Stocks staged a huge rally on Tuesday, with the Nasdaq gaining well over 2%, the S&P 500 gaining nearly 2%, and the Dow rising more than 200 points. Tuesday’s gains mark the fourth straight day of gains for the S&P 500, as the Dow once again turned positive for the year. The S&P 500’s rally on Tuesday was the biggest single-day gain for the benchmark index since October 10, 2013.
First, the scoreboard:
- Dow: 16,605.2, +205, (+1.2%)
- S&P 500: 1,940.2, +36.2, (+1.9%)
- Nasdaq: 4,418.4, +102, (2.3%)
And now, the top stories on Tuesday:
1. It was a huge rally for the markets, as the Dow once again turned positive for the year after last week giving up all of its year-to-date gains. In an email this afternoon, NYSE floor governor Rich Barry said, “We knew it was just a matter of time before our ‘buy-the-dipper’ friends came back into the market. At last look, the S&P 500 is up 113 points from its Wednesday ‘panic’ lows, which equates to a 6.2% up-move in just four trading sessions. Expanding on this point a little further, over the last nine trading sessions, we have seen the S&P 500 index trade from 1966 on October 9th, down to 1820 on October 15th, (minus 146 points, or -7.4% in five sessions); immediately before the ensuing 6.2% rise over the last four days. Does anyone else feel like they just got off a roller-coaster??”
2. In a slow week for economic data, the lone data point on Tuesday was existing home sales, which rose 2.4% in September to an annualized rate of 5.17 million units, topping the 5.1 million expected by economists. Following the report, Lawrence Yun, chief economist at the National Association of Realtor said, “Low interest rates and price gains holding steady led to September’s healthy increase, even with investor activity remaining on par with last month’s marked decline.”
3. Coca-Cola reported earnings on Tuesday morning and said that it expects it expects to miss its long-term profit targets. In a statement, Coke said that in 2014, it expects to miss its growth target, and doesn’t see its 2015 results being different from this year. Coke also announced plans to cut costs that will results in $US3 billion in annualized cost savings by 2019. Coke shares fell more than 6% on Tuesday.
4. With the decline in Coke shares, it was yet another bad day for Warren Buffett, adding to yesterday’s huge decline in IBM shares. Buffett also had a significant stake in UK grocer Tesco, which has been plagued by a number of accounting an management problems in recent weeks and has seen shares fall 44% this year.
5. McDonald’s reported third quarter profit that beat expectations, but sales that disappointed. McDonald’s third quarter global comparable store sales fell 3.3%, worse than the 2.9% decline that was expected by economist. “McDonald’s third quarter results reflect a significant decline versus a year ago, with our business and financial performance pressured by a variety of factors – from a higher effective tax rate, to unusual events in the operating environments in APMEA and Europe, to under-performance in the U.S., our largest geographic segment,” CEO Don Thompson said.
6. Shares of mortgage servicing company Ocwen Financial fell more than 17% on Tuesday after New York financial regulator Benjamin Lawsky sent the company a letter that said his office had uncovered “serious issues” with the company’s “systems and controls,” among other things. In a statement to Business Insider following the news, an Ocwen spokesperson said that the back-dated letter, a problem singled out in Lawsky’s letter, were caused by errors in the company’s correspondence systems.
7. Biotech company Amgen gained more than 4% after activist investor Dan Loeb said in his quarterly letter to investors that the company could be worth 80% more if it split into two, comprised of a dividend-paying company with Amgen’s mature assets and a growth company made up of Amgen’s pipeline assets. In a statement to Business Insider following Loeb’s letter, an Amgen spokesperson said, “Amgen maintains an active, engaged dialogue with all shareholders. Amgen has always appreciated the perspectives of all of its shareholders, including Third Point, and welcomes constructive input toward our common goal of enhancing shareholder value.”