Investors are feeling fearless on the 22nd anniversary of the "Black Monday" stock market crash of October 1987. Positive earnings results have continued to set a bullish tone and markets are in breakout mode across the globe. While we're still not seeing big improvements to the bottom line traders seem to be happy that companies are beating Wall Street's earnings estimates. About 75% of the companies that have reported third quarter earnings have beaten analysts' estimates. A drop in the U.S. dollar is fueling gains for oil and gold and that's lifting energy and mining stocks.
Asian markets were mostly higher. The Hong Kong Hang Seng rose 1.2% and closed over round-number resistance at the 22,000 level. The Chinese Shanghai index rallied 2% and closed above psychological resistance at the 3,000 mark. Investors have positive expectations for China's economic data and GDP reports due out on Thursday. Analysts are expecting China's GDP to hit +8.9% for the third quarter. Japan's NIKKEI index under performed with a 0.2% decline but the index had broken out over the 10,000 level last week.
European markets are in rally mode with a surge to new 12-month highs. Better than expected earnings from German carmaker Daimler and a big upgrade for Nestle helped fuel the rally. The English FTSE rose 1.1%. The French CAC-40 rallied 1.69%. The German DAX gained 1.9%.
Earnings are in the spotlight today and will remain so all week long. Topping the headlines this morning were ETN, GCI and HAS. Eaton (ETN) delivered a profit of $1.21 per share, which was 29 cents better than Wall Street expected. Revenues missed expectations but the company guided higher for the fourth quarter. Investors have been worried about the ailing newspapers so today's report from Gannett Co. (GCI) was improvement. GCI beat estimates by 3 cents with a profit of 44 cents per share. Investors have also been worried about the consumer and toymaker Hasbro's report was positive. HAS produced a profit of 99 cents per share, which was 6 cents better than expected. Later tonight we'll hear from tech titans Apple Inc. (AAPL) and Texas Instruments (TXN). Wall Street is looking for a profit of $1.42 from AAPL and $0.39 from TXN.
Federal Reserve Chairman Ben Bernanke made the headlines again with his comments at a conference in Santa Barbara, CA. Bernanke reinforced the theme from the recent G20 meeting that countries need to work on improving current trade imbalances. The U.S. needs to save more and Asian countries need to get their consumers to spent more.
Another positive news item were inflows for the hedge fund industry. Investors had been pulling money out of hedge funds for four quarters in a row. At the end of the second quarter hedge funds had lost $330 billion. A new report today said that hedge funds saw inflow of $1.1 billion in the third quarter and given the rise in the markets the industry's assets has risen to $1.53 trillion.
Currently the major indices are in positive territory. The S&P 500 index rallied to 1100.17 a few minutes ago. The 1100-1120 zone is a big target for many investors. The NASDAQ composite is up 0.8% and trying to hold on to new highs near 2175. The Dow Jones Industrials are up 1% and hitting new highs at 10,100. The small cap Russell 2000 is up 1.1% but it's still under resistance near the 620-625 zone.
Let's take a quick look at charts for the major averages:
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
Scanning the OptionInvestor.com play list for movers today I see that AVB, a REIT stock, is up 3.9% and testing resistance near $75. CAT is one of the best performers on the DJIA with a 4.8% gain. CLB is up 2.1% and hitting new highs over $110. CNX is up 3.9% and hitting new highs near $52. EOG is up 1.3% and testing the $94 level. MBT is at new 2009 highs with a 3.4% rally. MLM has broken through resistance near $95 and hit our trigger to buy calls. PCP is breaking out over resistance near $104 but we plan to exit ahead of the earnings report!