Dow 10,000: Stocks at one-year highs – Tyler Vernon – CNNMoney.com

Dow 10,000: Stocks at one-year highs – Tyler Vernon – CNNMoney.com

Wall Street recharges the rally as investors gear up for a big week for corporate results. Apple delivers strong results after the close.

By Alexandra Twin, CNNMoney.com senior writer
Last Updated: October 19, 2009: 6:28 PM ET

NEW YORK (CNNMoney.com) — The Dow reclaimed 10,000 on Monday, hitting its highest point in over a year, as a weak dollar, higher commodity prices and some earnings optimism fired up a broad market advance.
The Dow Jones industrial average (INDU) rose 96 points, or 1%, ending at 10092.19. That was its highest close since Oct. 3, 2008, when it closed at 10,325.38.
The S&P 500 (SPX) index gained 10 points, or 0.9%, to close at 1097.90, ending at its highest point since Oct. 2, 2008.
The Nasdaq composite (COMP) advanced 19 points, or 0.9%, and closed at its highest point since Sept. 26, 2008.
“This is a liquidity driven rally and the market is probably going to keep moving higher over the next few weeks,” said Tyler Vernon, chief investment officer at Biltmore Capital.
“People are feeling optimistic,” he said. “They’re getting sick of getting zero percent returns on money market accounts and are wanting to take on more risk.”
After the close Apple (AAPL, Fortune 500) reported fiscal fourth-quarter revenue and earnings that easily beat Wall Street analysts’ estimates, thanks to strong sales of Macintosh computers and iPhones. Shares surged as much as 9% in extended-hours trading, hitting an all-time high of $204 per share, before pulling back to trade at $202.19.
Apple’s forecast for the current quarter sets revenue in a range between $11.3 billion to $11.6 billion, encompassing the $11.4 billion analysts are predicting. Apple also predicted earnings per share of between $1.70 and $1.78 versus the $1.91 analysts’ predict.
Texas Instruments (TXN, Fortune 500) also reported results after the close. The chipmaker reported weaker quarterly earnings and revenue that topped estimates. Shares gained 3% in after-hours trading.
Stocks have been essentially on the rise for more than seven months. Since closing at a more than 12-year low on March 9, the S&P 500 has gained 62.3% as of Monday’s close.
Monday’s market: Gains were broad-based Monday, with 25 of 30 Dow issues rising, led by 3M (MMM, Fortune 500), American Express (AXP, Fortune 500), Chevron (CVX, Fortune 500), Caterpillar (CAT, Fortune 500), United Technologies (UTX, Fortune 500), Wal-Mart Stores (WMT, Fortune 500), Exxon Mobil (XOM, Fortune 500) and IBM (IBM, Fortune 500).
Wall Street advanced last week after Goldman Sachs (GS, Fortune 500), Intel (INTC, Fortune 500), Google (GOOG, Fortune 500) and others reported better-than-expected quarterly results, raising bets that profits are starting to recover along with the economy. That perception helped the Dow push past the 10,000 level, a key psychological point.
However, Bank of America (BAC, Fortune 500)’s big quarterly loss and General Electric (GE, Fortune 500)’s weaker revenue, both reported Friday, reminded investors that any profit recovery is going to be choppy.
Results: About 135 companies, or 27% of the S&P 500, will report results this week, including 13 Dow components. The standouts are: American Express, 3M, Microsoft (MSFT, Fortune 500), Merck (MRK, Fortune 500), Pfizer (PFE, Fortune 500), and Coca-Cola (KO, Fortune 500). Other big names due to report include: Yahoo (YHOO, Fortune 500), Wells Fargo (WFC, Fortune 500), Amazon.com (AMZN, Fortune 500) and eBay (EBAY, Fortune 500).
Earnings have been beating forecasts around 79% of the time, while revenues have been topping expectations around 61% of the time, according to Thomson Reuters.
S&P 500 earnings are expected to have fallen around 23% in the third quarter from a year ago, according to the latest from earnings tracker Thomson Reuters.
That would make the third quarter the ninth consecutive loser for the S&P 500, the worst streak since Thomson began tracking results a decade ago.
World markets: Global markets were mixed. In Europe, London’s FTSE 100 rose 1.8%, France’s CAC 40 added 1.7% and Germany’s DAX gained 1.9%. Asian markets ended mixed, with the Hong Kong Hang Seng lower and the Japanese Nikkei higher.
Bonds: Treasury prices gained, lowering the yield on the 10-year note to 3.38% from 3.41% late Friday. Treasury prices and yields move in opposite directions.
Prices were volatile after the latest government debt auctions saw strong demand. Treasury sold $30 billion in 3-month bills and $30 billion in 6-month bills.
Currency and commodities: The dollar tumbled versus the euro and the yen, resuming its recent slide versus a basket of currencies.
U.S. light crude oil for November delivery rose $1.08 to settle at $79.61 a barrel on the New York Mercantile Exchange, after ending the previous session at the highest level in a year.
COMEX gold for December delivery rose $6.50 to settle at $1,058.10 an ounce. Gold has surpassed records repeatedly this month due to the weak dollar and longer-term worries about inflation.
Market breadth was positive and trading volume was fairly light. On the New York Stock Exchange, winners beat losers seven to three on volume of 1.08 billion shares. On the Nasdaq, advancers topped decliners eight to five on volume of 1.99 billion shares. To top of page