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Stocks Hit Record Highs As Fed Delays Taper

Dan Berman
Hot Stock Minute

Stocks surged following the Fed’s announcement to delay tapering on its bond-buying program. The Federal Open Market Committee decided to continue the program in full with a vote of 9-1.

Expectations were for a cut of $10 billion - $15 billion to the $85 billion dollar-a-month program. The S&P 500 (^GSPC) and Dow Industrials (^DJI) both reached record highs on the news, closing at 1,725.47 and 15,677.10 respectively. Gold prices jumped more than 4% reaching $1,363.69 an ounce. The 10-year Treasury Note yield (^TNX) slid 14 basis points to 2.710%.

Ahead of the announcement, traders also looked to new numbers on housing starts. The Commerce Department said starts rose .9% to an adjusted annual rate of 891,000 in August. That was below estimates of 916,000. It was also below the original number of 896,000 new starts reported last month. That figure has now been revised down to 883,000 units.

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FedEx (FDX) climbed 5% after coming out with an earnings beat. The shipper posted profits of $1.53 a share when expectations were for $1.50. Revenue was also higher than expected at $11.02-billion when estimates were for $10.968-billion. FedEx is pointing to cost-cutting during the quarter. Moving forward, it hopes to benefit from shipments of new products like the iPhone. The company also plans to start raising rates in 2014. By the way, FedEx had its worst trading day of the year when it reported earnings back on March 19th. But shares have soared since then, rising 18% year-to-date even before today's gains.

Cereal maker General Mills (GIS) moved fractionally higher on its earnings which were released ahead of the opening bell. The breakfast behemoth matched on earnings at 70-cents a share on revenues that beat expectations at $4.37-billion versus $4.29-billion. Sales were up 8% from a year ago, largely on the introduction of new health products like Yoplait Greek yogurt as well as gluten-free offerings. The company has been acquiring companies overseas to boost its overall business. Shares hit an all-time high above 52-dollars last month, and are currently up 20.5% year-to-date.

Cracker Barrel (CBRL) fell more than 2% despite a robust earnings beat. The restaurant and retail chain reported earnings of $1.43 a share compared to estimates of $1.35 on revenue of $674.1-million. Estimates had been for sales of $668.6-million. The drop in shares stems from its forecast for the current quarter. Cracker Barrel says profits will be lower due to higher food costs. The chain is also citing training costs associated with the rollout of lower-calorie foods. Cracker Barrel shares hit an all-time high just yesterday, and even with today's drop are up more than 60% year-to-date.

Walgreen (WAG) moved up slightly today, reaching its all-time high. This is despite (or perhaps because of) the announcement of changes to employee benefits. The pharmacy giant says it will stop offering direct healthcare coverage next year. Instead, employees will be given money to buy their own insurance. The company cites rising health care costs and the new health care law for the change. Walgreen stock is up 44% this year.

Adobe (ADBE) climbed more than 9% despite an earnings miss which was reported after yesterday's closing bell. The company made 32-cents a share excluding items when estimates had been for 34-cents. Revenues came in at $995.1-million when consensus was for sales over $1-billion. On the upside, Adobe says paid subscribers to its Creative Cloud service now tops 1-million, or than triple the number in the last quarter.

Electronic Arts (EA) moved nearly 3% lower on the announcement of Andrew Wilson as the company's next CEO. Wilson's promotion comes after a six-month search that followed the ouster of John Riccitiello. Wilson has worked at the company for 13 years, so his selection suggests the company wishes to stay the course despite massive shifts in the industry. Electronic Arts stock is up 97% over the past year as Microsoft and Sony prepare to release new gaming consoles.