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Stocks Bolt Higher as Debt Deal Reached; BAC, PEP, MAT, SWK Report

Dan Berman
Hot Stock Minute

Stocks bolted higher on news a deal is in place that would avoid a debt default by the federal government. The agreement would be a temporary one, in a sense simply kicking the issue of the debt ceiling down the road. The path to a deal reemerged this morning with Harry Reid and Mitch McConnell in the Senate coming to an agreement. Last night, things seemed to collapse when the House canceled a vote on a bill because there wasn't enough Republican support to pass it.

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Bank of America (BAC) was the biggest of several companies reporting earnings this morning. The bank beat on the bottom line, posting earnings of 20-cents a share when expectations had been for 18-cents. It missed, however, on the top line with revenues of $21.53-billion versus estimates of $22.034-billion. The bank says revenues from fixed income, currency and commodity trading fell 20%, excluding charges. The drop was offset at least in part by trading of equities.

Pepsi (PEP) also beat on the bottom line but missed on the top. The company earned $1.24 a share for the quarter when estimates had been for $1.17. Sales were $16.909-billion compared to a consensus of $16.960-billion. Pepsi says sales of its soft drinks have been disappointing, particularly here at home. It says a bright spot was the Frito-Lay snack business.

Stanley Black & Decker (SWK) plunged double digits on its quarterly report. The company actually beat earnings estimates but has lowered its outlook for the year citing the government shutdown. Stanley now expects adjusted earnings of $4.90 to $5.00 a share. The average analyst estimate had been for $5.44 a share. As for the quarter gone by, Stanley earned $1.39 a share, besting expectations by 1-cent. Revenues were short of the consensus at $2.76-billion versus $2.82-billion.

Mattel (MAT) pushed 1% higher on its earnings. The toymaker beat on the bottom line by a nickel posting earnings of $1.16 a share. Revenues also topped forecasts at $2.21-billion versus $2.175-billion. The company is pointing to strong sales of its American Girl dolls and Monster High product line. Barbie sales also increased 3%, reversing a decline in the last four quarters.

Advance Auto Parts (AAP) climbed more than 16% on the announcement that it's buying closely-held General Parts International for about $2-billion. The acquisition will make Advance Auto Parts worth about $9.2-billion and larger than the industry's largest player right now, Autozone (AZO). Advance Auto Parts was already up 14% year-to-date ahead of today's gains.

Veeva Systems (VEEV) gained more than 80% today in its debut on the NYSE. Veeva is a cloud-based software company headquartered in Pleasanton, California. It offered shares at $20, above its range of $16 to $18. Veeva had initially set a range of $12 to $14 but then revised it.

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