YAHOO [BRIEFING.COM] : Stocks rose 1.0% in
a volatile session as traders digested testimony from the head of the Federal
Reserve, Treasury and FDIC, upside earnings guidance from Hewlett-Packard and
speculation regarding the future of
The S&P 500 climbed to a gain 1.8% at midday, dropped to a loss
of 2.8% in the final hour of trade before a surge in buying interest sent the
S&P 500 back into positive territory. Seven of the ten economic sectors
posted a gain. Small- and mid-cap stocks underperformed, with the Russell
2000 (-0.8%) and S&P 400 (-0.3%) both declining.
Fed Chairman Bernanke, Treasury Secretary Paulson and FDIC Chairman
Bair were called to testify about the $700 billion financial relief package
before the House Financial Services committee. Bernanke said there are some
signs that credit markets are improving, although they remain strained.
Treasury Secretary Paulson defended scrapping the original plan to buy troubled
assets, saying that direct capital injections were more effective given the
sharp deterioration in financial markets. Paulson believes the economy will not
recover as fast as anyone would like, but will recover at a quicker pace
because of the relief package.
On a related note, the Treasury bought $33.6 billion in preferred
stock from 21 banks, including $6.6 billion in US Bancorp (USB 25.73, -0.07) and $3.6 billion in Capital One Financial (COF 29.25,
-0.62). This brings the totaled preferred stock purchases in banks up to $158.6
billion. The financial sector fell 0.8%.
In corporate news, Hewlett-Packard
(HPQ 33.58, +4.24) announced preliminary fourth quarter
earnings that topped estimates and issued fiscal year 2009 earnings guidance
that was above expectations.
Yahoo!
(YHOO 11.48, +0.85) gained after announcing that cofounder Jerry Yang will
step down as CEO as soon as a replacement is found, raising speculation that Microsoft (MSFT 19.62, +0.43) may
show renewed interest.
The 14.5% gain in HPQ and 8.0% increase in YHOO helped the tech
sector (+1.9%) outperform. More than half of tech stocks posted a loss,
however, as investors were aware that the upside HPQ guidance was largely a
company specific story, and not indication of overall strength.
In earnings news, Saks (SKS
3.27, -0.58) tumbled after missing third quarter earnings expectations, while Home Depot (HD 20.71, +0.71) rose
after topping estimates. Both retailers were cautions about the near-term
outlook. Retailers a whole fell 0.2%.
Shares of General Motors (GM
3.09, -0.09) and Ford (F
1.68, -0.04) fell to multi-decade lows. The automakers, along with Chrysler and
the United Auto Workers, testified before the Senate Banking Committee
regarding possible aid for the struggling
In economic news, domestic producer prices in October dropped by a
larger-than-expected amount due to the sharp decline in energy prices.
Specifically, October PPI dropped 2.8% month over month, compared to the
expected decline of 1.9%. Core PPI, which excludes food and energy, rose 0.4%,
which was larger than the expected increase of 0.1%. DJ30 +151.17 NASDAQ +1.22
NQ100 +0.3% R2K -0.8% SP400 -0.3% SP500 +8.37 NASDAQ Adv/Vol/Dec
1088/2.41 bln/1719 NYSE Adv/Vol/Dec 1153/1.60 bln/1975