Market Update: Bargain Hunters Drive Stocks Higher at Late Morning - TheStreet

Bargain hunters were out today and working to erase some of the past week's losses in the major indices.

The

Dow Jones Industrial Average was lately bouncing. A week or two ago, the gains might have looked fairly significant, but after falling almost 380 points yesterday, the Dow's comeback seemed restrained. The

Nasdaq Composite Index was quietly rallying, too.

Subdued or not, it's actually a wonder the market was up at all after the release of the September

Producer Price Index this morning showed that soaring energy prices sharply raised U.S. wholesale prices in September. Also, the September

retail sales number showed that sales in the U.S. jumped to the highest rate in seven months, boosted by car and truck sales and soaring gasoline prices.

What was making that news easier to swallow was a report that Saudi Arabia was not planning an oil embargo against the United States. That eased crude oil prices. Investor optimism was further stoked by some good earnings announcements after yesterday's closing bell and some positive comments about the

S&P 500 index.

Good solid earnings from PC-maker

Gateway

(GTW)

as well as from

Juniper Networks

(JNPR) - Get Report

and

PMC Sierra

(PMCS)

were giving tech a boost.

Gateway was one of investors' favorites; the stock was climbing 15.9%. It helped lift the

Philadelphia Computer Box Maker Index

5.3% and pushed up Dow components

Hewlett-Packard

(HWP)

,

IBM

(IBM) - Get Report

and

Intel

(INTC) - Get Report

.

The positive comments on the S&P 500 came from ever-bullish

Goldman Sachs

strategist

Abby Joseph Cohen

. She said the index is undervalued by about 15% and reiterated her year-end S&P target of 1575. The index was lately 1.6% higher.

Meanwhile, financials, which suffered this week, were in comeback mode today. Yesterday, Brad Zipper, a trader at

Herzog Heine Geduld

, said financials rally when everything else is good. And guess what? Financials were rallying. The

American Stock Exchange Broker/Dealer Index

was lately 3.7% higher, while the

Philadelphia Stock Exchange/KBW Bank Index

rose 4.4%.

Dow components

J.P. Morgan

(JPM) - Get Report

and

Citigroup

(C) - Get Report

were adding a total of almost 60 points.

Still, today's rally doesn't mean we're in the clear yet. New lows on both the Big Board and the Comp were still far outstripping new highs. Moreover, moderate volume showed that money was still sitting on the sidelines. It'll take some more positive news to get more of it back in the game.

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Sector Watch

The

Philadelphia Stock Exchange Semiconductor Index

jumped about 6%. Those components making the biggest percentage gains include

Texas Instruments

(TXN) - Get Report

, up 11.1%,

Altera

(ALTR) - Get Report

, 10% higher, and

Novellus

(NVLS)

, up 11%.

Investors were taking their money out of gold and oil. The

Philadelphia Stock Exchange Gold and Silver Index

was down about 3%.

Philadelphia Stock Exchange Oil Service Index

fell 3.6% and the

American Stock Exchange Oil & Gas Index

lately dropped about 3%.

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Bonds/Economy

Bond prices turned lower following hotter-than-expected reports on both consumer spending and wholesale prices.

Retail sales increased 0.9% in September, the largest gain since February, and 0.7% excluding autos. Economists polled by

Reuters

had forecast gains of 0.6% overall and 0.5% excluding autos. The data suggest that consumer spending, the primary driver of economic growth, continues to run at a very strong pace.

Meanwhile, the

Producer Price Index also rose 0.9% in September, the largest gain since February. Oil prices, which rose 3.7%, were largely responsible. The core PPI, which excludes food and energy prices, gained 0.3%. But that gain too was larger than expected. On average, economists had forecast a 0.5% rise in the PPI overall and 0.1% excluding food and energy. The report fans fears that rising oil prices are leading to a faster rate of inflation overall.

The benchmark 10-year

Treasury note lately was down 6/32 at 100 3/32, lifting its yield to 5.734%.

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