After the Close - Today was a good day to be long equities. That is because the major market indexes, helped by some good news on both the earnings and economic fronts (more below), started the day in positive territory and never looked back. By the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index had added 128, 37, and 15 points, respectively. It is also worth noting that interest was strong in the mid- and small-cap markets, which would suggest that there was an increased appetite for risk on Wall Street today. All told, advancing issues far outnumbered decliners on both the Big Board and the NASDAQ.

The buying was all encompassing today, moreover, with each of the 10 major sectors comfortably in positive territory. Leadership was shown by those groups most closely tied to the global economy, with notable interest in basic materials and energy stocks. Within these two areas, we witnessed strength in the shares of Murphy Oil (MUR), Phillips 66 (PSX), U.S. Steel (X), Exxon Mobil (XOM - Free Exxon Stock Report), and Chevron (CVX - Free Chevron Stock Report). And, despite the aforementioned increase appetite for risk, the defensive-oriented sectors performed well, with nice showing put forth by healthcare and consumer noncyclical stocks—especially the large drugmakers.

As noted, the economic news was rather market supportive. Before the opening bell, the Labor Department reported that consumer prices, excluding the volatile food and energy components, rose a modest 0.1%, which would suggest that inflation will not be much of a near-term problem for the Federal Reserve as it works to improve the struggling labor market. We also learned from the Commerce Department that industrial production and capacity utilization firmed up in September after declining sharply in August. The September figure was twice the nominal 0.2% increase that had been widely forecast by economists. Then a half-hour into the trading day, the National Association of Home Builders reported that builder confidence in the market for newly built, single-family homes edged higher for a sixth consecutive month in October. (We will get additional insight on the recovering housing market tomorrow, with the release of data on housing starts and building permits for the month of September.) Our sense is that all of these reports played a part in today’s strong move by the bulls.

The earnings news, for the most part, was also encouraging. Three Dow-30 components— Coca-Cola (KO - Free Coca-Cola Stock Report), UnitedHealth Group (UNH - Free UnitedHealth Stock Report), the recent addition to this 30-stock composite, and Johnson & Johnson (JNJ -Free J&J Stock Report)—reported results that either beat or were relatively in line with Wall Street’s expectations. However, only the stock of the latter moved higher on the reports. Meantime, shares of Goldman Sachs (GS) rose after the financial services giant beat expectations and raised its quarterly dividend. It was also a good day for those who held shares of Domino’s Pizza (DPZ), which jumped after the food chain reported strong quarterly results. And we would be remiss if we did not mention that Mattel (MAT) reported strong results as well today. The good showing by the toy manufacturer could be a good sign ahead of the holiday shopping season and tends to support the recent solid data on consumer sentiment and retail sales. Investors should also note that technology heavyweights International Business Machines (IBM Free IBM Stock Report) and Intel (INTC - Free Intel Stock Report) are scheduled to release their quarterly results after today’s closing bell. That news, along with the latest quarterly results from Bank of America (BAC - Free B of A Stock Report) tomorrow morning, could affect the markets when trading resumes on these shores.

Meanwhile, the good feelings were not only confined to the United States.  The world equity indexes, particularly those in Europe, were higher on the aforementioned U.S. earnings news, as well as on bullish data from Germany and reports that Spain may be close to seeking a bailout and Greece may be on the cusp of receiving more aid from the European Union. The latter news seemed to boost demand for riskier equities on the Continent and pushed the euro higher versus the dollar—it finished above the $1.30 mark today.   - William G. Ferguson

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


12:20 PM ET - The U.S. stock market opened higher this morning, and continues to add to its gains. As we pass the noon hour in New York, the Dow Jones Industrial Average is up 120 points (0.9%); the broader S&P 500 Index is adding on 14 points (1.0%); and the NASDAQ is ahead by 33 points (1.1%). Market breadth suggests solid support for equities, as advancing stocks are ahead of decliners by well over 2 to 1 on the NYSE. Furthermore, all of the major market sectors are participating in the move higher. There is leadership in the energy, basic materials, and technology names. Notably, the Philadelphia Semiconductor Index (SOX) is up almost 2% today, which is good to see, as this important technology index has underperformed the broader market over the past six months. Gainers here include Cirrus Logic (CRUS) and bellwether Intel (INTC - Free Intel Stock Report). While there are no weak market sectors, the high-yielding utilities and services issues are ahead, but are lagging the broader market. This likely reflects a surge in bullish sentiment and an increased appetite for riskier equities today.

Technically, the S&P 500 Index has firmed up, after finding support at its 50-day moving average, now located at 1,430. Yesterday’s advance was accompanied by healthy trading volumes, which is encouraging. Moreover, it looks as if traders are building on those gains today, which is also a good indication.

Meanwhile, the economic reports released are likely helping matters, too. Specifically, industrial production rose 0.4% in September, which was better than the decline posted last month and ahead of analyst expectations. Consumer prices inched up slightly in September, but inflation is not a problem at this point, especially given that the Fed has committed to low interest rates for some time. The housing recovery is still likely underway. The NAHB Housing Market Index came in at 41 for October, up slightly from last month’s figure, but a bit lower than anticipated. We will get a better look at the housing market tomorrow with the release of housing starts and building permits data for September.  Notably, the Home Builders Trust (XHB), which is up just slightly, is underperforming today.

Meanwhile, in corporate news we received reports from a few big names. Coca-Cola (KO - Free Coca-Cola Stock Report) is seeing its stock slip, after the soda giant posted decent, but somewhat mixed results. Goldman Sachs (GS) stock is trading slightly higher, after the investment bank released healthy figures. Elsewhere in the banking sector, Citigroup (C) shares are up a bit, even though the company’s long time CEO has announced his resignation. - Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

11:30 PM - Surprisingly good economic news over the past several days, starting with last Thursday's upbeat data on jobless claims, continuing on Friday, with better metrics on consumer sentiment, pushing further ahead yesterday with a much improved retail sales performance relative to early in the year, and waxing even further this morning, as the Commerce Department reported better numbers for industrial production and factory usage. All of this has given the Wall Street bulls a welcome shot in the arm so far today--just as it did yesterday.

Of course, it is more than just the economy that is propelling stocks higher. It also is some surprisingly good news on the earnings front, as we get well into third-quarter reporting season. In part, some major companies are doing better than forecast. But it may also be that the profit bar has been set so low that decent, albeit not exceptional, news on this score is giving a major lift to the stocks directly affected as well as to the market, in general.

This as we get deeper into the morning, we now find that the Dow Jones Industrial Average has moved up to a triple-digit point gain, adding 115 points; the Standard and Poor's 500 Index is being pushed higher to the tune of 11 points; and the NASDAQ is more than 20 points to the good. The small and mid-cap indexes are also pressing forward nicely. There are a good number of major companies on the docket for profit reporting today, with some already issuing their statements, and several Dow companies set for earnings releases after the close. - Harvey S. Katz, CFA  

At the time of this article's writing, the author did not have positions in any of the companies mentioned.

Stocks to Watch From The Survey: Three Dow-30 components have already reported as the market begins its day. Soda titan Coca-Cola (KO - Free Coca-Cola Stock Report), health maintenance organization UnitedHealth Group (UNH - Free UnitedHealth Group Stock Report), and healthcare products behemoth Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report) each appear to have reported in line, or better –than-expected, results. At the close today there will be more action among the popular index’s components, as chipmaker Intel (INTC - Free Intel Stock Report) and technology powerhouse IBM (IBM - Free IBM Stock Report) release their figures for the most recent periods.

Elsewhere, Citigroup (C) closed yesterday on a high note when it reached a six-month high after reporting a surprise third-quarter profit and a surge in bond-trading revenues that beat estimates. This morning, however, that run-up will likely change course due to the fact that Vikram Pandit is stepping down as CEO and a board member. The New York bank's new CEO will be Michael Corbat, the CEO of the company's Europe, Middle East, and Africa division.

High-profile financial conglomerate Goldman Sachs (GS) has reported quarterly earnings and revenue that beat expectations and the company increased its dividend. This quarter's performance was particularly solid given the still-challenging economic environment.

Outside of the financial realm, Domino's Pizza (DPZ) has announced that third-quarter profit rose. The pizza chain's sales momentum at established restaurants, especially those overseas, surpassed expectations. International business has been a key driver for growth recently, after a change in philosophy and menu additions in the U.S. helped spur sales. Lessons learned from the U.S. are now being emphasized in markets abroad.   - Erik M. Manning

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


Before The Bell - The bulls were out in force yesterday following the stock market's worst week since June, boosted by a sudden rash of optimism on both the domestic economy and the outlook for third-quarter earnings. By the end of the trading session, the Dow Jones Industrial Average had scored its biggest one-day increase in a month, rising 95 points. The gains, moreover, were spread across the board, with the Standard and Poor's 500 Index jumping 12 points; the NASDAQ steaming ahead by 20 points; and the small-cap Russell 2000 adding five points.

Helping stocks yesterday, as noted, was an increase in optimism on the economic front. This suddenly more upbeat assessment of things followed both a much better-than-expected report on consumer sentiment issued last Friday and data, released before the stock market opened for trading yesterday morning, on consumer spending. Specifically, the government intoned that retail sales had surged by 1.1% last month, a gain that was materially better than the 0.7% increase widely forecast by economists. Moreover, the advance was revised upward for August from an earlier estimated rise of 0.9% to a more potent improvement of 1.2%. These more reassuring metrics and a sharp drop in jobless claims reported for last week now suggest that third-quarter GDP--the results of which will be issued late next week--could well show a gain of more than the 1.5% that has been the average growth forecast among the leading pundits.

As to the economy, we will hear a bit more in a matter of minutes, as the Commerce Department will be releasing its data for September on industrial production and factory usage. Modest increases are forecast in each series following some dispiriting results in August. Also, just moments ago, the Labor Department reported that the Consumer Price Index had gained 0.6% last month, largely on a steep increase in gasoline prices. Backing out the volatile food and energy components from the aggregate mix, to get the so-called core CPI result, we find a much more muted increase was recorded.

Looking ahead to the rest of the week, tomorrow will bring the latest data on housing starts and building permits. Thursday will see reports on weekly jobless claims, the Philadelphia Federal Reserve manufacturing index, and the Index of Leading Indicators, while Friday will bring issuances on sales of existing homes for September. It will, in short, be a very busy week.

Meanwhile, back on the earnings front, the market received a nice lift as well yesterday from a solid profit showing by banking giant Citigroup (C). Now, this morning, investment banking mainstay Goldman Sachs (GS) has easily beaten earnings expectations and raised its quarterly dividend. And, on cue, Goldman shares are indicated slightly higher in the pre-market. Also, reporting today--or already having done so--are Dow components Intel (INTCFree Intel Stock Report), the semiconductor behemoth, and IBM (IBMFree IBM Stock Report), the computer hardware and software giant, which will issue their statements after the market's close, and Johnson & Johnson (JNJ - Free J&J Stock Report), which reported earlier today and exceeded expectations, and the newest Dow member, UnitedHealth Group Inc. (UNHFree UnitedHealth Stock Report), which also topped forecasts and raised its full-year outlook.

As for the market, it is again riding this newfound wave of optimism, as the equity futures are barreling ahead this morning, with gains of seven points in the S&P 500 Index and 16 points in the NASDAQ, presaging a strong opening for stocks in less than an hour from now. – Harvey S. Katz

At the time of this article's writing, the author had positions in INTC.