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After some early hesitation, stocks were solidly higher Monday afternoon as Wall Street rebounds from last week's tumble on hopes Ben Bernanke will be reappointed and a rally in the basic materials sector.
Today’s Markets
As of 2:58 p.m. EST, the Dow Jones Industrial Average rose 73.46 points, or 0.72%, to 10246.44, the Standard & Poor's 500 gained 10.38 points, or 0.95%, to 1102.14 and the Nasdaq Composite picked up 15.05 points, or 0.68%, to 2220.33. The FOX 50 added 7.75 points, or 0.98%, to 798.57.
Aside from new shows of support over the weekend for Bernanke, the chairman of the Federal Reserve, market sentiment was boosted earlier by earnings beats from Halliburton (HAL) and AK Steel (AKS). However, the Dow had been up nearly triple digits before a new report revealed a worse-than-expected decline in December existing home sales.
More than half of the Dow's 30 components were in the green, led by Caterpillar (CAT), General Electric (GE) and Intel (INTC). The index's biggest percentage losers were Kraft (KFT) and American Express (AXP).
The Nasdaq Composite saw less buying as Google (GOOG) and Amazon.com (AMZN) slid by 2% a piece. The sector is likely to be moved by Apple (AAPL), which is expected to report robust growth after Monday's close.
Wall Street suffered a wave of selling last week -- wiping 553 points off the Dow in just three days -- on fears Bernanke won’t be confirmed, China’s economy could be overheating and the White House’s new efforts to reign in big banks.
“The market will eventually look past these Washingtonian speed bumps and focus on what is really important -- earnings,” Peter Kenny, managing director at Knight Capital Group, wrote in a note. “We are in correction mode however, and as trend dictates performance, you have to be somewhat defensive. We have had an incredible run. Smart money is cashing in on winning trades and lowering the risk profile.”
Wall Street pared some of its gains after the National Association of Realtors said existing home sales plunged by 16.7% last month, marking the steepest decline since records began in 1968 and missing expectations. However, shares of PulteHomes (PHM) and other home builders rose as median prices rose 1.5% -- the biggest gain since May 2006 and first rise since Aug. 2007. Also, inventories tumbled to their lowest level since March 2006, another positive sign.
Thanks to a full-court press from the White House, Bernanke’s reappointment at the Fed seemed a little more certain over the weekend after several key Senators, including Minority Leader Mitch McConnell, expressed support for Bernanke or said they expect him to be reappointed. Bernanke will need 60 votes to exceed the procedural hurdles necessary in order be reappointed.
Friday’s selloff, the markets’ steepest since late October, was triggered by a slew of non-committed Senators saying they oppose Bernanke. The Fed chairman, who specialized in his academic years on the Great Depression, is widely considered on Wall Street as the most qualified person for the job and has earned the trust of the markets. A vote is expected before Jan 31 when his term expires.
Boosted by AK Steel's (AKS) stronger-than-expected fourth-quarter profit of 36 cents on revenue of $1.32 billion, the basic materials sector led the way up on Wall Street. Analysts had forecasted EPS of just 20 cents on lighter revenue of $1.25 billion.
In the commodity markets, crude and gold posted modest gains. Crude rose 72 cents a barrel, or 0.97%, to $75.26. Gold gained $6 a troy ounce, or 0.55%, to $1095.20.
Corporate Movers
American International Group’s (AIG) bailout was treated with national-security level secrecy by U.S. securities regulators after a request from the New York Federal Reserve, which orchestrated the rescue, Reuters reported, citing emails. The Fed was only comfortable with AIG submitting critical documents to the SEC after getting assurances that “special security procedures” would be used, including allowing just two employees to review the document and keeping it in a safe, the wire service reported.
General Motors named Chairman Ed Whitacre Jr. its permanent CEO, ending the auto maker’s two-month search for a replacement for Fritz Henderson, Whiteacre, a former AT&T (T) exec, had been serving as interim CEO.
Ticketmaster's (TKTM) merger with Live Nation (LYV) was approved by the Justice Department with conditions, Dow Jones Newswires reported. The U.S. is requiring Ticketmaster to license ticketing software to concert promoter AEG and divest ticketing assets, including Paciolan. Shares of both companies surged more than 16% to 52-week highs.
Halliburton’s (HAL) profits shrank 48% during the fourth quarter but the No. 2 U.S. oilfield services company managed to exceed analysts’ expectations. Halliburton’s non-GAAP profit of 28 cents and 3% rise in revenue to $3.7 billion topped estimates.
Wal-Mart’s (WMT) Sam’s Club announced plans to slash 10% of its workforce over the weekend, eliminating more than 11,200 jobs, by outsourcing its in-store demonstrations and a recruitment position. The job cuts will mostly impact part-time workers.
Global Markets
The U.K.'s FTSE 100 slipped 0.8% to 5260.31, France's CAC 40 fell 1.02% to 3781.85 and Germany's DAX closed down 1.12% to 5631.37.
In Asia, Tokyo's Nikkei 225 lost 0.74% to 10512.69, Hong Kong's Hang Seng sank 0.62% to 20598.55 and China's Shanghai Composite tumbled 1.09% to 3094.41.
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