Stocks shot out of the gate Monday, fueled by earnings optimism, but then pulled back as investors took some profits.
The Dow Jones Industrial Average rose 20.86, or 0.2 percent, to close at 9,885.80. The blue-chip gauge popped above 9,900 right out of the gate, and stayed there for most of the day, before pulling back midafternoon. The S&P 500 gained 0.4 percent, while the Nasdaq finished flat.
"You're seeing prudence taking the lead here, with people starting to lock in profits in hopes we don't see a pretty big move down after some of the larger companies report over the next few days," Michael James, senior trader at Wedbush Morgan, told Reuters.
The big buzz today was that ... The recession is over! That's from the NBER — the group of economists that makes the official declarations of the recession beginnings and endings.
Of course, 15 million people remain unemployed in this country, the housing market is still loitering around the bottom and we have yet to see signs that people — or companies — are buying anything with conviction, so it's sort of a technical benchmark, not an umbrella statement about the state of the economy.
Shares of Onyx rose more than 5 percent.
Earnings season kicks into high gear this week and the word of the week is: Banks. We'll get reports from JPMorgan on Wednesday, Citigroup and Goldman Sachs on Thursday and Bank of America on Friday.
All of those stocks advanced, with Bank of America and Citigroup up the most — 3 percent each. Goldman Sachs gained just 0.5 percent as investors are waiting to see how the firm deals with up to $20 billion in bonuses just one year after it accepted federal bailout money.
Big banks should do wellin the coming quarters, helped by strong trading activity, banking analyst Dick Bove said on CNBC this morning. But, he cautioned that regional banks will take a hit from commercial real estate.
Bank of America was actually the biggest gainer on the Dow. Intel and Johnson & Johnson , which report earnings on Tuesday, were in the Dow's top five, along with Chevron and ExxonMobil, which benefitted from a rise in oil prices. Oil gained $1.50 to settle at $73.27 a barrelamid optimism about the economic recovery.
Black & Decker shares jumped 7.6 percent after the power-tool maker raised its third-quarter profit target, citing better-than-expected sales, operating margin and tax rate.
In analyst action today:
UBS raised its rating on chip maker AMD to "buy" from "neutral," and slashed its rating on SanDisk to "sell" from "neutral." AMD shares gained 4.4 percent, while SanDisk fel 2 percent.
UBS raised its price targets on Hewlett-Packard and IBM . HP fell, while IBM rose.
Google shares gained 1.5 percent after a double bonus: Goldman raised its price target on the stock, while JPMorgan raised its earnings projection.
Credit Suisse raised its rating on credit-card providers MasterCard and Visa to "outperform" from "neutral," and raised its price targets on the stocks to $255 and $84, respectively. Both stocks rose.
No major economic numbers today but later this week we'll get some key readings, including the consumer price index, initial jobless claims, and consumer confidence.
Among news items of interest, St. Louis Federal Reserve President James Bullard says medium term inflation risks could be higher than many think. He spoke at an economic conference in St. Louis over the weekend.
Various published reports indicate that private-equity firm Blackstone Group is planning to list up to eight companies in its portfolio and selling five others. This is being seen as another sign of a healthier market for IPOs and M&A activity.
Another M&A deal was announced today: Onyx Pharmaceuticals has agreed to buy Proteolix, a private biotech firm that's developing cancer drugs, for an upfront cash payment of $276 million. Onyx could pay an additional $535 million, depending on whether the new company reaches various development and regulatory approval milestones.
Market activity was lighter than normal, given the Columbus Day holiday. Just 946.81 million shares changed hands on the New York Stock Exchange. Advancers outpaced decliners, roughly 8 to 7.
TUESDAY: NABE annual meeting; Bear Stearns execs on trial; Enron's Skilling resentenced; Fed's Kohn and Dudley speak; Treasury budget; Earnings from Johnson & Johnson, Intel
WEDNESDAY: Allen Stanford court appearance; Weekly mortgage applications; government's report on retail sales; import/export prices; business inventories; Fed minutes; Earnings from Abbott Labs and JPMorgan
THURSDAY: IRS amnesty for offshore accounts ends; CPI; Empire State manufacturing; weekly jobless claims; Philly Fed; weekly crude inventories; Earnings from Citigroup, Goldman Sachs, Nokia, IBM and AMD
FRIDAY: Industrial production; consumer sentiment; Fed's Fisher speaks; Earnings from Bank of America, GE, Halliburton and Mattel
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