Tuesday Wrap - Dow +0.86%, S&P +0.81%, NQ +0.59%

by: Roy Mehta

The FOMC minutes spurred a rally late Tuesday that lifted the Dow and S&P to record highs. The Dow Jones Industrial Average rose 120.80 points (+0.86%), Standard & Poor's 500 index jumped 12.57 points (+0.81%), and the Nasdaq finished up 16.54 points (+0.59%). Volume on the NYSE came in at 1.16 billion shares, and advancers beat decliners by a ratio of about 2:1.

The markets surged after digesting the September 18th FOMC minutes, which detailed how the Fed decided to aggressively cut interest rates by 50 basis points because there was a risk the housing slump would lead to broader economic breakdowns. The members all agreed the cut was the right action, and also seemed comfortable with current inflation levels (full story). Future moves, it said, would depend on future economic development (full transcript). The market seemed to take the minutes as a sign the Fed is ready to act. U.S. Treasury prices were mostly lower after the minutes were released, with the 10-year dropping 4/32 to yield 4.65%.

Sector leaders included materials (+2.0%), energy (+1.8%) and utilities (+1.4%), while consumer staples (+0.2%) had the worst day off lackluster retail news. In stock news, Sallie Mae (-1.4%) said it has sued the group of private equity buyers who agreed earlier to buy the lender (full story). Yum Brands (+5.0%) had a strong day after posting a better-than-expected quarter and increasing its full-year outlook (full story). Crude finished $1.24 higher to $80.26/barrel, and the dollar index declined 0.2%.

Earnings season kicks off Tuesday night, as Alcoa will report. Alcoa's earnings will likely influence the market on Wednesday along with Wholesale Trade (10:00 AM).

Sources: Yahoo Finance, TheStreet.com
Commentary: Are Alcoa's Earnings a Barometer for the Market At Large?
Stocks/ETFs to watch: SLM, YUM
September 18th, FOMC Minutes
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