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Minyanville's Market Recap: Markets Gain Despite Financials Woes


Despite accusations regarding Merrill Lynch, markets gain with the help of economic data.

A late market rally pushed stocks into the green. The Dow Industrials gained 27 points, or +0.20% to 13595, the S&P 500 gained 1 point, or +0.08% to 1509, and the Nasdaq composite added 15 points, or +0.56% to 2810.

The markets started this morning on sour footing again with smoke signs in the financial sector. A day after negative comments on Citigroup (C), the WSJ reported accusations that Merrill Lynch (MER) attempted to hide its mortgage-backed securities exposure. The article quoted unnamed sources close to the situation that the Firm participated in transactions with hedge funds that may have been designed to hide losses. Merrill fell more than 10% on the news hitting a new 52-week low. The sentiment spread throughout the financial sector. Goldman Sachs (GS) closed -4.42%, Bear Stearns (BSC) fell -5.35%, and Morgan Stanley (MS) fell -5.64%. Stocks did recover after Merrill released statements defending the company saying the allegations were untrue. Further, Citigroup got the attention of investors as it was announced the company would have an emergency meeting to be held over the weekend. Nonetheless, Toddo noted the lagging performance in the lagging financial sector early on in Random Thoughts.

In other parts, economic data attempted to relieve the concerns of the markets. The nation's unemployment rate held steady at 4.7%. Nonfarm payrolls surprised the markets coming in larger than expected at 166,000 versus estimates of 85,000. Hourly earnings and the average workweek came in at +0.2% and 33.8 respectively. For more on these numbers as well as Merrill's off-balance sheet activity, read Professor Depew's Five Things You Need To Know.

In commodities crude continued its streak, reaching a new high surging +2.61% to 95.93. Precious metals also continued its run with gold breaking the $800 barrier. Professor Lance Lewis stated on the Buzz, "this round number has always been where I have thought we'd see an upward re-rating of sorts in the valuation of the gold shares." Gold settled at 808.50 for a +1.86% gain. Silver added +1.91% to close at 14.59.

For more summaries click on Minyanville's Buzz Bits and Professor Tuttle's Winners & Sinners.

Earnings Review:

Chevron (CVX) reported 3Q $1.94 EPS versus $2.05 consensus. Revenues rose 1.8% year-over-year to $55.17 bln.

Viacom (VIA) reported 3Q earnings of $0.65, better than analyst estimates of $0.60. Revenues rose 24.2% year over year to $3.27 bln versus consensus estimates of $3.01 bln.

Duke (DUK) reported $0.48 EPS versus $0.39 consensus. Revenues rose $3.82 bln versus $3.42 bln consensus.

NYSE Euronext (NYX) reported this morning with EPS figures for the third quarter at $0.76 versus estimates of $0.72. Revenues rose 77.2% year-over-year to $1.07 bln versus $0.99 bln consensus.

Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.

Some bullish trade or investment ideas: GFIG, SPX, GSS, gold, crude

Some bearish trade or investment ideas: GS, UBS, DB, BCS, SPX, C, DXY, WM, BKX, XBD, MA, BIDU, LVS, SHLD, FLR, CAG, WFC, CNS, SLM, FRE, TIF, MS

Woohoo! Weekend's here! Be safe and have a good one!
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No positions in stocks mentioned.

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