Equities Roundup: Gains, But Commodities Strongest

4:07 PM, Oct 8, 2009 --

• NYSE up 78 (1.1%) to 6,990.68.
• DJIA up 61.3 (0.6%) to 9,787.
• S&P 500 up 7.9 (0.8%) to 1,065.
• Nasdaq up 13 (0.6%) to 2,123.

GLOBAL SENTIMENT

• Hang Seng up 1.18%
• Nikkei up 0.34%
• FTSE up 0.71%

UPSIDE MOVERS

(+) LIZ in exclusive distribution pact with J.C. Penney (JCP).

(+) AA reported unexpected profit.

(+) CENX on better-than-expected Alcoa report.

(+) APCVZ gets FDA approval for Sumatriptan Succinate injection, a generic equivalent to GlaxoSmithKline's (GSK) Imitrex.

(+) DDSS completed a distribution and supply agreement with Grunenthal GmbH.

(+) M Sept. same-store sales fell 2.3%.

(+) ANF Sept. same-store sales fell 18%.

(+) CRXX says an abstract has been accepted for oral presentation at ACR 2009.

(+) MAR turns up after tops Street views for Q3, guides in line for Q4.

DOWNSIDE MOVERS

(-) GYMB boosts Q3 EPS forecast to $1.05-$1.10, compared with $1.08 Street view.

(-) LXRX offers to sell 27.5 million common shares.

(-) SVNT sets offering of 4 million shares.

MARKET DIRECTION

Stocks end higher but in the lower end of the day's range, clocking between a 0.6% and 0.75% advance.

Stocks gained broadly after retailers posted solid September sales, surprising many analysts. Alcoa (AA) kicked off earnings season with an unexpected profit and the Labor Department reported a drop in weekly jobless claims. In addition, the European Central Bank and the Bank of England left rates unchanged at record lows, which lent stocks worldwide some support.

Before the market opened, the Labor Department said new claims for jobless benefits fell to 521,000 last week, down from 554,000 the previous week and better than analysts' expectations. It was the lowest level since early January. Continuing claims fell to 6.04 million, better than the slight increase analysts had expected.

Wholesale inventories data at midmorning did little to move the markets. Wholesale inventories fell 1.3% in August, worse than the 1% drop economists had expected. That followed a 1.6 percent drop in July initially reported as a 1.4% decrease. But sales at the wholesale level rose a better-than-expected 1%, the fifth straight gain and the largest increase since June 2008.

September same-store sales lifted shares of retailers, many of which also reaffirmed or boosted third-quarter expectations. Target (TGT) reported same-store sales fell only 1.7%, and it expects Q3 to beat the consensus estimate of 43 cents a share. Macy's (M) also reported a smaller-than-expected same-store sales decline of 2.3%.

Discount retailers TJX Companies (TJX) and Ross Stores (ROST) reported September same-store sales and raised EPS outlooks.

J.C. Penney (JCP) said September same-store sales fell 12.4%. JCP increased its Q3 estimate, but it still was in line with Street views. JCP also agreed to be the exclusive distributor for some Liz Clairborne lines. LIZ jumps on the news.

Earnings provided a lift as Alcoa (AA) reported an unexpected profit after hours Wednesday. Pepsico (PEP) also rose as it posted Q3 EPS of $1.09, topping views, and reaffirmed guidance.

Among analyst actions, Broadcom (BRCM) lost ground on a downgrade to neutral from outperform at Robert Baird due an increased risk of cancellations. L-3 Communications (LLL) is down after Goldman Sachs cut its rating to sell as the company is disproportionately exposed to Iraq.

Monster Worldwide (MWW) was raised to overweight from neutral with a $24 price objective at JP Morgan. The broker is "increasingly confident" in product offering improvements. Kaufman upgrades eBay (EBAY) to buy from hold, increasing its objective to $29 from $22 on an improved outlook. Clorox (CLX) is raised to buy from hold at Deutsche Bank with a $66 on potential EPS upside.

WellPoint Inc. (WLP), Humana (HUM) and other companies that provide health plans sold off sharply Thursday after House Speaker Nancy Pelosi floated the idea of imposing a windfall tax on insurers to pay for extending health coverage to more Americans, MarketWatch said.

Crude oil ends up 3% at $71.69 a barrel as the dollar weakened.

Comments

[David White:]

The financial sector luster is wearing thin these days. JPM got another ding today as S&P downgraded $4.12B of RMBS (Alt-A loans).

The USD Index was down -0.65% -- a lot. This had a lot to do with commodities prices going up.

The SPY seemed to bounce off overhead resistance in the $107+ area today. The Trade Deficit news tomorrow (and the USD performance) will likely determine if the SPY breaks through resistance, or resumes a retracement mode.

The VIX got down into the high 23 range today. There is a support base at approx. 23.0. If the VIX rallies off the support base, that could mean the market will resume a downward course.

Gold keeps going higher. One gold miner in particular did well today -- AUY. It received multiple rating upgrades and even more target upgrades today alone.

Oct 08 05:47 PM

[bottoms-up:]

Long live commodities...

I'm surprised nobody on SA has looked at equities vs. the shrinking dollar.... Equities are going up, but, in reality, they are declining or running in place vis-a-vis the dollar.

Commodities are starting to outpace the junk-penny stock markets (and they are all junk-penny stock markets).

Oct 08 07:12 PM

[AndrewBaker:]

Generally, commodities are better buys now than stocks. And a weak dollar will make that more so going forward.

Oct 09 07:28 AM

[tripleblack:]

I finished pulling out of equities day before yesterday, but I am holding commodities (silver, oil, ng, etc) long.

I think its likely there will be a strong uptick in late November, with a Christmas present market of some sort... I may dip back in fishing for short term returns at some point between now and then.

After that, its going to get wierd.

Oct 09 08:25 AM

[Philip Cohen:]

"Kaufman upgrades eBay (EBAY) to buy from hold, increasing its objective to $29 from $22 on an improved outlook."

Another dreamer (or paid eBay lobbyist). Anyone who holds onto eBay stock, in anticipation of an improved eBay performance in the September quarter, is undoubtedly going to be in for another disappointment later this month, assuming they can work their way through all the "Ho-speak" spin ...

The reason why at: www.auctionbytes.com/f...

Oct 09 06:57 PM