Don’t Fight the Fed: Logic Proves Sound In Triple-Digit Dow Rally (QCOM, WFMI, RIG, BHP, POT, SMSI)

Yesterday, we said the bull market was still intact and not to fight the Fed, and the market certainly gave our sentiment a vote of confidence with a strong showing today. As we’ve been saying for some time now, we continue to believe the market will have a solid close to the year, and nothing in the data has persuaded us otherwise in this assessment.

The Mobile and Wireless Software Stocks Index was the top performing tickerspy Index on the day, led by Smith Micro Software (SMSI) with a 19% gain.

Stocks surged on the day, with the Dow soaring 220 points to 11,435. The S&P rose 23 points to 1,221, while the Nasdaq jumped 37 points to 2,577. Oil climbed $1.80 to $86.49 a barrel, while gold advanced $45.50 to $1,383.10 an ounce.

On the economic front, the Labor Department said that initial claims for jobless aid increased by 20,000 last week to a seasonally adjusted 457,000. Economists were expecting the claims to rise to 443,000. In a separate report, the Labor Department also announced that productivity grew at an annual rate of 1.9% during Q3, up from a -1.8% decline during Q2.

In earnings news, shares of Qualcomm (QCOM) jumped 5.8% after the cell phone chipmaker issued upbeat guidance and announced Q4 results that topped expectations. For the period ended September 26th, the company earned $865 million, or 53 cents a share, compared with $803 million, or 48 cents a share, last year. Adjusted EPS was 68 cents, which easily beat the 59-cent consensus. Revenue rose 10% to $2.95 billion. Analysts were expecting revenue of only $2.85 billion. Looking forward, Qualcomm forecast Q1 EPS of 70-74 cents on $3.05-$3.35 billion in revenue, which came in above the Street’s estimate of 64 cents on $2.99 billion in revenue. For FY11, the company expects EPS of $2.63-$2.77 on $12.4-$13 billion in revenue, above the Street view of $2.59 in EPS on $12.1 billion in revenue.

Whole Foods Market (WFMI) boosted its FY11 outlook, sending its shares soaring 15.1%. For Q4, the natural-foods grocer posted a profit of $57.5 million, or 33 cents per share, up 58% from $28.7 million, or 20 cents per share, a year earlier. Analysts were expecting EPS of 28 cents. Sales climbed 15% to $2.1 billion, while same-store sales rose 8.7%. For the full year, the grocer raised its projection to EPS of $1.66-$1.71 from $1.59-$1.64. Analysts were looking for FY11 EPS of $1.62. A total of 14 Pro investors counted the stock in their top-15 U.S.-listed equity holdings at the start of Q3, while 324 tickerspy members held the stock in their portfolios.

Shares of oil drilling owner and operator Transocean (RIG) edged up 0.4% despite the company reporting a -48% drop in its Q3 profit as a result of both higher costs and the Gulf of Mexico oil drilling moratorium. For the quarter, net income was $368 million, or $1.15 a share, down from $710 million, or $2.20 a share, a year ago. Wall Street was expecting EPS of $1.36. Revenue fell to $2.31 billion from $2.82 billion. The company said it expects FY10 revenue to fall below the $11.6 billion it earned in 2009. Transocean was the owner of Deepwater Horizon, the drilling rig that exploded in April. A total of 1,764 tickerspy members held the stock in their portfolios, but no pros held the stock as a top holding.

Mining giant BHP Billiton’s (BHP) $39 billion hostile bid for fertilizer producer Potash (POT) was blocked by Canada, only the second time since 1985 that the country has stopped a foreign takeover. Canada said the deal was not in its best interest. Shares of Potash slid -2.4% on the news, while BHP’s stock rose 6.0%.

Tags: BHP, POT, QCOM, RIG, SMSI, WFMI