Stock Market News Update
Tuesday, September 14, 2010

tuesday update

Tuesday saw U.S. stocks manage to pare some losses on better-than-expected retail sales data, but indexes ended mixed as investors stepped back from a recent run-up.

Stocks started the session on a sour note today, as disappointing data from across the pond renewed concerns about Europe's fiscal health. More specifically, a sharper-than-anticipated drop in German investor confidence, as well as data pointing to stagnant industrial production in the euro zone in July, weighed on stocks early on, with investors initially fleeing the equities market in favor of "safe-haven" assets like gold and Treasurys.

However, the major market indexes eventually turned higher with help from the Commerce Department, which said that retail sales rose by a stronger-than-expected 0.4% in August – the fastest pace in five months. Nevertheless, the valiant effort by the bulls proved fruitless when all was said and done, with a wave of eleventh-hour selling pressure effectively snapping stocks' four-session winning streak.

Before Tuesday, the blue-chip Dow and the S&P had closed higher for eight out of nine straight sessions. After that kind of run, analysts say it's not uncommon for investors to take a breather.

"The market has a bipolar effect to it right now -- it doesn't know what it's doing," said Joseph Saluzzi, co-head of equity trading at Themis Trading.

"Today's data confirmed that the double-dip fears have been put on hold for at least the time being," said Schaeffer’s Senior Technical Strategist, Ryan Detrick. "Given the S&P 500 Index (SPX) made it to the top of its three-month trading range, a pullback – or at least some consolidation – makes sense here," he explained.

Results for Major Market Indexes

The Dow Jones Industrial Average (DJIA – 10,526.49) finished with a loss, of 17.64 points, or 0.17%.



The S&P 500 Index (SPX – 1,121.10) also had a loss, on the day, of 0.80 points, or 0.07%.


The Nasdaq Composite (COMP – 2,289.77) had a gain of 4.06 points, or 0.18%.

The Russell 2000 Index of smaller companies managed a loss of 3.05 points, or 0.47%, to settle at 649.23.

Almost half of the Dow's 30 stocks closed higher, led by tech giant Hewlett-Packard (HPQ) and Travelers (TRV). The index's worst performers were Boeing (BA) and American Express (AXP).

The Nasdaq Composite outperformed the broader markets amid strength in the technology sector. The index soared 2% on Monday after Barron's questioned whether or not large-cap tech stocks like Intel (INTC) and IBM (IBM)were undervalued, especially considering the piles of cash sitting on their balance sheets.

The positive developments on the retail front boosted shares of retailers like J.C. Penney (JCP) and Abercrombie & Fitch (ANF).

The financial sector was the biggest drag on the overall markets, giving back a chunk of Monday's solid gains. Major banks such as U.S. Bancorp (USB) and Goldman Sachs (GS) slid by about 1% a piece.

Trading Volume:

Volume was light with about 7.2 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year's estimated daily average of 9.65 billion.

Declining stocks outnumbered advancing ones on the NYSE by 1.2 to 1, while on the Nasdaq, decliners beat advancers five to four.

Notes of Interest

The Dow Jones Industrial Average’s (DJIA): Despite the Dow's failure to extend its four-session run higher, the blue chip barometer maintained its foothold atop both its 200-day moving average and the round-number 10,500 level.

The S&P 500 Index’s (SPX) notched its second straight finish atop its 200-day moving average – a feat not accomplished since mid-August.

The broad S&P 500 index stayed above its 200-day moving average of around 1,115 after closing beyond that level on Monday for the first time since early August.

Wall Street analysts have eyed the 1,130 level as a key resistance point for the benchmark index, which could mean a strong move higher if it can pierce that target.

"We went through the 200-day yesterday, stayed above it today. It's only natural that we consolidate here a little bit, but if we punch through here, we will see 1,200," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

The Nasdaq Composite (COMP), the tech-rich index, finished north of its own 200-day moving average for the second consecutive session.

Crude futures finished a volatile session in the red today, thanks to reports that Enbridge could repair its damaged pipeline sooner than expected. More specifically, the firm said it may not need to submit a formal plan to regulators before resuming operations, calming fears of a prolonged outage for the Canada-to-U.S. pipeline. Against this backdrop, October-dated crude futures settled with a loss of 39 cents, or 0.5%, at $76.80 per barrel.

Gold futures ended at an all-time high today, bolstered by an early rush to safety and an ailing greenback. More specifically, the U.S. dollar tumbled against a basket of its foreign rivals, tagging a 15-year low against the Japanese yen after Naoto Kan was re-elected to his position as prime minister. Furthermore, some analysts noted seasonal trends for gold's record peak, with demand for the malleable metal typically rising ahead of the Indian wedding season and Hindu religious festivals. Marking its largest single-session gain in four months, gold for December delivery finished with a gain of $24.60, or 2%, at $1,271.20 an ounce.

Bonds: The yield on the 10-year Treasury note fell to 2.67% from 2.76% late Monday.

Economic Concerns

August Retail Sales

Sales at U.S. retailers increased more than expected in August, notching their largest gain in five months on strong receipts at gasoline stations and clothing outlets, according to a government report that further assuaged fears of a double-dip recession.

The Commerce Department said total retail sales rose 0.4 percent following a revised 0.3 percent rise in July. It was the second straight month of gains in retail sales, which are a measure of consumer health. July sales had been previously reported to have increased 0.4 percent.

Analysts polled by Reuters had forecast retail sales rising 0.3 percent last month. Compared to August last year, sales were 3.6 percent higher.


Data so far for August, including private payrolls and manufacturing, have pointed to a tentative improvement in the economy after a recent soft patch.

The recovery from the worst recession since the 1930s has cooled off as the boost from an $814 billion government stimulus package fades and unemployment remains stubbornly high.

Last month, motor vehicle and parts purchases fell 0.7 percent after increasing 1.0 percent in July. Excluding autos, sales increased by a bigger-than-expected 0.6 percent in August, also the largest increase since March, after a 0.1 percent gain the prior month. Markets had expected sales excluding autos to increase 0.3 percent in August.

Receipts at gasoline stations increased 1.9 percent after rising 2.2 percent in July. Building materials and garden equipment sales were unchanged after falling 0.4 percent in July, suggesting some stability after sharp declines following the end in April of a popular homebuyer tax credit. Clothing and clothing accessories sales increased 1.2 percent. Core retail sales, which exclude autos, gasoline and building materials, rose 0.5 percent after dipping 0.1 percent in July. Core sales correspond most closely with the consumer spending component of the government's gross domestic product report.

Receipts at sporting goods, hobby and book stores rebounded 0.9 percent last month. Purchases at electronics and appliance stores fell 1.1 percent.

Business Inventories

U.S. business inventories increased more than expected in July, posting their largest increase in two years, as sales rebounded strongly, a government report showed on Tuesday.

The Commerce Department said inventories rose 1.0 percent to $1.38 trillion, the highest level since May 2009, after increasing by a revised 0.5 percent in June. July's percentage increase was the largest since July 2008. Markets had expected July inventories to rise 0.5 percent from a previously reported 0.3 percent increase in June.

Inventories are a key component of gross domestic product changes over the business cycle and contributed hugely to economic growth during the early part of the recovery from the worst downturn since the Great Depression.

The boost from the rebuilding of merchandise stock is, however, fading and a small contribution from inventories contributed to a sharp slowdown in growth during the second quarter. But the trend in July, if sustained, could see inventories making a significant contribution to gross domestic product growth in the third quarter.

In July, business sales increased 0.7 percent, the largest gain since March, to $1.09 trillion in July after declining 0.5 percent in June.

The inventory-to-sales-ratio, which measures how long it would take to clear shelves at the current sales pace, was unchanged at 1.26 months' worth.

Economic Optimism

U.S. consumer confidence rose 3.9 percent in September from August as optimism about the state of personal finances offset continued worry about the weak labor market.

Investor's Business Daily and TechnoMetrica Market Intelligence said their IBD/TIPP Economic Optimism Index rose to 45.3 in September from 43.6 in August.

Readings above 50 indicate optimism, while those below 50 point to pessimism.

The index is now 1.5 points below its 12-month average of 46.8, and 0.9 points above the 44.4 level IBD reported in December 2007 when the recession began.

"Recent rallies in the stock market may be helping some Americans feel better about their own finances," said Terry Jones, associate editor of Investor's Business Daily. "But the continued slow-growth recovery and 9.6 percent unemployment rate have certainly hurt overall."

Those surveyed were more upbeat about their household finances in the next six months. The gauge's personal financial outlook measure rose 7.3 percent in the month to 52.8.

The index's six-month economic outlook component improved 2 percent to 44.2 and is now 12.1 points above its level in December 2007.

The IBD/TIPP surveys more than 900 adults generally in the first week of the month.

Overseas Concerns

In currencies: The dollar edged up against the euro and the British pound, but slipped versus the yen.

Earlier in the session, the dollar hit a fresh 15-year low against the yen. News reports said the Japanese government may take steps to curb the currency's strength amid growing concerns about the pace of the recovery. But most traders still don't expect to see any intervention just yet.

Overseas Markets

European Markets hovered around breakeven for most of the day but closed higher. France's CAC 40 and Germany's DAX ended 0.3% higher, while and Britain's FTSE 100 added 0.2%.

Asian Markets: ended mixed. Japan's benchmark Nikkei index fell 0.2% and the Hang Seng in Hong Kong rose 0.2%. The Shanghai Composite ended flat.

Company Earnings Reports and News



Best Buy (BBY)

Best Buy (BBY) reported a higher-than-expected quarterly profit and raised its full-year outlook as it benefited from strength in its mobile phone business, and its shares rose nearly 8 percent.

The largest consumer electronics chain, which operates stores under the Best Buy, Best Buy Mobile, and Car Phone Warehouse names, said its operating margin rose 1.1 percentage points to 3.6 percent in the second quarter ended Aug. 28.

Best Buy has stepped up its focus on selling more mobile phone, broadband and TV connections in a bid to boost margins while prices for televisions fall.

"We're still in the early stages of our Connected World strategy, but this quarter's results give me continued confidence that we're making progress," Chief Executive Officer Brian Dunn said.

Net profit rose to $254 million, or 60 cents a share, in the second quarter from $158 million, or 37 cents a share, a year earlier.

Analysts on average were expecting a profit of 44 cents a share, according to Thomson Reuters.

Sales rose about 3 percent to $11.34 billion, but missed the analysts' average estimate of $11.54 billion. Sales at stores open at least for 14 months fell 0.1 percent.

The company raised its fiscal 2011 earnings forecast to a range of $3.55 to $3.70 a share, up from its prior outlook of $3.45 to $3.60.

Best Buy shares rose 7.9 percent to $37.40 in premarket trading.


Kroger Co (KR)

Kroger Co (KR), the largest U.S. supermarket chain, posted higher quarterly earnings and stood by its full-year profit forecast, sending shares up 3 percent.

The company, which operates stores under the Kroger, Ralphs, King Soopers, Fry's and Food 4 Less banners, said net profit for the second quarter that ended on Aug. 14 was $261.6 million, or 41 cents a share, compared with $254.4 million, or 39 cents per share, a year earlier.

Cincinnati-based Kroger's sales, including fuel, increased 6 percent to $18.8 billion, beating analysts' estimate of $18.7 billion, according to Thomson Reuter’s data. Excluding gasoline, total sales increased 3.3 percent.

Kroger also stood by its forecast for fiscal-year earnings of $1.60 to $1.80 per share on identical-store sales growth of 2 percent to 3 percent, excluding gasoline sales.

Kroger competes directly with Safeway Inc (SWY) and Supervalu Inc (SVU) Many analysts see Wal-Mart Stores Inc (WMT) as Kroger's toughest rival and the biggest near-term threat to the overall supermarket industry.

Kroger shares rose 3 percent to $21.70 in premarket trading.

Neiman Marcus Group Inc [NMRCUS.UL]

Upscale retailer Neiman Marcus Group Inc [NMRCUS.UL] posted a smaller quarterly net loss on Tuesday as its stores saw higher demand than last year.

The operator of Neiman Marcus and Bergdorf Goodman stores said its net loss had narrowed to $32.8 million in the fourth quarter ended July 31 from $168.5 million a year earlier.

Neiman said operating earnings were $4.5 million, compared with a year-earlier loss of $192.1 million.

Revenue at Neiman, which was bought by an investor group led by TPG Capital [TPG.UL] and Warburg Pincus LLC [WP.UL] in October 2005, rose 7.6 percent to $826.3 million. Same-store sales were up 6.5 percent.

Company News and Movements


Green Mountain Coffee Roasters (GMCR) scooped up coffee brewing equipment maker Van Houtte for $890 million. The deal nets a solid return for Littlejohn & Co., a private equity firm that acquired Montreal-based Van Houtte in 2007 for $600 million. Van Houtte CEO Gerard Geoffrion agreed to stay on after the deal closes.

American International Group (AIG) is in talks with the U.S. to speed up the government’s exit plan, The Wall Street Journal reported. Under the plan, which could begin as early as the first half of 2011, the Treasury Department would likely convert its $49 billion worth of preferred shares to common equity, bringing its stake in the giant insurer to above 90%. The U.S.’s common shares would then be gradually sold to investors, the paper reported.

Cisco Systems (CSCO) soared as much as 4% after its CEO reportedly said the tech bellwether is likely to install a dividend in fiscal 2011 that yields 1% to 2%.

• Citigroup analysts said Tuesday that incoming BP (BP) Chief Executive Bob Dudley told them the company believes claims will be less than the $20 billion it has set aside for the "Independent Claim Fund."

But in separate news, the Justice department expects to sue BP for damages from the Deepwater Horizon oil spill, according to a filing made last night with the U.S. District Court in New Orleans.

BP shares ended 0.4% higher.

Toyota Motor Co. (TM) said it will put out six all-new hybrid vehicles worldwide by 2012. Shares closed down 0.7%.

Nucor Corp (NUE) became the latest stock to trip the new market-wide circuit breaker rules, which pause trading for five minutes if the stock moves more than 10 percent, after the stock traded at 1 cent on the CBOE Stock Exchange.

JPMorgan Chase & Co (JPM) Chief Executive Jamie Dimon said in an investor presentation the new capital rules are expected to increase bank loan prices for customers and may drive some to seek financing from non-bank financial institutions. Shares slipped 1 percent to $40.72.



Options Movement

Freeport-McMoRan Copper & Gold Inc.(FCX)

Traders have been gravitating toward put options on FCX, according to data from the International Securities Exchange (ISE). During the past five sessions, speculators on the ISE have bought to open 6,041 puts on FCX, compared to just 3,296 calls. The security's five-day ISE put/call volume ratio of 1.83 indicates that bearish bets have nearly doubled their bullish counterparts during this time frame.

Taking a slightly longer-term look at option buying trends on the ISE, traders have bought to open 1.12 puts for every call on FCX during the past 10 days. This ratio ranks higher than 82% of other such readings taken during the previous year, suggesting that options traders on the ISE have purchased puts over calls at a faster clip only 18% of the time.

This skepticism is mirrored by FCX's put/call open interest ratio (SOIR) of 1.10, in the 82nd annual percentile. This elevated percentile rank reveals that short-term speculators have been more bearishly aligned only 18% of the time during the past year. In the front-month series, peak put open interest of 11,606 contracts is located at the September 75 strike. However, the September 70 put isn't far behind, with 11,295 contracts in residence. FCX is currently trading near $82, leaving both of these popular put strikes well out of the money.

Elsewhere on Wall Street, short sellers are also betting on FCX to backpedal. Short interest on the shares swelled by more than 23% during the past month, and these pessimistic positions now account for a respectable 3.1% of the equity's float. Overall, it seems that both stock and options traders are expecting near-term weakness from FCX.

FCX hasn't exactly turned in a stellar performance in 2010, with the stock up just 1.9% year-to-date. The round-number $90 region rejected the equity's rally attempts in January and April, and the stock has since struggled to regain its positive momentum.

However, there are some signs of life for FCX. The stock has climbed consistently higher since Aug. 25, regaining the support of its 10-day and 20-day moving averages in the process. Even more compelling, FCX recently broke out above short-term resistance at its 200-day trendline, suggesting that the equity's short-term rally has legs.


If this technical breakout spooks the skeptics, a capitulation by the weaker bearish hands could translate to additional upside for FCX during the short term.

United States Steel Corporation (X)

X has been racking up heavy buy-to-open call volume on the ISE lately. During the past five days, traders on the ISE have purchased 11,748 calls on X, compared to just 3,892 puts -- netting the shares a five-day ISE call/put volume ratio of 3.02, with bullish bets more than tripling their bearish counterparts. In fact, X's 10-day ISE call/put volume ratio weighs in at 2.40, which ranks higher than 88% of other such readings taken during the previous year. In other words, traders on this exchange have shown a greater appetite for calls over puts just 12% of the time.

In the same optimistic vein, X's SOIR of 0.64 arrives in the slim sixth annual percentile, as short-term speculators have been more bullishly aligned only 6% of the time during the past year.

Front-month call players prefer the September 50 strike, which is home to peak call open interest of 16,278 contracts. Meanwhile, in the soon-to-be front-month October series of options, the 60 strike carries peak call open interest of 13,046 contracts. With X currently trading just shy of $47, options traders seem to have increasingly high hopes for a short-term rally.

However, it's worth noting that short interest on X climbed by 6.9% during the past month, and these bearish bets now account for a hefty 18.7% of the equity's float. In this context, it's possible that some of those out-of-the-money calls were purchased as hedges, rather than outright bullish positions.

From a technical perspective, X has been stagnating. The shares have found support in the $42 to $44 region since late July, but double-barreled resistance looms overhead -- since mid-May, X's progress has been stifled by its 200-day moving average and the round-number $50 region.


In light of the stock's range-bound ways, both bulls and bears might be disappointed by X's performance. During the short term, X could be a viable candidate for low-volatility plays, such as credit spreads.

Under Armour, Inc. (UA)

Speculative investors have turned their attention to Under Armour, Inc. (UA) today, with overall option volume rising to about four times the norm. So far, 3,068 calls and 1,760 puts have changed hands on the athletic apparel issue, with a pair of front-month options in focus.


UA's September 40 call is most active, with 1,689 contracts crossing the tape -- 76% at the ask price, suggesting a bias toward buying activity. Meanwhile, the equity's September 42 put isn't far behind, with 970 contracts exchanged. About 95% of those contracts have traded at the ask price, and the September 42 put currently has zero contracts in residence, so it's a safe bet that these are freshly opened positions.

Today's option activity is pretty evenly split, but traders have recently displayed a modestly bearish bias toward UA. The stock's 10-day International Securities Exchange (ISE) put/call volume ratio of 1.40 ranks in the 73rd annual percentile, revealing that options players have been purchasing puts over calls at a rapid clip in recent weeks.

Short sellers are also skeptically aligned, with a hefty 19% of the equity's float dedicated to short interest. At UA's average daily trading volume, it would take more than 10 days for all of these shorted shares to be covered.

Despite the cloud of pessimism surrounding the shares, UA is actually faring quite well on the charts. The stock earlier touched a new annual high of $42.58, extending its year-to-date rally of 50%. As UA continues to climb the charts, the stock could easily benefit from an unwinding of bearish bets.


The following companies also had some impressive options movements:-

Retailers breathed a collective sigh of relief this morning, as the Commerce Department reported that U.S. retail sales increased 0.4% in August -- beating analysts' prediction for an increase of 0.3%. This figure represents the second straight monthly increase for retail sales. Here is a look at how one of this sector's players has been faring lately.

Best Buy Co., Inc. (BBY)

Electronics retailer, Best Buy Co., Inc. (BBY), this morning reported that its second-quarter profit rose 60% to $254 million, or 60 cents per share. Meanwhile, revenue for the quarter increased 2.9% to $11.3 billion. Analysts had predicted a much slimmer profit of 44 cents per share.

The shares have responded very positively to this news, with BBY up some 6.4% so far, to trade around $36.82. Today's positive price action has catapulted BBY above its 10-week moving average -- which had contained all of BBY's rally attempts since April 30. BBY's next technical roadblock comes in the form of its 20-week trendline, which is located just below $37.


Option players seemed optimistic ahead of this morning's earnings, with volume of 44,000 calls traded on Monday. However, judging by one trader's activity, it seems that perhaps Monday's option players weren't bracing for such a strong performance from BBY.

Early Monday morning, 3,500 October 35 calls traded at the ask price, while 7,000 October 37 calls changed hands at the bid price. Both blocks were marked "spread," and open interest at each of these back-month strikes increased substantially overnight. By initiating this vertical ratio spread, this trader was counting on BBY to climb above $35, but stop its ascent just at, or right before, the $37 level, by October expiration. Given BBY's massive post-earnings rally, this strategist may want to rethink his position.


Today's price action could also motivate some of BBY's lingering bears to hit the exits. With short interest surging by 7.8% during the most recent reporting period -- perhaps in anticipation of this morning's earnings report -- there is currently some 5.1% of BBY's float tied up in short interest. A rush to cover by the shorts in the wake of today's positive report could help send the shares even higher.

TiVo Inc. (TIVO)

TiVo Inc. (TIVO) has just not been able to recover since tumbling some 50% after its legal battle with sector competitor DISH Network Corp. (DISH) in May. Since then, the shares have been confined around the $8 to $9 region; however, just this week, TIVO staged a rally, jumping briefly above the $10 level on Monday. TIVO has pulled back a bit today, and is currently trading around $9.10.

Call activity was rampant on TIVO on Monday, with some 29,000 of these bullish bets changing hands on the session -- 10 times the stock's expected daily call volume.


The September 10 call saw the most traffic on Monday, with 8,357 contracts traded -- the majority of which changed hands at the ask price, indicating they were likely purchased. Open interest jumped by 3,663 contracts overnight, confirming that fresh bullish positions were added at this strike. By buying to open the September 10 call, option players are counting on TIVO to muscle back above the $10 level before front-month expiration -- which happens after the close this Friday.

Option players maintain a relatively upbeat outlook on the digital recording diva, as indicated by TIVO's put/call open interest ratio (SOIR) of 0.32, which ranks in the 24th annual percentile. In other words, short-term speculators have been more bullishly aligned toward TIVO only 24% of the time during the past year.

**Bearish activity detected in China Biotics (CHBT), with 3201 puts trading, or 2x the recent average daily put volume in the name.

**Bullish flow detected in Blue Coat System (BCSI), with 8140 calls trading, or 3x the recent average daily call volume in the name.

**Bullish flow detected in RADWARE (RDWR), with 6753 calls trading, or 19x the recent average daily call volume in the name.

**Increasing volume is also being seen in Best Buy (BBY), Pfizer (PFE), and Yahoo (YHOO).


Stocks had rallied Monday after the release of new global banking rules, upbeat economic data from China and some acquisition activity helped boost investor sentiment.

Investors will continue to take their cues from the economy.

While retail sales rose for the second consecutive month, the increase was still modest, keeping stock gains in check.

The primary question investors are still struggling with is, "does the economy just muddle along?" asked Michael Sheldon, chief market strategist at RDM Financial Group. He predicted the economy is more likely to continue to grow slowly than to fall back into recession.

Meanwhile, with the dollar falling to a fresh 15-year low against the yen, some investors are turning to the safety of gold, sending the precious metal to a new intraday record high.

A Goldman Sachs forecast that the Federal Reserve might purchase $1 trillion worth of Treasurys also fueled demand for the safe-haven assets.

"Trees don't grow to the sky. We've had a pretty good run," said Art Hogan, chief market strategist at Jefferies & Co., of the market's struggle to hold modest gains.

Wall Street's hottest start to a September since 1939 ran into resistance on Tuesday as the Dow's four-day win streak stalled amid a lack of enthusiasm for a pair of upbeat reports on the state of the recovery.

The markets bounced between green and red for much of the session before ultimately closing in a stalemate. The bulls struggled to rally around new economic data revealing August retail sales rose by the most in five months and business inventories in July enjoyed their largest jump since 2008.

Stocks had edged higher for much of the day following positive reports on U.S. retail sales and business inventories, but retreated in the final 10 minutes of trading as investors' enthusiasm waned.

Disappointing news from overseas hung over the market all day. European markets struggled to end barely higher after reports that German investor confidence fell sharply in September and industrial production unexpectedly stagnated during July in the countries that use the euro. Stocks in Tokyo also fell after the yen touched another 15-year high against the dollar, which is bad news for Japanese exporters.

In other signs that investors remain cautious, gold climbed to another record and Treasury prices rose, sending interest rates lower.

The back-and-forth action comes amid a surprisingly strong start to September that had pushed the Dow up as much as 5.29% -- its best start to September since 1939. While the gains have mostly been on light volume due to holiday-shortened weeks, they have been driven by signs the economy is not at risk of a double-dip recession.

“I don’t know anybody who was expecting that. I called for a positive start to the month, but I did not expect this. I have been very surprised,” said Peter Kenny, managing director at Knight Capital Group. “Hopefully we can keep it going. If we can keep getting mildly positive economic numbers and a sense that large cap tech stocks are undervalued, then we definitely have an opportunity to move higher.”

September is usually a weak month for stocks but this year has been an exception. Even after Tuesday's losses the Dow is still up 5.1 percent in September, but 6.1 percent below its 2010 high reached on April 26. For the year to date it's up 0.9 percent.

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