Stocks extended their upward trajectory today, thanks to a widespread revival of recovery-related hopes. Some news from Down Under triggered an early running of the bulls, after the Reserve Bank of Australia became the first G20 member to boost interest rates since the economic downturn. In light of the news, the U.S. dollar backpedaled against most of its foreign rivals, which fueled dollar-denominated commodities into the black. In fact, gold futures finished at a fresh all-time peak, skyrocketing more than 2% by the close. Against this bullish backdrop combined with the Street's optimism ahead of Alcoa Inc.'s (AA) benchmark date in the earnings confessional tomorrow the Dow Jones Industrial Average finished its second straight session with a triple-digit win.
The Dow Jones Industrial Average (DJIA 9,731.25) sprinted into triple-digit gain territory right out of the gate this morning, eventually settling 131.5 points, or 1.4%, ahead. All of the Dow's 30 blue chips finished in the black, led by Alcoa Inc., which is set to unofficially kick off earnings season tomorrow. The blue-chip barometer is once again poised to close the week atop its 80-week moving average, but is still staring up at intimidating resistance from its 20-month trendline.
The S&P 500 Index (SPX 1,054.71) finished with a similar gain of 14.3 points, or 1.4%. In parity with the Dow, the index is battling resistance at its own 20-month moving average. Finally, the Nasdaq Composite (COMP 2,103.57) fared the best of the three major indexes, after tech titan Microsoft (MSFT) unveiled new mobile-phone software to compete with Apple Inc. (AAPL). By the close, the COMP advanced 35.4 points, or 1.7%, reclaiming its perch atop its 10-day and 20-day moving averages.
Turning to equities in focus, Chesapeake Energy Corporation (CHK) took the red road less traveled following a bearish note at Credit Suisse ... Skeptical option speculators swarmed CVS Caremark Corporation (CVS) ... October options expiration may not bode well for the shares of KB Home (KBH) ... A spread strategist centered on Alcoa Inc. (AA) ahead of earnings ... The Option Coach examined the ABCs of collars ... and today's Quote of the Day comes from Evan Newmark of the Wall Street Journal's Mean Street blog. The former Goldman Sachs employee recently reflected on the teamwork-heavy, "selfless collectivist culture" at the financial firm, stating:
"It's a culture that might have been dreamt up by Karl Marx if he had been more interested in profits than the proletariat."
But these weren't the only headlines hitting the Street today. Click on the links below for our Daily Option Blog coverage of:
And, in case you missed it, Andrea Kramer explained how traders can use contrarian principles to analyze the broad market in this week's installment of The Fundamentals of Trading. Click here to watch the video.
For today's activity in crude oil, gold futures, options, and more, turn to page 2.
Crude futures extended yesterday's journey higher, as hopes for an economic recovery helped ease concerns about supply and demand. Also fueling black gold higher was the ailing U.S. dollar, which tumbled after the Reserve Bank of Australia raised its key interest rate. In fact, U.K. newspaper The Independent said major oil producers are considering using other currencies to price their oil. Against this backdrop, crude oil for November delivery added 47 cents, or 0.7%, to finish at $70.88 per barrel.
Australia's rate change and the weakening greenback were also boons for gold, which finished at a new record closing level today. The aforementioned newspaper report though denied by top finance officials sparked a wave of buying pressure for the dollar-denominated commodity, bolstering the precious metal to a record intraday high of $1,045 an ounce. In addition, gold also got a boost as demand soared ahead of Diwali, the peak of the festival season in India which accounts for more than 20% of global demand for gold jewelry. By the close, December-dated gold skyrocketed $21.90, or 2.2%, to end at $1,039.70 an ounce.
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