Tuesday’s Market Recap: US Stocks Pulled Back While European Stocks Gained

The market pulled back today as investors cashed in on the enormous gains brought by yesterday’s historic jump. The Dow (^DJI) closed down 76.62 points, or 0.82%, with the news that the $250 billion dollar recapitalization plan will not be enough to solve every problem brought on by the credit crunch partly influencing today’s trading. The Nasdaq (^IXIC) and S&P (^GSPC) also ended 3.54% and 0.53% respectively.The newly adjusted bailout plan outlined this Tuesday will be broken into 3 segments. In addition to the $250 billion dollar influx into private banks, the Treasury will guarantee inter-bank loans, and FDIC insurance on non-interest baring bank accounts. The inter-bank lending guarantee is attempting to eliminate risk, lowering global lending rates, and starting a chain-reaction of lending that should eventually have an impact on the rest of the economy.

In contrast to the U.S. markets, European indices made further gains on the day. The FTSE (^FTSE) recorded a 3.23% increase today, while the DAX (^GDAXI) and the CAC 40 (^FCHI) rose 2.7% and 2.75% respectively. The Asian markets also saw the green at the closing bell with the Hang Seng seeing gains of 3.19%. On the day following the Dow’s record 1 day gain, the Nikkei closed up 14.15% also seeing its record 1 day gain in the volatility of the current economy.

Sweet crude oil fell below $80 once again in preparation of hard times to come and slowing demand. Oil trading reached as high as $84 a barrel before traders and speculators grew worried over the consumption. Gold ended lower again today and was trading at $836.60, or down 0.3%.

Johnson & Johnson (NYSE:JNJ) reported stronger than expected earnings today, and had a third quarter profit increase of 30%. This unexpected increase from last years third quarter earnings  was mainly due to the restructuring charges J&J faced a year ago, and the favorable currency swap with the weak dollar helping to boost profits by 3.1%.

Intel (NASDAQ:INTC) helped this quarter’s earning season by posting a 12% increase in profits experienced by cheaper processors. Net income rose $0.35 per share, up from $0.30 a year ago.

Genentech (NYSE:DNA) missed earnings this quarter as they post an $0.81 per share increase in net income. Analysts predicted an $0.88 per share increase. Genentech lowered their expected earnings for 2008 by 5 cents per share, and believe they will post numbers anywhere between $3.40 to $3.45 per share.

Disclosure: The fund the author is associated with holds JNJ, and INTC.

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