Traders-Blog.com

Stocks rallied at the outset of the fourth quarter, pushing the Dow to record heights as traders tried to put this summer’s credit crisis behind after a hefty profit-warning from Citigroup Inc. The Dow closing at an all-time high on bets that the big banks are starting to put the worst behind them - and on hopes that the Federal Reserve will continue cutting interest rates.

The Dow Jones industrial average closed up 191.92 or 1.38% to 14,087.55, the broader S&P 500 closed up 20.29 or 1.33% to 1,547.04, and the tech-fueled Nasdaq composite closed up 39.49 or 1.46% to 2,740.99. Market breadth was positive. On the New York Stock Exchange, winners topped losers 3 to 1 on volume of 1.41 billion shares. On the Nasdaq, advancers topped decliners 2 to 1 as 1.95 billion shares changed hands.

Despite the unfavorable news in the financial arena, the market continued to rally. Investors were perhaps reacting to hopes that any so-called “bad news,” whether it be weak bank earnings or a dip in the ISM index, means that the Federal Reserve is more likely to cut interest rates again at its next policy meeting scheduled for the end of the month. In economic news, the ISM index for September fell to 52.0 from 52.9 the previous month’ against the expected fall to 52.5.

Shares of Citigroup closed up $1.05 or 2.25% to $47.72, despite stating that its third-quarter earnings could slump 60% because of $3 billion in write-downs the company had to take due to sub-prime-backed securities. However, the company also said that it was a one-time issue and that the current quarter should be better.

Stock of UBS closed up $1.69 or 3.17% to $54.94, on news of a management shuffle that took the sting out of the warning that it will take a $3.4 billion write-down in the third quarter and post a quarterly loss, because of sub-prime related losses.

Shares of Nokia closed up $0.03 or 0.08% to $37.96, on news that it is buying navigation-software maker Navteq for $8.1 billion. Nokia will pay $78 in cash for each Navteq share, including outstanding options. Navteq maintains digital maps which it licenses to global positioning systems and Web sites.

Stock of Acxiom closed down $3.90 or 19.71% to $15.89, after the data management company that had agree to buy it for $2.25 billion backed out of the deal. Acxiom will receive $65 million from Silver Lake and ValueAct Capital to terminate the merger agreement.

Shares of Walgreen fell $7.05 or 14.93% to $40.16, after reporting quarterly profit that was short of forecasts. Net income slipped to $396.5 million, compared to earnings of $412.3 million a year ago. Revenue rose more than 10% to $13.4 billion from $12.2 billion. However, expenses climbed more than 11% to $12.8 billion.

U.S. light crude for November delivery lost $1.42 to $80.24 a barrel on the New York Mercantile Exchange.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter