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Dow Closes Above 10,000, Led by Banks

Wednesday, 14 Oct 2009 | 5:37 PM ET

Stocks rallied Wednesday and the Dow broke through 10,000 for the first time in over a year, fueled by strong earnings from JPMorgan and Intel.

The Dow Jones Industrial Average gained 144.80, or 1.5 percent, to close at 10,015.86, the first time it's closed above 10,000 since last October.

Cheers erupted on the floor of the New York Stock Exchange as the Dow crossed 10,000 around midday. As quickly as it crossed the 10,000 mark, it retreated — as if just stepping a pinky toe across the line. Another attempt in the final hour of trading helped push the Dow above 10,000 — and keep it there through the close.

Some market pros said the Dow's break above that level today will likely trigger a wave of sell orders but other said it could be full steam ahead.

"Dow 10,000 may be largely psychological, but with tremendous levels of cash on the sidelines this may still be a call to action for investors," Lawrence Glazer, managing partner at Mayflower Advisors, told Reuters.

More importantly, traders said — hedge your bets.

The drivers behind today's rally were JPMorgan and Intel, which delivered better-than-expected quarterly reports.

The third-quarter earnings season had gotten off to a great start last week, with Alcoa delivering analysts exactly what they wanted to see — an improvement in revenue.

The season took a turn earlier this week after Johnson & Johnson delivered more of the same — an improvement on the bottom line due to cost-cutting measures, but no signs of sustained growth. Intel and JPMorgan got this season back on the tracks.

Banks led the charge today after JPMorgancrushed earnings expectations, delivering 82 cents a share — analysts had expected 52 cents a share.

Financials were the best performer of 10 key S&P sectors, up 3.3 percent.

Bank of America was the biggest percentage gainer on the Dow, ahead of its earnings, due out on Friday. Citigroup and Goldman Sachs report Thursday.

Source: cnbc.com

The JPMorgan beat came on the heels of Intel's better-than-expected results after the bell yesterday. The chip maker also delivered a more bullish forecast than expected.

Railroad operator CSX also beat consensus on its latest earnings report.

"Third-quarter results are, on the whole better-than-expected in general, and it's taken some people by surprise," Anthony Conroy, head trader for BNY ConvergEX, told Reuters. "Now, you're starting to see not only decent earnings but a little bit of growth."

After financials, the best-performing sectors were industrials and materials, up 2.6 percent and 1.9 percent, respectively.

Crude oilsettled above $75 a barrelfor the first time in over a year as commodities continue to benefit from US dollar weakness.

The dollar tumbled to its lowest level in more than a year against the euro, hurt by persistent expectations for low U.S. interest rates as well as investor appetite for commodity currencies.

The economic news was also fairly positive: Retail sales fell 1.5 percent in September, the Commerce Department reported, but beat economists' expectations of a 2.1-percent drop. Auto sales trailed off a bit, now that the Clunkers program is over. Excluding the volatile auto component, sales rose for a second straight month.

This government report came after big chain stores last week beat September sales forecasts, helped by a 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.

Meanwhile, import prices rose 0.1 percent in Septemer as the price of imported petroleum fell. Economists had expected a 0.2-percent increase. And business inventories shrunk by 1.5 percent in August, the 13th consecutive monthly decline—and largest since last December.

Federal Reserve officials were apparently conflicted about whether to expand or cut backa program aimed at driving down mortgage rates during their meeting last month. Minutes of the meeting, released today, showed some members thought an increase in the program was necessary, while at least one thought signs of a recovery warranted a reduction.

Due to the Columbus Day holiday, the Energy Information Administration's measure of crude oil inventories will be out at 10:30 am New York time on Thursday.

Ford shares climbed 0.5 percent after the auto maker reported record third-quarter vehicle sales in China.

After the bell today, we'll get a report from chipmaker Xilinx .

Shares of American Airlines parent AMR jumped after Barclays upgraded its rating on the stock to "equal weight" from "underweight."

In the news, Bloomberg LPhas agreed to buy BusinessWeekfrom McGraw-Hill for an undisclosed amount.

Volume was slightly below average, with 1.35 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, roughly 3 to 1.

— Reuters contributed to this article.

Still to Come:

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

Send comments to cindy.perman@nbcuni.com.

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