Tulsa World: Dow up 132 as financial, consumer stocks gain

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Dow up 132 as financial, consumer stocks gain
A bullish forecast from Wal-Mart helps extend the rally.

By TIM PARADIS Associated Press
Published: 10/23/2009 2:27 AM
Last Modified: 10/23/2009 5:46 AM

NEW YORK — Investors encouraged by a good batch of earnings reports and forecasts jumped back into stocks after a two-day slide.

Stocks posted big gains Thursday as investors snapped up financial shares after several banks said they weren't seeing as many loans go bad.

The market extended its advance in afternoon trading when Wal-Mart Stores Inc. said it expects sales to grow this year and increase at a faster pace next year.

The Dow Jones industrial average jumped 132 points and logged the biggest gain of major indexes after Wal-Mart's forecast and as several companies included in the indicator reported earnings that beat expectations.

The technology-heavy Nasdaq composite index advanced the least among major indicators following a disappointing forecast from online retailer eBay Inc.

Consumer stocks rose after Wal-Mart said it expects sales to increase 1 to 2 percent this year and 4 to 6 percent next year. The nation's largest retailer also said it would focus on emerging markets when opening stores. Meanwhile, clothing retailer J. Crew Group Inc. raised its earnings forecast because of stronger sales and profit margins.

Financial stocks rose after PNC Financial Services Group Inc. and Fifth Third Bancorp each said bad loans weren't piling up as fast as they had been. Financials had pulled the market lower Wednesday after an analyst took issue with a profit report at Wells Fargo & Co.

Dow components Travelers Cos., McDonald's Corp., 3M Co. and AT&T Inc. posted stronger results than analysts had forecast.

Adam Gould, senior portfolio manager at Direxion Funds in New York, said the market's bounce on the Wal-Mart forecast illustrates how difficult it is to keep stocks down and allow those who missed the seven-month run to buy shares at lower prices.

"People have wanted to see some type of correction but whenever any earnings come out and beat and whenever any economic news comes out that is decent, the market rallies," he said.

Two stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 5.3 billion shares compared with 5.7 billion Wednesday.

Mixed economic and earnings reports signal that the economy remains in flux.

The Labor Department said workers filing for unemployment benefits for the first time rose more than expected last week. New claims rose to 531,000 last week from 520,000.

Separately, a private forecast of economic activity rose for the sixth straight month in September. The Conference Board's index of leading economic indicators rose 1 percent last month.

Jeffrey Beamer, Portfolio Manager of Lacerte Capital in Dallas, said earnings reports showing improved profits but still-weak revenue raise questions about whether the market can hold its gains. Cost-cutting, he noted, only helps so much.

"You may look great this quarter but what are you going to do in the coming quarters?" Beamer said. By TIM PARADIS Associated Press

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