How Long Can Bulls Avoid a Post-Stimulus Selloff?

• By the tickerspy.com Staff
• On 4:58 pm EDT, Thursday October 22, 2009

On the heaviest day of earnings season thus far, stocks rallied to bounce back from yesterday's late sell-off. The bulls overcame negative sentiment attached to China's 8.9% third-quarter GDP growth, and its potential impact on the future of stimulus efforts. It will be interesting to track the dollar, as well as commodity-tied equity sectors when global economic leaders finally roll out a plan to wind down government support.

The Canadian Energy Trusts Index was the top performing tickerspy Index on the day, led by Harvest Energy Trust (NYSE: HTE - News) with a 33% gain.

Stocks rallied on the day, with the Dow climbing 132 points to 10,081. The S&P jumped 12 points to 1,093, while the Nasdaq added 15 points to close at 2,165. Oil slipped -18 cents to $81.19 a barrel, while gold dipped -$5.90 to $1,058.60 an ounce.

On the economic front, the Labor Department reported that new jobless claims rose to a seasonally adjusted 531,000 last week, up from 520,000 the previous week. Economists were expecting only a slight increase. Elsewhere, the index of leading indicators rose 1%, according to the Conference Board, more than the 0.8% increase expected.

In earnings news, shares of AT&T (NYSE: T - News) edged up 0.6% after the company reported that it added 2 million wireless subscribers in Q3, above analyst expectations. For the period ended September 30th, the telecommunications company earned $3.28 billion, or 54 cents per share, compared to $3.29 billion, or 55 cents per share, a year ago. Wall Street was looking for EPS of 50 cents. Revenue slipped -1.6% to $30.9 billion. Over 400 Pro investors counted the stock among their top-15 holdings at the start of Q3. Shares of Xerox (NYSE: XRX - News) climbed 4.0% on news that the company had raised its FY09 outlook. For the quarter ended September 30th, net income came in at $123 million, or 14 cents a share, a drop of -52% from $258 million, or 29 cents a share, last year. Results beat the 12-cent consensus. Sales sank -16% to $3.68 billion from $4.37 billion. The company boosted its full-year earnings forecast to 55-57 cents from 50-55 cents; analysts had predicted EPS of 53 cents.

The world's largest delivery service, United Parcel Service (NYSE: UPS - News), said its Q3 profit came in ahead of analyst estimates, despite dropping -43% from a year ago. The stock was flat on the day. For the third quarter, UPS earned $549 million, or 55 cents per share, beating analyst predictions by 3 cents. A year earlier, UPS earned $970 million, or 96 cents per share. Revenue dipped -14.9% to $11.15 billion. Looking forward, the company said it expects Q4 EPS of 58-65 cents compared with Wall Street's 63-cent consensus.

Shares of Raytheon (NYSE: RTN - News) rose 3.6% after the defense contractor reported a 15% increase in its Q3 profit. The company earned $490 million, or $1.25 per share, compared to $427 million, or $1.01 per share, last year. Analysts were looking for EPS of $1.16. Revenue moved up 6% to $6.2 billion. For 2010, the company guided for EPS of between $4.75-$4.90, slightly below the Wall Street consensus of $5.00. Thirty-three Pro investors counted the stock among their top-15 holdings at the start of Q3.

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