Stocks rose for a second consecutive session on Tuesday, as strong quarterly results from several blue chip companies was enough to offset investors' uncertainty over the health of the economy. Late Monday, Apple (AAPL) released its fourth-quarter results, reporting a 67 percent increase in income on strong sales of its iPods, iPhones, and Macintosh computers. Additionally, Dow components American Express (AXP) and DuPont (DD) reported profit growth that exceeded analysts' estimates. AT&T (T) also turned in a strong third-quarter performance, as the company's net income rose 41 percent, while its revenue nearly doubled, rising 93 percent. Stocks opened the session well into positive territory on strength from the strong quarterly results. However, in late-morning trading, selling pressure infiltrated the markets, as investors mulled over comments from several corporate CEO's on the health of the U.S. domestic market. The losses were short-lived, as the strong quarterly results were enough to offset those fears. The Dow finished the session at 13,676.23, an increase of 109.26 points, or 0.81 percent, while the S&P 500 rose 13.26 points, or 0.88 percent, to end at 1,519.59.The Nasdaq posted the largest percentage gain, rising 45.33 points, or 1.65 percent, to end the session at 2,799.26. Dow Components The Dow posted a sharp gain on Tuesday, led by strong quarterly results from several of the average's components. Pharmaceutical company Merck (MRK) posted the largest gain within the Dow, as it continued to rise after releasing strong third-quarter results on Monday. Investors believe that the company's revenue will continue to rise on strong vaccine and drug sales. AT&T (T) also saw significant strength after the company posted a 41 percent increase in third-quarter income and a 93 percent jump in revenue. Shares of the company closed up 2 percent. Microsoft (MSFT) also saw significant strength after the company announced that it plans to release a family oriented version of its Xbox 360 game console at a reduced price. It is hoped that the new version will be better able to compete with Nintendo's Wii. DuPont (DD) also ended the day higher, climbing out of negative territory in afternoon trading. Prior to the opening bell, the company reported an 8.5 percent increase in its third-quarter income on strong international growth. Additionally, shares of American Express (AXP) experienced strength, rising 3.1 percent, after the company reported a greater than expected third-quarter profit. Other Dow components that traded higher included Alcoa (AA), McDonald's (MCD), General Motors (GM), and JP Morgan (JPM). On the other hand, Wal-Mart (WMT) subdued the market's strength by posting a loss of 2.9 percent. The company experienced selling pressure after it said it expects slower sales growth over the next three years and plans to open fewer Supercenters than in the past. Other Dow components that traded lower included Citigroup (C) and 3M Corp. (MMM). Sector News The steel sector turned in one of the strongest performances on Tuesday, reversing two straight sessions of losses and driving the Amex Steel Index to a 3.4 percent gain. Within the steel sector, Mechel Open Joint Stock Company (MTL) posted one of the strongest gains, as its stock rose 8.8 percent. With the strength, the company reached a record closing high Gold stocks also turned in strong performances, benefiting from a rebound in the price of gold after seeing a sharp loss in the previous session. The strength led the Amex Gold Index to a 2.7 percent gain Oil service stocks also saw significant buying interest despite a decrease by the price of oil. Within the sector, Schlumberger (SLB) posted one of the largest gains, reversing sharp losses seen in the past two sessions after the company warned of margin weakness in North America. The airline sector also experienced considerable strength on Tuesday, as oil prices fell, Jet Blue (JBLU) reported strong third-quarter results, and Frontier Airlines (FRNT) was upgraded by JP Morgan. The strength led the Amex Airline Index to a 2.8 percent gain. Among airline stocks, Jet Blue posted a strong gain after the low cost carrier swung to a third-quarter profit for the first time in two years on increases in capacity and occupancy. The airline reported third-quarter income of $23 million, compared to a net loss of $500,000 in the same period a year ago. The wireless sector also outperformed the broader market, sending the Amex Wireless Index to a 2.6 percent gain. Among wireless stocks, Research In Motion (RIMM) turned in the best performance after it announced that it plans to start selling its Blackberry smart phone in China. Additionally, computer technology stocks ended higher, as they benefited from the blockbuster earning results from Apple (AAPL). Shares of Apple reached a record closing high, rising 6.7 percent after the company reported a 67 percent increase in fourth quarter income. The company's earnings were boosted by the sale of more than 2 million Macintosh computers and strong sales of its iPods and iPhones. On the downside, housing stocks posted some of the largest losses, leading the Philadelphia Housing Sector Index to a 0.6 percent loss. Among housing stocks, PMI Group (PMI) posted a loss of 11.5 percent, leading the sector lower, as it continued to suffer from a downgrade by Lehman Brothers on Monday. The semiconductor sector also finished the day in negative territory, with the Philadelphia Semiconductor Index fell closing down 0.3 percent. Among semiconductor stocks, Texas Instruments (TXN) turned in the worst performance after the company was downgraded by two analysts this morning after the company provided fourth quarter earnings guidance below analysts' expectations. Shares of the company fell 8.3 percent. Other Markets In overseas trading, Asian stocks had a strong session, rising throughout the day on strong earning reports from several Asian companies. Hong Kong's Hang Seng closed up 3.54 percent. Across the pond in Europe, stocks rebounded from the previous day's losses on strength within industrial and mining stocks. The U.K.'s FTSE 100 rose 0.85 percent. Crude oil declined on Tuesday in U.S. trading as December took over as the front-month contract. Light sweet crude for December delivery closed at $85.27 a barrel, down 75 cents on the session. Gold prices finished the session higher on Tuesday in U.S. trading. December gold closed at $763.10, up $3.10 on the session. Treasuries closed weaker, snapping a six session winning streak. For Tuesday, the yield on the benchmark 10-year note closed up 1.2 basis points at 4.405 percent. Looking Ahead On Wednesday, investors will continue to focus on corporate earnings to better gauge the overall health of the economy, along with two economic reports that will hopefully shed further light on the Federal Reserve's upcoming interest rate decision. The notable companies set to release quarterly results tomorrow include Auto Nation (AN), Boeing (BA), Conoco Phillips (COP), Legg Mason (LM), Merrill Lynch (MER), Nasdaq (NDAQ), Praxair (PX), and Anheuser-Busch (BUD). On the economic front, the National Association of Realtors is scheduled to release its report on existing home sales in September, which are expected to decline for the seventh consecutive month. The Energy Department is also due to release its report on U.S. oil inventories, which could have an affect on the price of oil.
October 23, 2007 4:44 PM