Stocks Eliminate Early Losses and Continue Rally – November 17, 2009

Another Positive Day on Wall Street

Stocks continued charging ahead on Tuesday after recovering from earlier losses in the day. The major indices pushed modestly higher to close at 13-month highs for the second day in a row. Five more consecutive days like today will get the Dow closer to 11,000. A rebound in commodities prices boosted shares of energy and materials companies. But gains were limited by weakness in the retail sector after Home Depot (HD) and Target (TGT) offered up cautious outlooks. Investors are also still fretting about the strength of the recovery, so more declines may be on the way. Today’s economic news was mostly mixed. The latest reports showed that inflation at the wholesale level remains subdued, while industrial production was weaker than expected in October. Oil prices reversed early losses to close above $79 a barrel. Treasury prices rose, with the yield on the 10-year note falling to 3.33%.

Word on the Street

Some US tax avoiders confessed to the IRS in wake of its pact with UBS (UBS). More than 14,700 US taxpayers took advantage of a special US Internal Revenue Service amnesty program that offered reduced penalties to those who voluntarily revealed their foreign bank accounts.

A day after Lowe’s (LOW) reported a 30 percent drop in third quarter earnings, Home Depot (HD) said its third-quarter earnings dropped 8.9% to 41 cents per share as a result of weak housing and home renovation markets.

Check out this stock analysis on Home Depot (HD)

Investigators in New York City raided circulation offices at some of the nation’s largest newspapers Tuesday as part of a union corruption probe. The Investigators were looking for paperwork related to the Newspaper and Mail Deliverers Union. No arrests have been made, and the district attorney’s office has refused to comment at this time.

Costco (COST) told Coca-Cola (KO) to get lost today. The wholesale retailer and the beverage giant have been involved in a public squabble over prices for some time now. Costco is not planning to remove Coke products that are currently in the store, but it will not make any future orders until this matter has been settled.

A Congressional panel presented documents indicating that Bank of America’s (BAC) management knew that Merrill Lynch had deep losses, but failed to disclose that information to shareholders prior to the merger’s approval vote.

Was ’screw the shareholders’ BofA’s attitude?

Is there any hope left for holiday retail sales? Target Corp. (TGT), the second-largest U.S. discount chain, is not feeling that optimistic about the fourth quarter. The retailer said that it is planning for a modest decrease in fourth-quarter comparable-store sales.

Luxury retailer Saks Inc. (SKS) surprised Wall Street today after it was able to turn a profit for the first time in six quarters by trimming expenses and scaling back on promotions.

A key gauge of homebuilders’ confidence held steady in November, as companies fretted over the possible expiration of a government tax credit.

Video — Home Builder Sentiment Unchanged: NAHB

Billionaire Warren Buffett and Goldman Sachs (GS) are reportedly launching an initiative to help small businesses across the country. Many believe that the company is trying to improve its image after receiving criticism for allocating over $16 billion in bonuses in the first nine months of this year.

Other Juicy Tidbits

• Meredith Whitney released a negative view on banks and the economy in general Monday afternoon, but facts don’t support her claims.
• Time to bring financial incentives to Washington — Why Congress needs a pay cut, or a threat of one
• 15 Richest Members of Congress
• Smartphones: A Bigger Target for Security Threats
• The Next Market Meltdown Is Coming In 2012 — Don’t say we didn’t warn you this time.