cents a share on better-than-expected sales, operating margins and tax rate. UBS (NYSE:UBS) downgraded SanDisk (NASDAQ:SNDK) shares to “sell” from “neutral,” on concerns of peaking chip demand leaving little scope for price increases. Ford (NYSE:F) shares jumped 7% after the automaker reported that European sales jumped 12% on strong sales of its subcompact models Ka and Fiesta. Google (NASDAQ:GOOG) shares rose 1.5% after Goldman Sachs (NYSE:GS) raised its price and earnings target, saying the firm will benefit from next year’s recovery in online activity.
Financial shares continued their upward run, adding 0.7%. A number of banks report their earnings in the coming sessions, including JP Morgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C). According to analyst Dick Bove, large-cap banks are expected to perform well, helped by strong trading activity, but Bove noted regional banks could be under pressure due to commercial real estate losses.
Meanwhile, shares of Deutsche Bank (NYSE:DB) fell 1.6% yesterday after the company’s CEO Ackermann’s comments raised concerns of a capital raising. This morning influential analyst Meredith Whitney took a cautious stance on Goldman Sachs (NYSE:GS) and lowered her rating on the bank to “neutral” from “buy” with a $186 price target.
Today’s list of releases includes quarterly earnings reports from companies such as Altera (NASDAQ:ALTR), CSX (NYSE:CSX), Intel (NASDAQ:INTC), and Johnson & Johnson (NYSE:JNJ).