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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.651801 |
| Euro to US Dollar | 1.501502 |
| Japanese Yen to US Dollar | 0.011562 |
| Canadian Dollar to US Dollar | 0.943841 |
The U.S. open looks weak, despite Barack Obama's election as the next president of the United States.
U.S. investors are concerned about the political future of the country, and await the next move in Washington.
Stocks were already higher in Asia. Japan's Nikkei 22 Index ($N225) closed up 4.5% to 9,521. Hong Kong's Hang Seng Index ($HSIX) was up 5.6%. But in Europe, the Dow Jones Stoxx 600 Index was down 1.8%.
Yesterday's big rally in the U.S. saw the Dow jump 305 points, or 3.3%, to 9,625, its best close since Oct. 6. The S&P 500 added 39 points, or 4.1%, to 1,006, its first close over 1,000 since Oct. 13, while the Nasdaq was up 54 points, or 3.1%, to 1,780, its sixth consecutive gain.
The major indexes have risen by roughly 20% since a bottom began to form for the U.S. stock market in mid-to-late October.
Yesterday saw the Dow's fourth gain in the last six sessions and its highest close since Oct. 6; the blue chips have risen 1,450 points in the process.
The S&P 500 closed above 1,000 for the first time since Oct. 13. The Nasdaq, meanwhile, enjoyed its sixth consecutive gain.
The rally was surprising. In each of the six election days that the U.S. stock market has been open since 1984, stocks have barely moved. The biggest gains: 1.1% for the S&P 500 in 1984 when Ronald Reagan won reelection over Walter Mondale and 1% for the index in 1996 when Bill Clinton defeated Bob Dole for a second term.
The New York Stock Exchange was closed on all election days through 1968 and presidential election days from 1972 through 1980.
Yesterday's rally seemed signal relief that the long, often bitter campaign between McCain and Obama was finally over. It also followed substantial rallies in Asia and Europe.
But the rally also came as the stock market is entering historically its three best months -- November, December and January.
Real-world reasons for a rally
One reason for today's rally was growing hopes that the market bottomed in October.The Dow and S&P 500 are up 22% and 20% from their intraday lows on Oct. 10. The Nasdaq and the Nasdaq-100 Index are up more than 19% each from their intraday lows on Oct. 24. The Russell 2000 Index ($RUT.X) is up 23.5% from its intraday low on Oct. 28.
There's a big but in those numbers: The Dow is still down 27% this year, with the S&P 500 off 31.5%. The Nasdaq and Nasdaq-100 are down 33% and 35%, and the Russell 2000 is down 28.7%.
Forces that set off today's rally included:
- A big jump in energy stocks as crude jumped over $70 a barrel. Oil giants Chevron (CVX, news, msgs), up 6.1% to $78.19, and ExxonMobil (XOM, news, msgs), up 4.3% to $77.49, added 61 points to the Dow. The Select Sector SPDR-Energy (XLE, news, msgs) exchange-traded fund, which tracks the energy sector of the S&P 500, was up 6.4% to $53.02, tops among the ETFs that mirror the 10 sectors of the broad-based index. Crude closed up 10.4% to $70.53 in New York on reports that Saudi Arabia, the world's biggest oil exporter, has reportedly reduced exports by about 900,000 barrels a day since August.
- Gains in metals stocks. These were partly due to the dollar's decline against major currencies, which sent gold and copper higher. Freeport-McMoRan Copper & Gold (FCX, news, msgs) was up 14.2% to $32.94. U.S. Steel (X, news, msgs) jumped 7.6% to $41.37. The group has been battered as the dollar started rising this summer.
- Gains for General Electric and financial stocks. Dow component General Electric (GE, news, msgs) was up 7.6% to $20.77, second-best among the 30 stocks in the index. The Wall Street Journal reported today that the Treasury was considering investing funds from the $700 billion rescue program in a wide range of companies, including GE Capital and CIT Group (CIT, news, msgs). CIT was up 36.1% to $6.15, the biggest gainer among S&P 500 stocks.
- Great earnings from MasterCard. After Monday's close, credit card company MasterCard (MA, news, msgs) posted earnings that exceeded Wall Street's expectations. The company said that it took a net loss on charges related to settlement of a legal tussle with Discover Financial Services (DFS, news, msgs). MasterCard was up 18.3% to $170.24.
- Continued strength in telecommunications stocks. Telecom giant AT&T (T, news, msgs) was up 5.3% to $29.28. Fellow Dow component Verizon Communications (VZ, news, msgs) added 6.1% to $32.61. For the week, AT&T and Verizon are up 10% and 9% respectively.
- Confidence that measures to ease the credit crunch are starting to work. The 3-month London interbank offered rate, which many banks use to price loans to each other, was 2.7% today, down from a peak of 4.8% on Oct. 10, Bloomberg News said. That's a signal that credit markets are starting to ease.
| Index | Tuesday | Chg. from intraday low | Date of low | Chg. YTD |
|---|---|---|---|---|
| Dow Jones Industrial Average | 9,625.28 | 22.11% | Oct. 10 | -27.44% |
| Standard & Poor's 500 Index | 1,005.75 | 19.66% | Oct. 10 | -31.51% |
| Nasdaq Composite Index | 1,780.12 | 19.17% | Oct. 24 | -32.88% |
| Nasdaq-100 Index | 1,378.40 | 19.95% | Oct. 24 | -34.58% |
| Russell 2000 Index | 545.97 | 23.54% | Oct. 28 | -28.73% |
The economic news is still bad
Reality was still pushing into the market euphoria.The government yesterday said factory orders for September fell 2.5%, much worse than the 0.7% drop analysts expected. But investors were expecting data from September to be extremely weak, reflecting the freeze in credit markets.
On Monday, two economic reports contributed to crude's weakness -- one showing the steepest decline in manufacturing activity in a quarter-century and the other indicating that vehicle sales plunged in October to levels not seen in 25 years.
Friday will bring the October report on unemployment and non-farm payrolls. The payrolls report is expected to be quite weak as the recession deepens.
What to look for on Wednesday
Obviously, the market chatter will focus on the U.S. election results. As important as the presidential election is, the Senate results will studied closely, especially if the Democrats gain control of 60 or more seats.Traders will also look at the ADP private employment report for clues of Friday's Labor Department report on payroll employment may bring, and the Institute for Supply's Management Service Index comes out a 10 a.m. ET. Lastly, the Energy Department will release its the weekly report on crude inventor and gasoline inventories at 10:35 AM.
Meanwhile, 531 companies will report quarterly earnings. These include Cisco Systems (CSCO, news, msgs), the networking giant; media company News Corp. (NWS, news, msgs), Whole Foods Market (WFMI, news, msgs) and McCormick & Schmick's Seafood Restaurants (MSSR, news, msgs).
- Top Stocks blog: Stocks for a McCain win
- Top Stocks blog: Stocks for an Obama win
| Tues. | Mon. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $70.53 | $63.91 | $6.62 | 4.01% | -26.52% |
| Heating oil (per gallon) | $2.1616 | $1.9828 | $0.1788 | 7.74% | -18.41% |
| Natural gas (per million BTU) | $7.2190 | $6.8380 | $0.3810 | 6.43% | -3.53% |
| Unleaded gasoline (per gallon) | $1.5327 | $1.3625 | $0.1702 | 6.34% | -38.47% |
A new Yahoo-Google ad deal?
Investors today are also watching developments in the proposed alliance between Yahoo (YHOO, news, msgs) and Google (GOOG, news, msgs).The deal has been revised to be more acceptable to the Justice Department, which raised antitrust concerns. Yahoo rose 4.7% to $13.35; Google was up 5.9% to $366.94.
The revised agreement involves putting a 25% cap on the search-related revenues that Yahoo can generate from the partnership, and makes the run for two years instead of 10, as originally proposed.
Putting a revenue cap on the deal limits its effect on competitors because Google will only be able to take a quarter of Yahoo's search-advertising business -- rather than all of it. The cap also halves Yahoo's earnings in the agreement. The Justice Department has not yet commented on the revision.
Watch Toyota's forecast
Toyota Motor (TM, news, msgs) may lower its forecast for the fiscal year ending in March 2009. For now, no change has been made to its forecast results of $12.6 billion profit for the year, which would represent a 27% year-on-year decline.Analysts are forecasting earnings of $11.4 billion for the year. Toyota was up 4.8% to $80.34.
Other automakers have already lowered forecasts. Toyota is scheduled to announce its latest quarterly results Thursday. Auto sales in the U.S. have declined by 30% to 40% for most manufacturers.
BMW (BAMXF, news, msgs) announced today that net profit for the third quarter fell 63%, as cost-conscious consumers bought fewer luxury autos. But Chief Executive Norbert Reithofer told analysts in a conference call that results for the full year would be positive. The stock was up 13.3% to $29.58.
Companies reporting today
In the U.S., a mixed bag of companies reported results today, including:- Archer Daniels Midland (ADM, news, msgs), one of the nation's biggest food processors and ethanol producers, reported sharply higher quarterly profit, helped by higher selling prices and an accounting change. Net income jumped to $1 billion, or $1.63 per share, in the quarter that ended Sept. 30, from $441 million, or 68 cents per share, a year earlier. ADM shares were up 15.3% to $24.33.
- Tenet Healthcare (THC, news, msgs) swung to a third-quarter profit on an investment sales gain, but the results fell shy of Wall Street expectations and the hospital operator cut its full-year outlook. The company earned $104 million, or 22 cents per share, after a loss of $59 million, or 12 cents per share, a year earlier. Revenue rose 6% to $2.16 billion. Shares in Tenant were down 36.7% to $2.61.
- Comic book publisher Marvel Entertainment (MVL, news, msgs) reported results that topped estimates, helped by earlier-than-expected box office and DVD revenue from its film "Iron Man." But the company said it anticipated only a modest performance in 2009 for revenue and net income. Still, the stock closed up 1.9% to $31.45.
- Teradata (TDC, news, msgs), a maker of computers that companies use to analyze business trends, slashed its full-year sales and profit forecasts, citing a weakening economy and a stronger dollar. It lowered its forecasts. The stock was up more than 8.8% to $16.65.
Andrew Rosenbaum and Mark Baumgartner contributed to this report.
| Tues. | Mon. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 0.465% | 0.420% | 0.045 | -48.33% | -85.19% |
| 5-year Treasury note yield | 2.564% | 2.706% | -0.142 | -14.13% | -25.79% |
| 10-year Treasury note yield | 3.765% | 3.904% | -0.139 | -1.62% | -6.69% |
| 30-year Treasury bond yield | 4.222% | 4.321% | -0.099 | -1.93% | -5.32% |
| Currencies | |||||
| U.S. Dollar Index | 85.370 | 86.985 | -1.615 | -1.13% | 11.31% |
| British pound in dollars | $1.5972 | $1.5758 | 0.0214 | -0.72% | -19.71% |
| Dollar in British pounds | £0.6261 | £0.6346 | -0.0085 | 0.72% | 24.55% |
| Euro in dollars | $1.2992 | $1.2596 | 0.0396 | 1.91% | -11.11% |
| Dollar in euros | € 0.7697 | € 0.7939 | -0.0242 | -1.87% | 12.50% |
| Dollar in yen | 99.69 | 99.25 | 0.44 | 1.08% | -10.87% |
| Canadian dollar in U.S. dollars | $0.870 | $0.847 | $0.0234 | 5.17% | -12.37% |
| U.S. dollar in Canadian dollars | $1.150 | $1.181 | -$0.0308 | -4.89% | 14.12% |
| Commodities | |||||
| Gold | $757.30 | $726.80 | $30.50 | 5.44% | -9.63% |
| Copper | $1.9580 | $1.8400 | $0.12 | 7.05% | -35.61% |
| Silver | $10.1300 | $9.7500 | $0.38 | 4.11% | -32.10% |
| Corn | $4.1300 | $4.0300 | $0.10 | 2.86% | -9.33% |
| Crude oil (NYMEX) (per barrel) | $70.53 | $63.91 | $6.62 | 4.01% | -26.52% |
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