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Date: Wednesday 20 Aug 2008

LONDON (ShareCast) - Strong investment banks, weaker oil prices and a decent lead at Hewlett Packard helped US shares rally and offset further losses at mortgage financiers Freddie Mac and Fannie Mae.

Both slumped to a double figure percentage loss on worries that the government will have to take them over, but banks recovered from a Goldman Sachs downgrade to third-quarter and full-year earnings estimates at Morgan Stanley, Lehman Brothers, JP Morgan and Merrill Lynch.

After the closing bell yesterday, computer maker HP posted third quarter earnings that topped estimates. The world's largest personal-computer maker said profit jumped 14% in the period thanks to higher laptop sales.

In other earnings news, BJ's Wholesale Club reported a slight increase in second quarter earnings and raised its full-year earnings forecast. Net income rose to $36.5m in the quarter to 2 August compared with $36.3m last time. The period included income of $2m of favourable state income tax audit settlements.

Total sales increased by 17.9% to $2.65bn, while comparable club sales increased by 15.5%, including a contribution from sales of gasoline of 8.1%. BJ's raised its earnings guidance for the full year to between $2.10 and $2.20 per diluted share from a previous guidance in the range of $2.04 to $2.14 per diluted share.

The Dow Jones rose 68 to 11,417, the tech dominated Nasdaq Composite is up 4 at 2,389, while the broad-based S&P 500 has added 7 to 1,274.

Oil prices hit $117 a barrel earlier today, but then tumbled below $114 after weekly government supply data showed a bigger than expected 9.4m barrel increase in crude inventories, though at the close crude was just below $115.

In economic news, mortgage applications declined by 1.5% last week despite a drop in interest rates. The Mortgage Bankers Association's index fell to 419.3 in the week ended 15 August from a seasonally adjusted 425.9 one week earlier.

The refinance share of mortgage activity was down to 34.8% of total applications from 35.2% the previous week.

S&P 500 - Risers
Slm Corporation (SLM) $14.30 +10.00%
Freeport Mcmoran B (FCX) $91.09 +7.54%
National Oilwell Varco (NOV) $74.65 +6.78%
Xto Energy Inc (XTO) $49.93 +6.69%
Cit Group Inc (Del) (CIT) $9.47 +6.52%

S&P 500 - Fallers
Fannie Mae (FNM) $4.42 -26.46%
Freddie Mac (FRE) $3.25 -22.06%
Analog Devices (ADI) $29.20 -9.15%
Sovereign Bancorp (SOV) $8.78 -7.38%
GANNETT CO INC (GCI) $17.40 -6.70%

Dow Jones I.A - Risers
Hewlett Packard Co (HPQ) $46.16 +5.65%
Bk Of America Cp (BAC) $29.32 +4.42%
Jp Morgan Chase Co (JPM) $36.99 +3.96%
General Motors (GM) $10.19 +2.41%
Amer Intl Group Inc (AIG) $20.80 +2.36%

Dow Jones I.A - Fallers
Intel Corporation (INTC) $23.31 -1.19%
3m Company (MMM) $70.69 -0.87%
Merck Co Inc (MRK) $35.00 -0.71%
Procter Gamble Co (PG) $70.30 -0.59%
Du Pont E I De Nem (DD) $44.02 -0.47%

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