IMF Says Farewell to Recession; Markets Enjoy Modest Recovery

U.S. markets were able to recoup some of Monday’s losses, as positive earnings and calmer heads prevailed. Home Depot (HD) earned 67 cents per share, excluding items, topping analysts’ expectations by eight cents. Target (TGT) booked 79 cents per share in the reporting period, well above the consensus view of 66 cents.

Meanwhile, housing starts were virtually flat in July, losing 1% to a seasonally adjusted annual rate of 581,000. Economists were expecting an increase to 596,000. In other economic news, the PPI dropped 0.9% in July, thanks to notable declines in energy and food prices. The core index edged 0.1% lower last month.

At the close, the Dow Jones Industrial Average (DJIA – 9,217) tacked on 82 points, the S&P 500 Index (SPX – 989.67) closed up 9.9 points, or 1%, and the Nasdaq Composite (COMP – 1,956) was the big winner, easing 1.3% higher. As the market shook off Monday’s drubbing – the worst single-day performance in six weeks – some analysts blamed the price action on oversold conditions. Commodities followed suit, with oil futures surging 3.6% and gold edging modestly higher.

Elsewhere, a top economist with the International Monetary Fund stirred the markets by stating the global recession is "over," putting the world’s markets in so-called recovery mode. The clinical definition of recovery is an economy which has begun to grow but may not have returned to previous levels of wealth, employment, or other factors.

After the close, Hewlett-Packard (HPQ) reported third-quarter earnings of 91 cents per share (excluding items), compared to analysts’ expectations of 90 cents. Profit dropped 19% during the quarter while revenue slipped 1.8%. The PC manufacturer also projected fourth-quarter earnings of $1.12 per share. Wednesday will be free from economic announcements (aside from weekly crude inventories), but earnings will be rolling in from Deere &Co. (DE) and BJ’s Wholesale (BJS) ahead of the open.