Major markets hit fresh highs for the year yesterday, even as events over Colorado illustrated gravity can’t be kept at bay indefinitely. A point emphasized by Southwest Airlines' (LUV) 5.68% plunge, making it the S&P 500’s worst performer (though if increasingly off the wall attempts at cost saving by peers prove profitable, help is at hand). The other shoe is taking its time to drop however, what with footwear firm DSW Inc. (DSW) surging 13.08%. PetSmart (PETM) ended up over 8% after the American Kennel Club and Cat Fanciers’ Association rang the Big Board’s opening bell.

The Windy City, full of woe following its Olympics indignity and Wrigley Field’s bankruptcy brouhaha, will be cheered by Chicago Bridge & Iron’s (CBI) 9.38% gain, even if the company is in fact headquartered in Holland. Education outfit DeVry (DV), which is actually indigenous to Illinois, proved it pays to stay in school by gaining 3.55% on upbeat analyst comments. Earnings are already out this morning from Dow components General Electric (GE) and Bank of America (BAC), whose CEO Ken Lewis announced he’ll say sayonara to a salary in ‘09. Meaning he will make less this year than some common criminals. In economics, we’ll see September Industrial Production/Capacity Utilization at 9:15AM Eastern and the University of Michigan’s consumer sentiment survey for October at 9:55 AM.

Initiations

Retailers:Teen dreams Abercrombie & Fitch (ANF) (Hold), Aeropostale (ARO) and American Eagle (AEO) (both Buys) are initiated at Auriga with respective price objectives of $39, $51 and $24. See also Retail Still Trying to Rebound.

Martin Marietta Materials (MLM): Avondale assumes coverage of Martin Marietta Materials with an Outperform and $115 target, the broker believing the company is better positioned than peers.

Upgrades

Google (GOOG): The tech giant is upgraded to Buy from Hold at Benchmark after yesterday’s impressive earnings. The price target is taken to $625 from $500. For more, read Steve Smith's Two Ways to Play Google Earnings and also Two Ways: Google's Good Quarter.

AudioCodes (AUDC): The stock gets a 180 degree (Buy from Underperform) upgrade at Bank of America/Merrill Lynch.

Supermarket Stocks: Safeway (SWY) ($27 target) and Kroger (KR) ($30 target) are both upgraded to Buy from Hold by BB&T Capital Markets.

Masco (MAS): Masco is boosted to Neutral from Underperform at Credit Suisse, with the price objective increased $4 to $13, on increased confidence in its cost cuts.

Cardinal Health (CAH): The healthcare company is raised to Market Perform from Underperform at Raymond James.

Downgrades

Williams-Sonoma (WSM): The firm gets lowered to Neutral from Buy at Goldman Sachs.

Allegheny Technologies (ATI): JPMorgan downgrades Allegheny Technologies to Underweight from Neutral on valuation.

Covanta Holding Corp. (CVA): The stock is cut (Perform from Outperform) at Oppenheimer due to depressed scrap metal prices among other factors.

Stanley Inc. (SXE): Stanley is taken to Hold from Buy at BB&T Capital.

Nasdaq OMX (NDAQ): The group is nixed to Market Perform from Outperform at Keefe Bruyette, which reduces its price target to $21 from $27 on less likelihood of upside surprise.

Nokia (NOK): It's just-say-no to Nokia, clipped to Hold from Buy at Royal Bank of Scotland. For more on this, see Nokia Trying to Emerge from the Dust.