Stocks Reach Fresh 2009 Highs – September 15, 2009

Wall Street Ends on New 2009 Highs

Stocks advanced on Tuesday as investors welcomed a jump in retail sales and comments from Federal Reserve Chairman Ben Bernanke. Major stock indexes ended at their highest points of the year thanks to the news. Surging material and industrial companies like Alcoa (AA) and Caterpillar (CAT) helped pull the Dow Jones industrial average to a gain of 56 points. Stocks churned during morning trading, but made solid advances as the session progressed. Bernanke spoke to the Brookings Institution and stated that the recession is “very likely over, ” but that the pace of the recovery will be moderate next year. The comments appeared to give the markets a small lift. In economic news, retail sales improved in August, suggesting that consumers are becoming a little more comfortable with purchases. The Producer Price Index (PPI) rose 1.7% in August after falling 0.9% in July. U.S. light crude oil for October delivery rose $2.07 to settle at $70.93 a barrel on the New York Mercantile Exchange. The dollar resumed its decline against other major currencies.

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News Making Headlines

A couple of earnings reports trickled in during today’s session. First up, Best Buy (BBY) delivered a second-quarter profit that came in slightly lower-than-expected. Don’t throw the company under the bus just yet. They only missed estimates by a penny. That’s fairly good given the current consumer market that they are facing. Kroger Co. (KR), the largest US supermarket chain, also reported a decline in second-quarter profits and cut its earnings forecast for the year. Analysts were expecting sales to show a slight gain over last year, but instead they slipped about 2%.

Retail sales surged in August thanks to the Cash for Clunkers program giving auto sales an extra boost. Even excluding auto sales, the numbers were higher last month. The Commerce Department said total retail sales jumped 2.7% in August compared to a 0.2% decline in July.

It looks like a lot of companies have decided to shuffle around management. Bayer AG is the latest company that has announced some broad management changes. The company named a new chief executive and a number of new top managers.

Things may be shaping up in the economy, but the number of individuals missing their credit card payments is surging. Capital One Financial (COF) posted an unexpectedly robust expansion in the rate of its delinquencies in August.

Slower sales and increasing pressure from Netflix (NFLX) is prompting Blockbuster (BBI) to say goodbye to 960 stores by the end of the year. This move is being made to conserve cash and acquire new financing. The company is also trying to combat the growing popularity of Redbox, which allows people to rent movies for only $1.

Citigroup (C) is looking to get the U.S. government off its back. The company is wants to scale back the massive stake the government acquired in the company over the past year by initiating a multibillion-dollar stock offering.

The International Air Transport Association said that the airline industry is facing $11 billion in losses this year as business travel remains light and crude prices head higher. Airline fares will likely remain lower well into the next decade according to some analysts.

Dell (DELL) is preparing to write a $4 million check to settle consumer complaints surrounding false and deceptive advertising of its promotional credit financing and warranties.

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