Market Soars as Investors Take Comfort in Bernanke, GDP Data

by: Midnight Trader

4:04 PM, Aug 27, 2010 --

  • DJIA up 165.14 (+1.65%) to 10,150.95
  • S&P 500 up 17.37 (+1.66%) to 1,064.59
  • Nasdaq up 34.94 (+1.65%) to 2,153.63


  • Hang Seng down 0.07%
  • Nikkei up 0.95%
  • FTSE up 0.89%


(+) PAR gets revised $27 offer from Dell (DELL), HP ups bid to $30 per share.

(+) ARST reportedly up for sale.

(+) CMI system gets preapproval for seismic certification in Calif.

(+) OVTI moves up after evening decline that followed revenue miss.

(+) BA again delays delivery of first 787s.


(-) IMGN says guidance no longer valid; refuse to file letter received by partner Genentech.

(-) JCG continues evening decline that followed disappointing guidance.

(-) TIF misses sales expectations, beats on earnings, raises EPS forecast.


The major U.S. market averages closed near their day highs Friday as traders shook off a revenue warning from tech bellwether Intel (NASDAQ:INTC) and were instead consoled by some reassuring comments from Fed Chairman Ben Bernanke. Bernanke said the U.S. economy will continue to expand at a modest pace, and he suggested the Fed still has tools left to fight any downward drift in the economy. Adding to the somewhat buoyant mood was Commerce Department data that noted the U.S. economy grew at a 1.6% rate in Q2, revised lower from a previous 2.4% projection but still better than the 1.3% estimate pegged by Wall Street economists.

Bernanke said in a speech this morning in Jackson Hole, Wyo., that deflation -- not inflation -- is the central bank's main concern at the moment and pledged to "strongly resist" a downward price spiral. Bernanke also expressed confidence that the economy would continue to grow, albeit slowly, and that a double-dip recession is unlikely. He sees higher growth in 2011.

Intel warned it sees Q3 sales now around $11.0 billion, plus or minus $200 million, compared to the previous expectation of between $11.2 and $12.0 billion. The Thomson Reuters mean is for $11.5 billion.

3Par (NYSE:PAR) shares soared throughout the day after it accepted another raised offer from Dell (DELL) this morning, getting a $27-per-share offer that matched a revised bid from Hewlett-Packard (NYSE:HPQ) forwarded late Thursday. HP responded early this afternoon with another boosted bid, to $30 per share cash, or an enterprise value of $2 billion.

Looking forward to next week, earnings thin out considerably ahead of the Labor Day holiday the following weekend. On Monday, Donaldson Co. (NYSE:DCI) is due with results, and Dollar General (NYSE:DG) follows on Tuesday. Borders Group (BGP) and Hovnanian (NYSE:HOV) post numbers on Wednesday, and H&R Block (NYSE:HRB) and Finisar (NASDAQ:FNSR) are set to report on Thursday.

On the economic front, next week is data-rich with traders getting a look at personal income and spending and PCE prices on Monday, followed by the Case-Shiller 20-city index, Chicago PMI and consumer confidence on Tuesday. The ADP employment change, construction spending, ISM index, crude inventories and auto/truck sales are slated for release on Wednesday. Initial claims, productivity, factory orders and pending home sales reports are due on Thursday. The always market-moving payrolls data and unemployment rate will be distributed on Friday, along with ISM services data.

Commodities finished Friday mostly higher with gold futures gaining despite losing some early steam. Crude finished higher amid a strong showing for equities.

Crude-oil for October delivery closed up $1.54, or 2.5% at $75.17 a barrel on the New York Mercantile Exchange.

In other energy futures, heating oil was up $0.02 to $2.03 a gallon while natural gas fell 3.22%, to $3.69 per million British thermal units.

Gold futures managed some modest gains even as the metal came off multi-month highs, reported MarketWatch.

Gold for December delivery closed up $0.20 to $1,237.90 an ounce. In other metal futures, silver rose $0.05 to $19.07 a troy ounce while copper rose $0.06 to $3.39 a pound.