Stocks manage gains on strong earnings from Hewlett-Packard and despite a rise in crude prices. The Dow ($INDU) added 68.88 points to close the session at 11,417.42. The S&P 500 ($SPX) tacked on 7.85 points to 1,274.54. The Nasdaq ($COMPQ) gained 4.72 points to 2,389.08. Volume remained on the light side with 1.07 billion shares traded on the NYSE and 1.78 billion shares exchanged on the Naz. Market breadth was positive on the Big Board by a 16-to-14 margin and flat on the Naz.

Crude prices rose 45-cents on the session to $114.98 a barrel despite gains in weekly inventory levels. In fact, crude supplies rose by 9.4 million barrels for the week ending August 15. However, a sharp draw down of 6.2 million barrels in gasoline stocks offset the good news. This decline put gasoline supplies down 1.7 percent compared with the year ago period with demand down about 1.6 percent. Strength in oil prices helped oil companies and this in turned provided strength for the Dow.

Shares of Hewlett-Packard (HPQ) also benefited the bulls Wednesday with the stock up 5.7 percent to $46.16. HP reported earnings per share of 83-cents, 3-cents above expectations with revenues growing by 10.5 percent. This was good news, but the fact HP raised its fourth quarter guidance was the main reason for gains in the stock. HP shares closed at $46.16, right in the middle of its 52-week range.

Despite further losses in shares of Fannie Mae (FNM) and Freddie Mac (FRE), financials recovered from morning lows to finish positive. FNM and FRE fell 26.8 percent and 22.1 percent respectively with traders concerned that the government will bailout the two mortgage lenders at the expense of shareholders.

Ericsson (ERIC) and STMicroelectronics (STM) announced a new venture this morning that will have ERIC paying $1.1 billion to STM to produce microchips for wireless devices. ERIC shares were flat on the news, but STM shares gained 2.5 percent. The move is an attempt to challenge Texas Instruments (TXN), thus TI fell 1.6 percent on the session.

Thursday’s session will see the release of several economic reports, including the Philly Fed Survey, jobless claims and leading indicators. The jobless claims data will provide a glimpse into how payrolls in August are faring since it coincides with this survey period. Overall, traders are still a bit cautious about the credit markets and rising prices and August tends to see low volumes as traders take their last summer vacation.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site