Stocks Climb After Fed Holds Steady

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Also, Lehman was to be be removed from the S&P 500 index after the close of trading on Sept 16. Lehman's place in the S&P 500 will be taken by Harris Corp. (HRS; +3.5%) , and Harris will be replaced by Greif (GEF; +6.6%) in the S&P MidCap 400, all after the close of trading on Sept. 19.

Another big Wall Street firm posted results Tuesday morning. Goldman Sachs (GS; -4%) reported third quarter earnings per share of $1.81, vs. $6.13 one year earlier, on a 43% total revenue decline. The company's effective income tax rate for first none months of fiscal 2008 was 25.1%, down from 34.1% in fiscal 2007. Net revenues in Investment Banking fell 40% year-over-year and 23% from the second quarter. Net revenues in Fixed Income, Currency and Commodities were 67% lower than a very strong year-earlier quarter, primarily reflecting particularly weak results in credit products and mortgages.

Meanwhile, Morgan Stanley (MS; -10.8%) said that in order to provide the market with information on its financial performance in the most timely manner possible, it would hold its third quarter conference call Tuesday at 5:00 p.m. ET.

The U.S. CPI dipped 0.1% in August, while the core rate edged up 0.2%, about in line with expectations, and compared to gains of 0.8% and 0.3%, respectively, in July. On a year-over-year basis, the headline pace slowed to 5.4% compared to 5.6% in July. The year-over-year core rate was steady at 2.5%. As expected, energy was behind the softer trend, tumbling 3.1% on the month, after soaring a cumulative 15% over the prior three months. Energy prices are still up 27.2% year-over-year, compared to a 29.3% clip previously.

"The data reflect some of the softening in commodity prices, but won't have much market impact amid the ongoing credit turmoil," wrote Action Economics analysts in a website posting Tuesday.

"The expected softening in commodity prices is good news, and gives the Fed more room to move. However, it won't likely have much market impact," wrote S&P senior economist Beth Ann Bovino in a note Tuesday.

The National Association of Home Builders/Wells Fargo Housing Market Index rose two points to 18 in September from a record low 16 for the previous two months. Though this month's increase to the index is good news, any reading below 50 means there are still more builders who see conditions as poor than those who see conditions as good. The measure of current sales conditions rose one point to 17, the gauge of sales expectations for the next six months rose six points to 30, and the traffic of prospective buyers rose one point to 14. All regions posted some degree of improvement, with the Midwest, South and West each up two

points and the Northeast posting a six-point gain to 22.

Treasury Secretary Henry Paulson canceled his speech on the economy and housing market at an event on electronic payments sponsored by the Brookings Institution in Washington, D.C. He "is focused on staying on top of market developments today" and Undersecretary David McCormick will deliver the speech. Earlier Senator Richard Shelby on CNBC also indicated that hearings on the bailout of housing agencies Fannie and Freddie would likely be postponed as well, and that he planned to speak with Paulson within the hour on developments in the financial markets.

Energy futures were lower Tuesday afternoon as the Wall Street financial crisis threatened to add to growing global recession that would likely reduce demand for oil and other commodities. October WTI crude oil futures were off $4.07 to $91.64 per barrel, the lowest level since February.

December gold futures were down $5.40 at $781.60 per ounce.

Among Tuesday's other stocks in the news, Hewlett-Packard (HPQ; +6.8%) says it plans to implement a restructuring program for the recently-acquired EDS business group. As part of the plan, H-P will reduce workforce by about 24,600 employees, or about 7.5% of the combined company's workforce, with nearly half of the reductions occurring in U.S.

Dell Inc. (DELL; -11.2%) said it is seeing further softening in global end-user demand in the current quarter.

International Rectifier (IRF; +0.9%) rejected Vishay Intertechnology's (VSH; -1.7%) revised $23 per share buyout proposal. IRF says the offer significantly undervalues the future prospects of the company and is not in the best interest of its shareholders.

CBRL Group (CBRL; +12%) reported fourth quarter EPS from continuing operations of 91 cents, vs. $1.15 one year earlier, on 0.8% lower same-store sales and 4.8% lower total sales. The company sees 2%-3% fiscal 2009 same-store sales growth, 4.5%-5.5% total sales growth, and EPS from continuing operations of $2.80-$3.00.

European indexes pulled back from earlier losses Tuesday. In London, the FTSE 100 index was lower by 1.63% to 5,119.60. In Paris, the CAC 40 index shed 0.71% to 4,139.18. Germany's DAX index fell 1.11% to 5,997.06.

Asian markets, which were closed for holiday Monday, made up for lost time with sharp losses Tuesday. Japan's Nikkei 225 index fell 4.95% to 11,609.72. In Hong Kong, the Hang Seng index plunged 5.44% to 18,300.61.

Treasury market

Bonds, which soared Monday on Lehman's weekend bankruptcy filing, were lower after the FOMC decided not to change rates. The 10-year note was off 25/32 to 104-07/32 for a yield of 3.500% and the 30-year bond fell 30/32 to 106-31/32 for a yield of 4.095%.