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CNBC ON DIGG

Dow Rallies, Led by Alcoa, Home Depot

Published: Thursday, 8 Oct 2009 | 2:06 PM ET

Text Size

By: Cindy Perman
CNBC.com

Stocks rebounded Thursday after jobless claims beat and Alcoa kicked off the earnings season with exactly what analysts wanted to see: better-than-expected revenue.

The Dow was up over 80 points in early-afternoon trading, after starting the day up just 50 points.

The Dow was up more than 100 points early, but pulled back a bit after the Treasury's $12 billion auction of 30-year bonds was met with mediocre demand, following strong demand for other auctions in recent weeks. The high yield was 4.009 percent and the bid-to-cover ratio was 2.37.

Major U.S. Indexes

.DJIA

.NCOMP

.SPX

The number of workers filing new claims for jobless insurance fell to a nine-month low last week, down 33,000 to a seasonally adjusted 521,000 last week, the Labor Department reported.

In other economic news, wholesalers pared inventories for a 12th straight month in August, while the sales gain was the largest in more than a year.

FOR INVESTORS

A fresh round of optimism was sparked after the bell yesterday when Alcoa [AA Loading... () ] beat on both profit and revenue forecasts.

Alcoa was the top gainer on the Dow in early afternoon trading, up more than 3 percent, followed by Home Depot [HD Loading... () ] and DuPont [DD Loading... () ].

In regular trading yesterday, stocks finished mixed as anxiety about earnings season brewed.

In other earnings news today, Pepsico [PEP Loading... () ] beat expectations and the company affirmed its full-year outlook but shares fell as the earnings beat was largely due to cost-cutting measures and revenue actually declined.

That's how it's going to go down this quarter: Analysts are over the cost-cutting beat and are now looking for signs of improvement in revenue, not just an improved bottom line due to cost-cutting measures.

Banks opened higher, including Bank of America [BAC Loading... () ], Citigroup [C Loading... () ] and JPMorgan [JPM Loading... () ].

Retailers rallied as many beat September sales expectations, helped by a late Labor Day and delayed back-to-school shopping. Plus, a cool September helped several retailers that are more impacted by weather.

Macy's [M Loading... () ] and Target [TGT Loading... () ] were among the early winners, posting smaller declines than expected. Target also went so far as to say third-quarter earnings would beat expectations.

Abercrombie & Fitch shares [ANF Loading... () ] jumped 7 percent after the teen chain, which has taken a beating in recent months, reported its sales dropped just 18 percent, far less than the 21 percent expected.

Store Check: Who Beat, Who Hit, Who Missed

Homebuilders also rallied as the average rate on a 30-year mortgage dropped to 4.87 percent this week, down from 4.94 percent last week, according to a report from Freddie Mac.

Lennar [LEN Loading... () ] jumped about 9 percent, while KB Home [KBH Loading... () ] was up nearly 8 percent.

Techs were right back up there today, with Dell [DELL Loading... () ] and Microsoft [MSFT Loading... () ] up more than 2 percent. Palm [PALM Loading... () ] jumped nearly 5 percent.

IBM [IBM Loading... () ], however, faltered. The company is the subject of a Justice Department antitrust probe regarding its behavior in the mainframe computer market. IBM says there is no basis for any such claims.

It's been an active season as well for mergers and acquisitions, but one deal faces troubles.

In a provisional ruling, Britain's competition regulator said a deal between Ticketmaster Entertainment [TKTM Loading... () ] and Live Nation [LYV Loading... () ] could lead to higher prices and less competition. The US Justice Department also is examining the deal, which was announced earlier this year.

Across the pond, the European Central Bank and Bank of England, as expected, both held the line on lending rates. The decisions come a day after Australia's central bank raised its lending rate.

Gold prices will bear watching once again, having set yet another record high in Thursday's trading.