• Saks (NYSE:SKS) reported a surprise quarterly profit

• Microsoft (NASDAQ:MSFT) shares rose 3.0%, and led the gainers on the DJIA, after Morgan Stanley (NYSE:MS) and UBS (NYSE:UBS) recommended the shares.  Morgan Stanley's analyst raised the price target on the stock due to encouraging demand for Windows 7 and upbeat expectations for holiday season demand.  UBS' analyst placed a $34 price target on the shares

• Barclays Capital (NYSE:BCS) raised ExxonMobil (NYSE:XOM) to "overweight"

• Autodesk (NASDAQ:ADSK) offered a slightly downside fourth-quarter guidance of 24 cents a share ex-items

• Salesforce.com (NYSE:CRM) said it sees fourth-quarter earnings of 14 cents to 15 cents a share, versus Street estimates of 15 cents a share

• BMO Capital downgraded Research in Motion (NASDAQ:RIMM) to "market perform" from "outperform," cutting the price target to $64 from $100

• A counter-offer to Kraft's (NYSE:KFT) hostile, $16 billion Cadbury (NYSE:CBY) offer may be in the works from Hershey (NYSE:HSY) and Ferrero

• ExxonMobil (NYSE:XOM) shares were upgraded to "overweight" at Barclays Capital (NYSE:BCS)

• A regulatory filing showed Berkshire Hathaway (NYSE:BRK.A) nearly doubled its Wal-Mart (NYSE:WMT) holdings; added almost 112 million Wells Fargo (NYSE:WFC) shares; the filing showed a 1.28 million holding of ExxonMobil (NYSE:XOM) shares; and 3.2 million shares of SunTrust Banks (NYSE:STI)

• UBS (NYSE:UBS) CEO Grubel outlined an ambitious goal of annual pre-tax profits of $14.89 billion over the next 3-5 years

• Dillard's (NYSE:DDS) reported a smaller than expected third quarter loss, with a non-GAAP loss of 3 cents, versus estimates of a 51 cent loss on revenues of $1.36 billion, off estimates of $1.38 billion. Same-store-sales fell 9%

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).

Chicago, IL – October 28, 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: BP plc (BP), ExxonMobil (XOM), Chevron (CVX), U.S. Steel Corp. (X) and POSCO (PKX).

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:

BP Tops on Better Cost Control

BP plc (BP) reported its third quarter 2009 results of $1.71 per ADS (American Depositary Share), beating the Zacks Consensus Estimate of $1.14 on the back of stronger cost controls and increased upstream volumes. However, in comparison with the year-earlier results, earnings fell approximately 34% on lower oil prices.

BP’s strong performance sets the stage for earnings releases by ExxonMobil (XOM) and Chevron (CVX), which are scheduled to report their results on Thursday and Friday this week, respectively.

BP expects its capex budget to be $20 billion for the year. The company’s attractive dividend (currently yielding around 6%) remains unchanged from the year-ago level. We believe that BP’s dividend is safe with the recent uptrend in oil prices.

Net cash provided by operating activities for the quarter was $8.1 billion compared with $14.9 billion a year ago. Net debt at the end of the quarter was $26.3 billion, representing net debt-to-capitalization ratio of 21% (compared with 17% a year ago).

Steel Output Mounting

Key steel consuming industries such as auto, shipbuilding and construction have been experiencing weak demand in the last quarters, forcing global steel makers to lower production levels. U.S. Steel Corp. (X) had slashed production by almost 62% during the second quarter of 2009, while Korean steel maker POSCO (PKX) was forced to reduce production for the first time in its history. POSCO curtailed production by about 15% during the period.

However, with steel demand picking up in the last couple of months, United States Steel Corp. is restarting its blast furnace at its Hamilton, Ontario, plant after a nine-month shutdown. U.S. Steel had closed the Hamilton blast furnace in Nov 2008. It suspended the remaining operations at Hamilton and the Nanticoke facilities in March 2009 due to a drop in demand. Both the facilities were running at less than half their capacity.

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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.

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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).

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).

ExxonMobil (XOM) has been producing a little over 2.4 million barrels of oil a day for the last year and a half, its lowest rate of production over the last decade. The dark blue line in the figure below shows the company's production each year since 1999. Four years ago, Stuart Staniford noted that ExxonMobil's 2001 annual report predicted 3% annual growth in production between 2001 and 2007. That projection appears as the red line in the graph below; didn't quite come out as planned. Stuart's theory was that the company correctly predicted the contribution of its new discoveries, but underestimated the declining production rates from mature fields.

ExxonMobil again predicted in 2006 that it could achieve 3% annual growth over 2006-2011. I've shown that forecast as the lighter blue line in the figure. We still have two more years to make that one right, I suppose.

Dark blue: ExxonMobil's annual net production of crude oil and natural gas liquids in millions of barrels per day. 1999-2008 from company's annual reports. 2009 based on average of 2009:Q1 and 2009:Q2. Red: forecast from the company's 2001 annual report. Light blue: forecast from the company's statements in 2006.

The Wall Street Journal reported on Wednesday that ExxonMobil is prepared to spend $4 billion to buy 1/4 interest in the Jubilee oil field off the coast of Ghana, which would represent 15% of the oil giant's 2008 capital and exploration budget. Alan von Altendorf thinks they can't make a good return unless they sell the oil for $100/barrel. Presumably the company is reckoning on more oil in the field than current estimates suggest. But even if von Altendorf's calculations are off by a factor of two, it still seems to signal a change in philosophy for a company that has historically been extremely careful with its investments in order to maintain its position as a very low-cost producer.

But what else is the company to do? It's not like they haven't tried to take advantage of Russia's or Venezuela's strong commitment to protect foreign investors or the peaceful aspirations of Nigerian rebels.

Chevron (CVX) and many other companies are finding clever new ways to get more oil out of mature U.S. fields. That may well succeed in slowing the rate at which production from those fields declines over time. But to get the plot in the graph above to slope up you really need to develop new fields.

The New York Times is encouraged by the "brisk pace of new discoveries" which the paper reports "have totaled about 10 billion barrels in the first half of the year".

The Oil Drum, always a party pooper, notes that the world likely consumed that much in the first four months of the year.

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).

The 30-share Dow Jones industrial average rose 56 points, or 0.6%, to 9,497.34 and the S&P 500 index added 9 points, or 0.9%, to 1,025.39, its highest close in 11 months.  The tech-heavy NASDAQ added 19 points, or 0.94%, to close at 2,037.77 points. On the New York Stock Exchange, advancing issues outpaced those that declined three to one on volume of 1.32 billion shares.  However, a jump in the CBOE Vix volatility measure, which rose 1.4% to 25.62, added a note of caution to the upbeat mood.

Dollar’s plunge to an 11-month low was also due to a Monday release from the United Nations, which again called for less dependence on the greenback as the premier global reserve currency. Indications that China would diversify some of its interests into gold also hurt the dollar, although the size of China's reserves mitigates against much impact.  Nevertheless, the news helped gold prices.  This morning's news indicated Barrick Gold (NYSE:ABX) is planning to raise up to $3.5 billion through a new share offering priced at $36.95 per share.

Yesterday, General Electric (NYSE:GE) was the leading gainer on the DJIA after being upgraded by JP Morgan (NYSE:JPM).  Costco (NASDAQ:COST) advanced 2.3% after two brokerages upgraded the stock. Among tech issues, IBM (NYSE:IBM) retreated 0.3% after it was downgraded; however, the firm noted it is "well ahead" of its 2010 earnings target of $10-$11 per share.  Advanced Micro Devices (NYSE:AMD) surged 14.6% as Barclays Capital (NYSE:BCS) upgraded the shares to "outperform."  AIG (NYSE:AIG) shares slumped 10.5% after Credit Suisse (NYSE:CS) downgraded the stock to "underperform," noting "little to no value for common equity" remains.

Nine of the ten S&P industry groups recorded gains Tuesday , with oil and gas (+2.7%) and basic material shares (+2.1%) leading the list of gainers.  Only healthcare shares registered declines, declining 0.3%.  Crude prices spiked $3.31 to $71.33 on expectations today's OPEC meeting will see no change in the production levels.  Moreover, Goldman Sachs (NYSE:GS) maintained a favorable long-term view on the group, saying there is an "increasing evidence of a stronger-than-expected recovery in global industrial activity."  Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) shares gained 2.2% and 2.1%, respectively.  Among basic material issues, Alcoa (NYSE:AA) rose 3.5% to $12.60.

In today's Presidential appearance before a rare joint session of Congress, President Obama will attempt to resuscitate his healthcare reform package and counter the groundswell of centrist opposition, which has driven his ratings to a low 52% point.

The Dow Jones industrial average added 30 points, or 0.3% and closed at its highest point since November 4.  The S&P 500 index gained 2 points, or 0.2% to close at its highest level since November 6.  The NASDAQ composite rose 6 points, or 0.3%, to 2024, its highest close since October 1.  NYSE volume remained a modest 1.14 billion shares, with advancing issues ahead of decliners by a three-to-two margin.

After touching their 10-month high, crude prices retreated 3.1% to $72.05, reflecting yesterday's reported rise in stockpiles from the American Petroleum Institute, generating a 1.4% fall in the S&P's oil and gas sector.  Among DJIA components ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) eased 0.9% and 0.2%, respectively.

A favorable housing report sent shares of Hovnanian (NYSE:HOV) up 6.5%, Pulte Home (NYSE:PHM) up 3.5%, and Lennar (NYSE:LEN) 2.8%.  Among home improvement retailers, Lowe's (NYSE:LOW) shares gained 1.7% after it said it was entering Australian markets in a Woolworth partnership.  Home Depot (NYSE:HD) shares rose 2.2%.

Consumer services shares rose 1.2% and were the leading gainers among the S&P 500 industry groups.  Shares of retailers advanced with luxury-retailer Saks (NYSE:SKS) up 8.5%, Macy's (NYSE:M) up 3.5% and Sears Holdings (NASDAQ:SHLD) up 2.4%.

The Treasury sold $42 billion 2-year notes in its planned $109 billion auction for the week.  Although, the response was average, with a high yield of 1.119%, Treasury prices rose on improved inflation expectations, with the longer-dated 30-year up 22/32 in price, and its yield down 4 bps to 4.22%.  Three-month Libor fell to a record low of 0.38%, its lowest level since 1986, pointing to increased credit market liquidity.

In what could be a major policy matter, the government expects US debt over the next decade to almost double, as a less-vigorous-than-hoped-for economic recovery fails to offset increased spending on retirement and health care benefits.  The White House expects a $9 trillion deficit over the next decade, $2 trillion more than previously anticipated, with a 2009 deficit of $1.58 trillion.

The Dow Jones industrial average edged up 3.32 points, or 0.03%, to end at 9,509.28.  The Standard & Poor’s 500-stock index fell 0.56 points to end at 1,025.57, and the NASDAQ fell 2.92 points, or 0.14%, to 2,017.98.  On the New York Stock Exchange, winners narrowly edged losers on volume of 1.23 billion shares.

Shares of auto-related companies were under pressure as the government’s cash-for-clunkers program was set to end.  Financial stocks retreated 0.9% after an influential banking analyst noted that the current economic crisis could see another 150-200 banks failing.  Moreover, SunTrust Bank (NYSE:STI) CEO warned of further pressure among US banks from troubled commercial real estate loans throughout 2010.  Its shares fell 3.8%. The news outweighed a report from Barclays Capital (NYSE:BCS) in which ratings on three credit card firms were raised to "overweight," due to estimates that a peak in write-offs is near at hand.  The firm raised its American Express (NYSE:AXP) rating to "overweight," and increased its price target to $38 from $28.

A rise in crude prices to almost $75 per barrel helped oil and gas shares lead the gainers on the S&P 500 with a 1.3% advance.  Shares of ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) rose 2.0% and 1.5%, respectively.  Defensive health care and utility shares also advanced, with gains of 0.3% and 0.2%, respectively.

President Obama's anticipated, 9:00 AM ET announcement from Martha's Vineyard, where he is on vacation with his family, regarding the reappointment of Fed Chairman Bernanke could boost sentiments today.  Many on the Wall Street like Bernanke’s calming presence and have grown increasingly confident in his ability to avoid further financial missteps. Moreover, the early nomination offers the Chairman the opportunity to make plans beyond the end of his term, which would include the exit strategies needed as the economy improves.

Shanghai's main index jumped 126 points, or 4.5%, to 2,911.58, while Japan's Nikkei 225 stock average climbed 179.41 points, or 1.8%, to 10,383.41.  Hong Kong's Hang Seng rose 374.63, or 2%, to 20,336.36.  South Korea’s Kospi advanced 2% to 1,576.39.

Stock futures pointed to a higher open on Wall Street Thursday.  Dow Jones industrial average futures rose 24, or 0.3%, to 9,300. Standard & Poor's 500 index futures edged up 3.70, or 0.4%, to 1,000.80, while Nasdaq 100 index futures rose 3.50, or 0.2%, to 1,602.25.

On Wednesday, the unexpected drop in crude inventories helped U.S. stocks wipe off early losses and finish the day with gains of less than 1% as investors looking for reassuring sings picked up oil and other commodity stocks.  Rumors that the Obama Administration was considering a second stimulus package also helped sentiments on the Street yesterday.  However, the rumors were later dismissed, with White House spokesman Gibbs noting, "There is no imminent economic announcement."

The 30-stock Dow Jones industrial average added 61 points, or 0.7%, to close at 9,279.16.  The NASDAQ added 13.32 points, or 0.7% for a close at 1,969.24, and the S&P500 ended 6 points higher at 996, up 0.7%.  Volume remained light with only 988 million shares trading on the NYSE and advancing shares ahead of decliners by a 3-to-2 margin.

On the earnings front, the picture was mixed as Hewlett-Packard (NYSE:HPQ), Deere (NYSE:DE) and PetSmart (NASDAQ:PETM) reported earnings that beat expectations, but outlook from these companies disappointed.  Some retailers, though, were optimistic, with BJ's Wholesale (NYSE:BJ) and Limited (NYSE:LTD) offering improved yearly outlook.

Among S&P500 industry sectors, oil and gas shares advanced 1.9% and were the leading gainers.  DJIA components Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) moved higher, up 1.8% and 2.3%, respectively.  Commodity-related issues were not far behind, with basic material shares up 0.9%, following the broad-based gain in commodities. Freeport-McMoRan (NYSE:FCX) shares surged 2.7%.  However, Alcoa (NYSE:AA) led the decliners on the DJIA after Goldman Sachs (NYSE:GS) downgraded the stock, citing Alcoa's (NYSE:AA) recent appreciation and advised rolling positions into Freeport-McMoRan (NYSE:FCX), which is on its Conviction Buy List.

Health care issues advanced 1.3%, as Merck's (NYSE:MRK) 2.5% advance led DJIA component gains. A New Jersey court upheld the firm's patent for asthma drug Singulair, and ruled against Teva Pharmaceuticals (NASDAQ:TEVA).

Despite the day's reported increase in weekly mortgage applications, financial shares failed to gain in the market advance, and eased 0.03%. News of last week's rise in mortgage applications on increased refinancing requests did not have an impact on financial shares.  Bank of America (NYSE:BAC) shares dropped 0.9% and JP Morgan (NYSE:JPM) eased 0.7%.

Retailers scheduled to report include: Barnes and Noble (NYSE:BKS), GameStop (NYSE:GME), HJ Heinz (NYSE:HNZ), Hormel Foods (NYSE:HRL), Ross Stores (NASDAQ:ROST), Sears Holdings (NASDAQ:SHLD), and Gap (NYSE:GPS).

The Dow Jones industrial average rose 83 points, or 0.9% and the broader S&P 500 index added 11 points, or 1.2%, to 986.75, its highest close since November 4.  The tech-heavy Nasdaq gained 16 points, or 0.8%, to close at its highest level since October 1.

The much-awaited GDP report this morning demonstrated a smaller-than-expected 1% contraction, signaling the recession is losing force. Expectations were for a 1.5% drop.

Yesterday, GE (NYSE:GE) led the Dow Jones industrial average higher after the conglomerate was upgraded to “buy" from “neutral" by Goldman Sachs (NYSE:GS). The analysts at Goldman Sachs said chances of GE severing its GE Capital business appeared to be less likely. Shares in GE surged 6.9% helping the Dow average end at its highest level since November 4.  The index is up 40% since it hit a 12-year low on March 9.

Meanwhile, the Labor Department’s weekly jobless data helped calm shaky nerves as it signaled a stabilizing economy and an improving employment scenario.  Upbeat sentiments on the Street helped all ten industry groups in the S&P 500 register gains.  Among the S&P500 industry sectors, gains were led by basic materials (+3.2%), financials (+2.3%) and industrials (+1.9%).  The index is up about 12% from July 10, as significant beats from companies like Intel (NASDAQ:INTC), Caterpillar (NYSE:CAT), Goldman Sachs (NYSE:GS), Eli Lilly (NYSE:LLY) have pushed the index closer to the 1,000 level.

Motorola (NYSE:MOT) jumped 9.4% to $7.19 after reporting a loss of 1 cent a share that was better than expected.  MasterCard (NYSE:MA) rose 3% to $194.11 after higher fee income drove profit to $2.68 a share that was above estimates.  Visa Inc. (NYSE:V) gained 0.6% to $67.21 after its earnings came ahead of projections.

Among commodity-related issues and industrial shares, Alcoa (NYSE:AA) rose 4.1%, DuPont (NYSE:DD) gained 4.3%, and Caterpillar (NYSE:CAT) rose 3.8%. Among the DJIA components, McDonald's (NYSE:MCD) fell 1.5% after Morgan Stanley (NYSE:MS) cut its ratings on the firm to "equalweight" from "overweight." Travelers (NYSE:TRV) shares fell 1.6% on its earnings miss despite a raised full-year outlook. ExxonMobil (NYSE:XOM) shares lost 1.0% after the company reported its smallest profits in six years.

Key companies reporting their earnings today include American Electric Power (NYSE:AEP), Chevron (NYSE:CVX) Constellation Energy (NYSE:CEG), Dominion Resources (NYSE:D), and Weyerhaeuser (NYSE:WY).

Chicago, IL – July 31, 2009 – Zacks Equity Research highlights Hanesbrands, Inc. (HBI) as the Bull of the Day and CEMEX, S.A. de C.V. (CX) the Bear of the Day. In addition, Zacks Equity Research provides analysis on ConocoPhillips (COP), ExxonMobil (XOM) and Chevron (CVX).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676

Here is a synopsis of all five stocks:

Bull of the Day:

Hanesbrands, Inc. (HBI) management's business model requires only modest sales growth to create substantial EPS growth. Earnings are being driven by brand-building and cost-reduction initiatives.

Since the spin-off in September 2006, the company has reduced debt by $511 million, lowering interest expense from the post spin-off financial structure. However, management is reporting non-GAAP EPS, which excludes unusual actions, which may be distorting perceived earnings.

The Buy rating is maintained due to valuation. Currently, our six-month target price is $20.50 per share.

Bear of the Day:

We are keeping our Sell rating on CEMEX, S.A. de C.V. (CX). The company posted weak results in the second quarter of 2009 with more than 50% decrease in net income year over year.

The continued weak cement volumes in Spain and the U.S. are problematic. The short-term outlook for the company remains highly uncertain based on the prolonged downturns in the residential sector and tight credit conditions coupled with fall in the real estate prices throughout the world.

Moreover, the continuous increase in net debt is extremely concerning. Our six-month target is $8 per share.

Latest Posts on the Zacks Analyst Blog:

Conoco Beats Despite Slump

ConocoPhillips (COP) reported second-quarter earnings of $0.87 per share, above the Zacks Consensus Estimate of $0.83 per share.

However, earnings per share were well below from the year-earlier figure of $3.50. This significant downfall was mainly due to significantly lower commodity prices and a steep decline in worldwide marketing margins, which more than offset production improvements and lower costs.

While turnaround in crude oil prices is beneficial to the entire sector, we are maintaining our Hold recommendation on ConocoPhillips shares given the company’s competitive disadvantages relative to its super major peers. These disadvantages include a high-cost OECD-centric asset base and heavy exposure to the relative tentative outlook for U.S. natural gas (more than a third of total volumes) and refining markets. Our preferred names in the integrated space remain ExxonMobil (XOM) and Chevron (CVX).

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

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 analyst 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 by visiting http://at.zacks.com/?id=5508.

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=5509.

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However, earnings per share were well below from the year-earlier figure of $3.50. This significant downfall was mainly due to significantly lower commodity prices and a steep decline in worldwide marketing margins, which more than offset production improvements and lower costs.

The Exploration and Production segment reported earnings of $725 million during the quarter, down nearly 82% year over year. The fall was mainly due to lower commodity prices, partially offset by higher volumes and lower operating costs. Daily production from the E&P segment including Canadian Syncrude averaged 1.87 million barrels of oil equivalent per day (MMBOE/d), up from 1.75 MMBOE/d in the year-ago quarter.

The year-over-year increase in production from new developments in the U.K., Russia, Norway, Vietnam, China and Canada more than offset the impact of normal field decline. To some extent, production also increased due to less unplanned downtime and the impact of production-sharing contracts.

The Refining and Marketing segment reported a loss of $52 million, compared to a profit of $664 million in the year-ago quarter. The year-over-year decrease was primarily due to reduced refining volumes and worldwide lower marketing margins.

The domestic refining crude oil capacity utilization rate for the quarter averaged 93%, compared to 94% a year earlier. International capacity utilization rate averaged 72%, versus 88% last year. Worldwide utilization averaged 88%, compared to 93% in the year-ago period.

The Midstream segment (which includes the company’s 50% interest in DCP Midstream LLC) contributed $31 million to net income during the quarter, down approximately 81% year over year. The decline was due to lower realized prices and volumes.

ConocoPhillips’ earnings from its LUKOIL Investment segment came in at $682 million as against $774 million in the prior-year quarter. The year-over-year decrease came from lower realized prices, partially offset by lower taxes and higher volumes. LUKOIL’s estimated contribution to the company’s quarterly E&P volumes was 442,000 barrels of oil equivalent per day.

The Chemicals unit reported earnings of $67 million as against earnings of $18 million a year ago. The year-over-year improvement was mainly driven by lower operating costs.

At the end of the quarter, ConocoPhillips had $0.9 billion in cash and $30.4 billion in debt, with a debt-to-capitalization ratio of 34%. During the quarter, the company paid $700 million in dividends. ConocoPhillips generated $2.6 billion in cash from operations during the quarter and invested $2.9 billion in capital expenditures. The company maintained its total 2009 capital budget at $12.5 billion.

While turnaround in crude oil prices is beneficial to the entire sector, we are maintaining our Hold recommendation on ConocoPhillips shares given the company’s competitive disadvantages relative to its super major peers. These disadvantages include a high-cost OECD-centric asset base and heavy exposure to the relative tentative outlook for U.S. natural gas (more than a third of total volumes) and refining markets. Our preferred names in the integrated space remain ExxonMobil (XOM) and Chevron (CVX).

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).

During the last two weeks, as companies reported numbers that surprised the Street and gave an upbeat outlook, hope that the economy had come out of the worst started to rebuild and investors, albeit cautiously, began to build positions.  During the past two weeks major stock indices climbed at least 11%.  Investors’ increasing appetite for risk was reflected in Dow’s 188 point jump on Thursday.  Nevertheless, fear and skepticism did not entirely disappear from the market and traders remained conservative on certain fronts.

The rally last week saw the Dow Jones industrial average go beyond 9,000 for the first time since January.  During the week, the index jumped 349 points to reach a level of 9,093.  The S&P500 advanced 4.1% during the week for an 8.4% rise year-to-date. And in spite of the fact that the Nasdaq failed to hold on to a record rally – its longest since 1992 – for the week it remained up 4.2% and is 24.7% year-to-date.

According to Thomson Reuters' latest reported data, S&P500 second quarter earnings declines narrowed from the -35.2% of the previous week to -31.0%. Among the 184 firms that have already reported their earnings, 77% of the interims exceeded estimates. Nearly one-third of the S&P500 companies are scheduled to report results this week, with DJIA components Chevron (NYSE:CVX), Disney (NYSE:DIS), ExxonMobil (NYSE:XOM), Travelers (NYSE:TRV), and Verizon (NYSE:VZ) scheduled to report.

Nevertheless, concerns that the recent run of earnings have come on the back of cost-cutting measures may sour the upbeat mood on the Street.  Friday's 8.3% fall in Microsoft (NASDAQ:MSFT) shares was due to its in-line earnings numbers, but what hurt the most was a greater-than-expected, 17% fall in top line results. The company's drop was a major contributor to the NASDAQ's 0.4% Friday decline. This week 146 of the S&P500 are slated to report.

Also on the agenda for the week is the two-day meeting of top US and Chinese officials, discussing a broad agenda and raising questions of currency issues and China's willingness to continue its sizeable Treasury purchases.  This week, the Treasury has announced plans to auction $115 billion in 2,5, and 7-year notes. A Bernanke-fest hits the airwaves with PBS' coverage for three nights beginning on Monday.

Today's corporate releases are due from: Amgen (NASDAQ:AMGN), Corning (NYSE:GLW), Honeywell (NYSE:HON), and Verizon (NYSE:VZ).

• Barry Ritholtz and Robert Reich believe investors should not be pleased with recent positive corporate earnings surprises.
• Hal Varian reports that Google Trends predicts further reductions ahead in new claims for unemployment insurance.
• Felix Salmon [1], [2] describes how Larry Summers lost a billion dollars for Harvard.
• ExxonMobil is investing big bucks in some radical new tools for controlling carbon emissions.
• Lucian Bebchuk worries that the proposed Goldman Sachs compensations represent a return to a dangerously flawed incentive structure.
• Dave Altig has a very interesting graph showing just how pessimistic consensus estimates are about this economic recovery.
• And here's one of the reasons I always try to find something that doesn't come from AP as a source any time I want to link to something in the news.

Chicago, IL – July 21, 2009 – Zacks Equity Research highlights ExxonMobil (XOM) as the Bull of the Day and SurModics (SRDX ) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Marathon Oil Corporation (MRO), CNOOC Ltd. (CEO) and Sinopec (SNP).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676

Here is a synopsis of all five stocks:

Bull of the Day:

We are maintaining our Buy recommendation for ExxonMobil (XOM) shares ahead of the quarterly results, reflecting its strong operational and financial position on the back of solid business portfolio and prudent investment approach.

The company's capital spending plans remain unaffected by the current commodity-price and credit market turmoil, with annual capital outlays in the $25 billion to $30 billion range over the next five years.

We are, however, keeping our estimates and target price unchanged.

Bear of the Day:

SurModics (SRDX ) provides surface modification and drug delivery technologies to medical device and pharmaceutical companies. Revenue continues to decline in fiscal 2Q09 and outlook for the whole fiscal year is bleak.

Cypher stent sales from J&J declined dramatically again during the April-June quarter and will continue to fall in the coming quarters. This is certainly not good news to SRDX since revenue from Cypher sales makes significant contribution to the company's top line. The current economic environment also has a negative impact on the company's outlook.

Both revenue and EPS will decline in fiscal 2009 and 2010. As such, we maintain our Sell rating for the company with a price target of $15.50.

Latest Posts on the Zacks Analyst Blog:

Chinese Oil Buying into Angola

On Friday, July 17, integrated oil major Marathon Oil Corporation (MRO) announced the sale of its 20% interest in a block offshore Angola for $1.3 billion. A subsidiary of Marathon has reached an agreement with Chinese oil companies CNOOC Ltd. (CEO) and Sinopec (SNP). The transaction is expected to close by year-end 2009, subject to government and regulatory approvals.

Per the deal, CNOOC and Sinopec will form a 50-50 venture to buy the stake in the subsea Angolan oilfield located some 150 kilometers off the country's coast in a water depth of 1400 to 2200 meters. Known as ‘Block 32,’ the 5,090-square-kilometer field has already yielded 12 successful exploration wells. Pursuant to the proposed sale, the Houston-based, fifth-largest refiner and marketer of petroleum products in the U.S. would retain a 10% interest in the enterprise of the 30% it originally had.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

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 analyst 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 by visiting http://at.zacks.com/?id=5508.

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=5509.

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

A barrel of oil has about six times the energy content of a thousand cubic feet of natural gas. The graph below compares the dollar price of a barrel of oil with the oil-equivalent cost of natural gas, calculated by multiplying the price (in $/1000 cu ft) by six. The two prices tended to move together in the early part of the decade, but have diverged significantly over the last few years, with natural gas today selling for 1/3 the price of oil in terms of BTU content.

Black line. Jan 1998 to Jun 2009: average price over the month of West Texas Intermediate, in dollars per barrel (from FRED). Jul 2009 entry is spot price on July 17 (from WSJ). Blue line. Jan 1998 to April 2009: six times the U.S. natural gas wellhead price (from EIA). May to Jul 2009: six times estimated Henry Hub spot price (from WTRG).

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Does this mean that oil prices will go down, natural gas prices will go up, or both? Let &#916o_t denote the monthly percent change in in oil prices (technically, the change in the natural logarithm) and z_t the percentage gap in cost (technically, z_t = ln(o_t/6g_t)). If you use a regression to try to predict oil prices from their own lagged values and the lagged oil-gas cost gap, a positive gap such as we have at the moment does tend to tug down future oil prices slightly, though the coefficient is not statistically significant. Here are the regression coefficients, with standard errors in parentheses:

On the other hand, the cost gap does seem to help significantly to predict where natural gas prices might go. With the gap currently at z_t = 1.13, the historical regression below might lead you to expect natural gas prices to climb by 10% a month (0.103 x 1.13 = 0.116) until the gap is closed.

But it's hard to see that happening in the face of news like this:

Natural gas prices have been pummeled by over-supply and weak demand, cutting the national drill rig count in half in the past year. Meanwhile, monstrous initial production rates in non-traditional shale plays have added to price pressure, as producers fight to hold the terms of their expensive leases in boomtowns....

Now, British Columbia's Horn River Basin might be added to the list, with the help of behemoth ExxonMobil (XOM) reportedly coming up with initial rates on early test wells to the tune of 16- to 18-million cubic feet a day.... That is double the rate of a really good well and in line with the Haynesville, in Louisiana, which may hold some 250 trillion cubic feet of recoverable national gas, enough to satisfy domestic demand for a decade.

So maybe that negative coefficient in the first regression will do some work after all, tugging oil prices down. In the mean time, trends like this are worth encouraging:

Mass transit buses have operated on natural gas for years and in other countries for decades. According to NGVAmerica, some 125 transit agencies are now operating over 10,000 natural gas transit buses on American highways. This trend is expanding, with over 20 percent of all new bus orders offering natural gas propulsion.

ConocoPhillips cautioned about lower production in the quarter, compared to the year-earlier as well as the previous quarter. The company anticipates production from the E&P segment, including Canadian Syncrude and excluding LUKOIL, to be 1.86 million barrels of oil equivalent per day (MMBOE/d), while its first quarter 2009 and fourth quarter 2008 production were 1.93 MMBOE/d and 1.87 MMBOE/d, respectively. Before-tax exploration expenses are expected to be $225 million, essentially flat with the first quarter 2009 figure.

The Refining and Marketing segment is also expected to be impacted by low distillate margins and considerably squeezed light-heavy crude differentials. Anticipated worldwide average crude oil refining capacity utilization rate in the upper 80% range compared to 81% in the first quarter. International utilization rate is expected to be in the low 70% range, compared to 85% in the first quarter. This lower utilization rate reflects turnaround activity in Europe and production run cuts at the Wilhelmshaven, Germany refinery.

Despite the turnaround in oil prices, ConocoPhillips experienced sluggishness in market conditions for refined products as the increase in summer demand was hampered by the weak macro backdrop.

While this turnaround is beneficial to the entire sector, we are maintaining our Hold recommendation on ConocoPhillips shares, given the company’s competitive disadvantages relative to its super major peers such as ExxonMobil (XOM) and Chevron (CVX). These disadvantages include a high-cost OECD-centric asset base and heavy exposure to the relative tentative outlook for U.S. natural gas (about a third of total volumes) and refining markets.

The total-market Russell 3000 Index has seen some sizable changes in its sector weightings, although the top 10 remain very much the same. Figure 1 shows the new 2009 sector weightings according to the Russell sector classification system. Not surprisingly, financial services is no longer the largest sector: It now takes second place to technology, which is weighted at 16.19% versus financials at 15.27%. In 2008, those sectors were reversed, with financials at 17.24% and tech at 14.19%.

Health Care saw its weighting increase to 13.41% from 11.52%, popping it up to the third position from No. 5. It displaced energy, which fell from the third slot to the fourth, declining to 11.97% from 13.42%; presumably, declining oil prices had something to do with that. Consumer discretionary also fell: It was the fourth-largest sector after the 2008 rebalance, at 12.94%, but is now the fifth-largest, with a weighting of 11.86%. Producer durables, consumer staples, utilities and materials & processing maintained their same positions (six through 10, respectively).

The top 10 stocks in the Russell 3000 are by and large the same, except for one: ConocoPhillips was displaced by JPMorgan Chase & Co.—a financial company, of all things. Of course, JP Morgan did acquire two former giants in the field of finance last year: Bear Stearns and Washington Mutual. And it has been one of the least-scathed of the financial services companies.

While the other members of the top 10 remained largely the same, some of their positions did not. ExxonMobil is still at the top of the heap, like it was last year, but General Electric fell from the second-largest weighting in the Russell 3000 to the tenth-largest, with a weighting of 1.27%. Microsoft moved up from the third slot to the second, with a weighting of 1.87%. And Johnson & Johnson jumped to No. 3, befitting its strong performance.

Russell 2000

In the Russell 2000, financial services is still the top sector, increasing its weight to 21.10%. A surprising result, perhaps, but the sector was boosted by having hard-hit banks move out of the Russell 1000 and into the smaller index. Technology claims the second-largest slot, with a 16.75% weighting, displacing consumer discretionary, which falls to the No. 3 position, with a 14.68% weighting. That’s down from 17.65% in 2008. Energy only fell one spot, to No. 9, and saw its weighting nearly halved, falling from 8.60% to 4.52%, further emphasizing the differences between the large- and small-cap worlds.

The Down Jones industrial average advanced 91 points or 1.1% and the S&P 500 increased 0.9%.  NASDAQ edged up 0.3%.  Volume on the NYSE was light with only 1.07 billion shares exchanging hands and advancing issues outpacing declining stocks by a three-to-two margin.  The measure of market volatility, the CBOE Vix, retreated 2.2% to 25.35%, its lowest level since mid-September.  Treasury prices jumped, with the yield on the benchmark 10-year note declining to 3.48%.  Crude prices jumped to more than $71 per barrel on higher demand expectations and reports that Nigerian militants partly shut down an offshore oil facility.    

Trading is expected to remain volatile this week as some money managers do last minute adjustments to their portfolios, a phenomenon known as "window dressing."  The week, cut short by the Independence Day holiday, also brings a spate of economic data and is likely to provide a sense of where the markets are headed.  Of key importance is the monthly employment report that is due on Thursday.  There are expectations that unemployment in US rose at a slower pace than projected.   

The jump in crude prices boosted energy stocks, sending shares of Chevron (NYSE:CVX) up 1.4% and ExxonMobil (NYSE:XOM) up 2.2%.  A WSJ report that said banking firms are expected to report higher second-quarter profits boosted financials. Moreover, SLM (NYSE:SLM) shares rallied 8.5% on pricing details of its student loan services contracts, announced yesterday by the Department of Education.

Meanwhile, Apple Inc. (NASDAQ:AAPL) announced that CEO Steve Jobs has returned to work.  The iPhone maker said Jobs will work at Apple offices "a few days a week" and work from home the other days.  Microsoft (NASDAQ:MSFT) rose 2.2% after Deutsche Bank (NYSE:DB) raised its price target on the software maker.  General Dynamics (NYSE:GD) rose 2.8% to $57 and Eastman Chemical (NYSE:EMN) jumped 3.7% to $38.79. 

Among DJIA components, all but Alcoa (NYSE:AA) advanced.  Hewlett-Packard (NYSE:HPQ) led the gainers with an advance of 3.5%, followed by Bank of America (NYSE:BAC), which rose 3.5% and Merck (NYSE:MRK), which added 3.2%.  The $22.4 billion Magellan Fund reported it raised its holdings of Bank of America (NYSE:BAC) in May. Merck (NYSE:MRK) rose after reporting it has returned to normalized shipments of its Zostavax shingles vaccine.  However, Alcoa (NYSE:AA) declined after analysts at FBR Capital, downgraded the stock to "underperform" from "market perform", citing valuation and oversupply concerns.

All ten S&P500 industry groups recorded gains, with utilities rising 1.3%, oil and gas adding 1.2%, telecom rising 1.2%, and financials advancing 1.1%.  Home builders also rose after Credit Suisse (NYSE:CS) upgraded KB Homes (NYSE:KBH), which had reported signs of moderation in certain negative housing trends. Lennar (NYSE:LEN), which reported new home sales and orders picked up during the quarter, jumped 5.8%.  Morgan Stanley (NYSE:MS) upgraded JC Penney (NYSE:JCP) shares to "overweight" from "equal-weight", noting the company was "the most likely candidate" among department store chains to outperform current margin projections for the second quarter.

Dollar prices were under pressure after Russian President Dmitry Medvedev, speaking at a summit of the Shanghai Cooperation Organization, said the world needs new reserve currencies.  Wall Street futures point to a flat opening.  

On Monday, US stocks registered their worst slide in a month with the Dow Jones Industrial Average, which ended last week in a positive territory for 2009, went back in the red for the year. Among S&P 500 stocks, 95% registered losses. Commodities and basic material stocks declined, hurt by a rise in US dollar.  The morning session saw most of the declines and stocks traded sideways as the session advanced.  The NASDAQ, off 2.3%, and the S&P 500, down 2.4%, recorded their steepest declines since May 13.  Volume on the NYSE was light with only 1.1 billion shares trading.  Market breadth was negative with decliners outpacing advancing issues by a five-to-one margin.  The market's measure of volatility, the CBOE Vix, jumped the most since April 20, rising 9.5% to 30.81.

The National Association of Home Builders reported that confidence among U.S. home builders fell after rising for two months. A prime concern was the rise in mortgage rates that followed a recent selloff in U.S. Treasurys.  Meanwhile, US Treasuries moved higher for the third straight day, with the benchmark 10-year up 20/32 and the yield declining to 3.715%, falling back from their seven-month highs of last week.

A rising dollar reduced the luster of basic material and oil stocks as inflation hedges.  Positive comments at the G8 summit regarding the greenback's status as world's reserve currency helped the dollar, which rose 1.2% against a basket of currencies.  Copper prices declined 3.7% in New York trade and silver lost 5.7%.  Among DJIA components, only Microsoft (NASDAQ:MSFT) and American Express (NYSE:AXP) recorded gains.  Alcoa (NYSE:AA) led the decliners on the DJIA, dropping 6.5%.  Freeport-McMoRan (NYSE:FCX) fell 5.8% and US Steel (NYSE:X) shares declined 5.7%. Among energy stocks, ExxonMobil (NYSE:XOM) fell 1.3%, and Chevron (NYSE:CVX) declined 2.2%, with Schlumberger (NYSE:SLB) shares down 2.8%. Among S&P 500 components, only 22 advanced with all ten industry groups losing ground.    

The expected decline in industrial production of 1.0%, up from the drop of 0.5% prior, is largely attributed to the GM (NASDAQ:GMGMQ) and Chrysler bankruptcies. Capacity utilization rates are expected to have tightened to 68.4% from 69.1% prior, the lowest in 42 years since record-keeping began.

In overseas developments, ECB warned Eurozone banks on potential additional losses of over $283 billion this year and next.  In a report, the International Monetary Fund said exiting the fiscal stimulus programs will be challenging for the US.  The IMF Chief cautioned that the worst of the recession has yet to be felt. 

Stock futures show Wall Street is headed for higher open.  Dow futures rose 0.8% at 8,450. Standard & Poor's 500 index futures rose 0.7% to 911.80 and Nasdaq 100 index futures rose 1% to 1,433.00. 

Although government's ability to fund its massive debt requirements played in the minds of investors throughout the week, on Thursday traders chose to look at the bright side of things sending the DJIA up 1.3% to 8403.80; the NASDAQ up 1.2% to 1751; and the S&P higher by 1.5% to 906.83.  Stocks seesawed through the session as a better-than-expected auction of seven-year Treasury notes helped assure investors of an economic recovery.  And this optimism saw 26 of the DJIA's 30 ending higher and 77 of the NASDAQ 100 ending the day in the green. AT&T CEO, speaking at an investor conference yesterday, also sounded optimistic, noting, "I'm not seeing green shoots...But we haven't seen any deterioration either."

In last night's speech Dallas Fed President Fisher, speaking on the recent steepening of the Treasury yield curve, whether a result of burgeoning supply or improved recovery prospects, noted "I think it is probably a little bit of both, discounting the supply of new debt, but I detect...there is a pick up in confidence about the future."

As risk appetite grew, financials advanced and led the gainers on the DJIA.  JP Morgan (NYSE:JPM) jumped 5.7%; Bank of America (NYSE:BAC) was up 3.6%; and American Express (NYSE:AXP) recorded a 3.4% rise.  The oil and gas sector rose 3.0%, with Chevron (NYSE:CVX) increasing 1.9% and ExxonMobil (NYSE:XOM) rising 1.4% on the DJIA.  Weekly crude inventory levels posted a much sharper 5.413 million barrel drop than the -0.1 million drawdown anticipated, and deeper than last week's 2.1 million decrease. As expected, OPEC maintained production at current levels.  A rise in oil prices also boosted energy producers with Exxon Mobil Corp. (NYSE:XOM) adding 1.4% to $69.23. Schlumberger (NYSE:SLB) jumped 5.5% to $56.35. Occidental Petroleum Corp. (NYSE:OXY) advanced 4.2% to $65.47.

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.

In its weekly inventory report released earlier today, the Energy Information Administration (EIA) reported that commercial crude oil stocks totaled 326.6 million barrels for the week ended January 9, 2008. This represents a better-than-expected inventory build of 1.2 million barrels. Current crude oil inventories, excluding the Strategic Petroleum Reserve, are now 13.8% above the year-earlier level, highlighting the imbalance between growing supplies and shrinking demand. Current stocks provide for 22.6 days of supply, significantly above the year-earlier level of 18.7 days.

As the above EIA chart shows, current inventories remain above the 5-year average (the shaded region represents the 5-year range). While the overall inventory build came in better than expected, the build at Cushing, Oklahoma -- the official delivery point for the NYMEX futures contract -- reached a new record of 33 million barrels, double the year-earlier level of 16.5 million barrels.

In refined products, gasoline inventories increased 2.1 million barrels, providing for 23.9 days of supply, up from gasoline stocks providing 23 days of supply this time last year. Distillate stocks, which includes heating oil, increased a greater than expected 6.4 million barrels, taking current inventories above the high point of the 5-year range and 11.1% above the year-earlier level. The above-average distillate stock-build dashed hopes of weather support to prices given the chilly weather in the heating oil consuming regions.

This is another addition to the growing list of negative news for crude oil prices, which have been unable to get support from OPEC's extraordinary cut of more than 2 million barrels. The growing inventory levels, both in the U.S. as well as in the other OECD markets, reflect falling demand due to the uncertain economic times. It will be hard for the commodity to stabilize and consolidate given this lack of visibility on the economic front.

Having said that, we believe that further downside risk is limited than the upside potential from current levels. We would take advantage of the weakness in energy stocks in the face of such bearish reports to make new positions or add to existing ones in such quality energy names, as ExxonMobil (XOM), Chevron (CVX), Schlumberger (SLB) and Transocean (RIG).

Read the full analyst report on XOM.

Read the full analyst report on CVX.

Read the full analyst report on SLB.

Read the full analyst report on RIG.

Company Description

Avocent provides IT infrastructure to data centers, small/medium businesses and branch offices around the world. The company's products include local and remote switching, serial console servers, wireless, mobile and video display services.

Avocent's sells to some of the largest companies in the world, including Microsoft, Intel, GE, ExxonMobil and Home Depot.

AVCT Reaffirms Fourth Quarter Guidance

Given current economic conditions, many companies are announcing forecast revisions. Avocent is not one of them. On Nov 12, the company reaffirmed its Oct 21 fourth-quarter guidance.

Revenue is still expected to be in the range of $175 to $185 million compared with revenue of $155.4 million in the fourth quarter of 2007.

Earnings per share for the fourth quarter are forecast in the range of 55 cents to 63 cents compared to earnings of 28 cents in the fourth quarter of 2007.

Third-Quarter Revenue Grows 13%

On Oct 21, Avocent reported third-quarter earnings that beat Wall Street estimates by 81%. Revenue grew 13% to a record $183 million from $162.1 million in the year ago period.

Revenue growth was spurred by double digit sales growth from branded and OEM products. Management Systems sales rose 7%. LANDesk sales surged 45% to $41.6 million.

International sales were hot, rising 32% to $88.2 million, and accounted for nearly 48% of total sales in the quarter. Europe and Asia saw strong demand that made up for the flat sales in the U.S.

The company also saw revenue benefit from the acquisitions of Touchpaper and Ergo that were completed in the third quarter.

Earnings per share were 67 cents, up from 56 cents in 2007. Analysts expected only 37 cents.

Importantly in this tight credit environment, Avocent had cash and cash equivalents of $115 million at the end of the quarter.

Consensus Estimates Rise

Analysts have been slow in updating estimates based on the company's recent guidance. Fourth-quarter estimates are up 6 cents to 44 cents in the last 60 days- well below the company's guidance of 55 to 63 cents.

2008 full-year consensus estimates rose 23 cents to $1.49 per share in the last 2 months.

Value Fundamentals

Avocent is a Zacks #1 Rank (strong buy) stock. It has surprised on estimates 3 out of the last 4 quarters by an average of 25.05%.

AVCT is trading at 10.6x forward earnings. Its price-to-book is 0.94.

"AVCT" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

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News that Shell is to halt development of its vast Canadian tar sands project is a sign of changing times in the oil industry – and one that will not be well received at the AIM-listed provider of data to the oil industry, GETECH (LON:GTC). This is a pity because…

Company Description

Green Mountain Coffee Roasters, Inc is a prominent fixture in the specialty coffee industry. The company sells a wide variety of coffee blends commercially and direct to customers in addition to teas, hot cocoa, and Keurig brewing products. Green Mountain is a socially responsible company headquartered in Waterbury, Vermont and has a market cap of approximately $900 million.

Green Mountain Buys Tully's Brand

Green Mountain announced the purchase of Tully's brand name in addition to its supply chain and domestic wholesale business. The $40.3 million cash acquisition was announced on September 15th. While Tully's will continue to run its retail and international business, the deal will give Green Mountain a strong presence on the west coast.

Profits for Green Mountain should see a bump soon after the transaction is finalized. Tully's also produces coffee for Keurig single-serving brewers, which have been a strong point for Green Mountain as coffee drinkers are opting for home-brewed coffee in today's tough economy.

Estimates Percolating

Estimates have been climbing since the most recent earnings announcement, reported on July 31st. The company earned 25 cents per share in the third quarter, up from just 15 cents in the same period last year. This was the third surprise in the last four quarters as analysts only estimated 21 cents per share for the company.

Net Sales were $118.1 million, a 43% year-over year increase. Strong sales were driven by a sharp rise in Keurig brewers sold, up 61% year-over-year and a 49% increase in single serving packs sold.

Revv Up At ExxonMobil

Revv is Green Mountain's newest offering available at nearly 1,100 ExxonMobil locations across the country. The extra-bold blend is targeting coffee drinkers searching for more energy, as it advertises more kick than their regular brew.

With marketing focusing on attitude and energy, Revv may even bring in those customers who usually reach for sugary energy drinks.

Impressive Earnings Growth

The consensus estimates for the current quarter, next quarter, and current year are all between 22% and 28%. Next year's earnings growth is currently projected at a staggering 53.3%.

Analysts have not released estimates since the announcement of the asset purchase, previously mentioned, so it is very possible for these figures to continue to climb before the next earnings announcement.

The Chart

Shares of GMCR have developed a nice level of support near $32 per share. However, the stock has been setting lower highs recently, which is a bearish sign. Those lower highs, for the chartists, are possibly forming a descending triangle. While fundamentals look good, be cautious if it breaks the support level at $32. Take a look at the chart below.

"GMCR" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Importantly, the partnership increased its quarterly distribution by 11.7% year-over-year to the annualized rate of $3.74 per unit. While the partnership no doubt offers strong distribution-growth prospects, we believe that to be already reflected in its premium valuation relative to the peer group, thereby offering limited upside from current levels. Our preferred names in this space remain Enterprise Products Partners L.P. (EPD), NuStar Energy L.P. (NS) and TC Pipelines, L.P. (TCLP).

The partnership’s earnings have grown to $195 million over the last twelve months. In recent transactions, Sunoco Logistics acquired a 50% interest in a refined products terminal from Mobil Pipe Line Company for approximately $13.4 million. In April, Sunoco bought a refined products pipeline system in Texas and other related assets from ExxonMobil (XOM) for roughly $200 million. The deal will enable geographic and customer base expansion of the partnership’s core Northeast and Midwest refined products pipeline and terminals platform.

However, the relatively unfavorable macro backdrop characterized by restricted access to capital continues to weigh on the entire market in general and MLPs in particular. Our unchanged $45 target price reflects an annualized distribution run rate of $4 per unit, 7% above current levels, and a target yield of 8.89%. Our yield assumption is based on a 439 bps spread over our 10-year Treasury bond yield expectation of 4.50%.

Read the full analyst report on SXL

Read the full analyst report on EPD

Read the full analyst report on NS

Read the full analyst report on TCLP

Read the full analyst report on XOM

Last week the New York Times reported:

In the first major oil deal Iraq has made with a foreign country since 2003, the Iraqi government and the China National Petroleum Corporation have signed a contract in Beijing that could be worth up to $3 billion, Iraqi officials said Thursday.

Under the new contract, which must still be approved by Iraq's cabinet, the Chinese company will provide technical advisers, oil workers and equipment to help develop the Ahdab oil field southeast of Baghdad, according to Assim Jihad, a spokesman for Iraq's Oil Ministry. If the deal is approved, work could begin on the oil field within a few months, Mr. Jihad said.

And today the Guardian confirms that the deal was approved by Iraq's cabinet.

There are some Americans who regard expanding Chinese global influence with fear and suspicion. But I maintain that stability and prosperity for Iraq and the broader Middle East should be the primary U.S. objective at the moment. Although China of course has its own reasons to be interested in the region, those interests are undermined by terrorism and regional instability just as much as ours. And precisely because China is a distinct power with separate interests from the U.S., its status as a more neutral third party leaves it in a position to assist in restoring stability to Iraq and the region in ways that the U.S. cannot. The perception that the purpose of toppling Saddam Hussein was to benefit U.S. oil companies greatly undermines our capacity to bring peace to the region. One way the U.S. can signal that our goal is instead regional stability is by embracing a larger role for China in Iraq and the Middle East.

Some may ask, What good does it do Americans if Iraqi oil gets shipped to China? The answer is, it is a global market for oil, and apart from quality differences you would pay pretty much the same price whether you buy the product in New York, Rotterdam or Singapore. That price depends on the total quantity produced globally and the total quantity consumed globally. More global production means a lower price, and which country consumes which oil is of little practical significance. It matters very little for the price that U.S. consumers pay whether the assistance for Iraqi oil production comes from CNPC or ExxonMobil or whether the oil is sold to the U.S. or to the Chinese. But it matters a great deal for the price that American consumers pay for oil whether the Iraqi oil is produced or is not produced.

Others may worry that higher oil production today just leaves the world with less of this depletable resource for the future. But to this I would counter that the transition to a world when global oil production no longer increases each year will raise some tremendous geopolitical stresses. The more stability and cooperation we can have as we enter that phase, the better off we will be.

You've heard it said, "What's good for General Motors is good for the U.S." But I say, "what's good for Iraq and China is good for the U.S."

Technorati Tags: oil, Iraq, China

Geopolitical events are driving oil prices. Russia blocked the entrance to Georgia’s main oil port, and Russia is showing that it can control Europe’s natural gas supply. The neocons in Washington seem to be hoping for a new cold war with Russia, and they just might get it. Unfortunately, fear of such a cold war add to the price of oil.

Supply and demand is also in play.

Drawdown of gasoline stockpiles in US was more than twice expectations -- 6.3 million barrels. Demand destruction may have been short-term. Since prices have pulled back, people may be driving again.

Chinese demand dipped during the Olympics as they shut down factories and took cars off the road. It will probably increase again after the Olympics.

On the supply side, Mexico, Nigeria, Norway, Britain and Russia are all seeing production go down year over year. Nigeria’s shortfall is due to civil war, everyone else may be hitting production peaks.

[End notes]

In other developments, I am so glad I sent out an issue yesterday to Red-Hot Commodity ETFs subscribers telling them to buy the DGP (double-gold ETF) and DIG (Double oil index ETF). Oil is up more than $4 this morning before the open and gold is up $20 an ounce as I write this.

Does this mean we're out of the woods on commodities? Not by a long shot! However, this is a playable bounce. What will determine how high the bounce will go? Probably action in the US dollar. Let's look at a weekly chart of the dollar ...

And now let's close up on that next support on a daily chart.

That test of support for the greenback will be very interesting.

In other news ...

The Neo-Cons are getting the war they always wanted -- a renewed cold war with Russia. This has sent oil prices soaring this morning which, again, is exactly what the powers that be in Washington (I'm looking at you, ExxonMobil) have wanted, despite their "drill-drill-drill" mantra.

This ugly turn of geopolitical events prompted former Soviet Union President Mikhail Gorbachev to write the following op-ed in the New York Times ...

In recent days, Secretary of State Condoleezza Rice and President Bush have been promising to isolate Russia. Some American politicians have threatened to expel it from the Group of 8 industrialized nations, to abolish the NATO-Russia Council and to keep Russia out of the World Trade Organization.

These are empty threats. For some time now, Russians have been wondering: If our opinion counts for nothing in those institutions, do we really need them? Just to sit at the nicely set dinner table and listen to lectures?

Read Gorbachev's whole piece.  He doesn't have a monopoly on the truth.  But we have to know where the Russians are coming from if we want to reach a compromise everyone can live with.

Honda Motor Co. and Komatsu Ltd. are turning to China, the world's fastest-growing major economy, as the U.S. slowdown intensifies and rising fuel and food costs weaken demand at home. Higher oil prices caused the import bill to climb to a record last month, triggering an 87 percent drop in the trade surplus.