Murphy Oil (
) andFirst Solar (
) helped power Tuesday's broad stock market rally as some
companies reported upbeat earnings, homebuilder confidence
increased, consumer prices rose less than expected and industrial
production beat forecasts.
In midday trade, the SPDR S&P 500 (
) was up 0.95% to 145.45. It rebounded from support at its key
50-day moving average.
PowerShares QQQ (
), tracking the 100 largest non-financial stocks on the Nasdaq,
surged 1.34% to 68.07. It's trying to regain the 50-day moving
SPDR Dow Jones Industrial Average (DIA) climbed 0.92% to
135.26. It also bounced off support at its 50-day line.
Murphy Oil gapped up 9.34% to 64.51 in nearly six times
average trading volume. The oil and natural gas explorer and
refiner said it will spin off its retail gasoline business, pay a
special dividend of $2.50 a share and buy back $1 billion in
shares to return cash to its investors. The spinoff should be
finished by mid-2013.
Murphy's stock broke out of a bullish cup-with-handle chart
pattern and is currently trading 8% above a 59.89 buy point. It
sports an IBD Relative Strength Rating of 71, which means its
price action is outpacing 71% of the market. Its A+ IBD
Accumulation-Distribution Rating is the highest possible on an A
to E scale. That shows institutional investors are loading up on
the stock and hanging on. Murphy releases Q3 earnings Oct.
Watch-maker Fossil surged 7.19% to 91.21. But it's still
trading below its long-term 200-day moving average, which is
bearish. The biggest intraday trading ranges tend to occur below
that line. Citigroup upgraded shares to buy from neutral.
The company has applied to market in India through a wholly
owned business. Earnings are due Nov. 6.
First Solar soared 7.68% to 23.96 in slightly above-average
trade as it climbed above its 200-day moving average for the
first time in a year and a half. The largest U.S. maker of solar
modules and gear signed an agreement with Pembangkitan Jawa Bali
Services (PJB Services) of Indonesia to develop 100 megawatts of
utility-scale solar power plants in the country, Reuters
reported. First Solar reports Q3 results Oct. 29. Its shares have
been in a downtrend for four and a half years.
Major Economic News
The National Association of Home Builders said its confidence
index rose one point from September to 41 in October. That's
highest reading since June 2006.
"The data signal no let-up in the recovery in housing," wrote
Jim O'Sullivan, chief U.S. economist at High Frequency Economics
in Valhalla, N.Y.
But the index still remains lower than 50, which means that
more builders see conditions as bad than good.
The consumer price index, a common gauge of inflation, rose by
0.6% in September, ahead of expectations, owing to high gas
prices. Excluding food and energy prices, the index edged up 0.1%
-- less than expected. Federal Reserve officials say inflation
remains on target.
"The jump in gasoline prices appears to have run its course,"
O'Sullivan wrote. "Based on the latest weekly data, gasoline
prices are likely to be close to flat in October."
Industrial production and capacity utilization readings came
in a little better than expected. Production rose 0.4% in
September -- above the 0.2% projected. Utilization came in at
78.3%, which means manufacturers have room to grow output without
having to build new plants. Capacity utilization measures the
extent to which the highest potential output levels are being met
or used. Production data for August was revised downward.
"The trend in manufacturing is clearly weaker than the trend
in nonmanufacturing now, consistent with manufacturing being more
exposed to slumping exports and nonmanufacturing benefiting more
from what appears to be an improving trend in domestic spending,"
Mixed manufacturing readings overall point to further
uncertainty about third-quarter growth.
In a 16-page report released Tuesday, The Levy Forecast said
that the world economy is slowing and vulnerable to fall into a
"The trends of important economic activities remain mixed.
Clearly, the global economy has been weakening, and exports have
rolled over," wrote economists at the Jerome Levy Forecasting
Center in Mount Kisco, N.Y. "Capital spending is sliding.
Nonresidential construction appears to be stalling, if not
turning down. General merchandise retail sales have been
flattening. Employment growth has remained sluggish, even with
some indicators improving somewhat."
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