Why Is This Bull Smiling?
Major
indexes spent most of the day trying to stay out of negative territory, only to
finish with another strong close. The Dow Jones Industrial Average
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$INDU.X |
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closed up 0.39% at 9384.23. The S&P 500
(
$SPX.X |
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1097.54. The Nasdaq
(
$COMPQ.X |
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There was strong participation across the sectors for today’s gains.
In
the news, a report of anthrax infecting 12 employees at the London Stock
Exchange briefly sent stocks lower today, while many investors stayed on the
sidelines waiting for key earnings reports to be released in the tech sector
after the close. So far there have been over 2,300 reports of anthrax, most of
them false alarms. On the economic front, the
Fed announcedÂ
that its measure of US industrial output shrank 1% in September after a 0.7%
drop in August. This measure ofÂ
the country‘
s factories, mines and utilities
has been in its longest uninterrupted slump since the second World War. Alan
Greenspan will testify to Congress tomorrow on the economic outlook and monetary
policy.
NYSE
advancing issues were 1,967, with up-volume at 771,651,328; declining issues
were 1,136, with down-volume at 407,155,104. Nasdaq advancing issues were 2,171,
with up-volume at 1,262,688,128; declining issues were1,434 with down-volume at
477,201,088. The VIX was down 2.32 to 35.04 and the Put/Call Ratio was 0.5628.
Overall volume on the day for the NYSE and Nasdaq was below the 50- and 200-day
moving averages, taking away from the potential staying power of the rally.
Bulls are looking for a pullback, while bears are looking for a retest to the
lows. So far there has been no real signal to reverse this rally, and today’s
broad-based gains mark another sign of strength. A pullback will come, and when
it does, the intensity of its sellers will be carefully watched.
Top
sectors of the day were the Natural Gas Index
(
$XNG.X |
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PowerRating), up 3.36% at
205.31, and the Semiconductor Sector Index
(
$SOX.X |
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PowerRating), up 2.45% at 462.8.
The
losing sector of the day was the North American Telecom Index [$XTC.X|$XTC.X],
down 0.58% at 838.5.
Johnson
& Johnson
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JNJ |
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PowerRating), up 1.87% at 56.76, led the Dow today with third quarter
profits rising 16%. The surprise came from better-than-expected sales in medical
devices and key prescription drugs.
United
Technologies
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UTX |
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PowerRating)
was up 1.66% at 53.90. The company reported a 14% increase in profit for
the third quarter. The parent of aircraft-engine maker Pratt & Whitney also
said it would cut about 5,000 jobs over the next year.
Caterpillar
(
CAT |
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PowerRating) was down 0.35% at 48.03. This Dow component missed third quarter
estimates by 3 cents, earning 59 cents a share. It also warned of lower fourth
quarter sales and revenue.
Financials
were stronger with Bank
One
(
ONE |
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PowerRating)Â rising 8.11% to $32.81 after beating third quarter
expectations by 2 cents on an increase of profits by 30%.
American Express
(
AXP |
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PowerRating) was
up 1.33% at $31.30, and Citigroup
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C |
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up 2.88% at $46.09. Wells Fargo
(
WFC |
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PowerRating)
lost 1.47% to $40.17 after reporting a 42% rise in net income despite falling
short of analysts’ estimates.
Leading
technology stocks were mixed ahead of key earnings announcements, with Microsoft
(
MSFT |
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PowerRating) traded up 0.67% $58.45 while Cisco Systems
(
CSCO |
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PowerRating) gained 4.69%
to $16.97.