Major equity indexes rallied Tuesday, led by recovering insurance stocks. Traders ignored a late-session spike in oil prices, and a lower-than-expected read of consumer confidence.
The Dow Jones industrial average added 138.49 points, or 1.4%, to close at 9,888.48. The broader Standard & Poor's 500 index gained 16.3 points, or 1.47%, to 1,111.10. The Nasdaq composite index finished 14.75 points higher, or 0.76%, to 1,928.79. Weaker chip and telecom-equipment shares weighed on the Nasdaq.
S&P's MarketScope reports that many traders expect the stock market to bounce, but that analysts are split on whether it will last. "Many see a sizable burst next week after the election, regardless of who wins," according to MarketScope.
Up ahead Wednesday: a read of September durable goods orders arrives ahead of the market open. A rebound is expected following a 0.3% decline in August. Plus, well known names like Northrop Grumman (NOC) and MetLife (MET) report quarterly earnings.
Oil prices pressed higher Tuesday afternoon, after lower prices through the morning. NYMEX crude lifted to $55.17 per barrel, as edgy traders await Wednesday's weekly inventory data from the Department of Energy -- which is expected to report a rise of 1 million to 3 million barrels in crude oil stocks -- and the American Petroleum Institute.
In economic news Tuesday, the Conference Board's October reading of consumer confidence arrived weaker than expected, and marked the third straight drop in the index in a row. Consumer confidence registered a 92.8 reading, from a downwardly-revised 96.7 in September, as rising energy prices weigh on consumers' minds. The expectations component dropped to 92.0 from 97.7, while the present situation index dipped to 94.2 from 95.3. "The data are supportive for bonds but should further pressure the dollar," notes Action Economics. MarketScope adds that traders were encouraged the data weren't worse.
Topping company news, New York attorney general Eliot Spitzer won't bring criminal charges against professional services firm Marsh & McLennan (MMC) now that Jeffrey Greenberg has resigned as CEO. The company's board named Michael Cherkasky as its new president and CEO, and will announce significant reforms in the business model of its Marsh, Inc. unit. S&P upgraded the stock to hold from sell. Shares rose 9.3%. Dow component American International Group (AIG) added 7.5% on the news.
Delta Air Lines (DAL) surged 22% after J.P. Morgan upgraded shares to neutral. On Monday, the company entered into a commitment letter with American Express Travel Related Services, a unit of American Express (AXP), to provide up to $600 million of financing to Delta, subject to certain conditions.
Qualcomm (QCOM) lost 4% Tuesday as Morgan Stanley downgraded the stock to underweight from equal-weight.
Earnings reports poured in. After Monday's session, American Express (AXP) reported third quarter diluted earnings per share (EPS) of 69 cents, vs. 59 cents a year ago, on a 12% rise in revenue. AmEx shares finished higher Tuesday.
Flextronics (FLEX) shed 6.9% after posting a second-quarter EPS of 17 cents, vs. 9 cents (non-GAAP) on an 18% sales rise. CIBC World downgraded the stock to sector perform from outperform, and S&P lowered its opinion to accumulate.
Dow component DuPont (DD) reported third-quarter EPS of 25 cents, vs. 13 cents (before special items). The stock moved lower.
In healthcare, Wellpoint Health Networks (WLP) posted third-quarter EPS of $1.97 vs. $1.63 on 16% total revenue rise. Wachovia has reportedly upgraded the stock to outperform from market perform. Shares gained 5.1%.
Marathon Oil (MRO) reported third-quarter EPS of 64 cents (diluted), vs. 90 cents, as hurricanes and lost gas production time offset higher crude prices. Shares were 2.2% lower.
The earnings calendar remains busy. ExxonMobil (XOM) and Gillette's (G) quarterly reports arrive Thursday. On Friday, earnings news arrives from Bristol-Myers Squibb (BMY) and ChevronTexaco (CVX).
The rest of the week's economic news focuses on Friday's key report: the advance reading for third-quarter gross domestic product. Economists expect GDP growth for the quarter to come in at 4.3%.
Treasury prices finished somewhat lower Tuesday in a day of choppy trading. A weaker-than-anticipated read of consumer confidence helped lift bonds, but lower oil prices through the morning encouraged traders to return to equities.
The dollar remained weak vs. major currencies, but staged a small recovery Tuesday. The euro was worth $1.276, the British pound sterling was at $1.834 and the dollar was at 106.65 yen.
European stock markets finished higher Tuesday, as oil prices cooled somewhat. London's Financial Times-Stock Exchange 100 index finished18.9 points higher, or 0.41%, to 4,583.40. The index was aided by lower oil prices, but restrained by a report that U.K. manufacturing optimism is at its lowest level in a year, reports S&P's Advisor Insight.
Germany's DAX index gained 7.85 points, or 0.2%, to 3,862.26. France's CAC-40 index added 10.42 points, or 0.29%, to end at 3,619.48, on news that housing starts rose by a 20% annual rate in the third quarter, while September factory prices rose 3.1%.
Asian markets made gains on Tuesday. Japan's Nikkei average lost 13.31 points, or 0.12%, to 10,672.46. Banking and insurance stocks rebounded, while exporters were pressured by a strong Japanese yen.
In Hong Kong, the Hang Seng index lost 34.25 points, or 0.27%, to end at 12,852.35.