On Monday, the 30-stock Dow Jones industrial average surged 132.79 points, or 1.29%, to 10,450.95.  The broad Standard & Poor's 500-stock index rose 14.86 points, or 1.36%, at 1,106.24 and the tech-heavy Nasdaq composite index jumped 29.97 points, or 1.40%, to 2,176.01. Trading volume was light, with NYSE volume less than 1 billion shares, as advancing shares outran decliners by a four-to-one margin.  Wall Street’s fear gauge, the CBOE Vix, plummeted 4.6% to 21.16.

Treasuries lost ground as investors’ risk appetite grew.  A number of analyst upgrades also helped shares yesterday and after the close Hewlett-Packard (NYSE:HPQ) came out with strong numbers and also announced plans to triple its repurchase plan.

Among the DJIA components, all but two gained, led by Verizon (NYSE:VZ), up 3.0%, AT&T (NYSE:T), up 2.9%, General Electric (NYSE:GE), up 2.9%, and Chevron (NYSE:CVX), up 2.6%.  A Barron's article suggested AT&T (NYSE:T) shares undervalued due to concerns its exclusive iPhone contract with Apple (NASDAQ:AAPL) might not be extended next year; Verizon (NYSE:VZ) shares jumped shot up on hopes the exclusivity agreement might not be extended.  And Chevron (NYSE:CVX) shares gained from the dollar’s retreat.

All ten S&P 500 industry groups advanced, led by consumer services and telecommunications, both up 2.7%, oil and gas, up 1.6%, and industrial and tech shares, both up 1.5%.

Gold prices jumped to fresh highs yesterday, before giving up some ground to settle at $1164.70, up $17.90.  Meanwhile, the greenback dropped 0.7% to 75.13 against a basket of currencies.  This afternoon's FOMC meeting minutes will be scrutinised by investors for any evidence of a timing change for its asset purchase programs.  Such considerations are also key to the trajectory for gold pricing, viewed as an inflation hedge.

Earnings reports are due from Barnes and Noble (NYSE:BKS), Borders (NYSE:BGP), Dollar Tree (NASDAQ:DLTR), Heinz (NYSE:HNZ) and Hormel (NYSE:HRL).

On Friday, the 30-share Dow Jones industrial average fell 14 points, or 0.1%, to close at 10,318.16.  The broader S&P 500 index closed 0.3% lower at 1091.38 and the tech-heavy Nasdaq finished the day at 2146.04, off 0.5%.  On the week, the Dow average managed to hang on to gains, registering a paltry 0.5% advance.  The S&P 500 and the Nasdaq fell 0.2% and 1%, respectively.  On the New York Stock Exchange, 1.1 billion shares exchanged hands, with declining issues ahead of those that advanced in price by a three-to-two margin.

Last week’s disappointing reports on housing and weak forecasts from technology companies had antsy investors swooping up safe haven investments like Treasury bonds and dollar.  The demand for safe havens also spiked after European Central Bank President Jean-Claude Trichet remarked that the bank is planning to unwind some of its stimulus measures.  A higher dollar pushed crude prices lower and pressured stocks.

Nevertheless, at the center of the activity on the Wall Street is the ascending price of such physical assets as gold, which touched its fresh highs of $1146.80 on Friday, and a declining dollar.  The metal, although lacking fundamental valuation measures, has surged 29.7% so far this year.  Since India's central bank bought 200 tons from the IMF, the metal has jumped 11.5% on its dollar-alternative, safe-haven, inflation-resistant appeal.

Meanwhile, the decline in the US dollar has raised valuation expectations for the major industrial companies, with offshore sales expected to boost revenues.  Nevertheless, this week’s highlight remains today’s after-market-close earnings from Hewlett-Packard (NYSE:HPQ).  Last week the company preannounced strong quarterly numbers, anticipating record sales results of $30.36 billion, and earnings of $1.13, and also lifted its 2010 guidance.

Last week, the 1% decline in the technology shares came after weaker-than-expected guidance from two software companies, Autodesk (NASDAQ:ADSK) and Salesforce.com (NYSE:CRM), was compounded by disappointing numbers from Dell (NASDAQ:DELL).  Technology companies felt the heat after Dell (NASDAQ:DELL) reported quarterly earnings that were well below analysts’ expectations.  The company said sales of its computers to big businesses remain weak.  Shares in the company plunged 10% to $14.29.  So far in November, the NASDAQ has advanced 5%, and is up 36.1% year-to-date. 

The 0.2% pullback in S&P500 was caused by declines in oil and gas (-1.4%) and tech (-1.3%) sector shares that offset gains in health care issues (+1.5%) and basic materials (+1.2%).

The earnings calendar has slowed, but companies still due to report include: Campbell Soup (NYSE:CPB) on Monday; American Eagle (NYSE:AEO), Barnes and Noble (NYSE:BKS), Dollar Tree (NASDAQ:DLTR) on Tuesday, with Deere (NYSE:DE), J Crew (NYSE:JCG) and Tiffany (NYSE:TIF) on Wednesday.

The spike in bond prices came even as the Treasury announced plans to auction a record $118 billion in new notes next week – an auction schedule of $44 billion 2-year notes on Monday, $42 billion 5-year notes Tuesday, and $32 billion 7-year notes on Wednesday.

The Dow, which had plunged as much as 170 points during the session, ended down 93.87 points, or 0.9%, to 10,332.44.  The broader Standard & Poor's 500 index fell 14.90 points, or 1.3%, to 1,094.90, while the tech-heavy Nasdaq composite index dropped 36.32 points, or 1.7%, to 2,156.82.  Wall Street’s fear gauge, the CBOE Vix, jumped more than 4%.  Crude prices dropped $1.93 to $77.46. Gold prices rose to their fifth straight record close, up 70 cents to $1141.90.

As glimmers of a full-blown economic recovery fade, investors have increasingly become intolerant, locking in profits at every opportunity.  Also, a lack of conviction on part of the market to push beyond the current rally has been a dampener and concerns of an asset bubble build-up due to accommodative monetary policies have diminished risk appetites, sending daily average volume to levels of only about 1 billion.   

Nevertheless, to show not all is bad, the OECD raised its growth estimates for its 30-country members to 1.9% in 2010 from June's estimate of a 0.7% growth, and to a 2.5% GDP expansion in 2011.

Tech shares, already up 54.3% year-to-date, fell 1.7% Thursday, after Merrill's analyst slashed 2010 global growth targets, and downgraded ten companies in the semiconductor sector.  Intel (NASDAQ:INTC) shares fell 4.1%, and Texas Instruments (NYSE:TXN) retreated 3.4% after the downgrade.  Dell (NASDAQ:DELL) shares plunged 6.1% in premarket trading, after the company reported earnings that missed analysts’ projections.

Among the S&P 500 industry groups, energy producers, off 2.1%, were the biggest decliners.  ConocoPhillips (NYSE:COP) fell 1.9% and Chevron Corp. (NYSE:CVX) dropped 2% as crude prices fell for the first time in four days. Schlumberger Ltd. (NYSE:SLB) shares fell 3.3%.

The Dow, which had slid as much as 77 points in the morning trading, closed down 11.11 points, or 0.1%, to 10,426.31.  The broader S&P 500 index slipped 0.52, or 0.1%, to 1,109.80, while the Nasdaq, hurt by the weakness in tech shares, fell 10.64, or 0.5%, to 2,193.14.  Bond prices fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.37% from 3.33% late Tuesday.  Crude prices advanced 44 cents to settle at $79.58 per barrel.  Volume remained light, with only 1.063 billion shares trading on the NYSE, and declining issues ahead of advancers by an 8 to 7 margin.

Technology shares were under pressure after Autodesk Inc. (NASDAQ:ADSK) and Salesforce.com (NYSE:CRM) gave grim forecasts and BMO Capital Markets noted Research in Motion (NASDAQ:RIMM), the maker of Blackberry phones, faces increased pressure as consumers opt for cheaper phones.  However, shares in Sprint Nextel(NYSE:S) continued their forward run, jumping 6.7% after the previous session's 13% surge, on reports the company had paid off $1 billion in debt.

A weak housing report fuelled recovery concerns but shares in the sector managed to move higher after Citigroup (NYSE:C) raised Pulte Homes (NYSE:PHM) to “buy," saying the shares are "undeservedly out of favor." Citigroup raised its price target on the firm to to $12 from $11.  DR Horton (NYSE:DHI) rose 1.9% and Ryland (NYSE:RYL) advanced 0.8%, while Toll Brothers (NYSE:TOL) fell 0.9%. 

Financials also helped stem the retreat as hedge fund operator John Paulson noted in a quarterly post to shareholders that Bank of America shares will reach $29.81 by the end of 2011.

Seven of the ten S&P500 industry sectors moved lower Wednesday.  Tech shares slipped 0.6%, followed by 0.5% declines in basic materials, industrials, and utilities, 0.4% drops in oil and gas, 0.2% retreat in consumer services, and a 0.01% fall in consumer goods.  Stemming the retreat in the sector were financials, up 0.8%, and telecommunications, up 0.2%.  In a quarterly post to shareholders, hedge fund operator John Paulson said he expects Bank of America (NYSE:BAC) shares to double over the next few years.

Waning risk appetites sent gold prices up 20 cents to a fresh all-time high of $1,139.40.  Treasuries rose, pushing corresponding yields lower.  The yield on the benchmark 10-year note slipped to 3.33% from 3.34% late Monday.  Crude prices closed above $79 per barrel.  Copper prices rose to 14-months highs on expectations that China demand will remain robust.

A perpetual decline in the value of the dollar and record low interest rates in the US have driven stocks higher as investors, seeking higher return on their investments, have sought refuge in equities.  A subdued inflation has also proved welcome for the economy. 

This morning’s stock futures show a mixed opening on the Street.  Dow Jones industrial average futures are down 2 points, or about 0.1%, at 10,396.  Standard & Poor's 500 index futures are up 0.10, or nearly 0.1%, at 1,107.50, while Nasdaq 100 index futures are down 5.50, or 0.3%, at 1.803.25.

On Tuesday, the 30-share Dow Jones industrial average rose 30.46 points, or 0.3%, to 10,437.42, its highest close since October 2, 2008.  The Dow had jumped 136 points Monday after the retail sales report.  The broad Standard & Poor's 500-stock index inched up 1.02 points, or 0.09%, at 1,110.32 and the tech-heavy Nasdaq composite index gained 5.93 points, or 0.27%, to 2,203.78.  Meanwhile, the price of US Treasuries continued to gain, with the 10-year up 7/32 as its yield eased to 3.323%.  On the New York Stock Exchange, volume slowed to 972,000 shares with declining shares ahead of advancing issues by an 8 to 7 margin. The Vix volatility measure fell 2.1% to 22.41.

Six of the ten S&P500 industry sectors managed gains yesterday, led by gains in basic material shares (+1.1%), technology (+0.5%), and telecommunications (+0.5%).  Consumer service shares (-0.4%), oil and gas (-0.2%), utilities (-0.2%) led on the downside, with industrials shedding 0.04%.

The US dollar gained against a basket of currencies yesterday in a delayed reaction to Fed Chairman Bernanke's remarks that the Fed is "attentive to implications of changes in the value of the dollar," as well as indications the Fed may be inching toward more restrictive policy measures as financial markets show signs of improvement.

A cautious holiday season guidance from major retailers such as Target (NYSE:TGT) and Home Depot (NYSE:HD) weighed on retail shares. Target (NYSE:TGT), down 3.0% on Tuesday, said average transaction size has dwindled in November, adding it sees lower fourth quarter same-store-sales.  Home Depot (NYSE:HD), off 2.4%, provided below-consensus fourth quarter guidance, saying its markets remain under pressure.  Ford (NYSE:F) shares, meanwhile, rose to their two-year high on news its Fusion hybrid was named Motor Trend's 2010 Car of the Year.

Gold advanced 2% to fresh record highs; and the price of silver jumped 5.9%.  The initial gains in the equity prices followed strength in Asian markets yesterday.  Strength in Asia was partly helped by reports that said Japanese economy grew at its fastest pace in over two years, up 1.2% during the third quarter.  To add to the bullish mood in the region, leaders of the Asia Pacific Economic Cooperation promised to keep the stimulus measures in place.

On Monday, the 30-stock Dow Jones industrial average rose 136.49 points, or 1.33%, to 10,406.96. The broad Standard & Poor's 500-stock index was up 15.82 points, or 1.45%, at 1,109.30. The tech-heavy Nasdaq composite index gained 29.97 points, or 1.38%, to 2,197.85.  On the New York Stock Exchange, 25 stocks were higher in price for every six that declined.

Bernanke warned of threatening headwinds from rising unemployment and tight credit but added comments supporting the government’s stimulus measures.  Yields on US Treasuries declined, with the yield on the 2-years touching its lowest since last January.  At session's end, Meredith Whitney questioned the fundamentals of the current stock market rally, and said she expected a double-dip recession next year.

Analysts, meanwhile, raised their ratings on number of firms.  Goldman Sachs (NYSE:GS) raised its rating on Nordstrom (NYSE:JWN) from "neutral" to "buy," saying the firm would be a "key beneficiary of a recovery in high-end consumer" demand.  Goldman's analysts also started their coverage on Dell (NASDAQ:DELL) with a "buy" rating, saying the company would benefit from the PC upgrade cycle.  JP Morgan's (NYSE:JPM) added US Steel (NYSE:X) and AK Steel (NYSE:AKS) to its focus list.

A number of key retailer results are slated for today's release, looked to for guidance on current consumer demand. Among companies reporting today are: Home Depot (NYSE:HD), Target (NYSE:TGT), TJ Maxx (NYSE:TJX), Saks (NYSE:SKS), Autodesk (NASDAQ:ADSK), and Salesforce.com (NYSE:CRM).

On Friday, the 30-stock Dow Jones industrial average rose 73 points, or 0.72%, to 10,270.47. The broad Standard & Poor's 500-stock index was up 6.24 points, or 0.57%, at 1,093.48. The tech-heavy Nasdaq composite index advanced 18.86 points, or 0.88%, to 2,167.88.  For the week the Standard & Poor’s 500 Index jumped 2.3% to 1,093.48.  The Dow average rose 247.05 points, or 2.5%, to 10,270.47, following its 3.2% advance the prior week.

The spike in commodities came after the greenback fell Friday on news that the trade deficit widened more than expected in September.  Commodities, which are priced in US dollar, benefit from a decline in the currency.

Nevertheless, the greenback's weakened status remains a foreign policy issue of contention, and is likely to weigh on President Obama’s tone in China.  Meanwhile, brushing aside concerns of potential asset bubbles in China, the Chairman of the China Banking Regulatory Commission, instead, cautioned the weak dollar "is boosting speculative investment in stock and property markets and will pose new, real and insurmountable risks to the global recovery and particularly to the recovery in emerging markets."

Treasury Secretary Geithner last week repeated the Administration's commitment towards a strong dollar; nevertheless, the impact of a weak dollar on improving American products' competitive positioning overseas markets is widely expected to help the sustainability of a fragile recovery in the US.

On Friday, the Walt Disney Co. (NYSE:DIS) said quarterly profit rose 18%, helped by higher revenue at its cable, broadcast and movie studio divisions.  Abercrombie (NYSE:ANF) reported better-than-estimated results, while J.C. Penney (NYSE:JCP) raised its earnings and revenue outlook, offsetting a lower-than-expected consumer sentiment post from the University of Michigan.

Among retailers reporting during the week are: Lowe's (NYSE:LOW) and Pacific Sunwear of California (NASDAQ:PSUN) today; Home Depot (NYSE:HD), Target (NYSE:TGT) and TJ Maxx (NYSE:TJX) on Tuesday; BJ's Wholesale (NYSE:BJ) and the Limited (NYSE:LTD) on Wednesday; Sears Holding (NYSE:SHLD), Gap (NYSE:GPS) on Thursday.

A busy Fed calendar includes today's comments from Bernanke; on Tuesday from Lacker, and Pianalto; on Thursday from Plosser, Fisher, Ghosn and Rattner; and on Friday from Plosser. Treasury Secretary Geithner speaks on Tuesday and Thursday.

The strength in US dollar, based upon its safe-haven appeal, undermined investors' appetites for riskier, high-yielding assets such as equities as upside guidance from DJIA components Wal-Mart and Hewlett-Packard failed to stem the retreat.

The Dow Jones industrial average fell 94 points, or 0.9%, to close at 10,197.47.  The S&P 500 retreated 11 points, or 1%, to close at 1,087.24, after climbing to an intraday high of 1,101.97.  The tech-heavy Nasdaq composite index retreated 18 points, or 0.8%, to settle at 2,149.02.  On the New York Stock Exchange, declining issues outpaced those that advanced in price by a four-to-one margin as volume slowed to 828 million shares.

Twenty-six of the thirty Dow average components ended lower, with energy and financial shares leading the decliners.  The CBOE Vix volatility gauge jumped 5.21% to 24.24.  Gold prices fell $8 to $1106.60. 

On the S&P 500, shares of financial companies were the second-steepest decliners among the 10 industry groups, falling 1.8%.  Bank of America (NYSE:BAC) dropped 2.3% to $16.06 and JPMorgan Chase (NYSE:JPM) fell 2.3% to $43.30.  Energy shares slumped 2% and led the decliners among 10 groups.  The falling shares wiped off an earlier advance in tech shares that was fueled by Hewlett-Packard Co.’s (NYSE:HPQ) takeover of 3Com Corp. (NASDAQ:COMS).

Meanwhile, the US Treasury said budget deficit widened to $176.4 billion in October, the largest October shortfall on record and the fifth largest monthly deficit ever.  Economists had expected a $150 billion shortfall.

The Dow Jones industrial average, which hit an intraday high of 10,341, advanced 44 points, or 0.4%, to close at 10,291.26. The S&P 500 added 6 points, or 0.5%, to close at 1,098.51, and the tech-laden Nasdaq composite rose 16 points, or 0.7%, to end the day at 2,166.90.  On the New York Stock Exchange, 19 stocks were higher in price for every 11 that declined

Nine of the ten S&P500 industry groups ended in the green, with financials (+1.3%), basic materials (+1.0%) and technology (+0.7%) leading the gainers.  Utilities fell 0.2%.  On the DJIA, Bank of America (NYSE:BAC) led the advancing issues as the firm’s CEO noted the integration of Merrill was running ahead of schedule, and will result in greater-than-anticipated cost savings in 2009.  Wal-Mart (NYSE:WMT) advanced 1.3% ahead of this morning's results.

Shares in home building companies rose after Toll Brothers (NYSE:TOL) said late Tuesday that signed contracts for new homes in its latest quarter jumped 42%.  Toll rose $3.02, or 16.4%, to $21.41.  Pulte Homes Inc. (NYSE:PHM) advanced 77 cents, or 8.1%, to $10.23, while Beazer Homes (NYSE:BZH) advanced 63 cents, or 12.4%, to $5.73.

Meanwhile, the greenback plunged to its lowest level since 2008 and ended the day just below $1.50 against the euro.  The steady decline in the greenback has been precipitated by continuing suggestions from the Fed that interest rates will remain low for an extended period as the recovery strengthens.  Across the globe, markets have interpreted this language as suggesting a mid-2010 timetable for raising rates. 

However, gold prices steered clear of wavering sentiment and hit an all-time high Wednesday at $1114.60 per troy ounce, up $12.10.  China reported greater-than-expected industrial output and retail sales, sending resource-related shares higher. Commodity prices also rose, with the broad-based, DJ-UBS index up 0.6% to 133.408. Crude prices gained, up 0.3% to $79.28.

Today's retailers' results will be an indication of consumers' appetites for goods.  Although the third quarter is seasonally slow, the current quarter numbers will be closely watched as the holiday season approaches.  Yesterday's reported loss at Macy's (NYSE:M) was less than anticipated; however, its raised fourth quarter guidance failed to meet expectations. Companies reporting results today include: Kohl's (NYSE:KSS), Nordstrom (NYSE:JWN), Urban Outfitters (NASDAQ:URBN) and another key consumer-driven firm, Disney (NYSE:DIS).
 

The Standard & Poor's 500 Index shed 0.01%, to 1,093.01 and the technology-laden Nasdaq Composite Index slipped 2.98 points, or 0.14%, to close at 2,151.08.  On the New York Stock Exchange, three stocks declined in price for every two that rose.  Volume was light as only 990 million shares exchanged hands.

Record low interest rates and a sliding dollar have helped stocks in recent months as investors have taken their focus away from some of the persistent worries of the economy.  Also, with the Federal Reserve continuing its highly accommodative monetary stance and the G20 finance ministers pledging to keep economic stimulus in place, risk appetites have received a boost lately. 

Of the $81 billion in Treasury auction scheduled for this week, yesterday’s $25 billion sale of 10-year notes witnessed decent demand, following robust demand for the $40 billion in 3-year notes on Monday. Bond markets are closed today for Veterans Day.

Shipping company FedEx Corp. (FDX) yesterday said it expects to ship more than 13 million packages on December 14, its busiest shipping day of the year.  United Parcel Service Inc (NYSE:UPS) said it sees growth in its volumes next year as the global economy recovers.  American Express (NYSE:AXP) said cardholder spending grew in October, with billing up 3%.

Meanwhile, Bank of America's (NYSE:BAC) Ken Lewis noted his firm is "keeping its head above water" this year.  Bob Toll of Toll Brothers (NYSE:TOL) noted, "Home buyers began to emerge from their bunkers in late March 2009 and the market continued to gain momentum up to Labor Day.  Since then demand has been volatile. This may be due in part to typical seasonality, but the more likely cause is concern about unemployment and the overall economy."

A number of Fed speakers yesterday sung the tone of caution, while mostly agreeing on the fragility of the economic recovery.  Both Lockhart and Yellen warned unemployment rate may remain high for the next several years.  Rosengren warned that with high unemployment levels, the US economy is not yet in a position to warrant exit strategies.  This morning Treasury Secretary Geithner reiterated the importance of the dollar strength for the health of the US economy.

The Dow Jones industrial average, which was well supported by strength in its all but one component, rose 203 points, or 2.0%, to a 13-month high of 10,227.  The S&P500 climbed 2.2% for its sixth straight session gain to 1093 and the tech-heavy NASDAQ gained 2.0% to close at 2154.  The market’s measure of volatility, the CBOE Vix, plunged 4.3% to 23.15.

All ten S&P500 industry groups ended in the green, led by gains in basic material shares (+3.5%) and financials (+3.5%).  Crude prices added $2.00 to close at $79.43 even as Hurricane Ida was downgraded to a tropical storm.  Gold prices went past the $1100 level, up $5.70 to $1101.40, as the metal shined brightly on its inflation hedge appeal.  At the same time, greenback took a beating on such concerns, declining 1.0% against a basket of currencies, to a 15-month intraday low of 75.04.  Shares of Freeport-McMoRan (NYSE:FCX) advanced 4.6%; Rio Tinto (NYSE:RTP) surged 5.9%.

A weak dollar helped shares of companies with large exposure to overseas markets.  Caterpillar (NYSE:CAT) jumped 4.2%, DuPont (NYSE:DD) gained 3.7%, Boeing (NYSE:BA) rose 3.4%, and General Electric (NYSE:GE) added 3.4%.

Financials rose 3.5% with American Express (NYSE:AXP) jumping 4.9%, Bank of America (NYSE:BAC) up 4.8%, Discover Financial Services (NYSE:DFS) up 5.9% and Capital One Financial (NYSE:COF) up 5.6%.  The Fed noted that of the ten bank holding companies that underwent US government’s stress tests only GMAC has raised its capital reserves sufficiently to meet the economic risks of higher unemployment and slowing growth. On Thursday, the FDIC meets to address the negative implications of an accounting rule change requiring credit-card firms to bring back on to their books card loans that are bundled into securities and sold to investors.

While the economic calendar remains light and corporate earnings schedule slim, Fed speak schedule is heavy, with Atlanta Fed President Lockhart slated to take the stage at 9:15 ET; San Francisco President Yellen at 10:15. Boston Fed President Rosengren is due to speak at 4:15, Dallas Fed President Fisher at 7:30 and Fed Governor Tarullo at 8:30.  Senate Banking Committee Chairman Christopher Dodd is expected to release a draft of the bill on financial regulatory reform.

On Friday, the Dow Jones industrial average rose 17.46 points, or 0.2%, to 10,023.42 and the Standard & Poor's 500 index added 2.67 points, or 0.3%, to 1,069.30.  The Nasdaq composite index advanced 7.12 points, or 0.3%, to 2,112.44.  For the week, the Dow and the S&P 500 index advanced 3.2%, while the Nasdaq rose 3.3%. 

On the New York Stock Exchange, 1.1 billion shares exchanged hands Friday as advancing shares narrowly edged ahead of those that declined in price.  Surprisingly, as investors' apprehension in front of the key economic and earnings data grew, the CBOE volatility index declined over 20%, closing at 24.19 on Friday.

Analyst upgrades helped a number of stocks Friday.  Analysts at Bernstein raised their ratings on both General Electric (NYSE:GE) and Amazon.com Inc. (NASDAQ:AMZN) to “outperform," sending shares in those companies up 6.2% and 4.6%, respectively, and helping give major averages a lift.  General Electric, which also received a rating upgrade from Oppenheimer, was the leading gainer in the Dow average as analysts saw reduced risks to its finance unit.  Lowe’s Cos (NYSE:LOW) jumped 4.3% and Home Depot (NYSE:HD) added 1.8% after analysts at Bank of America Corp. (NYSE:BAC) raised the two companies to “buy" from “underperform."

The coming week, though devoid of any substantial economic event, does contain a number of corporate posts that are likely to give an indication about the health of the consumer as markets enter the key holiday season.  Disney (NYSE:DIS) and Wal-Mart (NYSE:WMT) report their numbers on Thursday.  Wal-Mart (NYSE:WMT), which has not been posting monthly comparable sales reports, will be watched closely for how the retailer fared during the third quarter.  Kohl's (NYSE:KSS) also reports on Thursday, with Macy's (NYSE:M) numbers expected on Wednesday and JC Penney's (NYSE:JCP) on Friday.  Most analysts expect favorable results, as shoppers remain on a bargain hunting spree.  Setting the fire to the latest advance in stocks was the estimate-topping numbers from 80% of the S&P500 firms that have so far reported their numbers.

This morning’s futures suggest stocks are likely to open with gains of at least 1%.  The healthcare package passed the House by the narrowest of margins, with much wrangling still expected before any decision is reached within the Senate.  The G-20 meeting of Finance Ministers promised extended government stimulus measures.  Meanwhile, the Moody's Investor Services (NYSE:MCO) upgraded its rating on China and Hong Kong to positive from stable.

Cisco Systems’ (NASDAQ:CSCO) CEO John Chambers said he now sees a global economic recovery, fueling a rebound in the company’s sales this quarter.  The Dow average jumped 203 points, or 2%, while the tech-heavy NASDAQ, riding high on Cisco’s forecast, bolted up 50 points or about 2.4%. 

All ten S&P 500 industry groups ended in the green, with banking shares advancing 2.6% as analyst Dick Bove of Rochdale Securities noted the group will double by the end of 2010.  Technology shares advanced 2.2%.  Qualcomm Inc. (NASDAQ:QCOM) jumped 5.4% to $43.85 and Microchip Technology Inc. (NASDAQ:MCHP) gained 3.9% to $25.37 after it was raised to “buy" from “neutral" at FTN Equity Capital Markets.  Research in Motion (NASDAQ:RIMM) jumped on news of its $1.2 billion share buyback plan as well as a Standard & Poor's ratings increase to "buy" from "hold."  A report on the semiconductor industry projected sales growth of 10% in 2010.

On the retail sales front, action was largely mixed.  About half of firms that reported numbers missed expectations as the growth proved selective. Costco (NASDAQ:COST) posted 3% same-store-sales gains excluding gasoline results; Gap (NYSE:GPS) registered a 4% sales growth and raised its third quarter guidance.  Luxury retailers Nordstrom (NYSE:JWN) showed surprising gains with its 6.5% sales increase.

On the political front, President Obama is expected to sign into law today an extension and broadening of the homebuyers' tax credits, to include both first-time buyers' credits of $8,000, and existing homeowners, in residence for over five years, of $6,500.  The measure also includes an extension of unemployment benefits by up to twenty weeks.

After the house vote, financials slumped 1.5% and led the decliners among the S&P 500 industry groups.  Analyst Meredith Whitney noted the biggest U.S. banks may face declining values on home-loan bonds with government backing as the Fed moves towards ending its $1.25 trillion purchase program.  Whitney said bank earnings are far from approaching "normalcy," and will reflect regulatory changes for an extended period.  JPMorgan (NYSE:JPM) fell 1.2% to $42.21 and Wells Fargo (NYSE:WFC) retreated 3.1% to $26.82.  Citigroup (NYSE:C) slipped 1.7% to $3.97.

On Wednesday, the 30-stock Dow Jones industrial average closed up 30.23 points, or 0.31%, at 9,802.14.  The broad Standard & Poor's 500-stock index edged was up 1.09 points, or 0.10%, at 1,046.50.  The tech-heavy Nasdaq ended the day almost unchanged.  On the New York Stock Exchange, eight stocks advanced for every seven that declined as volume slowed to 1.35 billion shares.

Meanwhile, gold prices continues their upward run and hit an intraday record high of $1098.50, before giving up most of that gain to settle at $1087.30.  The US dollar retreated 0.5% against a basket of currencies.

Yesterday, investors breathed a sigh of relief after the Fed’s announcement to keep interest rates near historically low levels for an extended period.  The Fed, in its policy assessment, noted the economic activity was likely to remain weak for some time and ruled out any plans of a premature exit.  As it continued with its highly accommodative monetary stance, the Fed offered a reminder that the current recovery still lacks strength to be self-supportive.

Healthcare shares Wednesday rose 1% and led the gainers within the S&P500 industry sectors as Republican gubernatorial wins were seen as votes against President Obama's healthcare initiative, likely to result in further delays to changes to the healthcare program. The Senate unanimously voted to extend jobless benefits and broaden homebuyer tax breaks, with the Congress expected to vote before week's end. Helped by the news housing shares finished higher, with Pulte Homes (NYSE:PHM) up 3.5%, Lennar (NYSE:LEN) up 3.4%, and DR Horton (NYSE:DHI) adding 3.2%.

On Tuesday, the 30-stock Dow Jones industrial average closed down 17.53 points, or 0.18%, to 9,771.91.  The broad Standard & Poor's 500-stock index added 2.53 points, or 0.24%, to 1,045.41 and the tech-heavy Nasdaq advanced 8.12 points, or 0.40%, to 2,057.32.  On the NYSE, volume slowed to 1.38 billion shares.  

The news of a sale of 200 tons of gold to India sent gold futures surging $32.10 to $1086.  Treasury prices declined with the 10-year off 16/32 to 101-08/32 and the corresponding yield surging to 3.47% from 3.41% Monday.      

Burlington Northern (NYSE:BNI) surged 28% to $97 after the $26 billion offer from Berkshire.  Technology stocks were under pressure following a Morgan Stanley (NYSE:MS) analyst downgrade of semiconductor companies. Intel (NASDAQ:INTC), the world’s biggest computer-chip maker, fell 2.7% to $18.50 and Novellus Systems Inc. (NASDAQ:NVLS) declined 5.2% to $19.71.  Shares in basic materials, oil and gas and industrials rose 1.8%, 1.5%, and 1.3%, respectively in yesterday's trade.  Meanwhile, automakers reported October sales numbers mostly higher from a year ago.  General Motors (NYSE:GM) posted its first y/y sales gain, in nearly two years, as its sales rose 5%; Ford (NYSE:F) said its sales rose 3%; Toyota (NYSE:TM) sales, although flat, were ahead of estimates of a 6% decline.  Chrysler sales fell 30%.

Nevertheless, corporate earnings so far have continued to beat Wall Street estimates, with 84% of the S&P500's 358 firms reported so far currently beating Street estimates.  Meanwhile, the S&P 500 is currently trading 55% above its 12-year low hit on March 9. 

Today’s earnings calendar includes quarterly reports from the following: Comcast (NASDAQ:CMCSA), Time Warner (NYSE:TWX), News Corp. (NYSE:NWS), Prudential (NYSE:PRU), Qualcomm (NASDAQ:QCOM), Devon Energy (NYSE:DVN), and Becton Dickinson (NYSE:BDX).

The positive surprise was enough to propel benchmark indexes to their biggest advance since July and send safe havens like Treasuries and dollar lower.  Caterpillar Inc. (NYSE:CAT) and Alcoa Inc. (NYSE:AA) advanced at least 5.1% after the Commerce Department said the economy returned to growth following four straight quarters of decline.  Crude prices jumped $2.44, or 3.1%, to $79.87 and gold was up $16.50 to $1046.40.

The S&P 500 registered its biggest one-day gain since July 23, jumping 2.2% to close at 1,066.11.  The 30-share Dow Jones industrial average shot up by 199.89 points, or 2.05%, at 9,962.58 and the tech-heavy Nasdaq Composite index 37.94 points, or 1.84%, to 2,097.55.  The advance was broad-based on the New York Stock Exchange where advancing issues ran ahead of those that declined by a five-to-one margin.  Treasuries also took a beating after an auction of seven-year notes received a weaker-than-expected response.  As the month-end nears, the DJIA has advanced 2.6% in October; the S&P500 0.9%, while the NASDAQ remains 1.2% lower for the month.

A lackadaisical third-quarter performance from Exxon Mobil (NYSE:XOM) could not dampen the mood either and the company’s shares edged up 0.16%.  Procter & Gamble (NYSE:PG), also a Dow component, reported weaker quarterly earnings but revenue was above expectations. The consumer products maker also raised the low end of its fiscal 2010 earnings forecast and its shares rose 4%.

Twenty-eight of the DJIA's 30 components finished higher while all ten industry sectors of the S&P500 rose during the day, led by advances in basic materials (+4.1%), financials (+3.9%), oil and gas (+2.4%), consumer services (+2.4%), and industrials (+2.2%). 

Among financials, MetLife Inc. (NYSE:MET) jumped 7.9% to $36.84 ahead of its earnings report.  After the close, the biggest U.S. life insurer reported estimate-topping third-quarter operating earnings of 87 cents a share.  Lincoln National Corp. (NYSE:LNC) surged 14% to $25.34 after it reported first quarterly profit in a year that was also ahead of estimates.

Meanwhile, the International Monetary Fund sharply boosted its outlook for Asian economic growth. The IMF also raised its next year's guidance.  The IMF now expects economic growth of 2.8% this year and 5.8% next, up from last May's estimates for 2009 growth of 1.2% and 2010 growth of 4.3%.

Firms reporting their earnings include: Chevron (NYSE:CVX), Duke Energy (NYSE:DUK), Sony (NYSE:SNE), and Weyerhaeuser (NYSE:WY).

The Nikkei 225 stock average fell 1.8% to 9,891.10 and Hong Kong’s Hang Seng index plunged 2.3% to 21,264.99 points. In Mainland China, the Shanghai Composite Index dropped 2.3% to close at 2,960.47.  All other major indices in the region ended in the red.   

On Wednesday, US stocks tumbled after a weaker-than-anticipated new home sales report aggravated concerns that the seven-month old rally has gone ahead of any economic recovery.  To add to the bearish sentiment Goldman Sachs lowered its projection for the third-quarter gross domestic product.  The government's report on third-quarter GDP is due Thursday.  Goldman Sachs said it now predicts third-quarter GDP rose at an annual rate of 2.7%, weaker than its earlier forecast of a 3% rise. 

This morning the Commerce Department reported the economy grew at a 3.5% rate.  The economy's return to growth follows four straight declines. The stimulus spending and the government ‘s cash-for-clunkers program is expected to have boosted consumer spending in the quarter, with residential investments also higher.

The Dow Jones industrial average dropped 119 points, or 1.2%, to close at 9,762.69 and the S&P 500 index declined 21 points, or 2%, to close at 1,042.63. The Nasdaq composite plunged 56 points, or 2.7%, to close at 2,059.61.  Volume on the NYSE jumped to 1.68 billion shares as declining issues ran ahead of those that advanced by a whopping nine-to-one margin.  The market's volatility index, the CBOE Vix, continued higher, up 12.4% Wednesday to 27.91.  Riding high on their safe-haven appeal, US Treasuries headed higher and the $41 billion 5-year note auction received good response. Prices on the 10-year increased 10/32 in price, dropping the yield to 3.415%.

All ten S&P500 sectors were in the red yesterday, led by falls in basic materials (-4.0%), oil and gas (-3.2%), financials (-2.9%) and industrials (-2.6%).  The US dollar continued its advance for the fifth straight day, trading up 0.5% against a basket of currencies.  The dollar’s rise saw commodities retreating. Crude prices fell 2.8% to $77.79.

Today's reports include: Allergan (NYSE:AGN), Eastman Kodak (NYSE:EK), ExxonMobil (NYSE:XOM), Monster Worldwide (NYSE:MWW), Procter & Gamble (NYSE:PG), and Sprint (NYSE:S).

The Dow Jones industrial average oscillated within a 200-point range and briefly touched the 10,000 mark, before some profit taking saw the index squandering the earlier advance and ending the day 104-points lower.  Technology shares, only sector to have recorded gains last week, fell out of favor and slid along with the broader market.  The technology-laden Nasdaq retreated 12.62 points, or 0.6%, to 2,141.63.  The CBOE Vix, the market’s measure of volatility, witnessed its sharpest one-day percentage increase in a month.     

As risk-appetite fell and investors turned to safer bets, the greenback moved further from last Wednesday's 14-month low of $74.94, up 0.7% against a basket of currencies.  Weak demand prospects sent crude prices off $1.82 to a close of $78.68.

The S&P500 witnessed weakness in all ten industry groups, but notable laggards were financials (-2.3%), basic materials (-2.0%), and oil and gas (-1.6%).  A moderate 1.39 billion shares traded on the NYSE, sharply lower than last year's average of 2.28 billion, as declining issues beat those that advanced in price by a three-to-one margin.

Financials came under the hammer as Dick Bove of Rochdale Securities lowered ratings on a number of regional banks, including Fifth Third Bancorp (NYSE:FITB), Sun Trust Banks (NYSE:STI), and US Bancorp (NYSE:USB).  To add to the weakness, a Saturday WSJ article indicated towards disagreements between Bank of America (NYSE:BAC) and the government over capital requirements before the firm could repay its bailout funds.  Rumors surfaced the company might need to sell shares to repay the funds.  Furthermore, FDIC Chief Sheila Bair cautioned banks still face "serious challenges."

Shares in homebuilders also witnessed weakness as the government pondered over whether to extend or possibly wind down the first-time homebuyers' tax credit due to expire November 31.  Concerned about the state of housing minus the catalyst, investors sold off homebuilders' shares, sending Toll Brothers (NYSE:TOL) down 4.2%, Lennar (NYSE:LEN) down 4%, and Beazer Homes (NYSE:BZH) off 4.4%.

Investors, looking for bargains, picked up financial shares as many banks noted lower loan losses.  Travelers (NYSE:TRV) surged almost 8% after reporting a three-fold jump in quarterly profit.  Travelers, together with McDonald’s (NYSE:MCD), led the Dow average higher.  AT&T Inc. (NYSE:T), also a Dow component, rose 0.6% after reporting better-than-expected profit.

The Dow Jones industrial average jumped 132 points, or 1.3%, to close at 10,081.31 and the S&P 500 index rose 11 points, or 1%.  The tech-heavy NASDAQ, limited by late-session, downward guidance from eBay (NASDAQ:EBAY), gained 14 points, or 0.7%.

The New York Times Co. (NYSE:NYT) was the leading gainer among the S&P 500 stocks, surging 23%, after reporting improved quarterly profit helped by cost-cutting measures.  3M (NYSE:MMM) beat both earnings and sales estimates for the quarter and raised its 2009 guidance. Dow Chemical (NYSE:DOW) also reported better-than-expected profit report.

Among financial stocks, PNC Financial (NYSE:PNC), Fifth Third Bancorp (NASDAQ:FITB) and Sun Trust Banks Inc. (NYSE:STI) said borrowing costs were declining and they were offering lower deposit rates.  Shares in all three companies recorded gains.   

Commodity prices declined as the greenback remained neutral, and with larger-than-expected Treasury bond auction scheduled for next week, the 10-year declined 8/32 in price.  The market’s measure of volatility, the CBOE Vix, eased to 20.69, off almost 7%.  This rally, nevertheless, appears to be taking a cue from corporate results rather than backward-looking economic data.  And yesterday's reports affirmed hopes for a sustainable recovery.

Today's calendar covers additional key corporate releases from Microsoft (NASDAQ:MSFT), Honeywell (NYSE:HON), Ingersoll-Rand (NYSE:IR), and Fortune Brands (NYSE:FO).

In what has been a volatile year, equity REITs gained approximately 29% (total return FTSE NAREIT Index) in the second quarter after falling 32% in the first quarter. So far in October, equity REITs are down about 1%; the worst performing sectors in October have been Self Storage (- 3.4%), Retail (-1.6%), Industrial/Office (-1.6%), and Residential (-0.8%).

OPPORTUNITIES

Many REITs are still trading at discounts to NAV (net asset value), traditionally a good "buy" signal. Over the past seven or so years, REITs have traded near or in excess of NAV.

With dividend cuts and share price gains, the average yield for equity REITs during the third quarter was about 4%. Although yields have exceeded that of the 10-year Treasury, the spread has narrowed considerably over the past quarter. Most companies have been raising cash through asset sales and equity financing, with the proceeds being used to pay down debt.

The credit freeze will have a positive effect on commercial real estate down the road; new office, apartment and retail construction has slowed considerably, which will benefit owners in a couple of years. Many companies that we cover have stopped all-new construction.

In this environment, we like well-capitalized companies that have adequate liquidity and manageable near-term debt maturities. Currently, we are bullish on American Capital Agency Corp. (AGNC), a mortgage REIT that invests exclusively in agency securities for which the principal and interest payments are guaranteed by U.S. government agencies like Ginnie Mae, Fannie Mae (FNM) and Freddie Mac (FRE). During the second quarter of 2009, American Capital reported net spread of 3.66% with 39.8% return on equity (ROE), and is one of the few companies to have increased the dividend.

Another stock worth mentioning is Vornado Realty Trust (VNO), the largest publicly traded office REIT in the New York region concentrating on Class A office properties. The core properties of Vornado are still performing at a high level, maintaining strong occupancies and increasing rents in most property formats. We believe this puts the company well ahead of many competitors, and warrants upside potential.

We would also like to mention Simon Property Group Inc. (SPG), the largest publicly traded retail real estate company in North America, with assets in almost all retail distribution channels. The geographic and product diversity of the company insulates it from market volatility to a great extent and provides a steady source of income. Furthermore, Simon Property's international presence gives it a more sustainable long-term growth story than its domestically focused peers.

WEAKNESSES

REITs still depend on access to capital to fund growth, and with the credit markets still not fully back to normal, it is difficult to raise money for new developments/acquisitions. In this scenario, most REITs are raising capital through property level debt, dividend reductions and equity offerings. Although both debt and equity financings provide the much-needed cash infusion, they could potentially burden an already leveraged balance sheet and/or dilute earnings. Property level debt is also harder to obtain and more expensive as commercial real estate prices continue to remain under pressure.

Fundamentals are declining in many suburban office markets as corporate expansion continues to slow. More and more corporations are putting off leasing decisions until the economy recovers. Recent employment trends are also not encouraging as the U.S. economy continues to shed jobs at a rapid pace. To date, the U.S. has lost about 7.2 million jobs since the start of recession in December 2007. The national unemployment rate has surged to 9.8%. As the U.S. economy struggles with the economic downturn, REITs will have trouble holding tenants and leasing new space.

Given the market uncertainties, we are bearish on Developers Diversified Realty Corporation (DDR), which is primarily engaged in owning and leasing shopping centers across the U.S., Puerto Rico, Brazil, Russia and Canada. The current recession has led to increased tenant bankruptcies, which in turn have led to a decline in occupancy and an increase in vacancy rates. The possibility of store closings at many Developers Diversified centers further adds uncertainty to the earnings, and it might have to re-let large "big-box" spaces at significantly lower rents in a very tough leasing environment.

We would also avoid Post Properties, Inc. (PPC), an apartment REIT relying heavily on low-barrier markets such as Atlanta, Dallas, Houston, Orlando and Tampa. We think the company will have a difficult time continuing to raise rents in a faltering economy, and expect flat rental rates and negative same-store revenue growth in 2009. Zacks Investment Research

In what has been a volatile year, equity REITs gained approximately 29% (total return FTSE NAREIT Index) in the second quarter after falling 32% in the first quarter. So far in October, equity REITs are down about 1%; the worst performing sectors in October have been Self Storage (- 3.4%), Retail (-1.6%), Industrial/Office (-1.6%), and Residential (-0.8%).

OPPORTUNITIES

Many REITs are still trading at discounts to NAV (net asset value), traditionally a good "buy" signal. Over the past seven or so years, REITs have traded near or in excess of NAV.

With dividend cuts and share price gains, the average yield for equity REITs during the third quarter was about 4%. Although yields have exceeded that of the 10-year Treasury, the spread has narrowed considerably over the past quarter. Most companies have been raising cash through asset sales and equity financing, with the proceeds being used to pay down debt.

The credit freeze will have a positive effect on commercial real estate down the road; new office, apartment and retail construction has slowed considerably, which will benefit owners in a couple of years. Many companies that we cover have stopped all-new construction.

In this environment, we like well-capitalized companies that have adequate liquidity and manageable near-term debt maturities. Currently, we are bullish on American Capital Agency Corp. (AGNC), a mortgage REIT that invests exclusively in agency securities for which the principal and interest payments are guaranteed by U.S. government agencies like Ginnie Mae, Fannie Mae (FNM) and Freddie Mac (FRE). During the second quarter of 2009, American Capital reported net spread of 3.66% with 39.8% return on equity (ROE), and is one of the few companies to have increased the dividend.

Another stock worth mentioning is Vornado Realty Trust (VNO), the largest publicly traded office REIT in the New York region concentrating on Class A office properties. The core properties of Vornado are still performing at a high level, maintaining strong occupancies and increasing rents in most property formats. We believe this puts the company well ahead of many competitors, and warrants upside potential.

We would also like to mention Simon Property Group Inc. (SPG), the largest publicly traded retail real estate company in North America, with assets in almost all retail distribution channels. The geographic and product diversity of the company insulates it from market volatility to a great extent and provides a steady source of income. Furthermore, Simon Property's international presence gives it a more sustainable long-term growth story than its domestically focused peers.

WEAKNESSES

REITs still depend on access to capital to fund growth, and with the credit markets still not fully back to normal, it is difficult to raise money for new developments/acquisitions. In this scenario, most REITs are raising capital through property level debt, dividend reductions and equity offerings. Although both debt and equity financings provide the much-needed cash infusion, they could potentially burden an already leveraged balance sheet and/or dilute earnings. Property level debt is also harder to obtain and more expensive as commercial real estate prices continue to remain under pressure.

Fundamentals are declining in many suburban office markets as corporate expansion continues to slow. More and more corporations are putting off leasing decisions until the economy recovers. Recent employment trends are also not encouraging as the U.S. economy continues to shed jobs at a rapid pace. To date, the U.S. has lost about 7.2 million jobs since the start of recession in December 2007. The national unemployment rate has surged to 9.8%. As the U.S. economy struggles with the economic downturn, REITs will have trouble holding tenants and leasing new space.

Given the market uncertainties, we are bearish on Developers Diversified Realty Corporation (DDR), which is primarily engaged in owning and leasing shopping centers across the U.S., Puerto Rico, Brazil, Russia and Canada. The current recession has led to increased tenant bankruptcies, which in turn have led to a decline in occupancy and an increase in vacancy rates. The possibility of store closings at many Developers Diversified centers further adds uncertainty to the earnings, and it might have to re-let large "big-box" spaces at significantly lower rents in a very tough leasing environment.

We would also avoid Post Properties, Inc. (PPC), an apartment REIT relying heavily on low-barrier markets such as Atlanta, Dallas, Houston, Orlando and Tampa. We think the company will have a difficult time continuing to raise rents in a faltering economy, and expect flat rental rates and negative same-store revenue growth in 2009. Zacks Investment Research

Bove of Rochdale Securities said earnings at Well Fargo (NYSE:WFC) were helped by mortgage-servicing fees rather than improving business trends, and trimmed his rating on the bank to “sell" from “hold."  However, Well Fargo and Morgan Stanley (NYSE:MS), which reported its first quarterly profit in a year, were behind the market’s strength earlier in the session.  Bove also cited accelerating loan losses at the firm for the downgrade.  After Bove’s cut, FBR slashed its rating on the firm to "underperform," questioning Well Fargo's earnings quality.

The Dow Jones industrial average fell below the psychologically important 10,000 level, declining 92.12 points, or 0.9%, to close at 9949.36.  Earlier in the session, the index had risen to as high as 10,119.47.  The broader S&P 500 index declined 9.66 points, or 0.9%, to 1081.40 and the tech-laden Nasdaq was off 12.74 points, or 0.6%, to 2150.73.  The Treasury’s 10-year note fell 12/32, to 101 31/32. The yield rose to 3.39%, from 3.34% late Tuesday.

Meanwhile, China said its economy grew 8.9% during the third quarter, up from 7.9% in the second quarter and 6.1% in the first.

Eight of the ten S&P500 sectors finished lower, led by declines in consumer services (-1.8%), financials (-1.8%), health care (-1.4%) and industrials (-0.9%). Utilities remained flat, and telecommunications edged up 0.01%.  Selling was broad-based.  The weakness in financial sector saw shares of JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corp. (NYSE:BAC) and Goldman Sachs Group Inc. (NYSE:GS) each declining at least 2.9%.  Merck & Co. (NYSE:MRK) led the Dow average lower, declining 3.1% to $32.68. 

The greenback fell to fresh 12-month lows against a basket of currencies, falling through $1.50 against the euro for the first time in 14 months.  The greenback's fall sent crude prices higher, with prices touching an intraday high of $82 yesterday, its highest since October 9, 2008.  Government inventory figures showed a large drawdown in US gasoline stockpiles to 2.3 million barrels last week - more than the 800,000 anticipated.  Price cuts from Wal-Mart (NYSE:WMT) also dampened holiday sales hopes.  Wal-Mart declined 2.1% to $50.63.

Today's calendar covers another heavy dose of corporate reports including before-the-open releases from: 3M (NYSE:MMM), Black & Decker (NYSE:BDK), Bristol-Myers Squibb (NYSE:BMY), Dow Chemical (NYSE:DOW), McDonald's (NYSE:MCD), Schering-Plough (NYSE:SGP), and UPS (NYSE:UPS). Also reporting are American Express (NYSE:AXP), Amazon.com (NASDAQ:AMZN), and AT&T (NYSE:T).

Weakness in share sent Treasury prices higher, with the 10-year closing up 13/32, to 102 11/32.  The yield fell to 3.34%, from 3.39% late Monday.  On Tuesday, the 30-stock Dow Jones industrial average fell 50.71 points, or 0.50%, to 10,041.48.  The broad Standard & Poor's 500-stock index retreated 6.85 points, or 0.62%, at 1,091.06 and the tech-heavy Nasdaq composite index lost 12.85 points, or 0.59%, to 2,163.47.  Market breadth was negative.  On the New York Stock Exchange, declining shares beat those that rose in price two to one on volume of 1.24 billion shares.

After the close yesterday, Yahoo Inc. (NASDAQ:YHOO) and SanDisk Corp. (NASDAQ:SNDK) reported strong quarterly numbers that were well ahead of Street expectations.  Caterpillar (NYSE:CAT) was the leading gainer among the Dow 30 stocks, rising 3.4% after it reported estimate topping numbers.  Apple (NASDAQ:AAPL) shares climbed 4.7%.

Military contractor Lockheed Martin (NYSE:LMT) fell nearly 6% after it announced weak 2010 outlook.  Chemical maker DuPont (NYSE:DD) and UnitedHealth Group Inc (NYSE:UNH) reported better-than-expected numbers, helped by cost-cutting measures.  However, DuPont (NYSE:DD) shares fell 2.2% after the company reported lower-than-expected revenue, even as earnings came in above estimates and the firm raised its full-year outlook.

Coca-Cola's (NYSE:KO) shares dropped 1.3% as it reported revenue below estimates, even as earnings were inline with expectations.  The company noted, "We expect the consumer to continue facing economic uncertainties into 2010 and for consumer sentiment to recover slowly." 

Interestingly, the market’s measure of volatility, the CBOE Vix, continued its southward move, falling 2.75% to 20.90. All ten S&P500 sectors ended in the red, led by declines in utilities (-1.2%), health care (-1.1%), and basic materials (-1.0%).  Technology stocks showed some strength and eased 0.03%.

Oil prices rose to an intraday high of $80.05 yesterday, the highest level in a year, before retreating a little and ending the session off 52 cents at $79.09.  The drop came amid concerns that the world's largest oil consumer might face a weaker-than-expected recovery. Moreover, OPEC Secretary General El-Badri noted that prices above $80 could hinder economic growth.  El-Badri said he does not expect prices above $100 in the near future due to what he called "no shortage of oil supply."

Today's markets will see earnings from big names including Boeing (NYSE:BA), Eli Lilly (NYSE:LLY), Freeport-McMoRan (NYSE: FCX), Morgan Stanley (NYSE:MS), US Bancorp (NYSE:USB) and Wells Fargo (NYSE:WFC) before the market opens.

The Dow Jones industrial average rose 96.28 points, or 0.96%, to close at 10,092.19.  The broader S&P 500 index jumped 10.23 points, or 0.94%, to 1,097.91 and the tech-heavy Nasdaq climbed 19.52 points, or 0.91%, to 2,176.32, its highest point since September 26, 2008.  Market breadth was positive, with advancing shares ahead of decliners by a margin of three-to-one.  Only five of the DJIA thirty declined in price.

After the close, iPhone maker Apple Inc. (NASDAQ:AAPL) and Texas Instruments (NYSE:TXN) reported better-than-estimated numbers, fuelling hopes for the technology industry.  Last week Google Inc. (NASDAQ:GOOG) and Intel Corp’s (NASDAQ:INTC) numbers had come in above expectations.

Although there were some jitters last week after some major banks reported higher loan losses during the quarter, expectations that companies across a broad range of industries would report numbers above projections kept the momentum going.   Nevertheless, companies could find it relatively easy to beat analyst’s lowered bars of expectations and then turn in splendid performance in the future quarters as the economy moves into a recovery mode.

This week is likely to be decisive with 13 of the Dow 30 and more than 130 of the S&P 500 slated to report their results.  The numbers could well be the fodder for the next rally – or a downward spiral – even as a call for a 10-15% correction has gone unmet.  This morning's lengthy list of key corporate results, however, continues to surprise on the upside, adding fuel to the rally's fire.

On Monday, the S&P 500 broke above the 1100 mark before retreating a little to settle at 1097, its highest close since October 2, 2008. All ten industry sectors rose, led by gains in basic materials (+1.7%), utilities (+1.4%), oil and gas (+1.2%) and consumer services (+1.2%). 

Caterpillar (NYSE:CAT), due to report its earnings today, led the gainers with a 6% jump as analysts upgraded shares of Bank of America (NYSE:BAC) and RBC Capital that took price targets on the stock to $65 per share.  American Express (NYSE:AXP), due to report after the close Thursday, climbed 2.3% after FBR lifted its price target on the firm to $37 from $25.  On the downside, General Electric (NYSE:GE) shares fell 1.5% as questions continued regarding the price of the 20% stake Vivendi owns in NBC Universal.

Today's market action will be interesting to watch to find how the better-than-expected results from Apple (NASDAQ:AAPL) and Texas Instruments (NYSE:TXN) are seen by the broader indices.  Both companies posted strong results, beating top and bottom line expectations. Apple (NASDAQ:AAPL) said results were helped by record quarterly sales of Macintosh computers and iPhones, permitting earnings of $1.82 on strong sales of $9.87 billion.  The shares hit an all-time high of $204.  TI (NYSE:TXN) also bettered projections, reporting strong demand across all business segments.  The company reported earnings of 42 cents a share, ahead of estimates of 39 cents, as revenues of $2.88 billion beat estimates of $2.82 billion, and presented a sequential quarterly gain of 17%.

Today’s list includes Coca-Cola (NYSE:KO), SanDisk (NASDAQ:SNDK), Caterpillar (NYSE:CAT), DuPont (NYSE:DD), Pfizer (NYSE:PFE), Untied Technologies (NYSE:UTX), Yahoo (NASDAQ:YHOO), State Street (NYSE:STT), and Bank of New York Mellon (NYSE:BK).

Bank of America (NYSE:BAC) said it lost $2.2 billion during the quarter after it wrote down almost $10 billion in bad loans and General Electric’s (NYSE:GE) revenue numbers were below Street projections.  Higher loan losses aggravated investors’ concerns as Citigroup (NYSE:C) and JP Morgan (NYSE:JPM) had also reported higher loan losses during the quarter.  General Electric’s (NYSE:GE) results were impacted by lower earnings at its GE Capital unit.    

The 30-share Dow Jones industrial average fell 67.03 points, or 0.67%, to close at 9,995.91. The broad Standard & Poor's 500-stock index retreated 8.88 points, or 0.81%, at 1,087.68.  The tech-heavy Nasdaq composite index lost 16.49 points, or 0.76%, to 2,156.80.

Last week only 61 of the S&P500 released results, too early to signal trends, although the results were mainly above projections.  This week hundreds of companies report their earnings, and that could signal where the economy is headed in the times to come.  So far most earnings reports have beaten expectations.

Although nine of the ten S&P 500 industry sectors dropped Friday, on the week eight of the ten sectors managed gains.  Financials dropped 2.4% Friday, and ended off 0.2% for the week.  Oil and gas shares were the leading gainers during the week, up 5%, for a 20.2% year-to-date increase, as crude prices continued their advance, rising 95 cents Friday to $78.53 per barrel.  Crude prices have been rising on promising economic signs as well as the dollar's decline.  This morning China announced that its economy grew at a rate of more than 7% during the first nine months of the year and said it was comfortably placed to achieve its full-year target of an 8% GDP growth.  The greenback rose slightly Friday from a 14-month low.

This week 75 S&P500 firms are due to report their earnings, including today's results from Apple (NASDAQ:AAPL) and Texas Instruments (NYSE:TXN) after the close.  On Tuesday results are due from: Caterpillar (NYSE:CAT), Coca-Cola (NYSE:KO), DuPont (NYSE:DD), Pfizer (NYSE:PFE) and United Technologies (NYSE:UTX).  On Wednesday: Boeing (NYSE:BA), Freeport-McMoRan (NYSE:FCX), Morgan Stanley (NYSE:MS) and Wells Fargo (NYSE:WFC).  On Thursday: 3M (NYSE:MMM), AT&T (NYSE:T), Credit Suisse (NYSE:CS), Dow Chemical (NYSE:DOW), McDonald's (NYSE:MCD), Merck (NYSE:MRK), and Travelers Cos (NYSE:TRV). Microsoft (NASDAQ:MSFT) reports its numbers on Friday.

The Dow Jones industrial average closed above the 10,000 level for the second-successive day, edging up 47 points, or 0.5%.  The S&P 500 index edged up 4 points, or 0.4% and the tech-heavy Nasdaq composite ended the day virtually flat.  The gains in the Dow average were led by Microsoft (NASDAQ:MSFT) whose shares jumped 2.9%.  The Windows 7 is slated for release on October 22.

Among energy stocks, Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) shares climbed 1.6% and 1.5%, respectively, as crude prices jumped to their highest levels of the year.  Meanwhile, the US Department of Energy said gasoline stockpiles fell 5.2 million barrels per day last week, well below expectations of 700,000 decline.

Pfizer (NYSE:PFE) rose 1.7% after it completed its acquisition of Wyeth.

Nevertheless, weakness in financial sector shares, off 0.6%, hurt sentiment even as Goldman Sachs (NYSE:GS) reported estimate-topping numbers.  Citigroup's (NYSE:C) strong trading returns were overcome by increasing consumer loan losses.  Citi's (NYSE:C) CEO Vikram Pandit warned, "US consumer credit remains the number one issue affecting our near-term results." JP Morgan (NYSE:JPM) CEO Jamie Dimon warned that level of loan losses are likely to remain high. 

Tech shares also failed to advance, even as IBM (NYSE:IBM) raised its earnings outlook and reported numbers that were above Street projections.  Advanced Micro Devices' (NYSE:AMD) narrower-than-expected loss and the return of its core chip-making operations to profitability failed to lift sentiments either.  However, Google's (NASDAQ:GOOG) better-than-expected results were helped by return to sequential quarterly growth, a 5% increase in average cost-per-clicks over the second quarter, and a positive impact from the declining dollar.  Shares in Google (NASDAQ:GOOG) rose 3.6% in after-hours trading as CEO Eric Schmidt noted, "While there are a lot of uncertainties about the pace of [the] economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future."

Today's expected results include a number of significant results from companies such as Bank of America (NYSE:BAC), Genuine Parts (NYSE:GPC), General Electric (NYSE:GE), and Mattel (NYSE:MAT). Also reporting are: Halliburton (NYSE:HAL) and First Horizon National (NYSE:FHN).

On Wednesday, the Dow Jones industrial average jumped 144.80 points, or 1.5%, to 10,015.86, its biggest one-day gain since August 21 and highest close since October 3 last year.  The Standard & Poor's 500 index rose 18.83 points, or 1.8%, to 1,092.02, it new 2009 high.  The Nasdaq composite index surged 32.34 points, or 1.5%, to 2,172.23.  Since hitting their 12-year lows in March of this year, the S&P 500 has jumped more than 61% as of Wednesday's close, and the Dow is up 53%.

Amid an improving global economic sentiment, the Dow’s brush with the 10,000-mark was a foregone conclusion but the seven-month old rally has made many wonder if a sharp correction is in the offing.  That correction, though, is yet to materialize and investors have jumped to buy on dips, helping stocks continue their advance.  Nevertheless, it remains to be seen where the markets are headed amid lingering threats like rising unemployment, a weak housing market and sloppy consumer spending.  

Yesterday, crude prices went above the $75 level to close at $75.18 a barrel, its highest close of the year. Gold prices hovered near the $1,065 per ounce level.  Meanwhile, safe-havens such as US Treasuries fell, with the 10-year closing the session off 23/32, as its yield rose to 3.423%.

The fuel for Wednesday's rally was provided by promising earnings results from Intel (NASDAQ:INTC) and JP Morgan (NYSE:JPM), and further helped by CSX’s (NYSE:CSX) strong numbers.  Intel's (NASDAQ:INTC) quarterly results beat expectations, and the chipmaker offered better-than-expected fourth quarter revenue guidance.  JP Morgan’s (NYSE:JPM) better-than-expected results came on the strength of its underwriting revenues offsetting credit card and consumer loan losses; profits rose nearly seven times.  This morning Goldman Sachs (NYSE:GS) reported numbers that was well above estimates, coming in at $5.25 per share, versus Zacks projections of $4.14 per share, and sharply above last year's $1.81.

Today's schedule contains numbers from such companies as Goldman Sachs (NYSE:GS), IBM (NYSE:IBM), Google (NASDAQ:GOOG), Advanced Micro (NYSE:AMD), Harley-Davidson (NYSE:HOG), Safeway (NYSE:SWY).

Gains in commodity prices helped some mid-session buying in energy and material shares but the overall weakness in financial and healthcare stocks kept sentiment in check.  Shares of UnitedHealth Group Inc. (NYSE:UNH) and Aetna Inc. (NYSE:AET) fell more than 3% as the Senate Finance Committee approved an $829 billion plan to overhaul the U.S. health system.  Johnson & Johnson (NYSE:JNJ) fell 2.4% after the company reported revenue that was below the Street expectations.  However, the company reported higher quarterly earnings, helped by cost-cutting measures and a one-time tax benefit; Johnson &Johnson also raised its full-year guidance.  Nevertheless, shares of the company led the decliners on the DJIA.

The Dow Jones industrial average, which traded 70 points lower in the morning, recovered some ground to close at 9871.06, off 0.2% or 14.74 points, its first decline in four sessions.  The S&P500 retreated 0.3% from a new 2009 high set on Monday.  The tech-heavy NASDAQ, however, finished the day virtually unchanged.  On the NYSE, 1.14 billion shares exchanged hands with decliners ahead of advancing shares by a three-to-two margin.

After Whitney’s downgrade, shares of Goldman Sachs (NYSE:GS) fell 1.5%, with Bank of America (NYSE:BAC) easing 1.2%, and Morgan Stanley (NYSE:MS) down 2.0%.

However, after the close, Intel's (NASDAQ:INTC), a DJIA component, results offered to ease some worries.  The company reported third-quarter earnings of 33 cents a share, versus Zacks estimates of 27 cents a share; the company reported revenues of $9.4 billion that was off 8.1% from last year, but bettered Zacks estimates of $9.0 billion.

CSX (NYSE:CSX), joining Intel (NASDAQ:INTC) in painting an upbeat picture.  The company announced third quarter earnings of 74 cents a share, down from 94 cents a year ago, but above Zacks estimates of 71 cents a share as revenues of $2.36 billion bettered estimates of $2.33 billion.

This morning, however, JP Morgan’s (NYSE:JPM) results showed an upside surprise as losses from the firm’s credit cards and other consumer loans businesses were offset by strong underwriting revenues.  Third quarter results were well ahead of Zacks estimates at 82 cents and were sharply up from last year's 9 cents a share.

The US dollar remained under pressure, falling to a fresh 14-month low yesterday.  Strong demand for $30 billion in 3-month and $30 billion in 6-month notes helped support Treasury prices.  Gold prices jumped $7.50 to $1073 and crude prices hit $74.

Companies reporting their results include: Abbott (NYSE:ABT), WW Grainger (NYSE:GWW), Host Hotels and Resorts (NYSE:HST) and Xilinx (NASDAQ:XLNX).

The Dow Jones industrial average, which rose as high as 9931.82 points in the morning, gained 20 points to close at 9885.80.  The broad S&P 500 index rose 4.70 points, or 0.44%, to close at 1,076.19 and the tech-heavy Nasdaq ended the day little changed.  Bond markets were closed for the Columbus Day holiday.  On the New York Stock Exchange, 16 stocks were higher in price for every 14 that fell.

Eight of the ten S&P500 sectors finished higher in yesterday's session. Oil and gas shares led the gainers, adding 1.2% following a 2.1% rise in crude prices to $73.55, its highest since August 24.  DJIA components Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) rose 1.3% and 1.2%, respectively.

Meanwhile, equity prices appear to be taking into consideration upside surprises in last quarter's numbers.  The National Association for Business Economics' survey of its members showed majority believed the recovery has begun, but concerns remain over federal debt and rising unemployment.  Nevertheless, the greenback’s decline is expected to help results of multinational firms with significant overseas exposure.

Also, news emerging from the geopolitical front appears to be less motivating as the head of Homeland Security noted Al-Qaeda members likely within US borders and North Korea reportedly shot off five missiles off its east coast; the reports said the country is preparing to fire more.  Although stocks have had their steepest rally in more than 70 years, doubts remain over an exit strategy from simulative policies amid increasing unemployment levels and housing worries.

Black & Decker (NYSE:BDK) jumped 7.6% Monday after the company's raised its third quarter earnings guidance to 91 cents a share from 35- 45 cents a share on better-than-expected sales, operating margins and tax rate. UBS (NYSE:UBS) downgraded SanDisk (NASDAQ:SNDK) shares to "sell" from "neutral," on concerns of peaking chip demand leaving little scope for price increases.  Ford (NYSE:F) shares jumped 7% after the automaker reported that European sales jumped 12% on strong sales of its subcompact models Ka and Fiesta. Google (NASDAQ:GOOG) shares rose 1.5% after Goldman Sachs (NYSE:GS) raised its price and earnings target, saying the firm will benefit from next year's recovery in online activity.

Financial shares continued their upward run, adding 0.7%.  A number of banks report their earnings in the coming sessions, including JP Morgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C).  According to analyst Dick Bove, large-cap banks are expected to perform well, helped by strong trading activity, but Bove noted regional banks could be under pressure due to commercial real estate losses. 

Meanwhile, shares of Deutsche Bank (NYSE:DB) fell 1.6% yesterday after the company’s CEO Ackermann’s comments raised concerns of a capital raising.  This morning influential analyst Meredith Whitney took a cautious stance on Goldman Sachs (NYSE:GS) and lowered her rating on the bank to "neutral" from "buy" with a $186 price target. 

Today's list of releases includes quarterly earnings reports from companies such as Altera (NASDAQ:ALTR), CSX (NYSE:CSX), Intel (NASDAQ:INTC), and Johnson & Johnson (NYSE:JNJ).

After a two-week selloff, fueled in part by concerns that the seven-month old rally had gotten ahead of any economic recovery, stocks got a boost last week following better-than-estimated economic numbers and Alcoa’s (NYSE:AA) surprise quarterly profit.  That helped investors set aside worries and extend the rally.  Meanwhile, White House economic adviser Lawrence Summers reiterated the Obama administration’s commitment to a strong dollar, citing recent comments by U.S. Treasury Secretary Timothy Geithner.

This morning’s stock futures show markets are headed for a higher opening as the busy week of earnings commences. Ahead of the market's open, Dow Jones industrial average futures are up 59 points, or 0.6%, to 9,866.  Standard & Poor's 500 index futures gained 7.30 points, or 0.7%, to 1,075.40, while Nasdaq 100 index futures rose 11 points, or 0.6%, to 1,736.50.

On Friday, the Dow Jones industrial average rose 78 points, or 0.8%, to 9,864.94 -- its highest closing level in a year.  The S&P 500 index gained 6 points, or 0.6%, to 1,071.49 and the Nasdaq climbed 15 points, or 0.7%, to 2,139.28.  On the New York Stock Exchange, advancing issues beat those that declined in price by a three-to-two margin.  For the week, the DJIA rose 4% and the S&P 500 index gained 4.5% - their best performance since July.  The Nasdaq advanced 4.5% during the week.

Last week's rally saw all but one of the S&P500 industry sector recording gains.  Only telecommunications shares failed to advance, and fell 5.9%, following AT&T's (NYSE:T) announcement that it plans to allow internet-based phone calls on phones including Apple's (NASDAQ:AAPL) iPhones.  The gains last week were led by basic materials (+8.4%), oil and gas (+7.6%), financials (+6.3%), industrials (+5.0%), tech (+4.9%), consumer services (+4.5%), consumer goods as well as utilities (+2.9%), and health care (+2.7%).  Financials rose after a Goldman Sachs (NYSE:GS) report recommended large-cap banks. Gains in industrial shares were helped by last week’s fall in dollar and Caterpillar's (NYSE:CAT) announcement that it plans to hike prices globally in 2010.  Retail shares rose after firms reported better-than-expected comparable monthly sales numbers.

This week sees the release of the first big batch of third-quarter earnings.  Companies reporting their numbers include Johnson & Johnson (NYSE:JNJ), Intel (NASDAQ:INTC), JP Morgan (NYSE:JPM), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), Nokia (NYSE:NOK), Google (NASDAQ:GOOG), IBM (NYSE:IBM), Bank of America (NYSE:BAC), and General Electric (NYSE:GE).

Chicago, IL – October 12, 2009 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Intel (INTC), Goldman Sachs (GS), Google (GOOG), Fairchild Semiconductor International (FCS) and Safeway (SWY). To see more earnings analysis, visit http://at.zacks.com/?id=3207.

Every day, Zacks.com makes 4 stock picks available, free of charge. To see them, go to http://at.zacks.com/?id=5612.

This Week's Events

Large-cap companies will dominate the earnings headlines this week.

Six Dow components, including Intel (INTC), are scheduled to release third-quarter results. Joining them will be Goldman Sachs (GS) and Google (GOOG). In total, we have confirmed reports from 72 companies, 29 of which are in the S&P 500.

There will be quite a bit of economic data published, including CPI and industrial production and capacity utilization. We will also get the minutes from the September Fed meeting, which will be scrutinized for any talking points about the pace of the recovery.

• Wednesday: September retail sales, Fed minutes, August business inventories, weekly crude inventories, weekly mortgage applications
• Thursday: September Consumer Price Index (CPI), October Philadelphia Fed survey, weekly initial jobless claims, weekly natural gas inventories
• Friday: September industrial production and capacity utilization, preliminary October University of Michigan sentiment

Both Council of Economic Advisers Chair Christina Romer and Federal Reserve Vice Chairman Donald Kohn will speak at the National Association for Business Economics' Annual Meeting in St. Louis on Tuesday. Romer has a morning presentation and Kohn will speak in the afternoon. Also on Tuesday, New York Federal Reserve Bank President William Dudley will talk to the Institute of International Bankers.

Fed Governor Daniel Tarullo will testify before a House subcommittee on Wednesday afternoon. His testimony will focus on the state of the banking industry. Dallas Federal Reserve Bank President Richard Fisher will appear at a conference in Dallas on Friday. The conference is co-sponsored by SMU's business school.

Though Monday is Columbus Day, both the stock and futures markets will operate on normal hours.

Though stocks are poised to continue the rally, a good reaction to the third-quarter results will be required to get the Dow firmly above 10,000. The key will be whether business conditions improved enough to enable companies to surpass both revenue and earnings forecasts.

Keep in mind the number of reports will jump substantially next week.

Companies That Could Issue Positive Earnings Surprises

Fairchild Semiconductor International (FCS) has topped expectations for 4 consecutive quarters. Another positive surprise could be in works as 4 analysts recently raised their third-quarter profit projections. These revisions have pushed the Zacks Consensus Estimate a penny higher to 7 cents per share. The most accurate estimate is even more bullish at 9 cents per share. FCS is scheduled to report on Thursday, Oct 15, before the start of trading.

More than half of the covering analysts raised their third-quarter profit forecasts on Goldman Sachs (GS) over the past 30 days. These revisions resulted in a 63-cent upward revision in the Zacks Consensus Estimate, to $4.07 per share. The most accurate estimate is even more bullish at $4.16 per share. Last quarter, GS beat expectations by $1.41 per share. Goldman Sachs is scheduled to report on Thursday, Oct 15, after the close of trading.

The third-quarter Zacks Consensus Estimate for Google (GOOG) has risen 2 cents over the past 30 days to $4.66 per share. Positive revisions by about a quarter of the covering analysts are behind the optimism. The most accurate estimate is even more bullish at $4.72 per share. Google has topped expectations for 4 consecutive quarters. Google is scheduled to report on Thursday, Oct 15, after the close of trading.

Five analysts have raised their third-quarter profit forecasts on Intel (INTC) during the past 4 weeks. Due to the fact that more than 30 analysts cover INTC, the changes did not move the Zacks Consensus Estimate from its current level of 27 cents per share. They did, however, result in a slightly more bullish most accurate estimate of 28 cents per share. The semiconductor company has topped expectations during 3 out of the last 4 quarters. Intel is scheduled to report on Tuesday, Oct 13, after the close of trading.

Companies That Could Issue Negative Earnings Surprises

Safeway (SWY) has missed expectations for 4 consecutive quarters. Recent earnings estimate cuts by 2 analysts suggest another disappointment could be forthcoming. The revisions pushed the Zacks Consensus Estimate down a penny to 31 cents per share. The most accurate estimate is more bearish at 28 cents per share. Safeway is scheduled to report on Thursday, Oct 15, before the start of trading.

Charles Rotblut, CFA, is the senior market analyst for Zacks.com.

About the Zacks Rank

Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank Stocks have generated an average annual return of +26%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 111% annually (-0.8% versus +8%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

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On Thursday, the European Central Bank and Bank of England left interest rates unchanged.  Sentiment also received a boost from domestic corporate borrowing, which rose for the eight straight week. 

The growing optimism surrounding consumer spending, which is crucial for an economic recovery, followed late Wednesday's good results from Alcoa.  The company surprised investors with its first profit in nine months, which the aluminum company attributed to cost-cutting and rising sales to automakers.  Analysts believe that it will take more than just cost cutting to impress investors this earnings season.  

Meanwhile, a better reading on the job market also fueled investors' optimism.  The Labor Department reported that new claims for jobless benefits fell to 521,000 last week from 554,000 during the previous week.  Claims came to the lowest level since early January.

The Dow rose 61.29, or 0.6%, to 9,786.87. The index ended off its highest level after demand at a government auction of 30-year bonds fell short of expectations.  The Standard & Poor's 500 index rose 7.90, or 0.8%, to 1,065.48, while the Nasdaq composite index rose 13.60, or 0.6%, to 2,123.93.  About three stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 5.2 billion shares, compared with 5.1 billion on Wednesday.  The market's measure of investor worries, the CBOE Vix, dropped 2% to 24.18.

The Dollar Index, which tracks the US currency against a basket of currencies, dropped 0.7% to 75.968 after reaching 75.767, its weakest level since August 2008.  This morning, however, the dollar rebounded from its lows after Fed Chairman Bernanke seemed to signal a shortening of its accommodative policy timeline.  Economists currently do not expect policy shifts before mid-2010; however, Bernanke advised the Fed is ready to tighten monetary policy once the economy improves.  At the same time, he cautioned that "accommodative policy will likely be warranted for an extended period."  Gold closed at a record $1,056.30 an ounce and hit an electronic trading high of $1,062.70 during the day.

A weak dollar, along with rising oil and gold prices, gave a boost to dollar-sensitive multi-nationals, such as Dow components 3M (MMM), GE (GE) and Johnson & Johnson (JNJ). The rise in oil prices lifted Chevron (CVX), Exxon Mobil (XOM) and other commodity names. 

The House is considering an extension of the first-time homebuyers' tax credit, slated for November expiration. Pulte Homes (NYSE:PHM) shares climbed 4.3%; DR Horton (NYSE:DHI) increased 8.0%; and Lennar (NYSE:LEN) rose 9.1%.

Among retailers, Macy's (NYSE:M) increased 5.1% after reporting a 2.3% sales drop, half the projected decline. Abercrombie & Fitch (NYSE:ANF) rose 5.2% after its sales decline proved less than feared.  Luxury retailer Saks (NYSE:SKS) fell 4.5% following its reported 11.6% decline in comparable sales.

Australia's decision dented demand for the U.S. dollar, which, in turn, raised commodities prices.  US energy and materials stocks moved up, oil also rose, and gold reached a record high.  Stock investors cheered the drop in the dollar because it boosts corporate profits by making U.S. goods cheaper for overseas buyers. Companies can also get a bump in profits when they convert sales made in foreign currencies to dollar terms. The dollar has been falling for months so that added to expectations for positive corporate profit reports.

Five stocks rose for each that fell on the NYSE.  Producers of energy and raw materials had the two biggest advances in the S&P among 10 industries, rising about 2.1% and 1.9% respectively.

Financial sector shares (up 1.1%) received another boon, over and above Goldman's (NYSE:GS) upgrade of large-cap banks on Monday, as Bank of America/Merrill (NYSE:BAC) upgraded European banks to "overweight".  Gains in the financial sector included a 2.5% increase in JP Morgan (NYSE:JPM), 3.2% in Morgan Stanley (NYSE:MS) and 2% in Wells Fargo (NYSE:WFC).

Deal activity has also picked up steam, lifting confidence in financial markets.  Banco Santander (NYSE:STD) raised over $8 billion in an IPO of its Brazilian subsidiary.  ExxonMobil (NYSE:XOM) announced its has agreed to pay $4 billion for Kosmos Energy's 23.49% stake in the Jubilee oil field off the coast of Ghana.  Societe Generale said it intends to raise $7.1 billion in new shares to repay the French government, buy the 20% of Credit Nord it doesn't currently own, and improve its Tier 1 ratio.

Gold futures advanced as high as $1,045 an ounce in New York, topping the 18 month record of $1,033.90, on speculation that anticipated accelerating inflation will spur demand for the precious metal as a store of value.

The U.S. dollar index was off 0.31 at 76.33 in late trading, but up from its 76.22 session low after the Saudi Arabian central bank chief denied an Independent newspaper report that the Saudis and other Arab producers planned to price oil on a basket of currencies, instead of the dollar.

Observers believe that the decline of just over 4% on the S&P 500 prior to this week’s stellar stock movement seemed to give investors the entry point they were looking for to build positions on stocks.  "I think that most people believe that stocks are going to generally keep drifting higher for the next few months," said Gary Webb, CEO at Webb Financial Group. "So while nothing fundamental has changed this week, investors are taking opportunities to buy on the lows."

Nobel Prize winning economist Joseph Stiglitz added that US unemployment will keep rising and should be the focus for policy makers.  Gains in the stock market show that investors have been “irrationally exuberant" about a recovery.  

New York Fed President William Dudley said a tepid economic recovery should allow the Fed to keep interest rates at rock-bottom lows for a prolonged period.  Because the U.S. economy faces many headwinds, including an anemic labor market and a fragile banking system, Dudley said, inflation will not become a problem in the foreseeable future. "The recovery will turn out to be moderate by historical standards," Dudley said in a speech at Fordham Law School. He added that "the banking system has still not fully recovered."

Earnings are due today from Costco (NASDAQ:COST), Family Dollar (NYSE:FDO) and Alcoa (NYSE:AA).

Joining AA will be 6 other S&P 500 members: Costco (COST), Family Dollar (FDO), Marriott (MAR), Monsanto (MON), Pepsi Bottling (PBG), PepsiCo (PEP) and Yum! Brands (YUM). We have confirmed scheduled reports from a total of 24 companies.

Economic data will largely take a backseat to the earnings news. There is comparatively little on the calendar, with the most newsworthy release being the September ISM services index. The weekly energy and mortgage applications reports could still influence trading, however.

• Monday: September ISM services survey
• Wednesday: August consumer credit, September treasury budget, weekly crude inventories, weekly mortgage applications
• Thursday: August wholesale inventories, weekly initial jobless claims, weekly natural gas inventories
• Friday: August trade balance

The Fed will hold a conference in Washington D.C. Fed Chairman Ben Bernanke will provide an update of the Fed's balance sheet on Tuesday evening. Vice Chairman Donald L. Kohn will talk about the Fed's response to the financial crisis on Thursday at 12:15 p.m.

Kansas City Federal Reserve Bank President Thomas Hoenig will make 2 speeches this week. On Tuesday evening, he will appear at an economic forum in Denver. On Thursday evening, he will speak at a similar forum in Oklahoma City.

A 10-year TIPS auction will be held on Monday, a 10-year Treasury note auction will be held on Wednesday and a 30-year Treasury bond auction will be held on Thursday. Overall, the Treasury Department will sell $78 billion in securities this week. Recent auctions have been oversubscribed, signaling strong demand.

After this week's pullback, the markets will be seeking direction. The Dow was trading near the first line of support on Friday morning, though further downside is a possibility. How revenues, earnings and guidance fare relative to expectations will play a role in influencing market direction.

Keep in mind that the majority of earnings reports won't be released until the latter part of the month.

Third-Quarter Earnings

The median S&P 500 company is forecast to report a 15% drop in profits and a 6.9% drop in revenues. (On an average company basis, EPS should drop 36.2% and revenues should fall 9.4%. The average numbers look worse due to the influence of outliers, or companies projected to report very large year-over-year drops.)

Companies That Could Issue Positive Earnings Surprises

PepsiCo (PEP) has topped expectations for 2 consecutive quarters by an average margin of 3 cents per share. Though the third-quarter Zacks Consensus Estimate is unchanged at $1.03 per share, a recent revision by 1 brokerage analyst has resulted in a most accurate estimate of $1.04 per share. PepsiCo is scheduled to report on Thursday, Oct 8, before the start of trading.

Companies That Could Issue Negative Earnings Surprises

Concerns about lower demand for fertilizer prompted 3 analysts to cut their fiscal first-quarter profit projections on Mosaic (MOS) in recent weeks. The downward revisions have pushed the Zacks Consensus Estimate 4 cents lower to 33 cents per share. The most accurate estimate is more bearish at 22 cents per share. MOS has missed expectations twice in the past 4 quarters. Mosaic is scheduled to report on Monday, Oct 5, after the close of trading.

Charles Rotblut, CFA is the senior market analyst for Zacks.com.

Earnings Calendar

Here is a list of companies that we have confirmed will report during the week of Oct 5 - 9. Prices are as of Thursday's, Oct 1, market close.

Company	Stock	Zacks Estimate	Year Ago EPS	Last Qtr Surprise	Date	Time	Price
Mosaic Co/The	MOS	$0.33	$2.65	230.0%	10/5	AMC	$46.43
Robbins & Myers	RBN	$0.20	$0.74	4.0%	10/5	AMC	$23.01
Rpm Intl Inc	RPM	$0.44	$0.54	(2.3%)	10/5	BTO	$17.88
Team Inc	TISI	$0.11	$0.25	31.8%	10/5	AMC	$16.80
Angiodynamics	ANGO	$0.08	$0.09	(6.7%)	10/6	AMC	$13.75
Chattem Inc	CHTT	$1.21	$1.08	4.1%	10/6	BTO	$64.90
Pepsi Bottling	PBG	$1.08	$1.06	6.8%	10/6	BTO	$36.49
Yum! Brands Inc	YUM	$0.59	$0.58	16.28%	10/6	AMC	$33.13
Acuity Brands	AYI	$0.57	$1.02	(5.3%)	10/7	BTO	$31.16
Alcoa Inc	AA	($0.11)	$0.37	31.6%	10/7	AMC	$12.92
Costco Whole Cp	COST	$0.76	$0.92	(3.7%)	10/7	BTO	$55.69
Family Dollar	FDO	$0.41	$0.38	5.1%	10/7	BTO	$26.84
Helen Of Troy	HELE	$0.39	$0.34	34.3%	10/7	BTO	$18.70
Kayne Andsn Egy	KED	$0.22	N/A	N/A	10/7	AMC	$13.22
Monsanto Co-New	MON	$0.01	($0.03)	6.8%	10/7	BTO	$75.11
Richardson Elec	RELL	$0.04	$0.20	(90.9%)	10/7	AMC	$5.00
Ruby Tuesday	RT	$0.10	$0.01	40.0%	10/7	AMC	$7.76
Wolverine World	WWW	$0.55	$0.62	3.8%	10/7	BTO	$24.21
Infosys Tec-Adr	INFY	$0.50	$0.56	17.0%	10/8	AMC	$47.25
Intl Speedway	ISCA	$0.38	$0.73	12.9%	10/8	BTO	$27.25
Marriott Intl-A	MAR	$0.13	$0.34	9.5%	10/8	BTO	$26.36
Nu Horizons Ele	NUHC	($0.01)	$0.01	50.0%	10/8	AMC	$3.96
PepsiCo Inc	PEP	$1.03	$1.06	2.0%	10/8	BTO	$58.46
Tortoise Cap Rs	TTO	($0.01)	($0.04)	(81.3%)	10/9	N/A	$6.56

BTO = Before The Market Open, AMC = After The Market Close

Zacks Investment Research

On Wednesday, the Dow ended down 29.92, or 0.3%, at 9,712.28 after falling nearly 134 points at one stage.  The S&P 500 index fell 3.53, or 0.3%, to 1,057.08.  The Nasdaq fell 1.62, or 0.1%, to 2,122.42.  US stocks by and large closed lower as profit taking affected major indexes on the final trading day of what had been a strong third quarter for the market.  Sentiment was essentially dampened by major economic news expected on Thursday.  On the New York Stock Exchange, 18 stocks were lower in price for every 13 that advanced. 

The Dow Jones industrials and S&P 500 index both ended the quarter with gains of more than 15%.  In fact, the market posted its strongest quarter in 11 years.  However, market observers found many investors to still have an ambivalent view of the market as they shuffled between bouts of buying and selling.  The market dipped each time bad news hit the market but subsequently recovered as each dip was generally seen as a buying opportunity.  In addition, a large amount of funds from the sidelines typically entered the market on dips.     

Sector trends remained relatively constant during the month. The strongest sectors during the quarter were basic materials (up 29.9%), financials (up 29.2%), industrials (up 23.7%), consumer services (up 21.1%) and tech (up 18.9%). During September, the list of top-performers included basic materials (up 8.6%), industrials (up 6.2%), and tech (up 5.0%).  However, financials were at the low end of sector gainers (up 2.0%), followed by oil and gas up by 5.5%.

After the close, General Motors said it is shutting down its Saturn division after a deal to sell it to Penske Automotive Group (NYSE: PAG) fell apart.  Commercial lender CIT Group (NYSE: CIT) was making a last ditch effort to reconcile with its creditors to avoid its demise.

Headwinds to growth continue as unemployment lingers, and President Obama's $787 billion stimulus efforts wind down. Fed Chairman Bernanke joins the long list of central bankers in the limelight this week, which may further point to timing plans for the eventual phase-out of accommodative policy measures.

On Wednesday, the Dow ended down 29.92, or 0.3%, at 9,712.28 after falling nearly 134 points at one stage.  The S&P 500 index fell 3.53, or 0.3%, to 1,057.08.  The Nasdaq fell 1.62, or 0.1%, to 2,122.42.  US stocks by and large closed lower as profit taking affected major indexes on the final trading day of what had been a strong third quarter for the market.  Sentiment was essentially dampened by major economic news expected on Thursday.  On the New York Stock Exchange, 18 stocks were lower in price for every 13 that advanced. 

The Dow Jones industrials and S&P 500 index both ended the quarter with gains of more than 15%.  In fact, the market posted its strongest quarter in 11 years.  However, market observers found many investors to still have an ambivalent view of the market as they shuffled between bouts of buying and selling.  The market dipped each time bad news hit the market but subsequently recovered as each dip was generally seen as a buying opportunity.  In addition, a large amount of funds from the sidelines typically entered the market on dips.     

Sector trends remained relatively constant during the month. The strongest sectors during the quarter were basic materials (up 29.9%), financials (up 29.2%), industrials (up 23.7%), consumer services (up 21.1%) and tech (up 18.9%). During September, the list of top-performers included basic materials (up 8.6%), industrials (up 6.2%), and tech (up 5.0%).  However, financials were at the low end of sector gainers (up 2.0%), followed by oil and gas up by 5.5%.

After the close, General Motors said it is shutting down its Saturn division after a deal to sell it to Penske Automotive Group (NYSE: PAG) fell apart.  Commercial lender CIT Group (NYSE: CIT) was making a last ditch effort to reconcile with its creditors to avoid its demise.

Headwinds to growth continue as unemployment lingers, and President Obama's $787 billion stimulus efforts wind down. Fed Chairman Bernanke joins the long list of central bankers in the limelight this week, which may further point to timing plans for the eventual phase-out of accommodative policy measures.

Stocks swung between gains and losses and volume remained light.  Treasury prices declined, with the 10-year off 4/32 and the corresponding yield rising to 3.293%.  The Dow Jones industrial average lost 47 points, or 0.5%. The S&P 500 index lost 2 points, or 0.2%. The tech-heavy Nasdaq composite retreated 2 points, or 0.2%.  On the New York Stock Exchange, 1.18 billion shares exchanged hands with losers narrowly ahead of winners.

The greenback showed modest gains against a basket of currencies, closing at its highest level in three weeks, up 0.1%. Crude prices retreated 13 cents to $66.74 on demand issues.

Meanwhile, technology shares retreated from their year highs.  As the group the shares fell 0.7%.  Cisco (NASDAQ:CSCO), the biggest maker of networking equipment, lost 1.3% to $23.30 and Intel (NASDAQ:INTC), the largest producer of semiconductors, retreated 1.3% to $19.48.

Notable gainers included Walgreen Co. (NYSE:WAG) and Gannett Co. (NYSE:GCI).  Walgreen Co. (NYSE:WAG) jumped 9.2% to $37.35, after the second-largest U.S. drugstore chain reported better-than-expected fourth-quarter per-share profit on the back of higher prescription-drug sales.  Gannett Co. (NYSE:GCI) led the gainers on the S&P 500, rallying 18%, after the largest U.S. newspaper publisher said it sees third- quarter earnings above analysts’ forecasts and announced a plan to offer $400 million of senior notes.

Talks of exit strategies also gained ground.  Dallas Fed President Fisher, almost endorsing recent comments from Fed Governor Warsh, cautioned that the Fed should start removing stimulus measures as soon as the recovery gains "traction."  Philadelphia Fed President Plosser talked about the possible need for "aggressive" moves by the Fed in the future to contain inflation.  Release of the IMF's twice-yearly Global Stability Report showed a $600 billion drop in expected financial system losses to $3.4 trillion.  However, the report also cautioned, "Even so, credit channels are still impaired and the economic recovery is likely to be slow."

Today's calendar shows Atlanta Fed President Lockhart, notably hawkish, speaking on the US outlook at 2:30 ET and Vice Chairman Kohn discussing exit strategies at 4:35 ET.     

The Dow Jones industrial average jumped 124 points, or 1.3% and the broader S&P 500 index rallied 19 points, or 1.8% and the Nasdaq composite index advanced 40 points, or 1.9%.  The share gains were broad based with 28 of the 30 Dow components advancing.  On the New York Stock Exchange, four stocks rose for each one that declined in price.  Only 978 million shares exchanged hands on the NYSE.  Trading was light due to the Jewish holiday of Yom Kippur.     

In a spate of big corporate merger announcements, Abbott Labs (NYSE:ABT) said it will pay $6.5 billion for Solvay's pharmaceutical business, and Xerox (NYSE:XRX) offered to pay $6.4 billion in cash and stock for Affiliated Computer Services (NYSE:ACS).  Johnson & Johnson (NYSE:JNJ) said it will pay $444 million for an 18% stake in Crucell (NASDAQ:CRXL).  The announcements signaled corporations’ belief that equity markets still offer values, while economic conditions support a growth environment for purchases made.

The financial, basic materials, and oil & gas sectors were among the leading gainers yesterday.  Even as stock prices rose, Treasuries advanced and the corresponding yields fell, with the yield on the 10-year notes declining to 3.28% from 3.32%.

Yesterday's strength was broad-based with 28 of the DJIA's 30 components moving higher, and all ten S&P 500 industry sectors marking gains.  Financials (+3.4%) were the leading gainers, with American Express (NYSE:AXP) up 4.1% and Bank of America (NYSE:BAC) rising 3.7%.  Morgan Stanley (NYSE:MS) said it expects banks' credit losses to decline over the next 12-18 months, and noted large-cap banks are "largely done with capital repair."

Analyst upgrades also helped much of the rally yesterday, with Citigroup (NYSE:C) shares jumping 4.3% on an analyst upgrade. Cisco (NASDAQ:CSCO) rallied 4.4% after Barclays' (NYSE:BCS) upgraded the stock to "overweight" from "equal weight," citing prospects in Europe and momentum in the US. Applied Materials (NASDAQ:AMAT) jumped 3% on a Citigroup (NYSE:C) upgrade to "buy" on opportunities in its solar-power operations.  However, MEMC Electronic Materials (NYSE:WFR) shed 3.1% after Citigroup (NYSE:C) cut its rating to "hold" from "buy", noting recent poly production problems remain unresolved.

We are still a week away from the "official" start of third-quarter earnings season. Alcoa (AA) will release its results on Oct 7. The majority of companies will not start reporting until the latter half of October, however.

The economic calendar is most active towards the second half of the week with the release of the ISM manufacturing survey and the monthly employment surveys.

• Tuesday: September Conference Board consumer confidence survey, July Case-Schiller home price index
• Wednesday: September Chicago PMI, September ADP employment survey, final Q2 GDP, weekly crude inventories, weekly mortgage applications
• Thursday: September ISM manufacturing survey, August personal income and spending, August pending home sales, September auto sales, September Monster employment index, September Challenger employment survey, August construction spending, weekly initial jobless claims, weekly natural gas inventories
• Friday: September unemployment and nonfarm payrolls, August factory orders

Fed Chairman Ben Bernanke will appear before the Congressional Black Caucus Foundation on Tuesday morning. Also on Tuesday, Fed General Counsel Scott Alvarez will testify before the House financial services committee, Fed Governor Kevin Warsh will participate in a panel discussion about economic policy at the Chicago Fed Bank and Philadelphia Fed Bank President Charles Plosser will speak about the economy at the Lehigh Valley Economic Outlook.

On Wednesday, Vice Chairman Donald Kohn will discuss the Fed's exit strategy at the Cato Institute. Cleveland Fed President Sandra Pianalto will speak in New York on Thursday evening.

Monday is Yom Kippur, the holiest day on the Jewish calendar. Therefore, volume should be lighter than usual.

Given the calendar, I expect most of the market's action to occur during the latter part of the week. Though the Dow failed to get much above 9,900, I continue to think there is enough short-term bullish sentiment to get the average above the 10,000 mark. This said, investors should realize that getting above 10K amounts to a group hug for the markets rather than signaling any significant change.

Companies That Could Issue Positive Earnings Surprises

Earlier this month, Xyratex (XRTX) preannounced fiscal third-quarter revenues of approximately $247 million. CEO Steve Barber credited a rebound in the economy and the storage market for helping sales. All 3 brokerage analysts raised their profit projections in response, pushing the Zacks Consensus Estimate 13 cents higher to a profit of 10 cents per share. XRTX topped expectations last quarter by 8 cents, ending a streak of 3 consecutive disappointments. Xyratex is scheduled to report on Wednesday, Sep 30, at the close of trading.

Companies That Could Issue Negative Earnings Surprises

Walgreen (WAG) has missed expectations for 3 consecutive quarters. Ahead of the company's fiscal fourth-quarter report, nearly a third of the covering brokerage analysts have cut their profit projections. The revisions have resulted in the Zacks Consensus Estimate falling by a penny to 39 cents per share. The most accurate estimate is more bearish at 37 cents per share. Walgreen is scheduled to report on Sep 29, before the start of trading.

Charles Rotblut, CFA is the senior market analyst for Zacks.com.

Earnings Calendar

Here is a list of companies that we have confirmed will report during the week of Sep 28 - Oct 2. Prices are as of Thursday's, Sep 24, market close.

Company	Stock	Zacks Estimate	Year Ago EPS	Last Qtr Surprise	Date	Time	Price
Accenture Plc	ACN	$0.67	$0.58	6.3%	10/1	AMC	$35.96
Constellatn Brd	STZ	$0.45	$0.41	3.1%	10/1	BTO	$15.47
Corel Corp	CREL	$0.32	$0.12	0.0%	10/1	AMC	$2.77
CRA International Inc	CRAI	$0.39	$0.47	3.3%	10/1	BTO	$27.21
Demandtec Inc	DMAN	($0.06)	($0.05)	(62.5%)	10/1	AMC	$8.69
Global Payments	GPN	$0.71	$0.65	4.6%	10/1	AMC	$45.46
Immucor	BLUD	$0.28	$0.25	26.1%	10/1	AMC	$17.42
MSCI Inc-A	MXB	$0.19	$0.28	(4.2%)	10/1	N/A	$28.73
Resources Cnctn	RECN	$0.27	($0.04)	(125.0%)	10/1	AMC	$16.79
Smart Modular	SMOD	$0.03	$0.00	50.0%	10/1	AMC	$5.15
Standard Micros	SMSC	$0.38	($0.14)	53.1%	10/1	AMC	$22.97
Cal-Maine Foods	CALM	$0.47	$0.18	(57.0%)	9/28	BTO	$27.68
Ferrellgas -Lp	FGP	($0.61)	($0.51)	(21.5%)	9/28	N/A	$19.69
Allscripts-Misy	MDRX	$0.13	$0.13	7.1%	9/29	AMC	$18.57
Cano Petroleum	CFW	($0.04)	($0.02)	57.1%	9/29	N/A	$0.99
Jabil Circuit	JBL	$0.29	$0.02	0.0%	9/29	AMC	$12.53
Landec Corp	LNDC	$0.11	$0.07	0.0%	9/29	AMC	$6.65
Nike Inc	NKE	$1.03	$0.98	3.1%	9/29	AMC	$58.17
Omnova Solution	OMN	$0.08	$0.11	50.0%	9/29	N/A	$5.07
Sealy Corp	ZZ	$0.14	$0.05	75.0%	9/29	AMC	$3.01
Walgreen Co	WAG	$0.45	$0.39	(5.4%)	9/29	BTO	$33.65
Worthington Ind	WOR	$0.94	$0.03	(100.0%)	9/29	AMC	$15.20
Actuant Corp	ATU	$0.54	$0.16	81.8%	9/30	BTO	$15.52
Darden Restrnt	DRI	$0.61	$0.65	4.7%	9/30	N/A	$35.44
Diamond Foods	DMND	$0.16	$0.19	14.3%	9/30	AMC	$29.40
Lawson Software	LWSN	$0.04	$0.04	11.1%	9/30	AMC	$6.40
Xyratex Ltd	XRTX	$0.28	$0.10	23.53%	9/30	AMC	$8.99

BTO = Before The Market Open, AMC = After The Market Close

Zacks Investment Research

Although the Fed, in its policy statement, contended that it would continue to employ a wide range of tools to stimulate the economy, investors saw little reason to rejoice, wondering if the stocks were too expensive at current levels.  The Fed reiterated that it will slow its purchase of mortgage-backed securities, signaling its confidence that an economic recovery is indeed underway.  However, there was no talk of exit strategy methods and timetables.  Nevertheless, the FOMC minutes, released at 2:15 ET, maintained the Fed's intentions to keep "exceptionally low levels of the fed funds rates for an extended period."

Fed’s decision to hold interest rates steady helped the greenback maintain its recent momentum but the government’s auction of $40 billion in 5-year notes Wednesday failed to elicit an upbeat response, after Tuesday's sale of $43 billion in 2-year notes witnessed strong demand.

The Dow Jones industrial average fell 81.32 points, or 0.8%, to close at 9,748.55. The broader Standard & Poor’s 500-stock index lost 10.79 points, or 1%, to end at 1,060.87, while the Nasdaq composite index retreated 14.88 points, or 0.7%, to 2,131.42.  On the New York Stock Exchange, 1.32 billion shares exchanged hands and advancing shares outpaced those that declined three to two.

A surprising rise in crude stockpiles and a higher-than-anticipated yield on the Treasury's $40 billion auction of 5-year notes combined to generate a widely-expected but moderate pullback.  Today's markets are expected to take a cue from the existing home sales report along with the G-20 meet before deciding on a future course of action.  Moreover, this morning the US took another swipe at China trade practices, alleging China has improperly subsidized some types of coated paper.

Meanwhile, the weekly EIA report showed a surprising 2.8 million barrel build in crude inventories. The Street was expecting a 2.25 million barrel fall.  The unexpected build hurt basic material and oil and gas shares.  Basic material shares, up 51.2% year-to-date, were the leading decliners on the S&P500, off 2.3%.  Oil and gas shares fell 1.9%.  Exxon (NYSE:XOM) declined 1.2% to $69, while Chevron (NYSE:CVX) retreated 1.7% to $71.37.  Newmont Mining Corp., (NYSE:NEM) the largest U.S. gold producer, lost 3.6% to $43.59.  Freeport-McMoRan (NYSE:FCX) the world’s largest publicly traded copper producer fell 2.8% to $71.09.

On the DJIA twenty-five of its thirty components closed down; on the S&P500 only five stocks finished higher. Financial shares were also hit hard, with declines of 2.0%, as investors grew concerned over prospects for an eventual unwinding of the Fed's cheap money policy. Consumer services traded down 1.4%; health care 1.1%; and industrials 1.0%. Only telecommunications shares managed gains, moving 1.5% higher on the day; year-to-date, however, the group is the only sector to remain in negative territory on the year, with a 2.0% drop.

The 2:15 ET release of the FOMC minutes failed to elicit much of a response. Fed Chairman Bernanke had already spread the word of the recession's end, so the language change suggesting economic activity has now "picked up," and is no longer "leveling out" seemed old news, along with notes that "conditions in financial markets have improved further, and activity in the housing sector has increased."

The 30-share Dow Jones industrial average finished higher by 51 points, or 0.52%, at 9,829.87. The broad Standard & Poor's 500-stock index gained 7 points, or 0.66%, at 1,071.66 and the technology-laden Nasdaq composite index gained 8.26 points, or 0.39%, to 2,146.30.  Treasury prices rallied after the government’s successful auction of $43 billion in two-year notes.

Meanwhile, dollar continued its downward spiral against other major currencies, sending energy and material shares higher.  Gold and crude prices also advanced.  Gold reached $1014 per ounce, up $12.50, and oil, after a 3.3% plunge Monday, went above the $70 level, rising 2.6% to $71.55.  Volume on the NYSE was a modest 1.27 billion shares, with advancing shares ahead of decliners by a seven-to-three margin.

Among the ten S&P500 industry sectors, seven closed higher, led by financial shares (+2.2%), basic materials (+1.9%), industrials (+0.8%).  On the downside, telecommunication shares fell 0.6%, health care stocks eased 0.3%, and utilities edged 0.1% lower.

Twenty of the DJIA's thirty components finished higher yesterday.  On the Dow average, JP Morgan (NYSE:JPM) was the leading gainer, rallying 4.3% to $46.47 after analysts at Bank of America (NYSE:BAC) lifted their third-quarter earnings estimate on the firm to 49 cents per share from 46 cents per share.  Caterpillar (NYSE:CAT) shares jumped 3.6%, following the expected weak dollar benefit to foreign sales.  Bank of America (NYSE:BAC) rose 2.1% after Rochdale Securities’ Richard Bove raised the shares' price target to $25 from $19 due to the firm's recent moves to exit two federal guarantee programs.  However, rumors that CEO Ken Lewis might resign over the Merrill bonus saga kept the stock’s move in check.  Alcoa (NYSE:AA) rose 2.3% after analysts at Goldman Sachs (NYSE:GS) raised price target on the firm, citing projections for higher aluminum prices.

Analyst upgrades also benefited shares of Macy's (NYSE:M) (+5.1%); Citigroup (NYSE:C) lifted its rating on the shares to "buy" from "hold" on higher revenue expectations.  US Steel (NYSE:X) shares increased 4.6% after Bank of America (NYSE:BAC) changed its recommendation on the stock to "neutral" from "underperform," citing expectations the firm should return to profitability in 2010. Clorox (NYSE:CLX) shares gained 2.6% on speculation of a potential Procter & Gamble (NYSE:PG) bid.  AIG (NYSE:AIG) shares fell 5.4% in a late-session sell-off on talks of a possible secondary offering.  Goldman (NYSE:GS) shares rose 1.7% to $185.52, closing at its highest level since July 2008.

Of key interest today would be the much-expected FOMC policy report, due out at 2:15 ET.  Expectations that the Fed will maintain record low interest rate levels of zero to 0.25% are intact. Most expect the Fed language to support an ongoing accommodative stance.  Moreover, President Obama cautioned that unemployment could even get a little worse in coming months. Therefore, the Fed's $1.75 trillion asset purchase program is likely to remain in place to encourage the recovery's traction.

This morning’s stock futures indicate Wall Street is headed for a higher opening, helped by a rally in global stocks.  Ahead of the market’s open, Dow Jones industrial average futures rose 48, or 0.5%, to 9,766.  Standard & Poor's 500 index futures were up 6.20, or 0.6%, to 1,066.60, while Nasdaq 100 index futures rose 10.75, or 0.6%, to 1,738.50.  Ahead of the FOMC policy statement, trading is expected to remain range bound as traders look for more data before taking the plunge.  

Treasuries were mixed ahead of this week’s $112 billion note auction.  The 2-year rose 1/32 and the 10-year was off 3/32.  The dollar showed some strength, managing a 0.4% advance against a basket of currencies and sending the broad-based DJ-UBS commodity index down 1.8%, as crude prices went below the $70 level.  On the NYSE, declining shares were ahead of those that rose in price by a two-to-one margin on volume of 1.20 billion shares.

Seven of the ten S&P500 industry sectors declined, with health care (+0.6%), tech shares (+0.1%), and consumer services (+0.1%) ending the day in the positive territory.  The tech-heavy NASDAQ was the only outperformer among the major bourses, managing a 0.2% gain to 2138, helped by a Dell (NASDAQ:DELL) announcement to buy Perot Systems (NYSE:PER) in a $3.9 billion all-cash deal. Wal-Mart (NYSE:WMT) rose 1.6% as HSBC Holdings (NYSE:HBC) initiated coverage on the stock with an "overweight" rating and a price target of $61. Baird upgraded Celgene (NASDAQ:CELG) shares to "outperform," citing upside from strength of its Revlimid drug. Celgene shares closed up more than 5%.  General Electric (NYSE:GE) shares also rose, bucking the trend of both its financial and industrial counterparts, as Morgan Stanley (NYSE:MS) raised its price target on the stock $19, noting the company's improved risk profile.

Leading the indices lower yesterday were financials (-1.0%), oil and gas (-0.9%), commodities (-0.7%), as well as industrials (-0.6%) and consumer goods (-0.6%).  The Dow Jones industrial average, which was down 94 points in the morning session, closed down 41 points, hurt by its financial components, with American Express (NYSE:AXP) down 2.9% and Bank of America (NYSE:BAC) retreating 2.2%. Bank of America (NYSE:BAC) said it agreed to pay $425 million to terminate a tentative loss-sharing agreement with the government that had been established to facilitate its purchase of Merrill Lynch. However, the firm skipped a deadline to provide documents regarding that merger to a House panel.   Shares in AIG (NYSE:AIG) spiked 22% after a report from the Government Accountability Office noted the company is seeing stabilization following the government's bailout measures.  However, the report said it remains unclear when AIG would be able to repay those funds.

A $2.33 decline in crude prices also hurt share of commodity-related companies even as the greenback showed some resistance against a basket of currencies.  Alcoa (NYSE:AA) shares lost almost 1% after Macquarie warned of an unfavorable aluminum demand/supply outlook over the next six to twelve months.  Caterpillar (NYSE:CAT) declined 1.8% after reporting its global machinery sales plunged 48% in the three months to August.

The week ahead will show to be a busy one.  Leaders from the Group of 20 nations meet in Pittsburgh this week to increase financial regulation in the global economy as the President continues his busy media coverage, addressing economic expectations.  Today the Fed begins its 2-day interest rate policy meeting, with its rate decision Wednesday expected to maintain an interest rate target of 0.0% to 0.25%.  In addition, a multitude of initial public offerings are expected, the most offerings since December 2007.

The Dow Jones industrial average declined 7.79 points, or 0.08%, to end the day at 9,783.92. The broad Standard & Poor's 500 Index retreated 3.27 points, or 0.31%, at 1,065.49 and the tech-heavy Nasdaq Composite Index eased 6.40 points, or 0.30%, to end at 2,126.75.  On the New York Stock Exchange, declining shares beat those that advanced by eight to seven on volume of 1.52 billion shares.  At Wednesday's close, the DJIA stood almost 50% above its 12-year low of last March; the S&P500 at 58%, with the NASDAQ up 68% from its 6-year low.

Shares of FedEx (NYSE:FDX) and Oracle (NASDAQ:ORCL) declined after the companies’ lower-than-expected results. FedEx’s CEO noted plans to up shipping rates by almost 6% in January, a bullish signal of expected volume growth.  FedEx fell 2.2% to $76.46 and Oracle declined 2.8% to $21.52.  A decline in natural gas prices sent shares of Chesapeake Energy (NYSE:CHK) and Nabors Industries (NYSE:NBR) lower.  Chesapeake fell 3.3% to $27.97.  Eastman Kodak (NYSE:EK) fell more than 11% after the company announced plans to raise more than $700 million in senior secured notes.

Among the ten S&P 500 industry groups, telecom companies were the biggest decliners, retreating 1.6%, following UBS' (NYSE:UBS) analyst comments suggesting pressure in wireless business.  Verizon Communications (NYSE:VZ) retreated almost 3% to $29.51.  Moreover, yesterday Verizon's (NYSE:VZ) CEO suggested its wireless operations would consider dividend payments only after debt reductions.  Companies that receive a significant portion of their revenues from overseas operations showed strength, with Caterpillar (NYSE:CAT) up 2.4% and Coca-Cola (NYSE:KO) rising 1.4%.  Basic materials shares declined 0.8%, oil and gas was down 0.7%, and financials retreated 0.5%  

American Airlines parent AMR Corp. (NYSE:AMR) was a major gainer Thursday as its shares surged 19.7% to $8.80 after the company said it secured $2.9 billion in new financing.  AMR also said it is working on its flying schedule and would shift flying to more profitable routes.

Today’s calendar contains little of market-moving interest, with the day's quadruple witching expected to results in volatility.  Lacking a firm catalyst for the next upward move, the demand for increased risk eased, with the greenback backing off its one-year high against the euro, oil prices down $0.68 to $71.79, and gold up $2.20 to $1015.70.

Speaking at a Brookings Institution conference, Bernanke, however, added a note of caution, saying, “Even though from a technical perspective the recession is very likely over at this point, it’s still going to feel like a very weak economy for some time."

This morning’s stock futures indicate Wall Street would open with gains, helped by increased M&A activity, optimistic guidance from companies, and words from Warren Buffett that Berkshire Hathaway (NYSE:BRK.A) is "buying stocks right as we speak."

Yesterday, the 30-stock Dow Jones industrial average gained 57 points, or 0.6%, to 9,683.41, its highest point since October 6.  The broad Standard & Poor’s 500 index edged up 0.3% to close at 1,052.63, its highest level in almost a year.  The tech-heavy NASDAQ advanced 10.86 points, or 0.52%, to 2,102.64.  NYSE volume picked up to 1.5 billion shares yesterday from 1.2 billion on Monday, with advancing shares outpacing decliners by a seven-to-three margin.  Treasury prices declined, with the 10-year off 6/32 as its yield rose to 3.447% on increased risk demands.

Best Buy (NYSE:BBY), the country’s largest home-electronic chain, and Kroger (NYSE:KR) painted a mixed picture.  Best Buy reported a 22% plunge in quarterly earnings and its shares shed more than 5% to $38.32.  However, the company lifted its FY10 earnings outlook to a range of $2.70 to $3.00 per share and said it sees full-year revenue of $48 billion to $49 billion.  Kroger shares dived 7.5% after the company reported weaker-than-expected earnings and cut its outlook.  Health care shares declined 0.8% as President Obama reiterated his commitment to medical care reform, sending shares of Coventry Health Care (NYSE:CVH) down 7.1%, and United Health Group (NYSE:UNH) down 3.7%.   

Eight of the ten S&P500 industry groups moved higher on the day.  Basic material (+2.5%) and industrial (+1.1%) sector shares led the advance on improved recovery prospects and higher commodity prices.  The gains in the Dow Average were led by materials and industrial companies like Alcoa (NYSE:AA) and Caterpillar (NYSE:CAT) as the index gained for the seventh time in eight days.  Alcoa (NYSE:AA) shares jumped 8.1% and were the leading gainers on the DJIA; AK Steel (NYSE:AKS) shares advanced 5.7%, and US Steel (NYSE:X) shares gained 4.8%.  Among industrial recovery stocks, Textron (NYSE:TXT) shares gained 6.6%, Caterpillar (NYSE:CAT) rose 6%, Deere (NYSE:DE) advanced 4.4% and General Electric (NYSE:GE) added 4.2%. Oil and gas shares rose 0.9% as weekly crude inventory numbers are expected to show a 2.4 million decline last week.

However, the dollar failed to capitalize on the positive US economic news and sank to fresh yearly lows against a basket of currencies, due to its role as a funding currency given the fall in the benchmark US 3-month Libor rate to its lowest on record and the Fed's well-publicized promise to keep interest rates low.

After closing Thursday at its highest level since October, the Dow Jones industrial average retreated 22.07 points, or 0.2%, to 9,605.41 on a quiet trading day.  The NASDAQ composite index eased 3.12 points, or 0.2%, to 2,080.90, and the broader Standard & Poor's 500 index fell 1.41 points, or 0.1%, to 1,042.73.  On the New York Stock Exchange, 1.29 billion shares exchanged hands and about four stocks rose for every three that fell.  On the week, the DJIA rose 1.7%, the S&P 500 advanced 2.6% and the NASDAQ was the best performer, rising 3.1%.

This morning’s stock futures are pointing to a lower opening on the Wall Street amid reports of an escalating trade dispute between China and the US.  Dow Jones industrial average futures fell 61, or 0.6%, to 9,531. Standard & Poor's 500 index futures fell 8.00, or 0.8%, to 1,029.30, while Nasdaq 100 index futures fell 13.75, or 0.8%, to 1,669.75.

Bond prices were mixed Friday after their impressive performance the previous day.  The yield on the benchmark 10-year Treasury note fell to 3.31% from 3.35% late Thursday.  The slide in oil prices sent shares of energy companies lower.  Exxon Mobil (NYSE:XOM) slipped 1% to $69.98.  FedEx (NYSE:FDX) shares jumped 6.4% after the company said it now expects to earn 58 cents a share in the first quarter, compared with its prior view of 44 cents a share.  The company said it sees second-quarter earnings of between 65 cents and 95 cents per share, versus its earlier prediction of 70 cents.

For the week all ten S&P500 sectors recorded gains, led by oil and gas (+4.7%) basic materials (+4.6%), and industrials (+4.1%), the sectors considered most economically sensitive.  The sectors also closely reflected changes in the dollar trade, which experienced a fall to a 52-week low.

Reports that the United States has imposed a new 35% tariff on Chinese tire imports met with a retaliatory Chinese response as Beijing announced a dumping and subsidy probe into U.S. chicken imports.  Such measures, however, are likely to results in trade protectionism that could prove especially damaging to emerging countries' growth prospects.

Companies reporting their results include Best Buy (NYSE:BBY), FedEx (NYSE:FDX), Oracle (NASDAQ:ORCL), and Palm (NASDAQ:PALM).  Those scheduled to speak include Fed's Duke on regulatory reform at 8:35 AM ET, Fed's Lacker on financial regulation at 12:30 PM ET and Fed's Yellen on the economic outlook at 3:50 PM ET. President Obama will also address financial market reform as the anniversary of Lehman's demise is acknowledged.

On Thursday, the Dow Jones industrial average rose 80.26 points, or 0.8%, to 9,627.48, its highest close since October 6.  The broader S&P 500 index advanced 10.77 points, or 1%, to 1,044.14, its first five-day climb since November.  The Nasdaq composite index rose 23.63 points, or 1.2%, to 2,084.02.  With traders eschewing safe havens, yield on the benchmark 10-year Treasury note fell to 3.35%. The yield on the 30-year notes declined to 4.20%.

As the holiday-shortened week comes to an end today, investors would look toward extending gains into a sixth consecutive day, buoyed partly by strong reports from China.  This morning’s stock futures show shares opening with modest gains.  Dow Jones industrial average futures rose 9, or 0.1%, to 9,614.  Standard & Poor's 500 index futures rose 1.60, or 0.2%, to 1,039.00, while Nasdaq 100 index futures rose 3.00, or 0.2%, to 1,685.75.

Treasury Secretary Geithner was more forthcoming in a speech before Congress Thursday, as he noted the strategy has shifted to preparing for future growth, adding the economy is back from the brink.  Geithner advised, "We must continue reinforcing the recovery until it is self-supporting and led by private demand."
  
Thursday saw all ten S&P500 sectors moving higher, led by 2.2% gains in telecom shares, 1.7% in basic materials, 1.6% in oil and gas, 1.4% in tech, and 1.2% in consumer services.  On the New York Stock Exchange, volume picked up to 1.49 billion shares as advancing issues outpaced decliners by a 3-to-1 margin.

Among DJIA components, Procter & Gamble (NYSE:PG) shares jumped 4.2% after the company raised its 2010 profit outlook to $3.99 to $4.12.  Shares in Disney (NYSE:DIS) jumped 5.2% after the company reported strengthening ad markets, and hopes from improving consumer-spending trends.  Technology issues rose on increased estimates for top and bottom line results from Texas Instruments (NYSE:TXN) and ASML Holdings (NASDAQ:ASML); on the DJIA Cisco (NASDAQ:CSCO) shares advanced 3.5%. Cigna Corp (NYSE:CI) led healthcare issues higher even as President Obama's speech appeared to have garnered support for his much-talked healthcare initiative.

News from China indicated a V-shaped recovery underway in that country as the National Statistics Bureau reported investments, industrial output and credit expanded in August, alleviating to some extent fears that the government was clamping down on credit growth. Chinese Premier Wen Jiabao noted, "China's economic rebound is unstable, unbalanced and not yet solid," adding, "We cannot and will not change the direction of our policy when conditions aren't appropriate."  The Shanghai Composite closed up 2.2% Friday, with the Hang Seng at its highest in over a year.