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Market Recap: Volatile Day, FOMC Minutes, Markets Finish in Green


Another day of volatility! DR Horton. Freddie Mac. FOMC Minutes. Quite an exhausting day!

The markets ended in positive territory in today's volatile trading day. The Dow Industrials added 51.70 points, or +0.40% to 13010, the S&P 500 added 6.4 points or +0.45% to 1439, and the Nasdaq Composite closed up 3.4 points, or +0.13% to 2596.

Stocks popped after the opening bell, fueled by strong earnings from Hewlett- Packard (HPQ) and better-than expected results from homebuilder DR Horton (DHI). DR Horton surged as high as 4% as the company reported a $0.00 EPS versus expectations of -$0.57. Further helping that sentiment was this morning's economic data as housing starts came in at 1229 k vs. expectations of 1170 k. Data for building permits was also released although figures were at 1178 k, slightly below expectations of 1200 k. Nonetheless, the opening rally continued as Toddo had expected. Read this morning's Answers I Really Wanna Know, as he questioned "Shouldn't any near-term upside be considered a 'pure trade'… especially if the tape rallies on 'Turnaround Tuesday' as it did last week?" Also have a look at Toddo's Will We Rally Before It Gets Ugly?

The bullish sentiment seemed short-lived, however, as stocks seemed to flame out hours into the trading session. After rising as high as 150 points, the Dow Industrials lost over 200 points as selling pressure on Freddie Mac (FRE) hit its peak. The company reported this morning a $2 bln loss for the quarter in addition to stating in its conference call further credit market deterioration. Mr. Practical noted on the Buzz, "the clear implication … is that there is no way, even if politicians insist, to expand the balance sheets of the GSEs to help the broad economy "recover" from the credit slump." FRE hit a new low before settling in -28.69% to $26.74. Other notables hitting new lows include Citigroup (C) closing -1.88% and Countrywide (CFC), down -2.74%. Read Professor Mike Mish Shedlock's The Clobbering of Fannie and Freddie.

The markets recovered after an initial slump after the release of the FOMC Minutes, however. The Fed adjusted forecasts for real GDP growth to increase between 1.8 and 2.5%. Core PCE was forecast to increase between 1.7-1.9%. A notable highlight was that Fed officials judged the October rate cut as a "close call," though nearly all members supported the decision.

In commodities, crude oil surged to a record close adding +3.39 points to 98.03. The performance paved the way for energy stocks. Exxon Mobil (XOM) rose +4.41% and ConocoPhillips (COP) added +2.80%. The Oil Service Index (OSX) added +3.38% with individual stocks, including Transocean (RIG) up +4.42%, Baker Hughes (BHI) up +4.10%, and Global SantaFe (GSF) finishing higher by +4.16%. Schlumberger (SLB) was a notable laggard although it also finished higher by +1.90%.

Copper futures added 4.45 points to 306.95. Silver added +0.34 points to 14.50, and gold added +13.40 to 791.40. Gold specialist Professor Lance Lewis noted on the Buzz the performance of gold and silver "moving to new highs for the day even as stocks have reversed and given up all their gains." Professor Lewis cited the stagflationary environment of the 1970s and asked if history would repeat itself with gold and gold stocks completely diverging from the equity markets. "So far the answer appears to increasingly be 'yes.'"

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

After-hours Earnings Review:

Foot Locker (FL) reported $0.21 EPS vs. $0.23 cons on revs $1.356 bln vs. $1.377 bln cons.
Gymboree (GYMB) reported $0.91 EPS vs. $0.90 cons on revs $250 mln vs. $242.82 mln cons.

Limited (LTD) reported -$0.01 EPS vs. $0.00 cons on revs $1.923 bln vs. $1.945 bln cons.

Pacific Sunwear (PSUN) reported $0.16 EPS vs. $0.15 cons on revs $373.10 mln vs. $374.06 mln cons.

Whole Foods (WFMI) reported $0.24 EPS vs. $0.30 cons on revs $1.743 bln vs. $1.614 bln cons.

Idea Flow

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: BKX, GS, BSC, BAC, C, pharma, healthcare, gold, silver

Some bearish trade or investment ideas: FRE, FNM, BIDU, C, DKS, GME, DISH, TGT, LEN, KBH, ESLR

What an exhausting day! One more day until massive amounts of turkey! Have a good night!
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