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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

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%.

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).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The 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.

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.

With significant operating leverage, the company expects to continue expanding margins, helped by about $3.5 billion of savings from cost-cutting initiatives in 2009.

Shares of the company rose in early trading hours to $118.18 after closing at $117.46 on Friday on the New York Stock Exchange.

IBM expects to release third-quarter results on Oct. 15. The Zacks Consensus Estimate is pegged at $2.38 a share for the quarter and $9.77 for the full year, exceeding the company’s guidance of $9.70. Zacks estimates assume approximately 13.6% earnings growth and 2.1% sales growth.

IBM is the leader in the Software, Services and Storage business. With a shift to higher-margin software and services, the company raised its 2009 profit objective during the second quarter earnings call from its original forecast of $9.20 due to strong margin performance.

IBM’s second-quarter results beat the Zacks Consensus. Having focused on expense management, the pro forma EPS rose to a record $2.32, up 17.8% from $1.97 in the prior-year quarter. The Zacks Consensus estimate was $2.03 per share.

The server giant competes against Hewlett-Packard (HPQ), Sun Microsystems (JAVA) and Microsoft (MSFT). We maintain our Outperform rating on the stock based on strong fundamentals, substantial free cash flow, strong Services businesses and earnings momentum.

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.

Yesterday, the 30-stock Dow Jones industrial average finished higher by 63.94 points, or 0.69%, at 9,344.61.  The broad Standard & Poor's 500-stock index rose 8.49 points, or 0.85%, at 1,003.24, closing above 1,000 for the first time since Monday; the technology-laden Nasdaq composite index gained 16.13 points, or 0.82%, to 1,983.20.  Twenty two of the thirty DJIA components advanced.

Although stocks traded in a tight range yesterday, the final hour of trading witnessed activity as traders picked up technology and financial stocks.  Better-than-expected results from retailers signaled consumers were beginning to open their wallets.  Gold prices extended their recent gains, and almost touched the psychologically-significant $1000 level, before giving up some gains to settle at $995.80, its highest since February.  The Vix volatility measure eased 6.2% to close at 27.10, signaling the moods were more sanguine than before.  On the New York Stock Exchange, 1.16 billion shares exchanged hands.

Nevertheless, retailers surprised yesterday.  Retailers' comparable sales data posted ahead of expectations for a 3.8% decline in August, although still off 2.9%.  Retailers' shares rose 2% as a group, with Gap (NYSE:GPS) up 7.6%, Saks (NYSE:SKS) rising 7.5%, Aeropostale (NYSE:ARO) 7%, Costco (NASDAQ:COST) 6.6%, Target (NYSE:TGT) 1.7%, Wal-Mart (NYSE:WMT) 1.6%.  Shares of Abercrombie and Fitch (NYSE:ANF) dropped 3.5%. 

The advance in the DJIA was led by financials and basic materials shares, with Bank of America (NYSE:BAC) rising 3.5% and JP Morgan (NYSE:JPM) up 3.1%.  Among the ten S&P500 industry groups, financials and basic material shares advanced 2.2%, and were the leading gainers. Indications that credit markets are showing sings of softening helped financial stocks.  Meanwhile, resource stocks rallied on expectations for continuing China growth. Alcoa (NYSE:AA) jumped 4.0% and the company’s CEO raised China's aluminum demand projection to 4% growth this year from flat.  Caterpillar (NYSE:CAT) rose 3.5% to $45.04.

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.

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. 

US stock futures rose moderately Friday, pointing to a higher open on Wall Street as investors turn their focus towards Federal Reserve Chairman Ben Bernanke who speaks at the Jackson Hole conference.

The Dow Jones industrial average climbed 71 points, or 0.8% and the S&P 500 index added 11 points, or 1.1%. The Nasdaq composite (COMP) rose 20 points, or 1%.  On the New York Stock Exchange, advancing stocks beat those that fell seven to three on volume of 1.05 billion shares.

In another sign that investors are being careful, treasury prices gained with the yield on the benchmark 10-year note falling to 3.43% from 3.46%.  The dollar was mixed against other major currencies, while gold prices declined.

Yesterday all ten S&P500 industry sectors advanced, led by financials (+2.4%), industrials (+1.1%), and tech shares (+1.0%).  Among the financial issues, AIG (NYSE:AIG) jumped 21.25% after the firm noted it will likely be able to repay government bailout funds.  Citigroup (NYSE:C) soared 8.5% after analyst Richard Bove said Citi shares would triple in three years on increasing expectations sale of sour assets will enable its profitability. Also helping sentiments was news on next week's budget expectations, pointing to lowered budget deficit expectations after the elimination of a $250 billion provision for bailing out more banks.

Among tech issues, Google (NASDAQ:GOOG) advanced 3.7% after Goldman Sachs (NYSE:GS) noted higher revenue growth for the company.  Goldman Sachs (NYSE:GS) also added the firm to its Conviction Buy List.

Today's corporate results include JM Smucker (NYSE:SJM) and Ann Taylor (NYSE:ANN).

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 30-stock Dow Jones industrial average finished 120 points, or 1.3%, higher.  The broad S&P 500 index rose 11 points, or 1.1%. The tech-heavy NASDAQ composite advanced 29 points, or 1.5%.  On the New York Stock Exchange 1.23 billion shares exchanged hands and advancing stocks outpaced those that fell five-to-two.

Stocks seesawed after the Fed’s announcement, with the indexes jumping to new 2009 highs, but pared some gains as the session neared its close.  Crude prices added 1% to $70.16, despite the rise in US crude stockpiles, on the FOMC's improved take on the economy.  

In another positive development, the US trade deficit widened by a less-than-expected $27 billion in June, with exports up 2% on increased demand for semiconductors and aircraft engines, and imports up 2.3% due to higher oil costs. Energy issues rose 1.3%.  Exxon Mobil Corp. (NYSE:XOM) rose 1.4% to $69.11 and Schlumberger Ltd. (NYSE:SLB), the world’s largest oilfield-services provider, increased 1.9% to $53.88.

Yesterday, nine of the ten S&P industry sectors advanced.  Industrials and financials led the gainers, both rising 1.8%. Among DJIA components, United Technologies (NYSE:UTX) jumped 4.3% and Caterpillar (NYSE:CAT) advanced 2.8%.  Technology shares rose 1.7%.  Among financial issues, Travelers (NYSE:TRV) shares rose 3.3% after S&P raised its outlook on the firm to "positive" from "stable."  Allstate Corp. jumped 6.3% after Bank of America (NYSE:BAC) upgraded the stock to “buy."  Homebuilders showed strength with shares of Toll Brothers (NASDAQ:TOLL) jumping 14% after the company reported third-quarter orders rose 3% from last year, versus consensus estimates of a double-digit decline.

Today's markets are expected to add to yesterday’s gains in front of reports on retail trade (expected to have gone up 0.8% in July) and several retailers' results, and an expected modest drop in weekly jobless claims. Walmart's (NYSE:WMT) results posted better than expected despite the impact of a strong US dollar on international sales and the impact of last year's government stimulus checks. Earnings also topped Street estimates at Kohl's (NYSE:KSS). Macy's (NYSE:M) beat analysts' projections yesterday with an improved 2009 outlook.

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).

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 gained 94 points, or 1.1% and the S&P 500 index increased 8 points, or 0.9%. The NASDAQ index jumped 24 points, or 1.3%.  Volume remained moderate with only 1.2 billion shares exchanging hands on the New York Stock Exchange and advancing shares outpacing declining issues by a seven-to-three margin.  Stocks have rallied this week as better-than-expected earnings from Goldman Sachs (NYSE:GS) and Intel’s (NASDAQ:INTC) robust third quarter outlook have lifted sentiments on the Street.

Helping the sentiment further were reports that said New York University professor Nouriel Roubini who noted the recession is nearing its end.  However, after the markets closed, Roubini came out with clarifications saying a second stimulus package of $200 billion to $250 billion might be needed to improve labor market conditions and assure a less than anemic recovery.  Roubini said he still predicts the recession will end early next year.

Among the ten industry groups, nine recorded gains Thursday led by a 2.5% rise in basic material shares, 1.6% gains in technology stocks, and 1.0% increase in oil and gas stocks. Only telecom issues bucked the trend, closing off 0.3%.  Over the past five days, however, all sectors have moved higher, led by a 10.5% surge in basic material stocks, 8.9% in consumer services, 8.5% in financial shares, with tech and oil and gas issues up 6.6%.

Among DJIA components, American Express (NYSE:AXP) led with gains of 3.9% after JP Morgan Chase (NYSE:JPM) upgraded the stock to "neutral" from "underweight" noting second quarter results will be cushioned by a reduction in expenses and loan loss provisions, despite a fall in revenues.  IBM (NYSE:IBM) shares gained 3.2% ahead of its earnings release.  After the markets closed, the company reported earnings of $2.32 per share versus expectations of $2.01 a share, even as revenue fell 13% hurt by corporate spending cutbacks.  Nevertheless, the Big Blue noted that it will comfortably meet its 2010 earnings target of $10 to $11 per share. Disney (NYSE:DIS) shares added 3% after Sanford Bernstein upgraded the stock to "outperform" from "market perform," saying the stock is "too attractive to ignore" at current levels.  Alcoa (NYSE:AA) shares continued higher, up 3% on the back of general increases in economically-sensitive, commodity-related shares.

Ahead of today’s results, Bank of America (NYSE:BAC) shares fell 1.9%. Citigroup (NYSE:C), which is also expected to report earnings today, declined 2.8%. JP Morgan (NYSE:JPM) fell 0.4% despite is better-than-expected numbers on concerns regarding the firm's forecast of losses from its credit card business this year and in 2010, as well as higher commercial real estate losses over the next several quarters.

Mounting speculation over CIT Group (NYSE:CIT) could result in willingness to shelter profits today ahead of the weekend.  Two terrorist explosions in Jakarta and reports of a drop in US fuel demand to an 11-year low are also likely to weigh on sentiments.

However, CIT Group Inc. (NYSE:CIT) plunged 11.8% after the commercial finance lender said its failure would put prospects of 760 manufacturing clients in jeopardy and precipitate a crisis for about 300,000 retailers.  American International Inc. (NYSE:AIG) rallied 24% and was the leading gainer among S&P 500 stocks after media reports said Primus Financial Holdings Ltd. is looking to make a $2 billion bid for the firm’s Taiwan life insurance unit. 

Stock futures pared gains this morning, despite better-than-expected results from Goldman Sachs (NYSE:GS), as a government report said wholesale prices rose more than estimated in June.

Market breadth was positive. On the New York Stock Exchange, advancing shares beat declining issues five to one on volume of 1.19 billion shares. The market’s measure of volatility, the CBOE Vix, tumbled 9.3% to 26.31.  Crude prices sank to an eight-week low, off $0.20 to $59.69.

All ten S&P500 industry groups recorded gains, led by a 5.9% rise in financial stocks.  Financials rose, following Whitney’s "buy" rating on Goldman Sachs (NYSE:GS), that was issued a day before the firm reports its first-quarter earnings.  Goldman Sachs (NYSE:GS) is expected to beat consensus estimates of earnings of $3.48 per share, helped by its lucrative bond trading operations.  Bank of America (NYSE:BAC) jumped 9.3%, following Whitney’s comments.  General Electric (NYSE:GE) surged 6.3% ahead of its earnings release on Friday, after Goldman Sachs (NYSE:GS) said the company is likely to beat Street projections.  JP Morgan (NYSE:JPM), expected to report on Thursday, jumped 7.3% on expectations of better-than-projected earnings.

Yesterday's Treasury Budget statement for June of a slightly less-than-expected, but still onerous $94.3 billion deficit, sent the year-to-date cumulative deficit to a record $1.08 trillion. Treasury Secretary Geithner, however, countered suggestions of additional programs, noting, "...we're just beginning to come to the point when you're going to see the largest effective boost to the employment-intensive parts of the stimulus coming on stream," as he stated, "...we're starting to see a better basis for recovery."

Company earnings reports slated for release today include: Altera Corp (NASDAQ:ALTR), Goldman Sachs (NYSE:GS), Intel (NASDAQ:INTC), Johnson & Johnson (NYSE:JNJ) and Yum! Brands (NYSE:YUM).

The Dow Jones industrial average rose 44.13 points, or 0.5%, to 8,324.87, and the broader Standard & Poor's 500 index edged up 2.30 points, or 0.3%, to 898.72. The technology-laden Nasdaq declined 9.12 points, or 0.5%, to 1,787.40.  Among DJIA components, 19 closed higher while six of the ten S&P 500 industry groups advanced.  On the New York Stock Exchange, declining issues beat advancing ones by a three-to-two margin.

Among DJIA components, American Express (NYSE:AXP), up 5.6% and Merck (NYSE:MRK), up 3.3% led on the upside.  American Express gained after Stifel Nicolaus upgraded its rating on the firm (NYSE:AXP), noting the company the best positioned of credit-card issuers to endure the regulatory changes, advising as well that worries of bad debt are easing.  Dupont (NYSE:DD) shares added 2.2% and Proctor & Gamble (NYSE:PG) gained 2.1% on their safety play appeal.  However, as commodities declined, Alcoa (NYSE:AA) slid 6.1% ahead of its quarterly post after the markets closed Wednesday.

Bank of America (NYSE:BAC) shares declined 3.9% following a Credit Suisse (NYSE:CS) report that warned of worse-than-expected loan losses likely impacting the company's second-quarter results. Nevertheless, financials rose 1% with Bank of NY Mellon (NYSE:BK) adding 2.9%, Goldman Sachs (NYSE:GS) gaining 2.1% and JP Morgan (NYSE:JPM) rising 1% on news that Moody's (NYSE:MCO) may lift its rating on Brazil debt, lowering banks' exposure risk.  FedEx (NYSE:FDX) gained 3.2% to $56.04 after head of the company's international business said he saw signs of an economic rebound in the second half of the year.

Amid lingering worries about the pace of an economic recovery, commodity and material issues proved to be a drag as crude prices plunged to a five-week low of $64.05 after hitting an eight-month high of above $73 per barrel last week.  Among the ten S&P500 industry groupings, basic material shares fell 1.9% and oil and gas declined 1.3%. Technology shares eased 0.5%, as Apple (NASDAQ:AAPL) fell 1.0% and Microsoft (NASDAQ:MSFT) edged 0.7% lower, even as chipmaker Samsung projected a fivefold profit increase for the quarter.  A bullish report on semiconductors was also issued this morning, as Bank of America/Merrill (NYSE:BAC) upped its ratings on the sector, estimating 21% 2010 revenue gains versus 14%, and upgrading Intel (NASDAQ:INTC), Marvell (NASDAQ:MRVL) and LSI (NYSE:LSI) to "buy" and Maxim Integrated Products (NASDAQ:MXIM) and National Semiconductor (NYSE:NSM) to "neutral."  Sprint Nextel (NYSE:S) jumped 3.5% after receiving a ratings upgrade on strength of its Boost prepaid mobile telephone contracts.

Remarks from Obama advisor Tyson who noted a second stimulus package should be planned "on a contingency basis," and aimed at infrastructure investment may underscore remarks from Vice President Joe Biden Sunday complaining of a worse-than-anticipated economic legacy from ex-President Bush as well as the possibility of a second stimulus.

Stocks touched multi-month highs during the quarter, with the S&P surging 40% after plunging to 12-year lows on March 9.  The period from mid-March to mid-June saw the Dow average shooting up 34% on hopes that the US economy was coming out of a recession.  However, rising yields, worries of inflation and dismal economic numbers during the past two weeks failed to provide further boost to sentiments on the Street and the rally fizzled out.  Nevertheless, fears of a complete failure of the financial system were shrugged off by investors and many analysts believe stocks are on a more solid ground than they were before.  Tech-laden Nasdaq was by far the best performer, recording its fourth straight monthly gain.

On Tuesday, the Dow Jones Industrial Average fell 82.38 points, or 1%, to 8,447.00; the S&P 500 declined 7.90 points, or 0.9%, to 919.33, and the Nasdaq slid 9.02 points, or 0.5%, to 1,835.04.  On the New York Stock Exchange, declining issues beat advancing stocks three to two. 

The market's climb over the past quarter was led by a 30% jump among financial shares, 25% among basic material issues, 21% among technology stocks, and 21% among the industrials.  After plunging to 17-year lows in early March, financials have staged a spectacular comeback surging 97% amid hopes that the worst of the banking crisis is over. 

On Tuesday, the June Consumer Confidence index from the Conference Board, a private research group, declined to 49.3, from a revised 54.8 in May and was well below projections off 55.3.  After the Conference Board reported the figures, Caterpillar Inc. (NYSE:CAT) dropped 4.9% to $33.04; Expedia Inc. (NASDAQ:EXPE) lost 5.1% to $15.11 and Starbucks Corp. (NASDAQ:SBUX) declined 5.1% to $13.89.  All ten industry groups on the S&P 500 recorded declines, even as a home price gauge showed a lessening rate of decline and manufacturing barometer which indicated June's contraction was less than the prior month's and better than projected.       

Among Fed speakers, Evans speaks on the credit crunch at 11:15 AM ET today, following yesterday's remarks by Fed's Bullard, who noted, "I think deflation risks are abating," and Hoenig, tackling the question of "too big to fail," who noted "It will not be realistic for any authority in any regulatory structure to oversee a system where incentives remain to take on excessive risk." Janet Yellen suggested the Fed could hold interest rates near zero for the next several years, advising, "I expect that we will turn the growth corner sometime later this year, but I am not optimistic that the economy will spring back to normal anytime soon," adding further that unemployment will "remain painfully high for several more years."

Juniper Networks Inc. (JNPR) won a major deal from NYSE Euronext (NYX) to build an ultra-low latency IT infrastructure network for global trading data centers. NYSE, a financial trading network, is the largest enterprise customer for Juniper to date. This deal is most significant as it marks Juniper's expansion into selling routers and switches to large enterprise customers from its traditional focus on internet service providers.

Under the deal, NYSE plans to deploy 200 Juniper switches for a time-sensitive, low-latency 10Gbps Ethernet network. The exchange will utilize Juniper's Data Center Infrastructure Solutions at its two new data centers located in Greater New York and London. This will help NYSE Euronext to consolidate the total number of its global data centers from ten down to four.

NYSE predicts that Juniper solutions will drive the speed of its data center traffic to 50 microseconds from 150 microseconds when the sites become operational in 2010. This significant speed boost will help in generating increased revenue and scalability for NYSE.

Juniper will help design a more advanced network for the Exchange's new data centers and in building the world's fastest trading network for the New York Stock Exchange. NYSE said that Juniper's network will support several billion daily transactions and quotes across various asset classes and geographies, with extremely low latency, or fewer delays in data transmission. This ability to simplify data centers will also help lower costs for NYSE.

In addition, leveraging the high-performance and faster-networking switching and routing technologies of the Juniper Networks EX Series Ethernet Switches and MX Series Ethernet Services Routers will enable the NYSE trading platform to consolidate network layers as well as reduce capital and operational expenses across the infrastructure. Juniper Networks Data Center Infrastructure Solutions can significantly reduce network complexity and total cost of ownership by up to 52% in capital expenditures, up to 44% in power, up to 44% in cooling, and up to 55% in data center rack space.

In our view, this is a big win for Juniper as it will strengthen its focus on lowering latency and high speed networking. It will also provide a competitive advantage over its rival Cisco (CSCO). The deal is expected to increase the demand for advanced network equipment, despite a global economic slowdown.

Supervalu Inc. (SVU) warned that its first-quarter profit would fall "substantially below" analyst forecasts as shoppers cut back on spending on items with the deepening recession.

"Consumers have become more value-focused and cautious in their spending, which has pressured sales and margins greater than anticipated," the second-largest U.S. grocery chain's newly appointed Chief Executive Craig Herkert said on Wednesday. Eight analysts on an average were expecting Supervalu to earn 65 cents in the quarter.

The Eden Prairie, Minnesota-based company expects same-store sales to fall by 3% even after it slashed prices and boosted promotions to attract shoppers to its Shaw's, Save-A-Lot and Shop 'n Save stores. Increased competition from larger rivals like Wal-Mart Stores Inc.(WMT) have further added to Supervalu's woes.

Supervalu shares fell the most in four months to $13.52 on the New York Stock Exchange before paring some losses to trade down more than 12% to $13.77 at midday.

Shares of MGM Mirage Inc. (MGM) shot up a day after the casino giant said it no longer faced a bankruptcy concern.

As the global economic slump took the shine off the once thriving gambling industry in Las Vegas, MGM Mirage warned in March that there was "substantial doubt about its ability to continue as a going concern" due to mounting debts. The stock had slumped below $2 at the height of bankruptcy concerns.

Billionaire investor Carl Icahn has been pressuring the company to restructure its $13.5 billion debt through bankruptcy protection.

In a filing with the Securities and Exchange Commission late on Tuesday, MGM Mirage said that the $2.6 billion it raised by selling debt and equity last month will enable it to retire its short-term debt that had given rise to the going concern clause.

This would certainly bring some relief to Kirk Kerkorian, who owns a majority stake in the beleaguered company. If MGM were to file for bankruptcy, secured debtholders would get priority over shareholders.

Shares of the company were up more than 13% to $6.64 at noon on the New York Stock Exchange after reaching as much as $6.83 earlier in the session. They are, however, still far from a 52-week high of $39.50.

Among the number of economic posts that are due today, investors are likely to take a cue from Federal Reserve's interest-rate policy announcement that is due at 2.15 ET.  Expectations are that the central bank will hold the interest rates steady.  Also, May new home sales report is due out after the start of trading.  Monday saw increased risk-aversion in the market after the World Bank's report and the Vix volatility measure jumped 11.4%. 

But as governments across the world have geared up to prevent a collapse of the financial system, and a full-blown depression has been avoided, investors will now look toward the Fed for guidance on its exit strategy, on any expansion of its $300 billion Treasury purchase plan, as well as its views on rising yields. A bullish view form the Fed would likely put equities back on track to resume its three-month rally.

Among S&P sector groupings, six recorded moderate declines yesterday, with utilities down 1.0%, consumer services off 0.7%, consumer goods off 0.3%, industrials and tech down 0.2%, and health care off 0.1%.  Basic material sector shares jumped 1.9% and oil and gas edged up 0.7%  Financials, taking a cue from FBR Capital's raised earnings projections and price target on Goldman Sachs (NYSE:GS), advanced 1.4%.

According to the National Association of Realtors, existing home sales gave further evidence that housing may be stabilizing as falling prices, increased foreclosure activity and government tax breaks attracted buyers, sending sales 2.4% higher in May, though slightly lower than an expected 2.6% increase.

Exelon Corp. (EXC) said it would record a $40 million severance charge in the second quarter for slashing 500 jobs as part of its restructuring initiative.

The nation's largest nuclear power company has been trying to cut costs in order to buffer itself against a slump in demand for utilities amid the ongoing recession. Its plans to lay off employees, freeze executive compensation and other incentives are expected to yield $350 million in annual savings. Exelon currently employs about 17,000 people.

While 12 analysts on average expect the Chicago, Illinois-based company to earn 98 cents per share in the second quarter, the most accurate estimate is pegged at 94 cents.

Exelon is still pursuing its hostile $5 billion bid for Princeton, New Jersey-based NRG Energy Inc.(NRG) that could create the biggest power producer in the country. NRG's annual general meeting next month is expected to decide the future of that deal.

Shares of Exelon were up more than 4% to $50.67 at noon on the New York Stock Exchange.

Shares of Hospitality Properties Trust (HPT) tumbled a day after the real estate investment trust said it would sell 15 million shares in a public offering and use the proceeds to repay debt.

Late on Wednesday, the company said it expected to grant underwriters a 30-day option to buy up to an additional 2.3 million shares to cover overallotments, if any. Investors proceeded to turn away from Hospitality Properties as the offering would increase the shares outstanding by as much as 16%.

Hospitality Properties were down nearly 11% to $11.86 at noon on the New York Stock Exchange after touching an intraday low of $11.80 earlier in the session.

Watson Pharmaceuticals Inc. (WPI) agreed to buy privately held Arrow Group for $1.75 billion in a cash-and-stock offer on Wednesday that would expand its presence in more than 20 countries across the world.

Under terms of the deal, Arrow stakeholders will get $1.05 billion in cash, 16.9 million shares of Morristown, New Jersey-based Watson valued at $500 million, as well as an additional $200 million preferred shares redeemable three years after the transaction.

As patent expirations loom large for many large pharmaceutical companies, cash-rich drugmakers have been trying to bolster their pipeline through strategic acquisitions at attractive prices amid the recession. Watson said it will finance the deal with available cash and some debt.

Besides getting a larger foothold in the global market, the acquisition will also help Watson to sell a generic version of Pfizer Inc.'s (PFE) Lipitor once the blockbuster cholesterol drug loses exclusivity in 2011. As one of the fastest growing generic drugmaker in the world, Arrow reported revenue of $647 million in 2008.

With a big stake in biopharmaceutical firm Eden Biodesign, Arrow also brings with it the opportunity to explore the emerging market for generic biologics that Watson has been eying for sometime. The deal, expected to close later this year, will add to Watson's profit in 2010 and create a new company with annual revenue of over $3 billion.

Shares of Watson were up more than 5% to $30.30 at noon on the New York Stock Exchange after touching an intraday high of $30.68 earlier in the session.

Watson Pharmaceuticals Inc. (WPI) agreed to buy privately held Arrow Group for $1.75 billion in a cash-and-stock offer on Wednesday that would expand its presence in more than 20 countries across the world.

Under terms of the deal, Arrow stakeholders will get $1.05 billion in cash, 16.9 million shares of Morristown, New Jersey-based Watson valued at $500 million, as well as an additional $200 million preferred shares redeemable three years after the transaction.

As patent expirations loom large for many large pharmaceutical companies, cash-rich drugmakers have been trying to bolster their pipeline through strategic acquisitions at attractive prices amid the recession. Watson said it will finance the deal with available cash and some debt.

Besides getting a larger foothold in the global market, the acquisition will also help Watson to sell a generic version of Pfizer Inc.'s (PFE) Lipitor once the blockbuster cholesterol drug loses exclusivity in 2011. As one of the fastest growing generic drugmaker in the world, Arrow reported revenue of $647 million in 2008.

With a big stake in biopharmaceutical firm Eden Biodesign, Arrow also brings with it the opportunity to explore the emerging market for generic biologics that Watson has been eying for sometime. The deal, expected to close later this year, will add to Watson's profit in 2010 and create a new company with annual revenue of over $3 billion.

Shares of Watson were up more than 5% to $30.30 at noon on the New York Stock Exchange after touching an intraday high of $30.68 earlier in the session.

Capital One Financial Corp. (COF) said U.S. credit card defaults rose in May along with a 9.4% spike in jobless rates in the country.

The McLean, Virginia-based company said in a regulatory filing that in May its annual net charge-off rate, loans it believes won't ever be repaid, rose to 9.41% from 8.56% in April. The 30-day delinquency rate however fell for a third straight month to 4.9% from 5.04%.

Capital One said the change in its accounting period to processes bankruptcies had improved its charge-off rate by 50 basis points. Excluding that effect, the annualized default rate would have been close to 10%.

The company that issues MasterCard (MA) and Visa (V) credit cards, is still performing better than larger peers like American Express (AXP), Citigroup Inc (C) which are likely to paint an even bleaker picture.

Shares of Capital One were down nearly 2% to $23.58 at noon on the New York Stock Exchange.

Global Payments Inc. (GPN) bought out the remaining 49% stake in its one-year old merchant services joint venture from HSBC Bank Plc. (HBC) for $307.7 million.

The acquisition of the online card processing unit that serves British business clients is expected to hit the Atlanta, Georgia-based company's earnings by fiscal 2010. Global Payments had acquired majority rights in the joint venture for $439 million last June to expand its payment processing services in the UK.

"Our performance in the United Kingdom this year has provided a strong foundation for long-term growth, as we continue to provide a wide range of high-value payment solutions and world-class service to merchants," Chief Executive Paul R. Garcia said.

Under terms of the deal, HSBC will extend its exclusive marketing alliance agreement with Global Payments until June 2019.

Shares of Global Payments were up nearly 3% to $38.55 at noon on the New York Stock Exchange after touching an intraday high of $38.71 earlier in the session.

Boeing Co. (BA) forecast the demand for new commercial plane shrinking by almost 1.4% over the next two decades as the global economic crisis takes a toll on air travel.

The Chicago, Illinois-based company now expects 29,000 new planes to be ordered over the next 20 years which is below the 29,400 jets it had projected in 2008. However, it kept the value of new orders unchanged at $3.2 trillion considering price inflation.

"While the commercial aviation industry is facing a significant downturn, it is cyclic and has a long history of declines and upturns," Boeing's vice-president of marketing Randy Tinseth said.

According to reports, a cut in industrywide delivery forecast is extremely rare and has not taken place at least in the last decade. The forecast has been published annually since 1964.

In a separate announcement, the world's largest carrier Delta Air Lines Inc. (DAL) said it would cut seating capacity by 10% in September and make more headcount reductions to battle the ill effects of the recession.

While both Boeing and its bigger rival Airbus have already made some production cuts, they are still struggling to keep pace with deferred orders and cancellations amid a severe slump in travel demand. Boeing thus said it was now trying to ensure delivery of existing orders rather than chasing new contracts.

Shares of the company were down more than 2% to $51.01 at noon on the New York Stock Exchange. They had touched an intraday low of $50.48 earlier in the session.

Shares of Ameriprise Financial Inc. (AMP) lost nearly 9% a day after the company said it would raise $900 million in a common equity offering and use the proceeds for potential acquisitions.

The Minneapolis-based financial adviser that declined federal bailout money last month also plans to grant underwriters an option to purchase up to an additional 15% more shares to cover over-allotments.

Ameriprise had indicated last month that it was looking for acquisitions to expand its retail and asset management businesses. Last November, the company bought H&R Block Financial Advisors for $315 million.

While Ameriprise did not specify if it had identified a potential target, industry experts believe the company is trying to take advantage of the recent interest in new equity offerings.

However, investors speculated that the secondary offering would lead to significant dilution of their current holdings and took Ameriprise shares down more than 8% to $26.08 at late noon. The shares had slumped to an intraday low of $25.65 earlier in the session on the New York Stock Exchange.

Citigroup Inc. (C) finally agreed to bolster its common equity position by swapping $58 billion of preferred stock on Wednesday in a move that will make the federal government its largest shareholder.

Chief Executive Vikram Pandit said "Following completion of the exchange offers, Citi will be among the best capitalized banks in the world." As per the highly diluted exchange offer, the ailing bank will convert a part of the Treasury's $25 billion preferred stock into common shares giving the US government a 34% stake in the company.

Citi had issued these preferred shares to the federal government while taking $45 billion under the Troubled Asset Relief Program at the height of the financial crisis. When regulatory stress tests showed last month that Citi needed a $5.5 billion buffer in case of future losses, Citi chose to convert preferred shares to meet the shortfall.

The exchange with a $3.25 per share conversion rate is expected to close around July 30 and will increase the ailing banking giant's shares outstanding by 75%.

Citi shares were up nearly 4% to $3.54 at noon after touching an intraday high of $3.59 earlier in the session on the New York Stock Exchange.

Shares of Callaway Golf Co. (ELY) shed more than 14% a day after the company slashed its quarterly dividend to retain cash.

The Carlsbad, California-based golf club and ball maker said late of Monday that it would cut its second-quarter dividend by 86% to a penny per share and sell $110 million of convertible preferred stock.

While the dividend cut would help it in conserving $15.2 million in cash annually, Callaway Golf said it would pay down a part of debt under its existing $250 million revolving credit facility with net proceeds from the stock offering.

The Zacks#5 Rank ("Strong Sell") stock was down more than 13% to $6.29 at noon on the New York Stock Exchange.

General Motors' shares were delisted by the New York Stock Exchange and were dropped from the Dow Jones Industrial Average. Dow Jones said General Motors and Citigroup (NYSE:C) will be officially dropped from the average on June 8 and will be replaced by Cisco Systems (NASDAQ:CSCO) and Travelers Companies (NYSE:TRV). Cisco Systems jumped 5.4% to $19.50 and Travelers Cos., the biggest U.S. property insurer by market value, added 3.1% to $41.91.  Dow Jones said Citigroup (NYSE:C) is being dropped from the average amid "a substantial restructuring which will see the government with a large and ongoing stake."

The Commerce Department said US construction spending rose unexpectedly in April, with total spending rising 0.8%, to a seasonally adjusted annual rate of $968.67 billion compared to March.  Wall Street had expected a 0.9% decline.  Prudential Financial (NYSE:PRU), meanwhile, refused to access government's program for additional funds, and announced plans to raise $1.25 billion through a common stock offering. SunTrust (NYSE:STI) which needs $2.2 billion in additional capital outlined by last month's stress tests, announced plans to raise $1.4 billion in a common stock offering.   

Government bonds fell again Monday, driving yields back near last week's highs with the yield on the benchmark 10-year note rising to 3.68% from 3.46% late Friday.  The Reuters/Jefferies CRB Index of 19 raw materials increased for a sixth day, adding 3.1%.  Exxon Mobil Corp. (NYSE:XOM) added 3.5% to $71.76 and Chevron Corp. (NYSE:CVX) jumped 3.8% to $69.21 as crude prices went beyond $68 per barrel.

Treasury Secretary Timothy Geithner arrived in China to reassure the country that its holdings of U.S. debt are safe even as government borrowing rises.

Along with this much anticipated move, which is a natural corollary of the beleaguered firm's entry into bankruptcy court, the benchmark stock index also removed Citigroup Inc. (C) from its lineup to make way for the second-largest U.S. commercial insurer Travelers Co. (TRV). Both GM and Citigroup will be formally taken out from the average at the opening of trade on Jun 8.

While swapping companies on the index usually takes years, the worst financial crisis since the Great Depression has claimed many of its components as victims. The last change came when Kraft Foods Inc. (KFT) replaced the ailing American International Group Inc. (AIG) in September.

Dow Jones Editor in Chief Robert Thomson, who plays a key role in deciding the composition of the index, said, "We were reluctant to remove Citigroup at the height of the financial frenzy, but it is clear that the bank is in the midst of a substantial restructuring which will see the government with a large and ongoing stake."

Citi was added to the index in March 1997 as Travelers Group Inc. The country's biggest financial firm by assets was formed by a merger of Travelers and Citicorp. In 2002, it spun off the Hartford, Connecticut-based Travelers Property Casualty Corp. through an initial public offering. The irony is that the same firm is now replacing Citigroup on the DJIA.

With the addition of Cisco to the index, the technology weighting of the DJIA now goes up to about 17%. Shares of Cisco rose 6% to $19.61 at noon on the NASDAQ, while Travelers gained nearly 4% to $42.20 on the New York Stock Exchange at about the same time. Responding to upbeat economic reports, the DJIA is currently up 2.67% or 227.24 points.

Monsanto Co. (MON) disappointed investors on Wednesday by saying it would only meet the lower end of its earnings outlook for the year as stiff competition in the herbicide segment and adverse weather conditions hurt sales.

As cooler, wetter weather in parts of the U.S. postponed the use of Roundup and other glyphosate products, the agribusiness giant lowered its outlook for gross profit at the segment to $2 billion from a previous view of $2.4 billion. Monsanto also said "generic and other branded competitors continue to aggressively move larger-than-expected volumes of lower-priced material."

The company now expects to earn about $4.40 per share in fiscal 2009, the lowest point of its forecasted range of $4.40 to $4.50. For the year ending in August, 11 analysts on an average had estimated a profit of $4.62 a share. Monsanto is due to release its fiscal third-quarter results June 24.

Shares of the company were down more than 5% to $80.32 at noon on the New York Stock Exchange.

Bank of America (BAC) raised an additional $5.9 billion through the conversion of privately-held preferred shares into common stock on Wednesday and said it was "well on its way" to meet the regulatory mandate of plugging nearly $34 billion in capital shortfalls.

With this recent step, the Charlotte, North Carolina-based firm has attained 76% of the daunting task assigned to it by the federal government following a stress test to check its ability to hold up against future loan losses. A portion of the $26 billion that Bank of America has raised came from its sale of 1.25 billion common shares and a partial stake in China Construction Bank before the stock swaps.

The beleaguered banking giant said that none of the preferred shares exchanged for common stock were held by the government as part of the Troubled Asset Relief Program. While Bank of America seems keen to ensure less federal interference in the future, rival Citigroup's (C) plans to convert a part of the government's stake into common stock would make the US government a large shareholder in the New York firm.

Bank of America may also swap another set of non-government preferred shares for common stock depending on market conditions. The largest U.S. bank is also mulling several joint ventures and the sale of non-core assets like First Republic Bank and Columbia Management Group to improve its capital base.

Shares of the company were up nearly 2% to $11.19 at noon on the New York Stock Exchange after touching an intraday high of $11.54 earlier in the session.