Tuesday Wrap - Dow +2.46%, S&P +2.91%, Nas +3.46%

by: Roy Mehta

Good news from Wal-Mart and Goldman Sachs brought out buyers Tuesday, as the Dow enjoyed its second largest gain of the year. The Dow Jones Industrial Average jumped 319.5 points (+2.5%), Standard & Poor's 500 index increased 41.9 points (+2.9%), and the Nasdaq surged 89.5 points (+3.5%). Volume on the NYSE was not heavy at 1.15 billion shares, and advancers beat decliners by a ratio of about 4:1.

The morning started strong with Wal-Mart (+6.1%) beating estimates (full story). The retailer's profits increased 8%, and it upped its profit forecast for the year. Home Depot (+2.3%) reported profits dropped 27% (full story), but enthusiasm from Wal-Mart's quarter overshadowed the home-improvement retailer's poor results. Goldman Sachs (+8.5%) jumped after CEO Lloyd Blankfein said Goldman will not report a major writedown because of mortgage-industry related weakness (full story). Pending Home Sales unexpectedly increased 0.2% in September, after economists expected a 2.0% decline. The US 10-year Treasury note fell 13/32 in price, and now yields 4.26%.

All sectors finished with gains Tuesday, with transportation (+3.1%), tech (+3.7%), services (+4.0%), and financials (+4.1%) all having strong days. Corning (+10.0%) rallied after it announced it was upping its outlook for the fourth-quarter (full story). E*Trade (+40.9%) bounced back considerably after losing more than its market value yesterday. Rumors of a potential takeover were the catalyst for the up move (full story). Bank of America (+5.2%) announced it will writedown about $3 billion in losses from mortgage-related securities (full story). Crude fell $3.45 to $91.17/barrel (full story).

The PPI (8:30 AM), Retail Sales (8:30 AM), and Business Inventories (10:00 AM) are scheduled to be released Wednesday. The news should provide some help to investors who are currently sorting out the market's recent movements, and determining if this is the beginning of another rally, or simply a "dead cat bounce," as many are suggesting.

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