Market Talk

There now, doesn’t that feel better?

US stocks surge, with the DJIA recrossing the 10000 mark, after strong earnings reports from Intel and JPMorgan and an encouraging retail sales report.

DJIA jumps 145 (1.5%) to 10016, its biggest one-day gain since Aug. 21 and the first time it’s closed over 10000 since Oct. 3, 2008. S&P 500 rises 19 (1.8%) to 1092, Nasdaq Comp gains 32 (1.5%) to 2172.

Dow 10000 is not a very big technical level, but it is a very big psychological level. A cheer went up on the trading floor at the NYSE when the index first crossed it at about 1:20 p.m., and many will also read into the fact that it took out the level on the first try as a bullish sign.

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Still don't need as many of these

Considering our interest in railroad volumes as an important barometer on economic activity, we took some keen interest in the commentary from CSX on its 3Q results yesterday.

Decline in 3Q volume moderated from 2Q — only down 15% vs 2Q’s 21% drop, and the company expects that trend to continue to improve in 4Q, Newswires’ Bob Sechler reports. CSX CEO Michael Ward also suggests the worst of the recession is over.

CSX shares recently up 6.4% to $47.11.

But while the company expects volume to keep improving, it isn’t in any hurry to bring railcars or locomotives out of storage to handle the load.

CEO Ward said the current active rail fleet likely is sufficient to handle improving conditions through 4Q. “We’re pretty much on the same pace of storage” as in the 3Q, he said.

That says a lot about how much spare capacity the railroad has on line. It had roughly 26,000 railcars – or 32% of its fleet, and 640 locomotives (17% of its fleet) in storage at the end of the third quarter.

And it sounds like that’s where they’re staying.

 (Bob Sechler contributed to this report.)

Break out the party hats, but this isn't 1999 all over again.

What a letdown.

The Dow Jones Industrial Average crossed above 10000 for a hot second earlier this afternoon, only to revert back and hover around the 9990 level in afternoon trading. And while it’s back above 10000 currently, the joy that attended the index’s first assault on five-digits just isn’t there this time.

It’s been more than 10 years since the Dow first crossed above the psychological 10000 level, prompting Miller Tabak equity strategist Peter Boockvar to put the time frame in perspective. Back in 1999 the Backstreet Boys had the best selling album, “American Beauty” won the Oscar for best picture, the euro was established and gasoline, on average, was about $1.20/gallon.

The US dollar index was at 100.36 (now 75.60), gold was at $280 (now
$1,063), oil was $16.44 (now $74.80), the 10-year yield was 5.19% (now 3.39%), and the fed funds rate was at 4.75% (now 0-0.25%).

“Oh, how time flies,” Boockvar says.

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There were cheers on the floor of the NYSE when the Dow popped through 10000 earlier. We’re back, baby!

Right?

I remember back in the heady days of 1999, when the Dow first got into five-digit territory. The Dow was pushing inexorably toward the magical, previously untouched level of 10000. That first morning it breached the mark, everybody, it seemed, was standing around just watching the ticker tape (well, even by back in those gold old days of the ’90s, ticker tape’s were long gone.) There were cheers back then too.

After it closed above 10000, at Dow Jones we all got hats that said “Dow 10,000″ and had a big party. I have to say, back then, it really did seem like we’d solved every problem, and it really did seem like we were in a new golden age. The Cold War was over, America was the globe’s preeminent nation, the national debt was being erased, everybody was making money, and our biggest problem was figuring out what were we going to do with all our riches.

What a difference a decade makes, huh?

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Maybe next month.

Sure, today’s all about Intel and JPMorgan and their strong earnings. That’s fueling investors and it certainly seems like today could be the day the Dow revisits the 10000 level. In a frenzy like this, a report like monthly retail sales just gets lost in the shuffle.

But the sales report is telling a very compelling story: sales are down sharply from even last year’s awful September, a month when the world seemed to stop revolving on its axis.

To recap, retail sales in September fell 1.5% from August. This is being given the green-shoot treatment, because it’s not as severe a slide as Wall Street expected; consensus pegged the drop at 2.1% from the previous month, which if you recall rose a surprisingly strong 2.7% from August, largely as a result of the cash-for-clunkers scheme.

Now, the Census Bureau (an arm of the Commerce Department, and the group that reports the numbers) revised August down to an increase of 2.2%. And all of these monthly numbers come with a margin of error of plus or minus 0.5%, so basically all of this could very well be a wash.

But what is not a wash are the yearly numbers, and they tell a very interesting tale. Retail sales in September were down 5.7% from September 2008 (margin of error plus or minus 0.7%.)

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US stocks are poised for a burst higher — with Dow 10000 a probable plateau — spurred on by 3Q reports from Intel and JPMorgan, strength in overseas stock markets and also aided by an ongoing decline in the US dollar, which in turn boosted oil prices above $75/barrel.

At some point, stocks won’t gaze at oil’s rise so benignly, but apparently that won’t be today.

Focus squarely on the two DJIA bellwethers. Looks as if JPM knocked it out of the park, but frankly folks, should we expect anything less considering the way the Fed’s spraying money around with a fire hose? As for INTC, 3Q was better than expected, but still not seeing revenue growth.

September retail sales, and import prices due at 8:30am; August business inventories at 10:00am. FOMC releases its latest meeting minutes at 2:00pm ET.

S&P futures up about 13.60, Dow futures up 105. Ten-year lower, yield at 3.36%, as Treasurys fall on the rise in risk appetite spurred on by those earnings reports. Gold eases off its overnight record high of $1,072, lately at $1.061/ounce.