Final-Hour Rally Gives Stocks a Boost
After several false starts, stocks pulled off a final-hour rally, boosted by a better-than-expected forecast from Hewlett-Packard.
The Dow Jones Industrial Average rose 151.17, or 1.8 percent, to close at 8424.75, clawing back some of the more than 560 points the blue-chip index lost in the prior two sessions.
The Dow slipped below its five-year closing of 8175.77, hit on Oct. 27, just before 3 p.m. before rocketing higher.
The S&P 500 index gained 1 percent to close at 859.12, while the Nasdaqfinished flat at 1483.27.
"I guess we're testing the lows. Pulled the string on it and somehow, some way, there are people coming in ... and it appears to be real buying," said John Schloegel, vice president of investment strategies at CCAM.
Schloegel is encouraged that the S&P seems to be finding support between 830-840 but he thinks there's still cause for caution and favors a portfolio balance of 50-percent stocks, 50-percent cash.
"I'm seeing a glimmer of hope, a slice of light at the end of the tunnel -- but I'm still slightly uncomfortable about being fully invested," Schloegel said.
Hewlett-Packard led the Dow to victory, climbing 15 percent, after the hardware and software maker said said Tuesday it expects to top analysts' estimatesfor the fourth quarter and next year.
The news gave a boost to other big-name techs: Apple , Research In Motion , Dell and IBM were all higher.
Research In Motion got an extra boost after one analyst said sales of the BlackBerry Bold were looking strong. Later this week, RIMM -will launch its first touch-green device, giving Apple's iPhone and iTouch a run for its money.
Yahoo shares jumped 8.7 percent following news that CEO Jerry Yang will step down from his positionat the Internet portal as soon as the board finds a replacement.
Some late buying helped bump General Motors up the Dow rung a few notches after it spent most of the day at the bottom of the pack. GM shares ended down just 2.8 percent.
Auto stocks have taken a beating as the prospects for a bailout appear dim. Earlier, Treasury Secretary Henry Paulson said the government rescue fund should only be used for the financial system.
Paulson was on Capitol Hill today, along with Federal Reserve Chairman Ben Bernanke, being grilled over why they did an about-face and decided to use TARP funds for recapitalizing financial institutions instead of buying bad or so-called toxic assets as was originally proposed.
Executives from the Big Three auto makers — GM, Ford and Chrysler — pleaded their case later in the day.
If it's one thing the market hates, it's uncertainty, and the government is giving it to investors by the truckload.
The economic stimulus bill being backed by President-elect Barack Obama is unlikely to be approved by the Senate during its short legislative session this week, a top Senate aide said.
General Electric shed just 0.3 percent after the conglomerate, which is also the parent of CNBC, said it plans to cut costs by $2 billion at its financing arm, GE Capital, next year.
Citigroup tumbled 6 percent amid concerns that the plan to slash 52,000 jobs may not be enough to get the bank back on track.
In economic news,producer prices fell by a record 2.8 percent in October but core inflation, which strips out volatile food and energy prices, actually rose 0.4 percent in the month.
Homebuilder sentiment hit a record lowin November, the National Association of Home Builders reported.
Stocks in the sector were mixed, with KB Home off 4.3 percent, and Pulte Homes up 2.3 percent.
Home-improvement retailer Home Depotreported a 31 percent drop in quarterly profit Tuesday as consumers put off big-ticket projects amid a deepening economic crisis.But the profit of 45 cents a share beat analyst estimates and Home Depot shares rose 3.6 percent.
Wal-Mart said the drop in gasoline prices has helped boost store traffic. Not one to look a gift horse in the mouth, the discount retailer said it's cutting prices on food items to win over shoppers ahead of the Thanksgiving holiday.
TUESDAY: Housing-market index
WEDNESDAY: Bank Reserve settlement; weekly mortgage applications; housing starts; CPI; oil inventories; Fed minutes; Fed's Kohn speaks; Earnings from BJ's Wholesale
THURSDAY: Weekly jobless claims; leading indicators; Philly Fed manufacturing survey; natural gas inventories; Fed's Bullard speaks; Earnings from Gamestop, Dell and Gap
FRIDAY: Fed's Plosser speaks; Earnings from Heinz
Send comments to firstname.lastname@example.org.