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Friday July 10, 2009 11:34 AM ET
SmartMoney
Published July 8, 2008 4:15 PM  |  A A A
Breaking News by Mark Glassman (Author Archive)

Stocks Ride Late Rally

News at a Glance



  • Stocks Higher: Gains in financials, health care lift major indexes.


  • Bernanke Speaks: Fed mulls extending special lending to financials.


  • Crude Eases: Oil falls below $136 on stronger dollar.


  • Borrowing Rises: Consumer credit rose in May by more than expected.


    • The Lowdown



    Stocks surged Monday on lower energy prices and word that the government is considering offering more help to the ailing financial sector.

    The major indexes leaped forward in afternoon trading Tuesday. After spending most of the day near the line, the Dow Jones Industrial Average ended up 152 points at 11384. The Nasdaq picked up 51 to finish at 2294, and the S&P 500 climbed 21 to 1274.

    Financials led the market. Bank of America (BAC) and JPMorgan Chase (JPM) were among stocks that advanced after the Federal Reserve will consider extending its role as an emergency lender to banks and brokerages, Chairman Ben Bernanke said.

    "We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end, should the current unusual and exigent circumstances continue to prevail in dealer funding markets," he said in prepared remarks.

    Bernanke's comments were welcomed by traders who have shown concern over the health and stability of the nation's financial system.

    Bernanke also called on Congress to pass legislation expanding the government's regulatory powers. "Strong holding company oversight is essential and thus, in my view, the Congress should consider requiring consolidated supervision of those firms, providing the regulator the authority to set standards for capital, liquidity holdings, and risk management," he said.

    The Federal Reserve and the Securities and Exchange Commission have already begun to work more closely on sharing information about the banking industry.

    Traders also welcomed some relief from the commodities market. Oil prices continued to retreat as the dollar picked up more strength against the euro. Shortly before 4 p.m., crude traded down $5.50 on the day at $135.87 a barrel. Energy stocks fell in response. Oil has fallen sharply over the last two days, but most analysts said the downturn would be temporary.

    Health care stocks had a good day. Eli Lilly (LLY), Pfizer (PFE), Novartis (NVS) and Merck (MRK) each posted big gains.

    In economic news, consumer borrowing appeared to remain healthy. Credit rose by $7.8 billion in May, a bit above economists' estimates.

    In charity, billionaire investor Warren Buffett gave away more than $2 billion in Berkshire Hathaway (BRK.A) stock, the Associated Press reported. The majority of the shares went to the Bill & Melinda Gates Foundation.


    Corporate News



  • Siemens (SI) plans to eliminate 16,750 jobs, or 4.2% of its global workforce, the German conglomerate said. The cuts are part of Siemens's larger effort to cuts costs by $2 billion. The bulk of the job losses will come from the firm's industry and energy units.


  • Office Depot (ODP) projects a 10% drop in second-quarter same-store sales, the firm said. Office Depot said it was disappointed with the results and cited the "challenging economic environment" to explain the decline. The firm is scheduled to release earnings on July 30.


  • DreamWorks Animation SKG (DWA) plans to replace the computer equipment it uses to make animated movies with new machines running on Intel (INTC) processors, The Wall Street Journal reported. DreamWorks said the change was intended to speed up its computing. The older systems ran on chips made by Advanced Micro Devices (AMD).


    • The Economy



  • Wholesale inventories, a measure of lag in demand relative to expectations, rose 0.8% in May, slowing from a revised April increase of 1.4%, the Commerce Department said. Economists had expected inventories to have climbed 0.6%. REPORT


  • The Pending Home Sales Index, a leading indicator for the housing market, fell 4.7% in May, down from a revised April increase of 7.1%, the National Association of Realtors said. Economists had expected a 2.8% decline. DATASHEET


  • Consumer credit rose by $7.8 billion in May, after a revised comparable increase in April, the Federal Reserve said. Economists had expected borrowing to have risen by $7.0 billion. REPORT


    • ReadMe



  • The Washington Post on regulation: The Federal Reserve and the Securities and Exchange Commission will share data about the nation's banks in an effort expand their watchdog roles. STORY


  • AFP on the presidential candidates and the economy: Sens. Barack Obama and John McCain have starkly different views on how to nurse the economy out of a recession. STORY


  • Time on federal spending: One candidate says he plans to balance the budget by 2013, but given the economic slowdown, current outlays and the candidate's tax plan, that seems highly unlikely. STORY


    • WatchMe



  • Bloomberg on oil prices: David Bell, the Sydney convenor of the Australian Association for the Study of Peak Oil and Gas, predicts oil will reach $200 a barrel, triggering palpable changes in the global economy. He also stirs a lot in his chair. VIDEO


  • Reuters on small business: Higher commodities prices and other upward pressure on overhead has hobbled dry cleaners. VIDEO


  • National Open House: A look inside homes in Hawaii, Colorado and Texas. HGTV, 9:30 p.m.


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