FOX Business: The Power to Prosper

Wall Street celebrated Fed Day by pushing the Dow to its highest close in more than two years  as the markets cheered new measures by the Federal Reserve to prop up the economy and the results of the midterm election.

Today’s Markets

The Dow Jones Industrial Average rose 26.41 points, or 0.24%, to 11215.13, the Standard & Poor's 500 gained 4.39 points, 0.37%, to 1197.96, the Nasdaq Composite picked up 6.75 points, or 0.27%, to 2540.27. The FOX 50 added 3.06 points, or 0.36%, to 861.53.

The mini rally came in the wake of a pair of bullish factors that Wall Street had been rallying around in recent weeks: the midterm election resulting in gridlock in Washington and the Ben Bernanke-led Fed unveiling a second round of quantitative easing, or QE2, to boost the disappointing economic recovery.

While Wall Street initially lost ground and struggled to rally after the Fed released its widely-expected strategy, the Dow closed 118 points above its worst levels of the day.

After several days of trying and failing, the blue chips also managed to end above 11205, landing at their highest close since Sept. 19, just four days after the implosion of Lehman Brothers that set off the panic of the financial crisis. 

The bulls “are gratified that the only person in this country, or perhaps on this planet, who can give them additional support -- Bernanke -- is poised to do so,” said Mitchell Eichen, founder & CEO of asset management firm The MDE Group. “He’s going to use every technique at his disposal to prevent us from falling into a recession.”

Most of the benchmark index's 30 components gained ground, led by Cisco Systems (NASDAQ:CSCO) and Hewlett-Packard (NYSE:HPQ). The index's worst performers were Microsoft (NASDAQ:MSFT) and Kraft (NYSE:KFT).

All eyes were on the Fed on Wednesday as the central bank did what it was widely expected to do: hold interest rates near all-time lows and announce a plan to buy U.S. Treasurys. The strategy is called quantitative easing -- a wonky term for printing more money -- and is aimed at encouraging economic growth when the Fed runs out of its traditional tools. 

The Fed put a price tag of $600 billion on QE2, slightly above forecasts from economists, but well shy of the $1.7 trillion it bought during the depths of the recession. The central bank said the measures are needed due to high unemployment, the sluggish economic recovery and low inflation, which has led to some fears of deflation. 

The U.S. dollar, which has an inverse relationship with stocks and commodities, fluctuated greatly on the news but was sharply lower by the time Wall Street closed. Crude oil jumped 79 cents a barrel, or 0.94%, to $84.69. Gold sank $19.30 a troy ounce, or 1.42%, to $1,337.10.

Wall Street had a mildly positive reaction to the midterm election, which resulted in the big victory for the Republicans that Wall Street had already been banking on. Republicans took over the House of Representatives, scoring the biggest party turnover in more than 70 years. As expected, the Senate remained in the hands of the Democrats. 

Traders have bet that a divided Congress will result in more pro-business policies and gridlock, slowing down big legislative initiatives that have spooked Wall Street.

Economic Reports Top Expectations

The markets mostly yawned at a trio of stronger-than-expected reports on the state of the U.S. economy.

On the labor front, ADP said the private sector added 43,000 workers in October, solidly beating forecasts from economists. The report could be a good omen ahead of Friday's more closely-watched government jobs report, which is expected to show the U.S. added 60,000 jobs and the unemployment rate remained at 9.6% in October. 

Also, the Institute for Supply Management said its service-sector index rose in October to a 54.3 reading, up from 53.2 in September and above estimates for 53.5. Likewise, the Commerce Department said factory orders jumped by 2.1% in September -- the largest increase since January. 

Corporate Movers

General Motors said U.S. sales of its core brands – Chevrolet, Buick, GMC and Cadillac – jumped 13% in October compared with a year earlier. The giant auto maker, which was bailed out by the government, also filed new papers showing it expects to sell 365 million shares at its upcoming initial public offering for $26 to $29 each.

Ford’s (NYSE:F) stock jumped 5% to fresh 52-week highs after revealing a 19% rise in October U.S. auto sales from a year earlier.

Aetna (NYSE:AET) grew its third-quarter profits by 53%, prompting the No. 3 U.S. health insurer to hike its 2010 view. Aetna’s non-GAAP EPS of 84 cents solidly topped the Street’s view of 69 cents.

Time Warner’s (NYSE:TWX) third-quarter net income slid 21% and its non-GAAP EPS of 62 cents exceeded expectations for 53 cents. Revenue rose 2% to $6.38 billion, trailing estimates of $6.41 billion. The media conglomerate upped its 2010 profit-growth range to the high-20s on a percent basis, up from at least 20%.

JPMorgan Chase (NYSE:JPM) Vice Chairman Steve Black plans to leave the banking giant early next year, The Wall Street Journal reported. Black, a longtime ally of CEO Jamie Dimon, has no job plans but told the paper “it’s time to move on.”

Electronic Arts (NASDAQ:ERTS) saw its stock drop 4% after projecting a weaker-than-expected adjusted profit of 50 cents to 60 cents a share for the holiday shopping season. Even the high end of that range would sharply miss the Street’s view of 70 cents

Hartford Financial (NYSE:HIG) soared 9% after beating the Street with non-GAAP EPS of $1.34, well above estimates of just 97 cents. The insurer also projected 2010 EPS of $2.60 to $2.70, which would solidly top forecasts for $2.25.

Toyota Motor (NYSE:TM) reported a 4.4% decline in U.S. auto sales in October due to slowing car sales.

Chrysler’s U.S. October sales soared 37% from a year ago, boosted by demand for trucks and SUVs.

OpenTable (NASDAQ:OPEN) surged 11% to 52-week highs after solidly beating the Street with non-GAAP EPS of 23 cents and a 44% jump in revenue to $24.5 million. Analysts had been calling for EPS of just 15 cents on revenue of only $23.2 million.

Garmin's (NASDAQ:GRMN) stock dropped 5% a day after the GPS maker reported a weaker-than-expected non-GAAP profit of 70 cents. Analysts had projected EPS of 75 cents. Sales slid 11% to $692 million, badly missing expectations. Garmin also cut its 2010 EPS and sales guidance below the Street's view.      

AOL’s (NYSE:AOL) third-quarter profits doubled despite a 27% drop in advertising revenue. The company’s non-GAAP EPS of 82 cents blew away the Street’s view of 48 cents, sparking a 3% rally in its stock. Revenue slid 26% to $563.5 million, missing estimates for $557 million.

Global Markets

The U.K.'s FTSE 100 dropped 0.15% to 57748.97, France's CAC 40 sank 0.59% to 3842.94 and Germany's DAX declined 0.55% to 6617.80. 

In Asia, Tokyo's Nikkei 225 inched up 0.06% to 9159.98, Hong Kong's Hang Seng soared 2% to 24144.70 and China's Shanghai Composite slid 0.47% to 3030.99.