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US Market Commentary

Stocks Post Strong Gains Amid Prospective Greece Bailout - U.S. Commentary
2/9/2010 4:48 PM ET

TOP MARKET NEWS

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(RTTNews) - Stocks rallied on Tuesday, as some bargain hunting and the prospect of a bailout for debt-embattled Greece drove the markets higher. The major averages all closed in positive territory, moving further away from recent three-month closing lows.

The increased likelihood of a bailout for Greece by the European Union boosted buying interest, as European Central Bank President Jean-Claude Trichet left earlier than expected to attend a European Union leaders' summit, where the details for the bailout are expected to be drawn up.

In U.S. economic news, the Commerce Department released a report showing an unexpected decrease in wholesale inventories in the month of December, although the report also showed a continued increase in wholesale sales during the month.

As earnings season continues to wind down, Coca-Cola (KO) reported fourth quarter earnings that fell short of expectations, while its revenues topped estimates. Pulte Homes Inc. (PHM) reported a fourth quarter loss but was also able to beat revenue forecasts.

Also on the corporate front today, fast food giant McDonald's Corp. (MCD) announced that global comparable sales for the month of January grew 2.6 percent, driven by the European and Asian markets. Total sales for January rose 9.1 percent, including a 0.1 percent drop in the U.S.

Additionally, Japanese automaker Toyota Motor Corp. (TM) announced the recall of nearly half a million new Prius and other hybrid cars due to problems related to the software program that controls the vehicles' anti-lock braking system.

The major averages saw some downside in late-session dealing but still closed with strong gains. The Dow gained 150.25 points or 1.5 percent to end at 10,058.64, the Nasdaq advanced by 24.82 points or 1.2 percent to 2,150.87 and the S&P 500 rose by 13.78 points or 1.3 percent to 1,070.52.

Sector News

Airline stocks were some of the day's strongest performers, resulting in a 7.7 percent gain by the NYSE Arca Airline Index. The index was led higher by UAL Corp. (UAUA), which surged up by 17.5 percent to a fifteen-month closing high after reporting a pick-up in January traffic.

Chemical stocks also moved notably higher on the day, with the S&P Chemical Index advancing by 2.5 percent. With the upward move, the index bounced off of yesterday's three-month closing low.

Steel, gold and oil service stocks also saw strong gains, reflecting the day's strength in the resource sector.

Networking, defense, semiconductor and biotechnology stocks also saw buying interest, while some commercial real estate stocks bucked the uptrend, resulting in a 0.2 percent loss by the Morgan Stanley REIT Index. With the pullback, the index closed at a two and a half month low.

Dow Components

Caterpillar (CAT) helped to lead the Dow higher, posting a gain of 6 percent. With the move, the stock bounced off of Monday's four-month closing low. Caterpillar moved higher on the day after an upgrade by Morgan Stanley, which cited the firm's pick-up in order volume.

Coca-Cola also rose, posting a gain of 2.6 percent. News of the firm's better than expected quarterly revenues helped the stock to move off of the more than four-month closing low set yesterday.

Boeing (BA), DuPont (DD) and American Express (AXP) also saw strong gains, while Merck (MRK) was one of the two Dow components in the red, seeing a loss of 0.3 percent. Bank of America (BAC) also fell, although by a minute margin.

Other Markets

In overseas trading, stocks markets across the Asia-Pacific region closed mixed on Tuesday. Japan's Nikkei 225 fell by 0.2 percent, while Hong Kong's Hang Seng Index gained 1.2 percent.

Meanwhile, the major European markets all posted modest gains. The French CAC 40 and the German DAX Index both gained 0.2 percent, while the U.K.'s FTSE 100 Index rose by 0.4 percent.

In the bond markets, treasuries closed on the downside after mixed results from today's three-year note auction. Subsequently, the yield on the benchmark ten-year note closed up 4.1 basis points at 3.633 percent.

Looking Ahead

Wednesday, the markets may focus on data on the trade deficit, the lone economic report scheduled for the day. Testimony from notable Federal Reserve officials, meanwhile, has been placed on hold in light of the recent inclement weather that has hit the Washington, D.C. area.

Earnings from Walt Disney (DIS), Sprint Nextel (S) and New York Times Co. (NYT) may also garner some attention as the influx of earnings reports continues to slow down.

For comments and feedback: contact editorial@rttnews.com

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