Markets are flying on earnings reports

Stocks are having another good day taking the Dow back over 11K.  Dow is up 110, advancers over decliner 3-1& NAZ added 19.  Bank stocks had more modest gains as the Financial Index is still a long way from topping 200..


S&P 500 FINANCIALS INDEX

Value	195.50
Change	0.84  (0.4%)

The MLP index was up a fraction in the 348s, still near its record above 350.  But the REIT index rose 3½ to a new 2010 high of 223.  Junk bond funds responding to higher stock markets rose.  Treasuries were mixed.  The yield on the 2 year note touched a record low but the 10 year Treasury bond yield rose 2 basis points to 2.49%.

Treasury yields:

U.S. 3-month		0.13%
U.S. 2-year		0.35%
U.S. 10-year		2.49%

Alerian MLP Index   ---   2 weeks



Dow Jones REIT Index   ---   2 weeks



10-Year Treasury Yield Index   ---   2 weeks




Oil advanced from a 2 week low after the dollar dropped, bolstering the appeal of commodities. Gold rebounded from yesterday’s loss, the biggest in 3 months.

CLX10.NYM

...Crude Oil Nov 10

....80.12

..... 0.63  (0.8%)

GCV10.CMX

...Gold Oct 10

.......1,341.80

..... 6.70 (0.5%)

Gold Super Cycle Link! Click Here

Photo:  Bloomberg


Boeing (BAC), a Dow stock, had a good Q3 & raised its profit guidance for the full year reflecting strong outlook for commercial planes. Orders & deliveries have rebounded this year, reversing a decline that occurred when airlines pulled back on orders during the recession.  BAC expects to deliver 460 commercial planes this year, at the low end of what was predicted in Apr, & repeated its hope to deliver the new 787 in the middle of Q1 in 2011 & the latest version of the 747 in the middle of the year.  Revenue for Q3 rose 2% to almost $17B with EPS of $1.12 (above forecasts of $1.06 on revenue of $16.8B).  In Q3 of last year, the company lost almost $1.6B as it took charges because of delays for the 787 & 747-8.  BAC now expects to earn $3.80-$4 per share for 2010 on revenue of $64.5-65.5B. Analysts were expecting EPS of $3.96 on revenue of $64.5B.  About half its revenue from commercial planes & half from defense, space & security.  The stock rose 1.54 & has gotten thru the recession in good shape.

Boeing Raises Forecast, Posts Profit After Shipping More Jets


Boeing   ---   2 years






Wells Fargo (WFC) Q3 profits rose 19%, beating forecast as losses from failed loans fell for the 3rd straight qtr.  WFC income after paying preferred dividends was $3.15B, or 60¢ per share beating foecasts of 55¢. Last year it earned $2.64B (56¢).  Contributng to the gains were lower losses from loan defaults. Wells Fargo set aside $3.45B to cover bad loans in the qtr, down from $6.11B last year.  But revenue dropped 7.1% to almost $21B. The stock gained 56¢.

Wells Fargo Reports Record Profit as Credit Improves

Wells Fargo   ---   2 years





Morgan Stanley (MS) reported weaker results from a trading slowdown during the summer. MS had a net loss during the Q3 as revenue fell 20% & because of special one-time charges. However even after stripping out the charges, adjusted earnings tumbled from the year-ago period. Morgan Stanley was hurt, like competitors, as customers significantly ratcheted back on investing & was especially hit hard by a slowdown in bond trading & underwriting stock offerings.  Revenue fell 20% to $6.8B, but beat the $6.4B forecast by analysts.  The net loss applicable to common shareholders was $91M, or 7¢ per share, during the qtr, compared with EPS of 38¢ last year.  However EPS from continuing operations was 5¢, a substantial drop from 50¢ last year.  Stripping out special charges & discontinued operations, MS earned 23¢, during the most recent quarter.  While the numbers are messy, the big picture is that this was a bad qtr for MS.  The stock fell 80¢ & hasn't done much during the post recession recovery.

Morgan Stanley Reports Loss After Casino Project Writedown

Morgan Stanley   ---   2 years





Despite the gains, the earnings look mushy to me, especially for the banks.  Reclaiming loss provisions made previously is the main factor in improved earnings while revenues are generally lower.  High yielders are having a very good day.

Dow Jones Industrials   ---   2 weeks

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