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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• Dell (NASDAQ:DELL) announced plans to enter the smartphone business, in partnership with China Mobile and Claro. Its first product, the Mini 3, will be designed around Google's (NASDAQ:GOOG) Android operating system

• Disney (NYSE:DIS) reported fiscal fourth quarter results after yesterday's close, with earnings ex-items coming in 5 cents a share better-than-expected at 46 cents. Revenues of $9.87 billion came in well ahead of Zacks estimates of $9.18 billion

• McDonald's (NYSE:MCD) addressed its plans to open 1,000 additional restaurants next year, and provide an image makeover to the rest.  The firm set targets for average annual sales growth of 3-5% and average annual operating earnings growth of 6-7%

• Abercrombie and Fitch (NYSE:ANF) reported third quarter non-GAAP earnings of 30 cents a share, well above Zacks estimates of 20 cents, as revenues of $765.4 million topped Zacks estimates of $763 million

• The rue21 IPO of 6,765,437 common shares was priced at $19.00 per share. The stock will trade on the NASDAQ with the symbol RUE

• Goldman Sachs (NYSE:GS) upgraded Goodyear Tire (NYSE:GT) shares to "buy"

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This week begins with Iran's report of a long-range missile firing this morning in front of Geneva talks over the newly-revealed uranium enrichment facility near Qom.  This week combines quarter end portfolio adjustments with several key economic posts, including the Employment Situation for September to be released on Friday, where the nonfarm payrolls number is likely to show the 21st consecutive month of job losses, but with a slowing pace of declines.

The notice letter also states that the company will be provided 180 calendar days, or until Mar 15, 2010, to regain compliance with respect to the minimum bid price requirement. To regain compliance, shares of the company must maintain a minimum closing price of at least $1.00 per share for a minimum of ten consecutive business days. However, Cosi's common stock will continue to trade on the Nasdaq Global Market under the symbol 'COSI'.

Should the company fail to regain compliance by Mar 15, 2010, Nasdaq will then provide a notice to Cosi that its common stock will be delisted. However, the company may be eligible for an additional grace period if it satisfies all the requirements, other than the minimum bid price requirement, for initial listing on the Nasdaq Capital Market, set forth in Nasdaq Listing Rule 5505. In order to take advantage of this alternative, the company will need to submit an application to transfer its securities to the Nasdaq Capital Market.

Therefore, the company plans to actively monitor the bid price for its shares between now and Mar 15, 2010, and is ready to consider all available options to resolve the deficiency and regain compliance with the Nasdaq minimum bid price requirement.

The global recession has severely affected the company's business, especially the catering services. Furthermore, the company posted dismal second-quarter results with a net loss of 2 cents per share and a revenue decline of 13.9% year over year. In addition, traffic also fell 9.8%, while the average check declined 2.9%.

Also, company-owned net restaurant sales fell 14.3% in the quarter, due to a 12.7% drop in comparable-restaurant sales and the closing of 5 locations since the end of the second quarter of 2008.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The greenback remained near its year lows against a basket of currencies while gold prices eased a little to settle at $995.30.  Crude prices were slightly up ahead of the September OPEC meeting.

The Dow Jones industrial average, which rose as much as 80 points earlier in the session, pared some gains to close at 9,547.22, up 49.88 points.  The broad S&P 500 index advanced 7.98 points, or 0.78%, to close at 1,033.37, its best finish so far this year, and the tech-heavy NASDAQ rose 22.62 points, or 1.11%, to close at 2,060.39.  On the NYSE, volume was a moderate 1.24 billion shares as advancing stocks outpaced those that fell seven to three.

Even as unemployment levels continuing to remain vexing, the Fed’s Beige Book revealed “signs of improvements" in 11 of the 12 districts.  Meanwhile, OPEC also exited its monthly meeting with soothing words, leaving production levels unchanged, and asserting current prices were within their desirable range.  Nevertheless, fears of a jobless recovery have given rise to worries that the economic recovery might be reversed after inventory builds and government assistance end.

Apple (NASDAQ:AAPL) shares declined even as CEO Steve Jobs made a much-awaited comeback after his almost six-month long medical leave.  The company announced the launch of new products and slashed prices of existing iPod Touch models.  SanDisk (NASDAQ:SNDK) jumped 6.1% to $19.32, its highest close in 11 months; Palm (NASDAQ:PALM) shares declined more than 8.7% after the company announced the launch of its Palm Pixi phones.  The stock was downgraded by Credit Suisse to “neutral" from “outperform."   

Among the S&P500 industry groups, nine recorded gains with industrials (+1.5%) and financials (+1.4%) topping the list.  Among the industrial conglomerates, General Electric (NYSE:GE) advanced 2.6% to $14.87, its highest level since January and Illinois Tool Works (NYSE:ITW) jumped 5% to $43.93.  Goldman (NYSE:GS) raised Illinois Tool Works (NYSE:ITW) to “conviction buy" from “neutral."  Caterpillar (NYSE:CAT) rose 3.1% to $48.41.  GE also benefited from an analyst upgrade from JP Morgan (NYSE:JPM), and a hiked price target from Goldman Sachs (NYSE:GS).  Boeing (NYSE:BA) shares added 2.1% following the firm's projection of a return to growth in global air traffic next year.  United Technologies (NYSE:UTX), which rose 1.4%, was also upgraded by Goldman Sachs (NYSE:GS).  3M (NYSE:MMM) rose 2.1%

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.

Following advances in the overseas markets, US stocks are expected to gain at the opening.  The DJIA futures added 79 points for a gain to 9496; the S&P500 increased 9.9 points heading toward a 1023.80 open.  Markets were closed yesterday for the Labor Day holiday.

On Friday, the 30-stock Dow Jones industrial average rose 96.66 points, or 1.03%, to 9,441.27.  The S&P 500 index rose 13.16 points, or 1.31%, to 1,016.40.  The technology-laden NASDAQ advanced 35.58 points, or 1.79%, to 2,018.78.  However, all three indexes ended the week lower.  During the week, the DJIA retreated 1.1% and the S&P 500 was off 1.2%; NASDAQ was comparatively better, easing only 0.5%.   

As stock prices gained, Treasury bonds lost ground.  The yield on the benchmark 10-year note rose 0.09% to 3.44% and the 30-year bond yield rose 0.11 to 4.27%.  On Tuesday $38 billion in 3-year notes is slated for auction, on Wednesday $20 billion of 10-years, and on Thursday $12 billion in 30-years.

Last week, Tax preparer (NYSE:HRB) saw its shares fall after the firm reported a wider-than-expected loss of 39 cents a share.  Apple (NASDAQ:AAPL) shares rose ahead of its media event next week where it is expected to introduce iPod Nano and Touch models that include digital cameras.  Societe Generale sharply raised its price target on the iPhone maker.

Traders return to their desks in a holiday-shortened week with last September’s collapse of Lehman Brothers absorption of Merrill and a government bailout of AIG still fresh in their minds.  Although a lot of water has passed under the bridge since then, traders still remain skeptical about the prospects of a full blown economic recovery.

This week, healthcare and insurance stocks may take a cue from President Obama's attempt to garner support for his much-talked-about healthcare initiative in a rare joint session of Congress Wednesday.  Remarks from Saudi Arabia's oil minister that crude markets are "in good shape" indicate further production cuts are not expected at this week's OPEC meeting.

Moreover, a Credit Suisse (NYSE:CS) report noting, "This is the ideal phase of the economic cycle...There is more of a positive growth surprise to come over the next three to six months," could be viewed in positive light.  Credit Suisse projected a 13% gain in the S&P500 to 1150 by mid-2010.

The 30-stock Dow Jones industrial average shed 47.92 points, or 0.50%, to close at 9,496.28.  The broad Standard & Poor's 500-stock index was down 8.31 points, or 0.81%, at 1,020.62.  The tech-heavy Nasdaq composite index lost 19.71 points, or 0.97%, to 2,009.06.  Nevertheless, the Dow managed to end August up 3.5% for its fifth monthly gain in six months while the S&P 500-index recorded its sixth consecutive monthly advance.  The market's measure of volatility, the CBOE Vix "fear factor" index, jumped 5.1% to 26.01, as volume on the NYSE improved to 1.38 billion shares and breadth turned negative to about 11 to 4.

This morning’s stock futures are pointing to a lower opening.  Dow Jones industrial average futures declined 57, or 0.6%, to 9,429. Standard & Poor's 500 index futures fell 6.90, or 0.7%, to 1,012.80, while Nasdaq 100 index futures fell 11.75, or 0.7%, to 1,613.25.  

Besides the Dow average, the S&P500 index rose 3.4% during the month while the tech-heavy Nasdaq was up a modest 1.5%.  Year-to-date the DJIA has risen 8.2%, the S&P 500 is up 13.0% and the Nasdaq has recorded an impressive 27.4% run.    

Sentiments were jittery on the Street and a couple of big corporate mergers and a better-than-expected regional manufacturing report failed to arrest the slide.  The Walt Disney Co. (NYSE:DIS) announced that it would acquire Marvel Entertainment (NYSE:MVL) in a $4 billion cash-and-stock deal.  Disney shares fell 3% to $26.04 while shares of Marvel jumped 25% to $48.37.  In another cash and stock deal, oil field services provider Baker Hughes (BHI) said it had agreed to acquire BJ Services (BJS) for $5.5 billion.  Baker Hughes plunged 9.6% to $34.45 after it announced the deal.  Shares of BJ Services rose 4.1% to $16.06.  

The DJ-UBS commodity index declined 1.7%, sending shares of Alcoa (NYSE:AA) down 3.6%, and Freeport-McMoran (NYSE:FCX) 3.8%.  However, this morning, a report showing a sixth straight monthly expansion in China's manufacturing sector to a sixteen-month high of 54 helped Shanghai Composite regain some ground.

Among S&P 500 industry groups, energy shares were the leading decliners, off 1.8%.  Exxon (NYSE:XOM) slid 1.4% to $69.15.  Financials as a group retreated 0.4%.  Insurer AIG (NYSE:AIG) fell for the first time in 10 days, plunging 12% as investors wondered if the stock was fairly valued. Citigroup (NYSE:C) declined more than 4% to $5 while Morgan Stanley (NYSE:MS) eased about 2% to $28.96.

The Shanghai Composite Index, which had declined nearly 3% on Friday, plunged 6.7% to 2,697.  Hong Kong's Hang Seng retreated 1.9%. In Japan, the Nikkei 225 stock average, which was up 200 points earlier in the session, fell 41.61 points, or 0.4%, to 10,492.53.  In Yesterday’s landslide victory, the Democratic Party of Japan came to power ending an almost half-a-century rule by the Liberal Democratic Party.  The yen strengthened, helped by the election results.

This morning’s U.S. stock futures show Wall Street is headed for a lower opening.  Dow Jones industrial average futures fell 59, or 0.6%, to 9,477. Standard & Poor's 500 index futures fell 5.70, or 0.6%, to 1,021.70, while Nasdaq 100 index futures fell 11, or 0.7%, to 1,631.50. 

On Friday, U.S. stocks closed mostly lower after a report showing a drop in consumer confidence offset a rally in technology stocks that was fueled by better-than-expected results from Intel (NASDAQ:INTC) and Dell (NASDAQ:DELL).  Also, Apple (NASDAQ:AAPL) announced that it entered into a deal with China Unicom to launch the iPhone in the country.  The rally in tech shares was also helped by signs of a bottoming in the personal computer market after Intel (NASDAQ:INTC) raised its third quarter sales forecast to at least $8.8 billion from its prior forecast of $8.1 billion.  The firm also raised its outlook on gross margin expectations.

The Dow Jones industrial average lost 36 points, or 0.4%. The S&P 500 index retreated 2 points or 0.2%. The Nasdaq composite added 1 point, or 0.1% and rose to its fresh 2009 high, closing at the highest point since October 1.  Trading was light as most traders remained out of the market due to the summer vacations.

Among the S&P500 industry groups, financials led the gainers rising 1.2% during the week; consumer services shares rose 1.2%, followed by technology shares (+0.8%), industrials (+0.1%), and telecommunication stocks (+0.1%).  The week saw financial stocks recording huge gains, helped by advances in AIG (NYSE:AIG), Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE).

Among the week's losers, basic material and consumer goods shares fell 0.8%; utilities declined 0.7%; oil and gas shares dropped 0.3%, and health care issues retreated 0.2%. 

Gains in retail stocks helped shares of consumer services companies record some gains.  Luxury jeweler Tiffany (NYSE:TIF) reported better-than-expected earnings for the quarter, and also raised its full-year guidance. Housing shares showed some strength, helped by a report on new home sales, which revealed a more-than-expected, 9.6% advance in July.

The Dow Jones industrial average, which at one point had given up as much as 84 points, rose 37.11 points, or 0.4%, to close at 9,580.63, its eighth consecutive advance.  The broad Standard & Poor's 500-stock index rose 2.86 points, or 0.28%, to 1,030.98.  The tech-heavy NASDAQ composite index edged up 3.30 points, or 0.16%, to 2,027.73, helped by a late-session rally in technology shares.  Treasuries fell, pushing the yield on 10-year notes up 0.3 point to 3.46%.  On the New York Stock Exchange 1.16 billion shares exchanged hands and advancing shares were ahead of those that declined eight to seven.

This morning’s stock futures suggest moderate gains on the opening.  Dow Jones industrial average futures are up 29, or 0.3%, at 9,596. Standard & Poor's 500 index futures are up 4.40, or 0.4%, at 1,033.70, while Nasdaq 100 index futures are up 6.50, or 0.4%, at 1,645.50.

Technology issues rose in anticipation of better-than-expected earnings from Dell (NASDAQ:DELL).  Leading the sector gains, however, were financial issues, up 0.9%, helped by a 27% surge in insurer AIG International’s (NYSE:AIG) shares.  Rumors of ex-CEO Greenberg's collaboration in asset sales, and the new CEO’s remarks suggesting there was no plan of any fire sale of the company's assets generated an influx of interest in the stock that has risen more than 400% since July 9.  CIT Group Inc. (NYSE:CIT) jumped 29 cents, or 22.8%, to $1.56. Citigroup Inc. (NYSE:C) rose 42 cents, or 9.1%, to $5.05 on reports in the New York Post that hedge fund manager John Paulson has acquired a 2% stake in the company.

Action was somewhat balanced on the DJIA where 16 stocks advanced and 13 declined with one ending the day unchanged.  Boeing (NYSE:BA) led the advancing issues, as the company said it sees first test flight of its much-delayed 787 Dreamliner by the end of this year and first delivery by the fourth quarter of 2010.  American Express (NYSE:AXP) shares rose 2.5%, helped by an advance in financial shares; a rise in commodity related stocks sent shares of Alcoa (NYSE:AA) up 1.1%.  However, home construction shares lost favor on reports of a wider-than-anticipated loss at Toll Brothers (NYSE:TOL), as well as lower sales guidance for the fourth quarter.

Banks, which have suffered the most in the current economic turmoil, came under further scrutiny as The FDIC announced that it has added more banks on its "problem" list. The agency said it had 416 banks on its "problem" list at the end of the second quarter, up from 305 at the end of March. However, the three-month Libor, a global measure of liquidity for short-term borrowings by companies and consumers, continued to signal improved liquidity in the credit markets.  On Thursday, Libor sank to a fresh, all-time low of 0.36%, down from 0.41% a week ago and an all-time high of 4.82% on October 10, 2008.

Yesterday, fifteen of the thirty DJIA components closed higher; 245 of the S&P500 closed up and 42 of the NASDAQ100 finished on higher ground.  Trading was subdued with NYSE volume of 1.05 billion well below last year's average of 1.49 billion.  The DJIA gained 4 points to close virtually flat at 9543; the NASDAQ and S&P500 each recorded gains of 0.01%.  Declining issues beat those that advanced eight to seven.  Treasuries were mixed after the government successfully auctioned $39 billion in five-year notes.  The Treasury is scheduled to auction $28 billion of 7-year notes today.

Five of the S&P500 sectors recorded gains.  The consumer services sector, which advanced 1.2% yesterday, edged up 0.5% on improved expectations for the consumer segment due to better-than-projected housing numbers and confidence report.  Healthcare shares issues were off 0.2%.

Basic material and industrial shares each declined 0.7% on Chinese Premier Wen Jiabao's comments regarding economic difficulties in that country, particularly domestic consumption.  The Chinese cabinet reportedly is assessing steps to control overcapacity in steel and cement production. US Steel (NYSE:X) and Nucor (NYSE:NUE) each dropped 2.4%. 

DJIA components 3M (NYSE:MMM) fell 1.7%, Caterpillar (NYSE:CAT) was off 1.2%, and General Electric (NYSE:GE) declined 1.3%.  Housing news, nevertheless, continued to signal a leveling off in the sector, with DR Horton (NYSE:DHI) up 5.7%, Beazer Homes (NYSE:BZH) up 5.0%, and Lennar (NYSE:LEN) up 4.1%.  Hovnanian Enterprises (NYSE:HOV) rose 43 cents, or 9.4%, to $5

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.

US stock futures point to a moderately higher open on Monday.  Dow Jones industrial average futures rose 34, or 0.4%, to 9,523. Standard & Poor's 500 index futures rose 3.30, or 0.3%, to 1,028.50, while Nasdaq 100 index futures rose 2.00, or 0.1%, to 1,637.50.

The Dow Jones industrial average gained 156 points, or 1.7%, closing above 9,500 for the first time since November 4.  The S&P 500 index added 19 points, or 1.9%, closing at the highest point since October 6.  The tech-heavy NASDAQ composite index added 31.68 points, or 1.59%, to 2,020.90, its highest close since October 1.  On the New York Stock Exchange about four stocks rose for every one that fell.

Speaking at an annual Fed conference, Bernanke noted that "After contracting sharply over the past year, economic activity appears to be leveling out, both in the US and abroad," adding prospects for a return to growth in the near-term “appear good."  However, he sounded a note of caution, warning that lending is not back to normal, and that the difficulty consumers and businesses are having obtaining loans will be a challenge.    

All ten S&P 500 industry sectors closed higher on Friday, led by gains in basic materials (+2.7%), oil and gas (+2.6%), industrials (+2.3%), and financials (+2.1%).  Year-to-date technology stocks have been the best of the lot managing gains of 40.4% and are followed closely by basic material shares (+40.1%), financials (+13.2%), industrials (+11.1%), and consumer goods (10.4%).  On the year only telecoms (-4.2%) have suffered declines.

A rise in energy stocks sent shares of Exxon Mobil (NYSE:XOM) up 2.5% to $69.92 and Chevron (NYSE:CVX) rose 1.6% to $69.73.  Shares of healthcare companies also advanced with Pfizer (NYSE:PFE) surging 5.5% to $16.64 and Merck (NYSE:MRK) gaining 5.1% to $32.56.  Among financial issues, AIG (NYSE:AIG) jumped 35% to $32.85 after the company said it will be able to pay back the government.  Game Stop (NYSE:GME) plunged 13% after the company reported earnings that were below analysts’ expectations.    

However, notable risks remain to the fragile economy.  A Sunday Financial Times piece quoted economist Nouriel Roubini as saying there remains a "big risk" of a double-dip recession, although Roubini currently sees a "U-shaped" recovery. 

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 added 37 points, or 0.4%, and closed at its highest point since November 4.  The broad S&P 500 index added 7 points, or 0.7%, and closed at its highest level since October 6.  The tech-heavy Nasdaq gained 10.63 points, or 0.5%, ending at its highest point since October 1.  On the New York Stock Exchange 776 million shares exchanged hands and advancing stocks outpaced those that fell two to one.  The Vix "fear factor" index, fell 2.9% to 24.71.

Treasury prices rose after an auction of $15 billion 30-year bonds met with strong demand.  The 30-year rose 1 20/32 in price and its yield declined to 4.432%; the 10-year was up 30/32 in price as its yield declined to 3.604%. This week the government issued a total of $75 billion of debt. 

Financials led the gainers yesterday on news that John Paulson’s hedge fund bought stakes in Bank of America (NYSE:BAC).  Bank of America shares surged 6.7% to $17 and were the leading gainers on the DJIA.  Basic material shares rose 2.7%.  On the DJIA Alcoa (NYSE:AA) shares gained 5.8%.  An increase in metal prices sent shares of Freeport McMoran (NYSE:FCX) up 4.9% and Newmont Mining (NYSE:NEM) 2.5%.  Ford (NYSE:F) shares increased 2.6% on its announced plans to increase current quarter production by 100,000 vehicles, with additions to the fourth quarter as well.

Technology shares advanced 1%.  Barclay's (NYSE:BCS) raised its price target on Apple (NASDAQ:APPL) shares to $208, citing its product pipeline. JP Morgan (NYSE:JPM) raised its price targets for Dell (NASDAQ:DELL) to $13 from $10 and Hewlett-Packard (NYSE:HPQ) to $49.50 from $40.

Nevertheless, consumer spending, which accounts for a whopping 70% of the US economy, remains a concern.  Yesterday’s report which showed a surprise 0.1% fall in retail sales, versus estimates of a 0.8% growth, did raise some doubts on demand side growth assumptions from the consumer sector.  The drop indicated that the "cash for clunkers" program may have stolen from alternative purchases and perhaps from future purchases as well.

The Dow Jones industrial average retreated 32 points, or 0.3%. The S&P 500 index fell 3 points, or 0.3%. The Nasdaq dipped 8 points, or 0.4%. On the New York Stock Exchange, 1.09 billion shares exchanged hands and losers were ahead of winners by a narrow margin.

The two-day Fed meet that begins today is expected to keep interest rates near close to zero.  However, Bernanke and Co’s assessment of how the economy is faring could be decisive and therefore its moves would be closely watched. 

Seven of the ten S&P500 industry groups ended in the red, led by declines in basic material shares (-1.7%), industrials (-0.9%), financials (-0.8%), and technology stocks (-0.6%).  Health care (+0.7%) and utilities (+0.3%) showed strength as investors snapped up defensive plays.  Material stocks declined as the US dollar gained against a basket of currencies.  Basic material shares fell due to a decline in commodities.  Alcoa (NYSE:AA) shares retreated 2.4% and Freeport-McMoRan Copper & Gold (NYSE:FCX) dropped 1.6%.  Retailers also headed lower in the face of upcoming earnings reports by the majors, including Abercrombie & Fitch (NYSE:ANF), JC Penney (NYSE:JCP), Macy's (NYSE:M), and Nordstrom (NYSE:JWN). However, yesterday McDonald's (NYSE:MCD) reported a stronger-than-expected 4.3% rise in July same-store sales, reflecting its appeal to the value-conscious consumer.

Analysts’ adjustments also reflected on some stocks yesterday.  Eli Lilly (NYSE:LLY) dropped 3% after Goldman Sachs (NYSE:GS) downgraded the stock to "sell" from "neutral" and added the company to its Conviction Sell list, citing its risk at having the industry's largest "patent cliff." Merck (NYSE:MRK), however, rose 1.7% after being reinstated with a "buy" rating at Goldman Sachs (NYSE:GS).   Merck was also added to Goldman Sachs’ (NYSE:GS) American Conviction buy list on its current valuation and product pipeline.  Best Buy (NYSE:BBY) fell 5.3% after Goldman Sachs (NYSE:GS) downgraded the stock to "neutral." Research in Motion (NASDAQ:RIMM) shares plunged 4.9% as the possibility of an iPhone launch at Verizon (NYSE:VZ) led analysts at UBS (NYSE:UBS) to downgrade the shares from "buy" to "neutral."  UBS (NYSE:UBS) lowered its rating on Yum Brands (NYSE:YUM) to "neutral" from “buy" on concerns about "sluggish" sales.

Tuesday will also see the first of the $75 billion in Treasury auctions scheduled for the week. $37 billion in 3-years is slated for today, with $23 billion scheduled tomorrow and $15 billion on Thursday. The sales are not expected to find a lack of buyers.

The broad-based S&P 500 index rose 13 points, or 1.3%, to its highest point since October 6 as the Labor Department noted nonfarm payrolls tapered off in July.  Results from a separate survey showed an unexpected decline in unemployment rate, indicating an improving employment picture.  The Dow Jones industrial average rose 114 points to 9,370.07 and the technology-laden NASDAQ rose 27 points, or 1.4%, to 2,000.25.  Volume remained moderate as 1.5 billion shares exchanged hands on the New York Stock Exchange where winners topped losers three to one.

The S&P 500 is now up 49.4% from its twelve-year lows hit on March 9.  Last week, the DJIA advanced 2.2%, for a 6.8% year-to-date climb; the NASDAQ tacked on 1.1% for a 26.8% gain on the year; the S&P500 rose 2.3%, now standing on a 11.9% increase in 2009.

Better-than-expected earnings reports from companies, manufacturing data and growing signs that the economy is on a path to recovery have boosted sentiments on the Street and indicated that a recovery might indeed be underway.  Then, Friday’s employment numbers positively surprised and indicated that the most vexing issue of the economy, unemployment, is showing some sings of moderation.  As President Obama happily noted after release of Friday's employment numbers, "the worst may be behind us."     

With $95 billion in Treasury auction slated for this week and investors turning to equities, US Treasuries lost their safety appeal.  Treasuries dropped to their lowest levels since October as prices marked their sharpest weekly fall in six years.  After a broad decline on the week, the US dollar jumped 95 cents to close at $79.105 against a basket of currencies, following bullish economic news on the employment front.  In another development, the Senate provided a $2 billion extension of the "cash-for-clunkers" program.

The coming week will provide more data on the consumer, with key retailers' results and July monthly sales figures. Among those firms, Wal-Mart (NYSE:WMT) will report results.  The major discounter had decided to eliminate release of monthly comparable sales numbers, so its numbers will be closely watched. Also on the docket are: Abercrombie & Fitch (NYSE:ANF), JC Penney (NYSE:JCP), Kohl's (NYSE:KSS), Macy's (NYSE:M), Nordstrom (NYSE:JWN), and Urban Outfitters (NASDAQ:URBN).

Using the Research Wizard, I found Zacks #1 Rank (Strong Buy) plays that are poised to deliver strong results over the long-term.

3 Tech Plays

Western Digital Corp. (WDC) is seeing bullish estimate revisions. The Zacks Consensus Estimate of $3.04 per share for the year ending June 2010 is up an astonishing 43% over the past month.

The company, which makes hard drives, offers a low PEG ratio of 0.96. Its return on equity (ROE) of 19% soars past the industry average of 4%. WD's net profit margin of 6% compares favorable to a negative industry average.

The company recently announced fourth-quarter results, delivering non-GAAP earnings of 76 cents per share. The result topped the Zacks Consensus Estimate by an impressive 181.5%.

Fourth-quarter revenue of $1.9 billion was 3% below the year-prior quarter. The company shipped 40 million hard drives during the quarter.

Management commented that in a challenging time for the worldwide economy and the hard drive industry, WD maintained profitability and stayed cash flow positive throughout the fiscal year. John Coyne, president and chief executive officer, said during the quarter, the company responded promptly to capitalize on unexpected market upside in each of its markets to produce financial results that significantly exceeded expectations, and included a return to WD's targeted gross margin and operating expense model parameters.

WDC has seen solid momentum, out performing the market by about 30% over the past year.

Checkout the recent Zacks Equity Research Snapshot report on WDC.

Perfect World Co., Ltd. (PWRD), a player in the burgeoning world of Chinese online gaming, just announced unaudited second-quarter results.

Net income of $40.9 million was 22% above the previous quarter's total and 69% ahead of the year-prior result. Total revenues jumped 56% year-over-year.

The company noted that strong results were primarily driven by better than anticipated performance of the newly launched 2.5D mysterious adventure MMORPG 'Battle of the Immortals' and increasingly optimistic results from a number of existing games. "We believe our fine-tuned strategy of allocating more resources to longer-term projects and larger expansion packs has really begun to show positive results," said Mr. Michael Chi, Chairman and Chief Executive Officer.

This Zacks #1 Rank (Strong Buy) is also enjoying higher Zacks Consensus Estimates. Forecasts for the year ending May 2010 stand at 38 cents per share, above the 2 months-ago level of 14 cents.

For the following year, the Zacks Consensus Estimate climbed from 44 cents to 62 cents per share over the past 2 months.

Shares of PWRD have surged past the market by more than 60% over the past year.

Take a look at the latest Zacks Equity Research Snapshot report on PWRD.

Syntel Inc. (SYNT) has seen the full-year Zacks Consensus Estimate climb from $2.20 to $2.41 per share over the past 2 months. For 2010, the Zacks Consensus Estimate stands at $2.39, versus the 2 months-ago level of $2.09.

The technology services player has a return on equity (ROE) of 40%, more than doubling the industry-average of 15%. The company boasts a solid balance sheet, showing no debt. Its net profit margin of 25% is well above the industry average of 6%.

This Zacks #1 Rank (Strong Buy) company recently posted second-quarter earnings 61 cents per share, eclipsing the previous year's 42 cents and exceeding the Zacks Consensus Estimate by 20%. Revenue slipped 3% year-over-year.

"Syntel was encouraged by improved stabilization in the marketplace and the increasingly positive discussions initiated with our clients during the quarter," said Chief Executive Officer and President Keshav Murugesh. "While discretionary projects remain sidelined, customers are beginning to once again look at cost reduction initiatives which are aligned with their longer-term strategic objectives."

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Read the latest Zacks Equity Research Snapshot report on SYNT.

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The Dow Jones industrial average lost 25 points, or 0.3% and the broader S&P 500 index fell 5 points, or 0.6%. The technology-focused Nasdaq retreated 20 points, or 1%.    

This morning, the July jobs report surprised as the Labor Department reported that U.S. employers shed fewer jobs in July.  That unemployment rate dipped to 9.4% against expectations of a 9.6% fall helped calm shaky nerves and pushed stock futures sharply higher.  The Labor Department noted that US employers cut 247,000 jobs in July, the fewest in a year.  Dow Jones industrial average futures are up 61, or 0.7%, at 9,290. Standard & Poor's 500 index futures are up 8.30, or 0.8%, at 1,003.20, while Nasdaq 100 index futures are up 16.50, or 1%, at 1,617.75.

Yesterday, poor July retail sales data and apprehension about the monthly non-farm payrolls report sent S&P500 shares lower and the index retreated back under the 1000 level.  Only utilities, up 0.1%, and industrials, up 0.04%, showed some strength as even financials, a major support sector over the past five sessions, headed lower.  Health care sector and telecommunications issues declined 1.1%, with oil and gas, consumer goods, and technology issues easing 0.9%.  Crude prices eased three cents to $71.94, following the downward drift of equity prices and US dollar gains.

Among the DJIA components, Procter & Gamble (NYSE:PG), off 4.5%, continued to decline as investor remain concerned over its sales outlook.  Copper prices declined sending Alcoa (NYSE:AA) down 3.6%.  Cisco's (NASDAQ:CSCO) cautious outlook weighed on technology stocks as Hewlett-Packard (NYSE:HPQ) eased 2.4%.  JP Morgan (NYSE:JPM) shares dropped 2.5%, despite news Deutsche Bank (NYSE:DB) had initiated its coverage with a "buy" rating.  American Express (NYSE:AXP) rose 3.1% after Citigroup (NYSE:C) upgraded the stock on news of a slowing pace of credit loans losses. 

In a Thursday CNBC interview, Goldman Sachs (NYSE:GS) strategist Cohen announced, "We do think the new bull market has begun," setting sights on a rise in the S&P500 of as much as 10% by year-end.

The Dow Jones industrial average added 33 points, or 0.4%, to jump to its highest level since November 4; the S&P 500 index gained 3 points, or 0.3% and the tech-heavy Nasdaq composite edged up 3 points, or 0.1%, ending at its highest point since October 1.  Both the NASDAQ and S&P500 are holding above key technical levels, maintaining their perches above 2000 and 1000, respectively.

Shares in Caterpillar Inc (NYSE:CAT) surged 6.1% after the firm noted at an analysts’ forum that cost cutting efforts and other initiatives will help it reap in profits in the coming years.  The company's CEO noted hopes of annual earnings of $8 to $10 on sales approaching $60 billion by 2012, should a "normal" global recovery occur.  Also helping the late-afternoon gains were financials, with Bank of America (NYSE:BAC) up 2.1%, Wells Fargo (NYSE:WFC) up 2.9%, and Citigroup (NYSE:C) up 2.2%.  The sector led the gainers on the S&P 500 index with a 2.1% advance.

On the S&P 500, six industry groups advanced, led by a 2.1% rise in financial shares, followed by a 0.5% rise in industrials, 0.4% in consumer goods, 0.1% in basic materials and consumer services.  On the downside, utilities, impacted by worse-than-expected results and downside guidance from PPL (NYSE:PPL), sank 1%, followed by drops in oil and gas (-0.3%), tech (-0.1%), and telecommunications issues, off marginally.

The recent optimism on the Street has sent S&P on a scintillating run of 49% from the March 9 lows.  That, however, has raised questions about the market's ability to sustain its recent gains.  Nevertheless, the optimism in not entirely baseless as evidenced by yesterday’s pending home sales, which rose 3.6% in June.  And while personal income recorded its largest drop in 4½ years, off 1.3% in June, the pace of consumer spending picked up slightly more than expected with a 0.4% increase on higher spending for nondurable goods.

Premarket futures suggest stocks are likely to fall as profit taking emerges.  Dow Jones industrial average futures are down 46 to 9,202. Standard & Poor's 500 index futures are down 6 points to 994, while Nasdaq 100 index futures are down 10 points to 1,616.

On Monday, the DJIA rose 115 points, or 1.3%, to close at a nine-month high of 9286.  The index is up 42% from its twelve-year lows hit on March 9.  The NASDAQ added 1.5% to close at 2008 and is now up 58% from its March 9 lows.  Volume remained low with only 1.21 billion shares exchanging hands and advancing shares ahead of decliners by five to one. Market’s measure of volatility, the CBOE Vix, fell 1.4% to 25.56.

Long-dated treasuries and US dollar fell as bets that an economic recovery would have a favorable impact on consumption sent prices of oil, copper, aluminum, zinc, lead and nickel higher.  Alcoa Inc. (NYSE:AA) surged 7.1% to $12.60 and Peabody Energy Corp. (NYSE:BTU) jumped 7.4% to $35.57.

As investors turned their focus towards riskier bets such as equities, Treasuries declined and the corresponding yield rose with the 10-year declining the most in almost two months, off 1 7/32, and the yield rising to 3.631%. The US dollar fell to its lowest point since Lehman's collapse against a basket of currencies, while crude prices surged 3% to $71.58.

Automakers reported their best sales level in ten months as the government’s cash for clunkers program pushed annualized sales to an 11.2 million-unit rate. Ford (NYSE:F) said sales rose 2.3% in July, its first monthly sales increase since November of 2007.

Comments from HSBC (NYSE:HBC) that noted improvement in financial sector operating conditions, as a cyclical bottoming appears to have occurred, also helped sentiments. The firm also showed an unexpected first half profit.  However, this morning Xstrata's CEO sounded cautious, noting, "As stock markets rebound and achieve significant gains, it would be tempting to believe that the world is returning to pre-financial crisis conditions...However...I fear that this belief is somewhat premature."

Today's economic calendar is heavy.  A number of companies are scheduled to report their earnings today.  First on the docket, ICSC-Goldman (NYSE:GS) store sales are due out, giving an up-to-the-moment look at spending. The figures posted in negative territory, off 0.7% y/y versus the -0.5% prior; for the week the drop was 0.2% reversing a 1% increase the earlier week.

This morning’s US stock futures indicate a sharply higher opening, helped by positive signs emanating from overseas markets.  Today, Chinese stocks hit a 14-month high after data showed manufacturing activity is expanding in the country.  The Shanghai Composite Index rose 50.53 points, or 1.5%, to close at 3,462.59 points and Hong Kong's Hang Seng index rose 223.93 points, or 1.1%, to 20,807.26.  However, Japan's Nikkei 225 stock average bucked the trend, closing down 4.36 points, or about 0.1%.

On Friday, the Commerce Department said that U.S. gross domestic product – a measure of all the goods and services produced – contracted at a 1% annual rate last quarter, compared with economists’ expectations of a 1.5% contraction and markedly better than first quarter’s 6.4% pullback. 

The Dow Jones industrial average edged up a paltry 17 points, or 0.2%; while the S&P 500 managed to end the day in positive territory.  The tech-heavy NASDAQ, however, lost 0.3% to close the day at 1979.  Of the 67% S&P500 companies that have reported their earnings so far, about 76% have exceeded Street estimates and only 14% have reported a miss. On the New York Stock Exchange, 1.52 billion shares exchanged hands as advancing issues beat declining stocks three to two.  

Over the weekend, Treasury Secretary Geithner noted signs pointing to an economy starting to turn around, although echoing expectations that unemployment numbers may not begin to recover until the second half of 2010.  Economist Nouriel Roubini advised, "There is now potentially light at the end of the tunnel," with previous Fed Chairman Greenspan concurring, as he also noted the recession may be ending.

Today's primary posts include vehicle sales for July, which are expected to have risen from the prior month to their highest since September, with analysts expecting car sales could even top a 12 million annual rate. Ford (NYSE:F) may show sales up from the previous year on the late-month surge in the government's successful "cash-for-clunkers" program.  Key market-moving data this week could be ISM manufacturing, the service sector survey, consumer credit, personal spending, with Friday seeing the release of the month's non-farm payroll report. 

Companies reporting their earnings today include: Humana (NYSE:HUM), Marathon Oil (NYSE:MRO), MGM Mirage (NYSE:MGM), Tyson Foods (NYSE:TSN), Anadarko Petroleum (NYSE:APC), Chesapeake Energy (NYSE:CHK), and Principal Financial Group (NYSE:PFG).

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).

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).

The Dow Jones industrial average lost 12 points, or 0.1% and the broader S&P 500 index declined 3 points, or 0.3% to 979.  The technology-focused Nasdaq rose 7 points, or 0.4%.  On the NYSE, 1.24 billion shares exchanged hands and 16 stocks ended lower for every 14 that advanced. 

Among the ten industry groups in the S&P 500, six ended in the red.  Leading the decliners were oil & gas equipment & services (-3.88%), followed by gold miners (-3.15%), industrial REITs (-3.15%), advertising (-2.86%), and agricultural products (-2.83%).  Leading the gainers were technology and health care issues that edged up 0.3%, with consumer services also on the plus side, up 0.1%.  Shares of Bank of America (NYSE:BAC) led the list of advancing issues on the DJIA with a 2.4% rise after the firm quashed media reports of its planned branch network retrenchment. Citigroup (NYSE:C) shares surged 10.4% to $2.97. The firm said it will deliver almost 6 billion new shares on Thursday, following its conversion of preferred stocks into common shares. General Electric (NYSE:GE) shares tacked on 1.6% on news that it expects profits next year from its financing unit even with increased loan-loss provisions, and will not need to tap its parent for funds until at least 2011.

The government’s sale of a record $42 billion in two-year notes, with the yield touching a higher-than-expected 1.08%, had a mixed reaction on treasuries.  However, in a note to clients this morning Goldman Sachs (NYSE:GS) slashed its estimate for Treasury auctions through September 2010 by 28% to $2.9 trillion based on economic recovery prospects.  The firm said, "The stabilization in financial conditions has occurred more quickly than most observers had anticipated."

BP (NYSE:BP) said its profits halved from a year ago, as declining oil prices and weaker refining margins hurt operations, even as its second quarter results topped estimates.  Further cost-cutting measures were prescribed as its CEO noted, "We see little evidence of any growth in demand and expect the recovery to be long and drawn out," as "demand may be stabilizing, but...well below previous year levels." Valero Energy (NYSE:VLO) results were also hurt by the impact of sizeable inventories and weak demand.

The latest data from Bloomberg puts the announced results from S&P500 firms reported since June 17 at an average decline of 27%, beating analysts' estimates by 9.9% on a per share basis, but ahead of revenue estimates by a mere 0.2%. Today's expected posts include results from: ConocoPhillips (NYSE:COP), General Dynamics (NYSE:GD), Sprint Nextel (NYSE:S), Time Warner (NYSE:TWX), WellPoint Health (NYSE:WLP), and Visa (NYSE:V).