Markets & Finance

Stocks Finish Higher


Stocks finished higher on Monday, as the major indexes extended Friday's rally as optimism about third-quarter financial results grows, says Standard & Poor's MarketScope. Some investors were betting that the market had overcompensated for decelerating earnings growth.

The Dow Jones Industrial average gained 23.89 points, or 0.23%, to 10,216.54. The broader Standard & Poor's 500 index was up 3.67 points, or 0.32%, to 1,135.17. The tech-heavy Nasdaq composite index climbed 10.2 points, or 0.53%, to 1,952.4.

In the energy markets, crude oil futures finished lower in price at $49.91 per barrel Monday as the rebel conflict with the Nigerian government appeared to cool off with a tentative cease-fire agreement. Oil closed at a record high of $50.12 on Friday.

Tuesday's economic calendar includes a release of September non-manufacturing business activity, which is expected to reveal an index level of 61.5 (median 59.5) from August's 58.2. The solid readings from the various factory surveys bode well for this report, although the three hurricanes that struck in the month suggest some downside risk, says Action Economics. The employment component will get heightened attention, given that it could flag the degree of strength or weakness to expect in Friday's employment report, says Action Economics.

Companies on Tuesday's earnings calendar include Apollo Group (APOL) and Yum! Brands (YUM). Wal-Mart (WMT) is holding a meeting with analysts.

Similar to Friday's trading activity, tech stocks led the way higher on Monday. Siebel Systems (SEBL) shares shot up nearly 16% after the company said it expects third-quarter total revenue to be about $315 million to $317 million and license revenue to be about $104 million to $105 million, exceeding analyst expecations. The company is comfortable with fourth-quarter financial analyst expectations.

PeopleSoft (PSFT) says it expects third-quarter license revenues of $155 million to $165 million, with total revenue of $680 million to $695 million. The software maker sees 13 cents to 14 cents earnings per share (pro-forma) and 3 cents to 4 cents GAAP EPS. The stock was 2.5% lower Monday. On Friday, the shares jumped after the company terminated Craig Conway as president and CEO.

Elsewhere in the software group, SunGard Data Systems (SDS) says it plans to spin off its availability services business to stockholders through a tax-free distribution of shares. The shares climbed almost 10%.

Among other sectors, retail groups were also rising, helped in part by CIBC World giving positive comments on September sales trends. Steel stocks were higher on the continued rise in commodity prices and positive comments from JP Morgan about AK Steel (AKS), which shot up 13%.

XM Satellite Radio (XMSR) says it added more than 415,000 new subscribers in the third quarter. The company says it's on pace to exceed 3.1 million subscribers by yearend. Bear Stearns says third-quarter new subcribers are below estimates. Shares fell 3%.

Office Depot (ODP) announced that Chairman and CEO Bruce Nelson has resigned from the company by "mutual agreement" with the board. The office supply retailer said Neil R. Austrian, 64 years old, a veteran board member and chairman of the finance committee, will serve as interim chairman and CEO while the board searches for a permanent replacement. The stock was up slightly.

In economic news, August factory orders came in weaker than economists expected, falling 0.1% from a revised 1.7% surge in July (+1.3% previously). Durable goods were revised to a fall of 0.3% from its preliminary drop of 0.5%.

Treasury Market

Treasuries ended lower in price on Monday. Follow-through selling from last week's corrective slump pushed yields to 3-week highs early in Monday's session, but the move ran out of gas as stocks pared their early sharp gains over the course of the session, says Action Economics. The yield on the benchmark 10-year note settled at 4.17%.

World Markets

European stock markets finished higher on Monday. London's Financial Times-Stock Exchange 100 index was up 22.2 points, or 0.48%, to 4,681.8. The CIPS Construction Spending index rose to seasonally adjusted 56.8 in September from 55.8 in August, the 68th consecutive month above the 50.0 no change mark.

Germany's DAX index rose 38.32 points, or 0.96%, to 4,033.28 as oil futures fell on the Nigerian ceasefire, and on reports that the EU-12 August PPI rose 0.4% and EU-12 retail trade fell 1.3%. In Paris, the CAC 40 index gained 36.9 points, or 0.99%, to 3,767.06.

In Asia, the markets finished with hefty gains on Monday, powered higher by a sharp rally on Wall Street on Friday and led by tech stocks. Japan's Nikkei 225 index jumped 294.46 points, or 2.68%, to 11,279.63. In Hong Kong, the Hang Seng index climbed 239.22 points, or 1.82%, to 13,359.25.


Steve Ballmer, Power Forward
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