Closing Update for Wednesday, August 12: The Fed's Relative Optimism Is Catching

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Includes: ADCT, AMAT, C, CYTR, EJ, HSH, ING, JASO, JAZZ, KATE, M, PTN, SOL, TOL
by: Midnight Trader

4:15 PM, Aug 12, 2009 --

  • NYSE up 75.3 (1.2%) to 6,538.87.
  • DJIA up 120.2 (1.3%) to 9,362.
  • S&P 500 up 11.5 (1.2%) to 1,006.
  • Nasdaq up 28.9 (1.5%) to 1,999.


GLOBAL SENTIMENT

  • Hang Seng down 3.03%
  • Nikkei down 1.42%
  • FTSE up 0.97%


UPSIDE MOVERS

(+) Applied Materials (NASDAQ:AMAT) continued upside reaction to earnings, guidance beat.

(+) Jazz Pharmaceuticals (NASDAQ:JAZZ) continued upside reaction to evening earnings.

(+) CytRx (NASDAQ:CYTR) says cancer drug dramatically inhibited tumor growth in animal study.

(+) E-House (NYSE:EJ) easily beats with results.

(+) Palatin (NYSEMKT:PTN) reports positive study results for sexual dysfunction treatment.

(+) Citigroup (NYSE:C) gets China regulatory approval.

(+) ADC Telecommunications (ADCT) guides for Q3 in line to above Street.

(+) Macy's (NYSE:M) beats with earnings and raises guidance.

(+) ING (NYSE:ING) lower after results.

DOWNSIDE MOVERS


(-) ReneSola (NYSE:SOL) beats loss estimate but misses revenue estimates.

(-) Sara Lee (SLE) loss narrows but disappoints.

(-) Liz Claiborne (LIZ) misses with loss, sales figure.

(-) JA Solar (NASDAQ:JASO) beats with revenue but sees deeper GAAP loss.

MARKET DIRECTION

Stock averages end up between 1% and 1.5%, in the upper end of the day's range but off the highs. Wall Street embraced the Federal Reserve's latest announcement, in which the group said it will rein in bond buybacks in a move signaling improving confidence in the economy.

The Federal Reserve's policy-setting FOMC said it would slow its purchases of long-term Treasurys and let the program end entirely by the end of October. Long-term Treasury yields edged higher on the news. The Fed, as expected, left its funds target rate 0% to 0.25%.

The Fed said that since its last meeting in late June, "economic activity is leveling out." Conditions in financial markets also "have improved further."

As stocks rallied, crude closed up $0.71 at $70.16 a barrel.

Stock opened tepidly out of the gate, but buyers moved in around mid-morning and sent the three major indexes soaring well above 1%.

Company news contributed to early gains. A day after the domestic market posted its biggest losses in five weeks, stocks were largely expected to tread water. But investors may have gotten some lift from Macy's (M), which is the latest retailer to report a better-than-expected Q2 profit. The retailer also raised its outlook largely on the effect of reducing costs. Retailers are being closely watched this week, as they report earnings, to get a fix on consumer spending.

Homebuilders jumped after Toll Brothers (NYSE:TOL) said 3% more homebuyers signed contracts in Fiscal Q3, the first annual increase in four years. Toll's statement that many of its markets are improving boosted confidence about the prospects for a recovery in the overall economy because along with unemployment housing is one of the biggest obstacles to a rebound. Homebuilders are rallying across the board.