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Stocks Gain; HP Falls, Cisco Rises

Stocks rose across all sectors Monday as investors continued to fuel a modest August rally. Financials were among the weakest performers, and Hewlett Packard shares suffered from the sudden exit Friday of CEO Mark Hurd.

Dow component HP captured the market's attention following Hurd's resignationon Friday after an investigation found that he had falsified expense reports to conceal a relationship with a female contractor. HP fell more than 7 percent Monday morning.

The fact the market is hanging on to gains also was affirmation that Wall Street may be looking beyond the nation's weak jobs picture.

A report Friday showed the economy shed 131,000 jobs in July, sending stocks plunging. But the market staged a late-day rally, the momentum from which was carrying over into Monday's trading.

Cisco, McDonald's and IBM were at the head of the Dow pack early Monday. McDonald's reported same-store sales globally rose 7 percentand were up 5.7 percent in the US after strong sales for new drink products helped increase business.

Banks were trailing with JPMorgan Chase and Bank of America among those leading financials lower. Regional bank PNC Financial also fell.

As second quarter earnings season comes to a close, Goldman Sachs issued a report saying a weak U.S. economic forecast has prompted the firm to raise its 2010 EPS estimate for the S&P 500 to $81 from $78, but to lower its 2011 EPS estimate to $89 from $93.

Goldman also lowered its 2010 forecast for the S&P 500 index to 1200 from 1250. The firm's 12-month target for the S&P is 1250, about 11 percent higher than today.

Home builders were among the biggest early market movers as investors grew more comfortable that record-low interest rates would help the industry through a slow recovery. In another piece of incrementally good news, Zillow.com said Monday that fewer homeowners owed more than their homes were worth—commonly referred to as being "underwater" on a mortgage.

Freddie Mac meanwhile, was down more than 5 percent after posting a large loss for the second quarter. The company is requesting $1.8 billion in additional federal aid.

The SPDR Homebuilders exchange-traded fund gained more than 1 percent.

Sara Lee was down modestly after the company announced Chairman and CEO Brenda Barnes is stepping down following a stroke. CFO Marcel Smits, who has been handling the CEO duties since Barnes took a medical leave in May, will continue in that role until a new CEO is named.

Apple will also be in focus after news that Mark Papermaster, the company's executive in charge of iPhone engineering, has left the firm weeks after the "Antennagate" controversy over complaints of poor reception on the company's latest smartphone.

Shares of Research in Motion are in the spotlight after a Saudi official said on Sunday the BlackBerry maker and Saudi mobile firms were testing three servers to send communications and data through Saudi Arabia before Canada to address Riyadh's concerns over security. The Gulf state of Oman said Monday it has no plans to bar Blackberry service.

In earnings, Warren Buffett's Berkshire Hathaway second-quarter earnings fell 40 percent, but its core profit rose more than analysts had expected.

Tyson Foods said its profit nearly doubled to 65 cents a share, ahead of Wall Street estimates, but its shares fell after Goldman Sachs issued a "conviction sell" for the company.

The dollar rose against the yen on Monday, bouncing off a 15-year low after a disappointing U.S. July payrolls report boosted talk the Federal Reserve could consider further easing monetary policy as early as this week.

Following its meeting on Tuesday, the Fed is widely expected to renew its vow to keep rates near zero for "an extended period" and markets will watch closely for signs officials are growing more concerned the recovery is at risk or that there is danger of falling into a damaging vicious cycle of falling prices and slowing growth.

On Tap for This Week:

MONDAY: SEC vs. Fabrice Tourre hearing
TUESDAY: FOMC meeting, NFIB Small Business Optimism Index, Wholesale Trade data, Treasury 3-year note auction; Earnings after the bell the bell from Disney
WEDNESDAY: MBA purchase applications, international trade data, oil inventories; 10-year note auction; Earnings before the bell from Macy's and after the bell from Cisco
THURSDAY: Dell's annual meeting, jobless claims, import and export prices, 30-year bond auction; Earnings before the bell from Kohl's and after the bell from Nordstrom and Nvidia FRIDAY: CPI, retail sales, consumer sentiment, business inventories; Earnings before the bell from JC Penney