Senate Deal Spurs a 206-Point Gain for the Dow

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"We had a pretty nice day today, as the momentum continues to resolve itself to the upside," noted Schaeffer's Senior Equity Analyst Joe Bell, CMT. "Every day is exactly the same story with Washington, as market participants continue to hope that some sort of resolution will arrive in time. Right now, many are very hopeful, after news surfaced that the House of Representatives and Senate are confident of a bill passing tonight." Against this backdrop, the Dow Jones Industrial Average (DJI) finished notably higher by the closing bell, recouping all of yesterday's losses.

Continue reading for more on today's market, including :

  • With a temporary debt ceiling deal in the works, Schaeffer's Senior Trading Analyst Bryan Sapp identifies three "levels of interest" to watch on the S&P 500 Index (SPX).
  • The latest Chart of the Day highlights nine reasons why Cisco Systems ( CSCO ) could be headed lower, courtesy of our Senior Options Strategist Tony Venosa, CMT.
  • This week's installment of Option Trends examines recent trading activity surrounding three well-known retail stocks.
plus...
    The Senate hammered out a temporary debt ceiling agreement, Fitch Ratings warned the U.S. government of a potential credit downgrade, and Citigroup's ( C ) dismal earnings sparked a round of bearish brokerage notes.

The Dow Jones Industrial Average (DJI - 15,373.83) spiked higher at the sound of the opening bell, tagging a session high of 15,374.15 around midday. By the close, the index was just off this intraday acme, up 205.8 points, or 1.4%. JPMorgan Chase ( JPM ) led the Dow's 27 advancers, gaining 3.2%, while Cisco Systems ( CSCO ) paced the three laggards with an analyst-induced decline of 0.8%.

Likewise, the S&P 500 Index (SPX - 1,721.54) surged right out of the gate, and ended the session with an advance of 23.5 points, or 1.4% -- just shy of its intraday peak, and back atop the 1,700 mark. Meanwhile, the Nasdaq Composite (COMP - 3,839.43) finished 45.4 points, or 1.2%, higher, and notched a new 13-year intraday high of 3,840.48.

Elsewhere, the CBOE Volatility Index (VIX - 14.71) tumbled at the start of the session, sinking to an intraday low of 14.67 during the final minutes of trading. The "fear gauge" ended up shedding 4 points, or 21.2%, on the day -- for lowest close since late September.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"We finally got a little bit of clarity and some hope," Bell continued. "Barring an unforeseen event, it seems like a bill will pass that pushes the debt ceiling back a few months, and keeps the government funded for the time being."

3 Things to Know About Today's Market :

  • Senate leaders reached an agreement today that would end the government shutdown and lift the debt ceiling , albeit temporarily. The deal -- which would reopen the government through Jan. 15 and enable the U.S. to pay its bills through Feb. 7 -- will be voted on by the Senate tonight, after which it will be sent to the House of Representative for final approval before moving to President Barack Obama's desk. "It has been a long, challenging few weeks for Congress and for the country," said Minority Leader Mitch McConnell, R-Ky. "It is my hope that today we can put some of those most urgent issues behind us." (Chicago Tribune)
  • The Fed's Beige Book revealed slower economic growth in Philadelphia, Richmond, Chicago, and Kansas City during September and early October, with just a handful of reports indicated any impact from the government shutdown. Meanwhile, growth in the remaining eight banking districts remained nearly flat. From an overall perspective, the survey noted "modest to moderate" growth, which was in keeping with earlier 2013 reports. (MarketWatch)
  • The U.S. government found its AAA debt rating in jeopardy this morning, after Fitch Ratings put Treasury bonds on Rating Watch Negative -- a move that sometimes precedes a downgrade. The firm issued a statement saying, "The prolonged negotiations over raising the debt ceiling ... risks undermining confidence in the role of the U.S. dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the U.S." (USA Today)

5 Stocks We Were Watching Today :

  1. Yahoo! ( YHOO ) received a round of price-target hikes following the release of its third-quarter earnings report yesterday.
  2. A management change at Apple ( AAPL ) triggered a flurry of short-term call activity in the tech giant's options pits.
  3. After revealing a 17% drop in quarterly profits on Tuesday, Citigroup ( C ) was slapped with a slew of price-target cuts.
  4. As ARM Holdings (ARMH) prepares to unveil quarterly earnings next week, sentiment toward the stock has been bearishly skewed.
  5. Weekly option bulls snapped up Sirius XM Radio (SIRI) calls with hopes of a post-earnings surge for the satellite radio issue.

EARNINGS

For a look at today's options movers and commodities activity, head to page 2.

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities :

Crude futures recovered most of yesterday's losses, thanks to a Senate deal that could end the government shutdown and lift the debt ceiling. By the closing bell, the November contract added $1.08, or 1.1%, to finish at $102.29 per barrel.

Meanwhile, the same headlines propelled gold futures to their loftiest settlement price since Oct. 10. December-dated gold rose $9.10, or 0.7%, to end at $1,282.30 an ounce.

SCHAEFFER'S MARKET POSTURE



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This article appears in: Investing , Options

Referenced Stocks: AAPL , C , CSCO , JPM , YHOO

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