Crude Bubbling Over (KMB, ETN, HS, CI, YHOO, GOOG, CAT, HSFT, SXCI)

Strong earnings from Caterpillar (CAT), a few large M&A deals, and even mention of QE3 from a Fed official sent stocks higher on the day. Meanwhile, crude was bubbling over after HSBC said that industrial demand in China increased month over month. With Europe largely in the background, stocks had a solid day based on the fundamentals. Europe’s woes remain, but we continue to think that if the sovereign debt issues can be largely contained, then stocks should close the year on a strong note.

The Chinese IT Stocks Index was the top performing tickerspy Index on the day, led by HiSoft Technology (HSFT) with a 15% gain. The Pharmacy Benefit Manager Stocks Index was the day’s worst performing tickerspy Index, with SXC Health Solutions (SXCI) down -23%.

Stocks climbed on the day, led by a 62-point, or 2.4%, jump in the Nasdaq to 2,699. The Dow added 105 points to close at 11,914, while the S&P advanced 16 points to 1,254. Oil surged $3.87 to $91.27 a barrel, while gold increased $16.20 to $1,652.30 an ounce.

In earnings news, shares of consumer products giant Kimberly-Clark (KMB) slid -4.6% after the Texas-based company lowered the high-end of its prior EPS guidance. Its third-quarter profit fell to $432 million, or $1.09 per share, from $469 million, or $1.14 per share, a year earlier. On an adjusted basis, Kimberly-Clark earned $1.26 a share, matching Wall Street estimates. Sales jumped 8% to $5.38 billion. The company forecast a full-year adjusted profit of $4.80-$4.90 a share, down from a previous forecast of $4.80-$5.05. Analysts were expecting $4.85. Nearly 50 pros held Kimberly-Clark in their portfolios at the end of Q2 and nearly 520 tickerspy members own the stock in their portfolios.

Shares of industrial products maker Eaton (ETN) jumped 4.7% after the company said its third-quarter profit rose to $365 million, or $1.07 per share, from $268 million, or 78 cents per share, a year earlier. On an adjusted basis, Eaton earned $1.08 a share. Revenue increased 15% to $4.12 billion. Analysts expected a profit of $1.08 per share on $4.16 billion in revenue. Eaton forecast a fourth-quarter profit of $1.06-$1.16 and a full-year profit of $3.95-$4.05. Analysts were expecting $1.10 for the fourth quarter and $3.98 for the full year. Nearly 30 pros held Eaton in their portfolios at the end of Q2 and nearly 400 tickerspy members own the stock in their portfolios.

In M&A news, shares of health insurance provider HealthSpring (HS) surged 33.7% after rival Cigna (CI) agreed to buy the company for $3.8 billion in cash, or $55 per share. The deal represents a 37% premium over the stock’s Friday close. Cigna also raised its 2011 profit forecast to $5.05 -$5.30 a share from $4.95-$5.25. Analysts were expecting EPS of $5.29. Cigna’s estimate excludes any contribution from the HealthSpring transaction. Cigna shares rose 1.4%.

Shares of Yahoo (YHOO), the second-largest U.S. Internet search provider, climbed 3.7% after The Wall Street Journal reported over the weekend that Google (GOOG) has spoken with multiple private equity firms about helping them finance a possible purchase of Yahoo. The Journal report did not identify the private equity firms that Google had spoken to.

Tags: CAT, CI, ETN, GOOG, HS, HSFT, KMB, SXCI, YHOO