News at a Glance
Equities Advance: Capital goods, energy help carry indexes.
Demand Rises: Durable goods orders for July top consensus.
Crude Higher: Up $2+ on threat from Hurricane Gustav.
More Welcome Mats: Mortgage applications rose last week.
The Lowdown
Optimism over the mortgage backers and some unexpected strength in manufacturing demand is giving the market a boost.
Stocks were higher in afternoon trading Wednesday on two reports: one suggesting the nation's government-sponsored mortgage financiers may improve and another showing an increase in demand for durable goods. The Dow Jones Industrial Average climbed 89 points to 11503. The Nasdaq picked up 20 at 2382, and the S&P 500 climbed 10 to 1282.
The financial sector posted gains and lifted the broader market after a report from Citigroup (C) that recent investments made by Fannie Mae (FNM) and Freddie Mac (FRE) should lift the firms' bottom lines.
Traders also welcomed a report from the Commerce Department showing durable goods orders rose 1.3% in July. The report marked the third consecutive monthly increase in orders and suggested some unexpected consistency out of the manufacturing sector.
The housing sector also got some good news. The Mortgage Bankers Association's Market Composite Index, which measures the volume of mortgage loan applications, climbed 0.5% last week, its first increase in three weeks. The report gave shares of home builders a boost.
A bump in energy prices only propelled the rally. Energy stocks posted gains when crude oil prices rose on a dip in inventories and the looming threat of Hurricane Gustav. By 3:53 p.m., crude traded up $2.06 on the day at $118.33 a barrel.
Corporate News
Lehman Brothers (LEH) has picked three finalists among the private-equity suitors interested in acquiring its asset management business, The Financial Times reported. Kohlberg Kravis Roberts, Hellman & Friedman and Bain Capital are still in the running to purchase the unit, though Lehman has not yet committed to selling it. The firm may still seek other means of raising capital before releasing its next earnings report in September.
General Motors (GM) plans to reduce its vehicle output in Spain to account for flagging demand, Reuters reported. GM will shutter its Figuerelas auto plant for two days in September and four days in October, lowering production by 12,000 vehicles.
ConocoPhillips (COP) plans to exit the gas station business, selling off the last of its 600 stations to PetroSun West for $800 million, The Wall Street Journal reported. The deal is part of a growing trend among oil companies, which are exiting the business to concentrate on energy exploration. The firm's Conoco, 76 and Phillips 66 stations will retain their branding.
TiVo (TIVO), the company that whose little black box allows users to watch what they want when they want, is now letting its customers sample other people's tastes, namely those of the staff at Entertainment Weekly. The comapny is entering a deal with the magazine, which is owned by Time Warner (TWX), which will allow users to configure their TiVo devices to automatically record programs recommended by EW, The Wall Street Journal reported.
The Economy
Durable goods orders rose by 1.3% in July, consistent with a revised June increase of 1.3%, the Commerce Department said. Economists had expected orders to remain flat in July. REPORT
Crude inventories fell by 177,000 barrels last week but remained in the middle of the average range for this point in the year, the Energy Department said. REPORT
ReadMe
Forbes on debt: The credit crisis is affecting everyone, but a few cities are well above the national average in terms of delinquencies on loans. STORY
The Los Angeles Times on banks: The FDIC raised the number of troubled financial institutions on its "problem list," which suggests more firms could go under. STORY
The Washington Post on the poor: The poverty rate remained flat in 2007, while the number of living without health insurance declined. STORY
WatchMe
Reuters on the Democratic National Convention: The middle class played a key role in yesterday's speeches and events. VIDEO
CNBC on bonds: David Fernandez, Managing Director of JPMorgan, makes the case for the conservative investment vehicle. VIDEO
"The Iron Giant" (1999): This animated film about a boy who befriends a giant robot is set in the 1950s, when commodities prices were low enough to believe in such things. HBOF, 7 p.m.
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