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).

• Credit Suisse (NYSE:CS) reported net profits of $2.33 billion on a surge in investment banking operations and strength in its private banking arm. Its tier one capital ratio rose to 16.4%, the highest of any of the world's major banks

• UPS (NYSE:UPS) reported third quarter results of 55 cents, three cents above Zacks estimates, on revenues of $11.15 billion, versus Zacks estimates of $11.17 billion. The company said it sees fourth quarter earnings of 58 cents to 65 cents a share

• Merck's (NYSE:MRK) third quarter results of 90 cents beat Zacks estimates by 8 cents on inline revenues of $6 billion. The firm set full year guidance at $3.20-$3.30

• Dow Chemical (NYSE:DOW) reported earnings of 24 cents ex-items, versus last year's 59 cents and Zacks estimates of 9 cents as revenues dropped 22% to $12.05 billion, off estimates of $12.79 billion

• AT&T (NYSE:T) reported flat third quarter profits at 54 cents on revenues of $30.86 billion, down 1.6%, iPhone sales rose sharply.  Zacks analysts had anticipated earnings of 50 cents on revenues of $30.88 billion

• McDonald's (NYSE:MCD) reported earnings of $1.15 a share versus Zacks estimates of $1.11 as global same-store-sales grew 3.8%

• Travelers (NYSE:TRV) reported estimate-topping results, a 10% dividend hike, $6 billion added to its share buyback program, and increased full-year guidance on operating income.  Third quarter earnings of $1.61 beat Zacks estimates of $1.30, versus 55 cents a year ago. Guidance for 2009 operating results was raised to $5.30 to $5.50 from prior $4.80 to $5.05

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).

Chicago, IL – October 21, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Nucor (NUE), Dow Chemical (DOW), Freeport McMoran (FCX), Mobile TeleSystems (MBT) and VimpelCom (VIP).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Tuesday’s AnalystBlog:

Inflation? What Inflation?

On a year-over-year basis, Crude goods are down 31.5%. However, the year-over-year numbers at the Intermediate -- and especially the Crude -- levels are going to show much slower declines in the next few months.

In October of last year, Intermediate goods prices fell 4.2% while prices fo Crude goods tumbled 16.1%. The plunge continued into November, with intermediate prices down 4.8% and crude goods falling 13.1%. This is a key reason why the year over year earnings for firms in the Materials sector, like Nucor (NUE), Dow Chemical (DOW) and Freeport McMoran (FCX) are going to generally look ugly in the third quarter, but will look wonderful in the fourth quarter.

From a broad economic point of view, this just adds to the compelling case for the Fed to keep interest rates low, and possibly even extend its unconventional quantitative easing policies. The danger is a recovery that is lackluster and falters, not that the economy overheats and inflation gets out of control.

MBT Confirms Outlook, Ups CapEx

Russia’s incumbent telecom carrier Mobile TeleSystems (MBT) released its 2009 outlook yesterday. The company has lifted its capital expenditure (CapEx) guidance to $1.8 billion from $1.5 billion as per the previous guidance.

This increase is primarily due to the expected growth in capital spending in Central Asian markets and appreciation of the ruble against the US dollar. While the revised CapEx for 2009 is lower than $2.2 billion spent in 2008, as a percentage of sales it still remains at 22%. In contrast, the company’s archrival VimpelCom (VIP) is expected to spend 12%-15% of sales in 2009.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

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.

Volatile crude oil prices have significantly affected the basic chemicals market, forcing the second-largest chemical manufacturer in the world to divest its styrene monomer and ethylbenzene production at Freeport, Texas. This sale will reduce Dow’s exposure to a capital-intensive Basic portfolio. About 60 employees will be affected.

Midland, Michigan-based Dow Chemical aims to shift focus to specialty chemicals that are used in cosmetics and food additives, and work with partners to meet basic chemical needs. After the Rohm & Haas acquisition in the second quarter, Dow announced a restructuring plan, including complete integration of ethylene production with internal demand, reducing its ethylene requirement from the US Gulf Coast by about 30%.

Dow expects to improve its cost position by eliminating ethylene purchases from the merchant market. The company purchases about three billion pounds of ethylene from external sources annually.

Separately, Dow partnered with Alstom Power to develop a pilot plant to tap about 1,800 metric tons of carbon dioxide (CO2) annually from flue gas of a coal-fired boiler at its South Charleston, West Virginia facility. Alstom is a global leader in power generation and rail infrastructure. The pilot plant is expected to be operational by the third quarter.

In 2008, Dow and Alstom had agreed to develop an advanced amine technology for CO2 capture. Currently, they are focusing on building an advanced amine-based scrubbing technology for industries that produce exhaust or flue gases containing CO2 and high levels of oxygen.

The new process will significantly reduce the amount of energy required for CO2 separation and capture. The West Virginia pilot plant will validate this new technology. Dow aims to reduce greenhouse gas emissions that are responsible for global warming by exporting the technology to its power plants, where CO2 will be stored. We maintain our Neutral recommendation on Dow Chemical.

• American Express (NYSE:AXP) joined the ranks of banks buying back TARP-issued warrants, as it paid the Treasury $340 million, providing the government a 26% return on its investment.  Other firms include Goldman Sachs (NYSE:GS), US Bancorp (NYSE:USB), and State Street (NYSE:STT)

• Sumitomo Trust announced plans to acquire Citigroup's (NYSE:C) entire stake in Nikko Asset Management for $1.2 billion

• Sanofi-Aventis announced it agreed to acquire a 50% stake in Merck's (NYSE:MRK) animal health venture for $4 billion

• Visa (NYSE:V) reported earnings, ex-items, of 67 cents a share, ahead of Street projections of 64 cents on revenues of $1.6 billion, versus estimates of $1.64 billion

• Motorola (NYSE:MOT) topped estimates for the second quarter with adjusted results of a one cent loss versus estimates of a 4 cent loss.  The company also provided third quarter guidance of a 1-cent loss to a 1-cent profit, with Street estimates at a 1-cent loss. Revenues of $5.5 billion missed estimates of $5.6 billion

• International Paper (NYSE:IP) reported second quarter earnings of 20 cents a share, beating estimates by 20 cents, on in-line revenues, off 0.1% to $5.8 billion

• Colgate-Palmolive (NYSE:CL) topped estimates by 2 cents, on earnings of $1.04, as in-line revenues of $3.75 billion fell 5.5%

• Mylan (NYSE:MYL) beat projections by 2 cents, posting second quarter earnings of 32 cents a share, as revenues rose 5% to $1.3 billion

• Dow Chemical (NYSE:DOW) earned a nickel in its second quarter versus an expected 8 cent loss, although revenues fell short at $11.3 billion compared to estimates of $13 billion
Travelers (NYSE:TRV) missed expectations with second quarter results of $1.25, off estimates of $1.28, on in-line revenues of $6.2 billion. Guidance for the year was raised to a range of $4.80-$5.05, still under consensus projections of $5.17

On Tuesday, stocks had declined after a weaker-than-anticipated consumer confidence report and a lackadaisical response to the auction of 2-year notes drew investors to the selling table.  The trend continued Wednesday and treasuries moved lower as the auction of 5-year notes failed to elicit enough interest.  The 10-year declined 6/32 and the corresponding yield rose to 3.664%. 

At the day’s end, the Dow Jones industrial average lost 26 points, or 0.3% and the S&P 500 index eased 4 points, or 0.5%. The tech-heavy Nasdaq gave up 8 points, or 0.4%.  Yesterday, a 5% plunge in Shanghai Composite index also had an impact on US markets.  However, the decline was arrested after Bank of China Vice Governor remarked this morning that the central bank will "unswervingly continue to apply appropriate loose monetary policy and consolidate the economic recovery momentum."  The index closed the day up 55 points or 1.7%.

On Wednesday, share prices reflected the concerns prevailing in the market, with Caterpillar (NYSE:CAT) shares declining 2.5% and Alcoa (NYSE:AA) down 2.2%. Demand concerns also impacted energy stocks as EIA weekly petroleum statistics demonstrated a 5.1 million barrel build in crude stockpiles, well ahead of the expected 1.1 million increase. Chevron (NYSE:CVX) shares fell 1.8%.

Among the ten S&P500 industry sectors, oil and gas and basic material shares led the decliners, easing 2.1% and 2.6%, respectively. Only two sectors showed some strength, with health care up 0.2% and consumer goods up 0.1%, reflecting their defensive appeal. Yesterday's release of the Fed's Beige Book of regional anecdotal data offered a balanced basket of good news and bad. Manufacturing, residential property and some employment data showed improvement, while commercial property, consumer spending and labor remaining under pressure.

Nevertheless, investors are not entirely giving up hope for a return to growth in the second half.  US GDP data for the second quarter, due out tomorrow, could provide a glimpse into what lies ahead.  Expectations are that it will show a moderation of the economy's contraction, with a 1.5% drop, down from the first quarter's 5.5% contraction.  Furthermore, Dow Chemical (NYSE:DOW) appeared confident of US recovery prospects, noting, "The economic outlook for the rest of 2009 appears to be stabilizing with strong growth in Asia Pacific, especially China, where domestic stimulus programs have created demand. In our view, the U.S. economy has found bottom, but will be slow in recovering as unemployment continues to be a drag on consumer spending."

Today's key post is the weekly jobless filing, which is expected to show claims rose to 575,000 from 554,000, while continuing claims increased to 6,300,000 from 6,225,000. The earnings calendar remains heavy, with earnings reports due from the likes of: Disney (NYSE:DIS), ExxonMobil (NYSE:XOM), Wynn Resorts (NASDAQ:WYNN), International Paper (NYSE:IP), Monster Worldwide (NYSE:MWW), Goodyear Tire (NYSE:GT), Becton Dickinson (NYSE:BDX), MasterCard (NYSE:MA), Travelers (NYSE:TRV), and Dow Chemical (NYSE:DOW).

Financials were once again the leading gainers, with a 3.5% advance. JP Morgan (NYSE:JPM) shares jumped 4.4%, Bank of America (NYSE:BAC) added 2.7%, and Citigroup (NYSE:C) was up 4.1%. Wells Fargo (NYSE:WFC), fresh from its $8.6 billion stock sale, jumped 6.2% after Moody's (NYSE:MCO) raised its ratings on the company's preferred shares, saying there is an improved likelihood of maintaining the dividend payout. The rating agency put Bank of America (NYSE:BAC) on review for an upgrade on consideration of its financial strength. Fortress Investment Group (NYSE:FIG), however, lost 5.3% after the company said an offering of its 40 million shares was priced at $5 each.  The 3-month LIBOR witnessed its biggest drop in three months, declining to a record low of 0.85%.

On Thursday, basic material shares jumped 2.2% and technology stocks were up 1.5%.  Among material stocks, Dow Chemical (NYSE:DOW) surged 6.0%, AK Steel (NYSE:AKS) was up 2.9% and Newmont Mining (NYSE:NEM) added 1.7%.  CA's (NYSE:CA) better-than-expected results helped technology firms register a 1.5% advance.  Reflecting improved Chinese demand for commodities, such as iron ore, coal and grains, the Baltic Dry Index jumped to its highest level this year.

Consumer spending nevertheless remained a core area of interest as several better-than-expected returns boosted sentiment yesterday, after Wednesday's 0.4% drop in April retail sales disappointed investors.  Although Wal-Mart (NYSE:WMT) reported inline earnings, its revenues came in below expectations.  Whole Foods (NASDAQ:WFMI) shares, however, added 2.8% after the company's cost controls measures helped it post better-than-expected earnings. Nike (NYSE:NKE) announced plans to lay off 1,750 jobs.  Nordstrom (NYSE:JWN), up 3.4% Thursday, posted better-than-expected first quarter earnings on inline revenues, and raised its full-year guidance.

Today's consumer price report is expected to have shown no change in April, with a 0.1% increase in core prices. NY Empire Manufacturing data is expected to come in at a negative 15.00.  Industrial production is expected to show a 0.6% m/m drop, with capacity utilization coming in at 68.9% from 69.3% prior.

For an explanation of the contrarian stance that makes Schaeffer's so unique, check out a recent version of Trading Tools.

Besting Expectations

Dow Chemical took its turn in the earnings confessional on Thursday, reporting a first-quarter profit of $24 million, or 3 cents per share - 97% lower than its net income of $941 million, or 99 cents per share, a year ago. Excluding items, however, the firm said it earned 12 cents per share, besting the Street's expectations for a per-share loss of 21 cents.

Helping offset demand issues were feedstock and energy costs, which fell by nearly half in the first quarter. In addition, the company said the closing of plants and payroll cuts resulted in savings of $270 million, compared to the period a year earlier.

Though Chief Executive Andrew Liveris said he expects 2009 to be "a recessionary year globally," he remained optimistic, stating "we actually have seen a few bright spots and some moderation in the pace of decline in the industry." In addition, Liveris said the firm is "very seriously engaged" with some "very serious bidders" for Dow's agriculture unit, Dow AgroSciences.

As a result of the pleasant surprise, shares of DOW skyrocketed 18% Friday - and fueled a mad dash for call positions on the stock.

Bulls Battle Back

According to Zacks, DOW saw nearly 38,000 calls change hands on Thursday - two-and-a-half times the security's average single-day volume of fewer than 15,000 bullish bets. Most active was the equity's near-the-money May 15 call, which saw roughly 8,500 contracts cross the tape.

However, the 12.50 strike remains home to peak call open interest in the front-month series, with about 21,300 contracts in residence. In addition, the May 11 strike harbors nearly 14,500 open call positions, while the round-number 10 strike is home to more than 10,000 calls.

The optimistic uprising stands in contrast to the sentiment among short-term options speculators. The chemical concern's Schaeffer's put/call open interest ratio (SOIR) - which measures options slated to expire within 3 months -rests at 1.03, in the 72nd annual percentile. In other words, near-term traders have been more bearishly biased toward DOW only 28% of the time during the past year.

Word on the Street

Joining options bettors on the bearish bandwagon are analysts. The stock currently harbors only 1 "buy" or better rating, Zacks reports, compared to 6 tepid "holds" and 2 "sell" or worse ratings.

However, after glancing at the charts, these skeptics could get spooked. Since grazing the 6 region in mid-March, shares of DOW have more than doubled. In fact, the stock has outperformed the S&P 500 Index (SPX) by a whopping 93% during the past 40 trading sessions.

What;s more, the equity is poised to close its second consecutive week atop its 20-week moving average - a trendline that, in conjunction with its 10-week counterpart, guided the shares into the red during most of the past year.

Should DOW's recent rally shake loose some bears, the stock could inch higher. A reversal in sentiment in the options arena, or a fresh wave of upgrades and/or price-target boosts, could place additional buying pressure on the equity.

Zacks Investment Research

April collectively revealed the DJIA soared 7.4%, the NASDAQ 12.4%, and the S&P 9.4%, pushed higher by a 19.8% rise in financials. On a dollar basis, the gain in Dow Jones shares results into a 12% gain, the record since 1991 when record keeping began.  The S&P also fared well in April, rejoicing in its largest monthly increase in 9 years and now stands 29%higher than its March 9 closing low; the NASDAQ gain proved its best in six. Crude prices soared 18.5% despite record high inventory levels as demand prospects for the second half improved

Nearly 70% of the S&P earnings results reported ahead of analysts' projections. Thursday's mixed market action betrayed disappointment in results from ExxonMobil (NYSE:XOM), downside 2009 guidance from Procter & Gamble (NYSE:PG), a dividend cut from Black and Decker (NYSE:BDK) - a trilogy of Street concern: earnings, outlook and payout. However, Dow Chemical (NYSE:DOW) offered the palliative of a profit in the quarter, a surprise that added 18% to the shares.

* Starbucks (NASDAQ:SBUX) reported fiscal second quarter earnings of 16 cents ex-items versus 15 cents, beating estimates of 15 cents a share, as revenues fell 7.6% to $2.33 billion, missing estimates of $2.36 billion

* Motorola (NYSE:MOT) reported a first quarter loss of 10 cents a share, topping estimates by one cent, versus a 5 cent loss a year ago, as revenues fell 27.9% year-over-year to $5.4 billion

* Eastman Kodak (NYSE:EK) reported a loss of $1.34 per share in the quarter, a $1.01 miss versus a 39 cent loss a year earlier, as revenues fell 29.4% year-over-year to $1.5 billion

* Comcast (NASDAQ:CMCSA) reported its first quarter topped estimates by 4 cents, coming in at 27 cents as revenues decline 5% year-over-year to $8.4 billion

* Colgate-Palmolive (NYSE:CL) reported first quarter earnings of 97 cents a share, one cent better than expected versus 90 cents a year ago, as revenues declined 5.7% year-over-year to $3.5 billion

* Dow Chemical (NYSE:DOW) reported first quarter earnings of 12 cents ex-items, 33 cents better than expected versus 99 cents a year ago, as revenues fell 38.7% year-over-year to $9.1 billion

* Exxon Mobil (NYSE:XOM) reported a 2 penny miss as earnings fell to 92 cents a share from $2.03 a share a year earlier

Japan's Nikkei 225 stock average closed up 108.09 points, or 1.2%, to 8,857.93, while Hong Kong's Hang Seng jumped 452.35 points, or 3.1%, to close at 14,998.04. South Korea's Kospi advanced 1.1% to 1,297.85.

Oil prices rose by almost $1 per barrel on hopes of economic recovery. US premarket futures suggest a continuation of equity interest this week, even as a dismal quarter for corporate results is anticipated.

Last week saw the DJIA registering a 3.1% advance on the week.   The index, which is now up 21.5% since March 6, recorded its best four weeks of gains since 1933.  The S&P 500, which rose 3.3% last week, has advanced 23.2% from its March 6 lows. And the tech-heavy NASDAQ jumped 5% for the week, with a 25.3% surge from its March lows. The CBOE Vix, the Chicago Board Options Exchange Volatility Index, closed below 40 on Friday for the first time since January.

Gold prices went below $900, off $11.60 on Friday as risk-appetite grew, resulting in shares of Harmony Gold (NYSE:HMY) to drop 13.9% on the week.  Rangold Resources (NASDAQ:GOLD) declined 5.4%.

Last week all but one of the S&P sectors recorded gains, led by a 7% advance among financials, and 6% increases in technology and basic material sector shares. Lagging the S&P sector action were health care stocks, which declined 1.9% during the week. Among financials, SLM Corp (NYSE:SLM) jumped 19.7%; Huntington Bancshares (NASDAQ:HBAN) 19.6%; ING Corp (NYSE:ING) 19.3%; and Friedman Billings and Ramsey (NYSE:FBR) 19.1%. On the DJIA, Citigroup (NYSE:C) rose 8.8% during the week, while JP Morgan (NYSE:JPM) jumped 6.9%, and American Express (NYSE:AXP) was up 6.1%.  Even though expected, FASB's moves to relax accounting standards for treatment of toxic assets were interpreted as likely to improve near-term results.

Commodity markets also jumped on hopes of economic recovery. Copper prices went above $4,000 per ton. Basic materials sector gains were led by a 22.8% weekly gain in Dow Chemical (NYSE:DOW), 21.7% in Arcelor Mittal (NYSE:MT), 21.1% in PPG Industries (NYSE:PPG), 16.1% in AK Steel (NYSE:AKS) and 15.1% in Celanese (NYSE:CE).

Technology shares, driven by increased risk appetites, advanced 6% during the week, led by a 32% jump in shares of Research in Motion (NASDAQ:RIMM), which reported better-than-expected results for the quarter on record revenues. Corning (NYSE:GLW) jumped 17.7% after several analysts' increased 2009 profit estimates and increased price targets, and in advance of a Barron's article noting a 39% increase in February flat-panel TV sales. Fairchild Semiconductor (NYSE:FCS) rose 14.4% and National Semiconductor (NYSE:NSM) gained 13.8%. 

However, health care sector remained the weak group, declining 1.9% on the week. Shares losing ground included Amgen (NASDAQ:AMGN), off 9.8% and Abbott Labs (NYSE:ABT), down 5.3%. Friday losses hit Bristol Myers (NYSE:BMY) shares, off 5.4% as analysts lowered expectations the company was a takeover candidate, and Humana (NYSE:HUM), off 5.7%, on analyst warnings that earnings would be hurt by changes in the US Medicare Advantage Program.

This week will indicate the market's ability to push beyond its month-long rally in the face of an earnings season likely to suffer first quarter declines of 36.9% from year ago levels, according to Thomson Reuters (NYSE:TRI), with a record nine straight quarterly declines. All S&P sectors are expected to post declines, led by a 97.4% drop in consumer discretionary earnings due to losses at General Motors (NYSE:GM) and Ford (NYSE:F). Material sector earnings are expected to have fell 74.9%, energy 56.7%, and financial firms - no longer at the top of the list - are projected down 33% according to FactSet. Alcoa (NYSE:AA) kicks off earnings season on Tuesday, with key corporate results also due out from Bed Bath & Beyond (NASDAQ:BBBY), Mosaic (NYSE:MOS), Constellation Brands (NYSE:STZ), Family Dollar (NYSE:FDO) and Pep Boys (NYSE:PBY).

Among key economic posts, February consumer credit is slated for Tuesday, February wholesale inventory data and the Fed minutes from the March 17-18 FOMC meeting on Wednesday, and weekly jobless claims and key February trade balance figures on Thursday. Fed Governor Warsh speaks on financial markets today at 5:00 PM ET, with Minneapolis Fed President Stern and Kansas City Fed President Hoenig speaking on Thursday.

Rohm & Haas Co. (ROH) tumbled 16% on Monday after its $15.4 billion acquisition by Dow Chemical (DOW) was postponed on account of the global financial crisis and collapse of a Kuwaiti joint venture, through which Dow had meant to fund the deal.

The Federal Trade Commission had approved the long awaited deal last Friday, creating a deadline of two business days for completing the merger. Dow said it remains interested in completing the acquisition as part of its “long-term strategy.”

Last July, Dow agreed to buy Rohm & Haas to defend itself against volatile commodity prices by gaining access to raw materials used for electronics and water-based paints. But the deal created investor concern as prices for commodities began to fall soon after the deal was signed.

Dow Chief Executive Andrew Liveris insisted that he could complete the transaction even without $7 billion in cash that the K-Dow Petrochemicals joint venture was supposed to supply. However, that would leverage its balance sheet with short-term loans worth $13 billion and equity investments.

Rohm and Haas said it would pursue all available alternatives to protect shareholder interests. According to CNBC reports, it filed suit in a Delaware court to force Dow to close the deal without delay.

Rohm and Haas was trading down 14% at $56.66, while Dow Chemical fell 4% to $13.75 at noon on the New York Stock Exchange.

But they threw off their shackles on Friday. Dupont (DD), which fell 46 cents to $45.24 a day earlier, was up by 3.77% to $47.67. Keeping it company was Dow Chemical (DOW), the only one to have bucked the pullback on Thursday, with a surge of 4.16% to trade at $37.31.

But the stock to really watch out for is Olin Corp. (OLN) that climbed by 10.39% to $23.17 in spite of the announcement that caustic soda shipments from its plant in McIntosh, Ala., will be halted until further notice. Praxair, Inc. (PX) too scaled $85.98, up by 4.65%. Dow and Praxair are trading near their 200-Day Moving Average.

Also on the upswing were PPG Industries, Inc. (PPG), Ashland Inc. (ASH) and Air Products & Chemicals, Inc. (APD), all stocks that had tanked on Thursday. However, the biggest chemical maker, BASF (BASFY) was not so lucky, as it was down to $46.83 following a Bloomberg news that the company will cut down polystyrene production in Europe by 25% because of a fall in demand. Dow Chemical too had announced a 15% reduction in polystyrene production in Europe in June.

More than 2,500 of the company’s downstream products are created from raw materials produced in Dow plants across the world. Financials are solid. Stronger demand in Europe, Asia Pacific, Latin America, India, Middle East and Africa has more than offset the continued economic slowdown in North America.

Moreover, price gains have largely offset significant increases in feedstock and energy costs. Dow’s merger with Rohm and Haas (ROH) will further consolidate its higher-margin and higher-growth specialty businesses and reduce the volatility in earnings and cash flow.

However, high raw material costs have forced the company to temporarily idle or reduce production at several of its plants. Further, DOW has a high exposure to the commodity chemical cycle. We expect earnings to remain under pressure and rate the stock a Hold with a target of $35.

Dow will construct a state-of-the-art membrane chloralkali production facility in Freeport, Texas, as several of Dow's existing chlor-alkali assets in Freeport are facing obsolescence. The facility will provide long-term reliable supply of chlorine for derivative products when it begins operations in 2011. Dow's current business profile has an anticipated growth rate of about 4% from 2008 to 2012.

Read the full analyst report on DOW

Copyright 2008 Stockerblog.com, All rights reserved. Reprinting without permission is prohibited.

read more