Tuesday Wrap: ECB Tender and Solid Earnings Support Markets

by: Roy Mehta

The Dow Jones Industrial Average rose 65.3 points (+0.50%), the Standard & Poor's 500 index increased 9.7 points (+0.63%), and the Nasdaq ended up 10.56 points (+0.84%). Volume on the NYSE was solid at 1.46 billion shares, and advancers beat decliners by a ratio of about 3:2.

Positive news in the morning saw stocks open higher. The European Central Bank announced it will inject $500 billion into its banking system (full story). The Fed proposed a new plan to give borrowers more protection against predatory lenders, which included a change disallowing brokers' fees for high-rate loans. Goldman Sachs (GS, -3.4%) beat expectations and actually profited from the subprime crisis, but provided a cautious outlook going forward (full story). Best Buy (BBY, +0.9%) announced profits jumped 52% in the third quarter, and projected an upbeat full-year outlook (full story). The Commerce Department said housing starts fell 3.7% and construction permits dropped 1.5% to 14 year lows (full story). The U.S. 10-year Treasury note ran up 6/32 in price, yielding 4.13%.

All sectors managed to finished with gains, with energies (+1.4%) showing the most strength. Crude fell $0.14 to $90.49/barrel in a wild session. Late Monday, Adobe (ADBE, +2.8%) beat estimates and increased its share buy-back plans (full story). After the close Tuesday, Palm (PALM, +5.0% day; -10.6% AH) swung a loss and delivered a disappointing forecast (full story). Take-Two Interactive (TTWO, +2.1% day; -3.5% AH) said it narrowed losses from last year, but kept up with the theme of the day and projected a weaker than expected outlook (full story).

Crude Inventories (10:30 AM) will be announced Wednesday, along with earnings from Morgan Stanley (NYSE:MS), Nike (NYSE:NKE), and Oracle (NASDAQ:ORCL).

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