Stocks Gain Ahead of the Fed — Tuesday’s IP Market Recap

by Marc Bastow | December 11, 2012 5:01 pm

IPMarketRecap Stocks Gain Ahead of the Fed    Tuesday's IP Market Recap[1]Stocks followed up Monday’s cautious advance with a more determined effort Tuesday, as investors appear optimistic that the Federal Reserve might announce continued stimulus measures when it wraps up its final meeting of the year.

The central bank will decide the fate of Operation Twist, a stimulus program set to end this month, with expectations that the Fed will announce $45 billion in bond-buying. The final pronouncements will come Wednesday after the meetings.

Beyond that optimism, Big Tech — via Intel (NASDAQ:INTC[2], +2.9%), Apple (NASDAQ:AAPL[3], +2.1%) and Microsoft (NASDAQ:MSFT[4], +1.3%) — helped fuel the rally. By Tuesday’s close, the Nasdaq surged 1.18% to close at 3,022.30, the S&P 500 rose 0.65% to finish at 1,427.84 and the Dow Jones gained 0.6% to 13,248.44.

Also Tuesday, the Treasury Department said it had sold its remaining shares of insurer American International Group (NYSE:AIG[5]) for $32.50 per share, or about $7.6 billion. Between the Fed and Treasury’s combined $182 billion injection into AIG, the government enjoyed a profit[6] of $22.7 billion. AIG finished more than 5% higher on the day.

Dollar stores were hammered, led by Dollar General (NYSE:DG[7]), which lost more than 7% after posting a higher-than-expected Q3 profit and sales in line with forecasts, but provided the Street with a weak outlook and showed low gross margins, partially due to increased “shrink,” which refers to shoplifting, theft and supplier fraud. Family Dollar (NYSE:FDO[8], -8.4%) and Dollar Tree (NASDAQ:DLTR[9], -3.7%) fell in sympathy.

Morgan Stanley (NYSE:MS[10]) gapped up more than 4% on reports that it might ask the Fed to reinstate its share repurchase program[11], which was suspended in 2008. Also, Delta Air Lines (NYSE:DAL[12]) soared more than 5% after buying a 49% stake[13] in Britain’s Virgin Atlantic Airways.

Lastly, online travel research site TripAdvisor (NASDAQ:TRIP[14]) jumped just under 7% after media mogul Barry Diller stepped down as chairman of the travel website and sold his voting stake in the company to John Malone’s Liberty Interactive (NASDAQ:LINTA[15]). Liberty shares traded down just over 1% on the news.

Three Up

Three Down

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he was long AAPL, MSFT and INTC.

Endnotes:
  1. [Image]: http://www.investorplace.com/hot-topics/investorplace-market-recap/
  2. INTC: http://studio-5.financialcontent.com/investplace/quote?Symbol=INTC
  3. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  4. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  5. AIG: http://studio-5.financialcontent.com/investplace/quote?Symbol=AIG
  6. the government enjoyed a profit: http://investorplace.com/2012/12/sale-of-aig-stake-adds-to-bailout-profit-for-u-s/
  7. DG: http://studio-5.financialcontent.com/investplace/quote?Symbol=DG
  8. FDO: http://studio-5.financialcontent.com/investplace/quote?Symbol=FDO
  9. DLTR: http://studio-5.financialcontent.com/investplace/quote?Symbol=DLTR
  10. MS: http://studio-5.financialcontent.com/investplace/quote?Symbol=MS
  11. reinstate its share repurchase program: http://grossmarginnarrowedandmissedWallStreetexpectations,hurtnotonlybyincreaseddiscountstoattractshoppersandfendoffcompetitionbutalsobyincreased“shrink,”whichinindustryparlancereferstoshoplifting,employeetheft,paperworkerrorsandsupplierfraud.
  12. DAL: http://studio-5.financialcontent.com/investplace/quote?Symbol=DAL
  13. after buying a 49% stake: http://investorplace.com/2012/12/delta-buys-big-stake-in-virgin-atlantic/
  14. TRIP: http://money.cnn.com/quote/quote.html?symb=TRIP&source=story_quote_link
  15. LINTA: http://studio-5.financialcontent.com/investplace/quote?Symbol=LINTA
  16. CLWR: http://studio-5.financialcontent.com/investplace/quote?Symbol=CLWR
  17. RIMM: http://studio-5.financialcontent.com/investplace/quote?Symbol=RIMM
  18. RSH: http://studio-5.financialcontent.com/investplace/quote?Symbol=RSH
  19. RKUS: http://studio-5.financialcontent.com/investplace/quote?Symbol=RKUS
  20. Read more here: http://investorplace.com/ipo-playbook/ruckus-wireless-comes-back-from-the-dead/
  21. CIEN: http://studio-5.financialcontent.com/investplace/quote?Symbol=CIEN
  22. BBY: http://studio-5.financialcontent.com/investplace/quote?Symbol=BBY

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