Introduction for beginners

 The aim of trading in any market is to buy some goods cheaper and to sell them for a higher price. The international exchange FOREX market is not an exception. Only the goods in this market are not things or food, but currency rates of different countries. Just like any other goods, currencies have their value. 

The present section of the web site will help new traders quickly learn the main moments, connected with working in the FOREX market. 

Currency symbols. 

At first reading currency quotes may seem a bit complicated. However, it's not that difficult, if you remember two things: 

currency that is written first is the basic one, the meaning of the basic currency always equals 1.The US dollar is the major currency in the FOREX market, and usually it is considered the basic currency in the quotes. Among the main currencies the following pairs are singled out: USD/JPY, USD/CHF, USD/CAD. For these and for many other currencies the quotes show how many units of the second currency, i.e. the quoted currency, there is in one US dollar. For example, the quote USD/JPY 112.05 means that for one US dollar you have to pay 112.05 Japanese yens. 

When the US dollar is the major currency, and the quote rises, it means that the dollar rises, and other currency weakens. If the mentioned quote USD/JPY grows up to 125.05, the dollar becomes stronger, because it's possible to buy more yens for one dollar. In its turn, when the quote increases, the value of the yen becomes lower, and when the quote falls, its value grows. Such quotes are called reverse quotes. 

However, there are such quotes as GBP/USD, EUR/USD, AUD/USD and, for example, GBP/USD 1.3977 means that 1 British pound equals 1.3977 US dollars. Such quotes are called straight quotes. Accordingly, growing of the quote will show that the pound is rising, and the dollar is falling, and if the quote is falling, the pound is becoming cheaper, and the dollar is growing. In other words, if the quote increases, the value of the basic currency increases, too. 

Rather often in mass media the US dollar is omitted in a currency pair, and then the pair EUR/USD looks like EUR, and USD/CHF like CHF. 

The rate of one currency to some other currency, where the US dollar is missing, is called the cross rate, but the method of reading currency quotes is the same. For example, the quote EUR/JPY 129.37 means that one euro cists 129.35 yens. 

Trading in the FOREX market, the quote usually consists of two prices, bid and ask. Bid is the price at which you can sell the basic currency and, at the same time, to buy the quoted currency. Ask is the price at which you can buy the major currency (or sell the quoted currency). The difference between bid and ask is called spread. 

Currencies, as a rule, are quoted as exactly as up to 0.0001 (except for yen), and the last number (after the comma) is called the point or pips. The value of each point is different for each currency; it depends on the current quote. See the calculation of one point here. 

For example, the quote GBP/USD 1.5910/15 means that you can buy British pounds at the price of 1.5915 dollars for 1 pound, or you can sell pounds at 1.591 dollars for 1 pound. In this case, the spread is 5 points. 

Conducting transactions. 

To conduct a transaction it's necessary to make an inquiry about the quote. Usually a pair of currencies and the sum of the transaction is given. When the quote is received, it's necessary to make a quick decision, whether to buy, sell or cancel. The reason of haste is explained by continuous changes of prices, and the quote you have offered can become old and unfit for any operations. When the broker confirms the transaction, it will be impossible to cancel it. 

When the trader buys currency, the operation is called a long position. When he sells currency, it is called a short position. When carrying out one of these operations, the trader opens a position, it means that the fluctuations of currency rates can bring some profit or some losses, i.e. they actually influence the trader's account. The trader can hedge the position, conducting a transaction, which is contrary to the one on which the position was opened. For example, initially the transaction was Buy 100,000. Now, to hedge the position, it's necessary to make the reverse transaction, Sell 100,000 EUR. 

The principle of margin trading in currency trading allows increasing your purchasing power. Let's suppose that your security deposit is $3,000. Then with the leverage 1:100 you can buy $300,000, i.e. in reality there must be only 1 per cent from the transaction sum on your account. 

What are the benefits of margin trading? With a bigger purchasing power you can increase your profit from the investment by spending less money initially. However, don't forget that by using the principle of margin trading you can increase not only your profits, but also your expenses. 

For example, let's take a look at the calculation of the profit and losses when using leverage. Let's suppose that you have $3,000 on your account and, npticing, that the US dollar (USD) is underestimated in relation to the Swiss franc (CHF), you decide to buy dollars (and sell francs at the same time). The current bid/ask price for USD/CHF is 1.6220/1 (which means that you can buy 1 USD for 1.6225 francs or sell one dollar for 1.6220 francs). Your leverage is 1:100 or 1 per cent. You carry out a transaction, buying one lot, i.e. you buy $100,000 and sell 162,250 francs. At the leverage 1:100 your deposit, or margin for this operation will be $1,000. As you expected, the bid/ask price for USD/CHF rose up to 1.6330 francs. As you initially sold 162,250 francs, your profit was 1,000 francs. To calculate your profit in dollars, divide the profit 1,000 francs by the current rate USD/CHF, 1.6325, i.e. the profit was $ 612,56, which makes 61,16 per cent of profit from the initial investment. 

If you haven't closed the position yet, it will be interesting to calculate the profit/loss at a certain moment of time. In this case the profit or loss are called unrealized. You will get some profit or be at a loss only if you close the position at the same moment and at the same rate. 

When you conduct a transaction in the FOREX market, then, beside inquiring the quote and making a decision about the buy, sell or cancel commands, there are opportunities to make orders, which means an order to buy or sell currency at the rate that was chosen beforehand. For that there are buy stop, sell stop, buy limit, sell limit. 

If you want to sell currency at a lower rate, or buy it at a higher rate, than it is in the market at the moment, then you should use sell stop or buy stop. 

If you want to buy currency at a lower rate or sell it at a higher rate, than it is in the market at the moment, then you should use buy limit or sell limit. 

To fix the received profit, take profit is used, and if you're afraid of some unfavorable change of the rate, you should use stop loss to diminish your losses. 

Fulfilling of orders takes place at the moment, when the market price reaches the aim you have set, i.e. the transaction is carried out without your direct participation at the price, which was declared beforehand. It's very seldom, only during the so-called storm in the market, that some difference between the order price and the actual fulfillment price is allowed. 

Peculiarities of trading in the FOREX market. 

In the FOREX market every transaction has a date of currency supply - value date. As is well known, in the FOREX market spots prevail, i.e. currency supply takes place on the second working day after the transaction was conducted. 

An artificial closing out of the current (open) position on a concrete value date and opening of the similar position at the same moment, but on the next value date at the currency rate, containing various interest rates, is called a postponement of the position on SWAP points, or rollover. 

Postponing the position, you can get some profit or be at a loss, depending on the currency you're buying. Conducting a transaction, the trader gets some credit in the currency he's selling, and he has to pay interest for that. At the same time he put the bought currency in his deposit, and he has to get interest on this deposit. Interest rates are different for currencies, that is why there occurs a difference, which is take into account at postponing the position. If the client sold currency with a high interest rate, he will pay for postponing the position. If he bought currency at a high interest rate, the broker will pay him for postponing the position. 

See the current SWAP meanings in the table. 

Because of frequent fluctuations of rates in the exchange market, when the position is opened, your sum on the account (deposit and current profit/loss) can also change. Your brokers and the bank constantly monitor the changing sum. This monitoring is carried out in order to prevent your losses. You will be informed about the losses if they exceed the initial deposit (otherwise the broker will have to compensate the difference). There's such a notion as margin, which is a part of the deposit, necessary for opening and supporting the position. The broker closes out the position at the current rate in a compulsory way (margin call), if equity falls lower than the minimum level to the margin. 

To avoid the margin call, it's recommended: 

to close unprofitable positions in time, not allowing your losses growing; 

to put stop loss orders; 

to open positions proportionally to the deposit size; 

to increase deposit.

Buffett fans set for 'capitalist Woodstock'

   Warren Buffett's Berkshire Hathaway had its worst year ever in 2008. But for the throng gathering in Omaha for Saturday's annual shareholder meeting, that's ancient history. 

Berkshire fans are far more interested in learning how Buffett sizes up the investing opportunities arising out of the global economic slowdown, and how the downgrade earlier this month of Berkshire's credit rating might affect the firm. 

Mostly, they expect to hear how Berkshire (BRKA, Fortune 500) will get back on track following a year in which its net worth dropped by $11.5 billion and its shares gave back five years of gains. 

"There are lots of opportunities out there right now," said Mohnish Pabrai, the managing partner at Berkshire shareholder Pabrai Investment funds in Irvine, Calif. "I'd love to see Warren give us some color on things like where they have been active in the debt markets." 

There should be ample time for color this year, even with attendance at the meeting expected to reach a record 35,000. One key is a shift in the format for the question-and-answer session with Buffett and Berkshire Vice Chairman Charlie Munger. 
0:00 /4:58Buffett's annus horribilis

The Berkshire meeting has long been a bit of a free-for-all, with Buffett and Munger fielding questions from anyone who took the microphones on the floor. In 1997, a year in which annual meeting attendance was estimated at 7,000, he dubbed the event "our capitalist's version of Woodstock" -- a label that has stuck. 

But this year's event should be a bit more orderly. The early morning rush to line up at the microphones has been replaced by a lottery, and Buffett and Munger will answer some questions that were submitted online and filtered by three journalists - including Carol Loomis of Fortune. 

The idea, Buffett has said, is to cut down on the non-Berkshire-related questions that had grown more prevalent as Buffett's profile rose. 

Last year he fielded one question on whether he believes in Christ ("I am agnostic") and three on environmental issues tied to the dams that Berkshire's Pacificorp unit operates on the Klamath River in Oregon. Buffett said regulators would have the final say there. 

"In recent years, we have received only a handful of questions directly related to Berkshire and its operations. Last year there were practically none," Buffett said in the guide to this year's annual meeting. "So we need to steer the discussion back to Berkshire's businesses." 
'Tailwinds' in insurance

The story there, Berkshire shareholders say, is largely upbeat, despite the downgrades earlier this month that stripped Berkshire of its triple-A credit rating. One of the downgrades came from Moody's (MCO) - the New York-based bond rater of which Berkshire owns 20%. 

Many investors brushed off the downgrades, coming as they did from ratings agencies that failed to warn investors of the credit meltdown. Still, some will be paying attention to any comments Buffett might make on the subject.

"I'd be interested to hear how the ratings actions could affect the business," said Glenn Tongue, managing partner at Berkshire shareholder T2 Partners. 

Meanwhile, there's little doubt that the third of Berkshire's industrial portfolio that focuses on economically sensitive businesses like retail and homebuilding will be hit hard by the recession. 

But as Buffett pointed out in February's release of his 2008 letter to shareholders, two-thirds of the company's businesses are in utilities and insurance -- which are less apt to suffer in an economic downturn. 

Berkshire holders such as Pabrai say the insurance business, which has been strong in recent years, could be in for even bigger gains as capital-impaired rivals raise prices to restore their financial health. 

"There could be some real tailwinds in some of the insurance lines," said Pabrai. 

Others note the regular income Berkshire shareholders stand to reap from the flurry of investments Buffett has made in blue-chip companies such as Goldman Sachs (GS, Fortune 500), General Electric (GE, Fortune 500) and Tiffany (TIF). 

They also see room for a substantial rise in Berkshire shares. At a recent $94,000 each, the class A shares have jumped more than 30% since the financial sector hit a recent low in early March -- but remain 38% below their all-time high from December 2007.

The company's less-expensive Class B shares, which have far fewer voting rights, have also bounced back lately. But at about $3,100 a share, they are also well below their peak from December 2007.

At last month's low, Tongue says investors in the A shares were essentially paying for the value of Berkshire's investment portfolio and getting the company's operating businesses -- such as insurer Geico and ice cream chain Dairy Queen -- for free. 

"Would you pay $70,000 for an envelope that contained $70,000 in cash and $50,000 worth of businesses?" he asked. "I think you would." 

This weekend in Omaha, it may be difficult to find anyone who wouldn't. 

Stocks recharge the advance

Stocks rallied Wednesday afternoon, pushing Wall Street to two-week highs, as investors found the positives in the day's bleak report on first-quarter economic growth.

Investors also geared up for an announcement from the Federal Reserve, due out shortly.

The Dow Jones industrial average (INDU) gained 180 points, or 2.3% at around 2:00 p.m. ET, just ahead of the Fed announcement. The S&P 500 (SPX) index added 20 points, or 2.4%. The Nasdaq composite (COMP) rose 42 points, or 2.5%.

Stocks were rising again after two down sessions, recharging the advance that boosted the major gauges all more than 20% over a six-week period. Last week only the Nasdaq gained, with the Dow and S&P 500 posting small losses.

"We had a period of consolidation on the back of a strong move," said Michael Church, president at Addison Capital.

"There have been some reports and earnings that were not as bad as expected and that's helped," he said. "At one point, investors were fearing the apocalypse, but it's become clearer that that's not what is happening."

Wall Street retreated Monday on worries about the potential economic impact of swine flu. On Tuesday, stocks slipped on reports that Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500) may need more capital should the recession deepen.

Fears that major banks may need more cash on hand have been in play this week ahead of the results of Treasury's "stress tests" of the largest companies, due next Monday.

"I think people are just looking forward to the tests being over," said Church.

GDP: The economy shrank at a faster-than-expected pace in the first quarter, surprising economists who were looking for an even slower pace of contraction after a rough fourth quarter of last year.

Gross domestic product fell at a 6.1% annualized rate in the first quarter after falling 6.3% in the fourth quarter. Economists thought it would fall at 4.7% pace, according to Briefing.com forecasts.

GDP was weighed down by a sharp decline in exports and plummeting business inventories. However, the inventory slowdown was seen as a positive, as it could mean the correction cycle is ending. In addition, personal consumption rose, after falling in the previous quarter, raising hopes that consumer spending will pick up.

In other economic news, home loan applications fell last week to the lowest levels in more than a month due to a drop in refinancing demand.

Federal Reserve: The Federal Reserve's two-day policy meeting ends Wednesday, with a decision on interest rates and a statement due at around 2:15 p.m. ET.

The central bank is widely expected to hold rates steady at historic lows near zero. However, the bank's assessment of the economy will be closely scrutinized. In addition, the Fed could announce it is speeding up its Treasury purchasing plan.

Wednesday is also significant as it markets President Obama's 100th day in office.

Banks: Citigroup (C, Fortune 500) has reportedly asked Treasury if it can pay out bonuses to certain workers, according to the Wall Street Journal. Citi has received $45 billion in federal bailout money and may need to raise more. Shares gained 7%.

Bank of America (BAC, Fortune 500) shareholders criticized CEO Ken Lewis for his handling of the company's recent purchase of Merrill Lynch. A vote has been taken at BofA's annual meeting on whether Lewis should retain his chairmanship with results to be announced soon. Lewis will retain his CEO position.

However, shares gained 5% as part of a broad bank stock rally. Wells Fargo (WFC, Fortune 500), Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500), Fifth Third were among the other gainers. The KBW Bank (BKX) sector index rose 4%.

Company news: Aetna (AET, Fortune 500) reported higher quarterly sales and earnings that topped estimates. But the health insurer also said it saw higher-than-expected medical costs. Shares slumped 9%.

Time Warner (TWX, Fortune 500), the parent of CNNMoney.com, reported weaker quarterly profit on slowing ad sales, but results were better than what analysts were expecting.

Dendreon (DNDN) shares rallied 105% in its first day of trading after saying its experimental treatment for advanced prostate cancer extended the lives of men suffering from the disease by four months. Shares were halted after the Tuesday afternoon announcement.

Market breadth was positive. On the New York Stock Exchange, winners beat losers six to one on volume of 700 million shares. On the Nasdaq, advancers topped decliners four to one on volume of 1.4 billion shares.

Bonds: Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.02% from 3.01% Tuesday. Treasury prices and yields move in opposite directions.

Lending rates were mixed. The 3-month Libor rate fell to 1.04% from 1.05% Monday, according to Bloomberg.com. The overnight Libor rate was unchanged at 0.21%. Libor is a bank-to-bank lending rate.
0:00 /00:59100 Days: Rating Obama

Other markets: In global trading, Asian markets ended mostly higher and European markets were higher in afternoon trading.

In currency trading, the dollar fell versus the euro and gained against the yen.

U.S. light crude oil for June delivery rose 97 cents to $50.89 a barrel.

COMEX gold for June delivery rose $6.90 to $900.50 an ounce.

Oil weak as demand fears remain

  The price of oil remains weak, at just under $49 a barrel, amid Opec warnings of falling demand and reports of high inventories. 

US light crude was down 42 cents at $48.99 a barrel, after three days of falls. Brent oil fell 54 cents to $51.42 a barrel. 

The oil producers' cartel said demand was shrinking faster than expected. 

Oil prices have slumped since hitting a record high of more than $147 a barrel in July last year. 

Prices dropped below $40 a barrel late last year. 

Demand drag 

Crude stocks reached 366.7 million barrels in the US, according to government data, the highest total since September 1990. 

At the same time, Opec forecast that demand would drop by 1.37 million barrels per day this year - greater than the 1.01 million barrels per day originally forecast - to average 84.2 million. 

"In the coming months, the market is expected to remain under pressure from uncertainties in the economic outlook, demand deterioration and the substantial overhang in supply," Opec said. 

Retail sales dropped 1.1% in March in the US, according to a government report released on Tuesday, renewing fears of a slowdown in demand. 

"Crude fell on the back of weaker-than-expected March retail sales, which also dragged on equities, and the main worry is still the large weekly increase in crude inventories," said Peter McGuire, managing director of Commodity Warrants Australia. 

There is as yet little sign that demand is picking up, said Ben Westmore, energy analyst with National Australia Bank. "Demand will have to come back before you see the oil price move up from $50 in a sustained way," he added. 

Last week, the International Energy Agency predicted that the global recession would cut demand for crude this year, with world oil demand falling by 2.4 million barrels a day to 83.4 million barrels. 

Separately, Mexico's state-owned oil company Pemex has unveiled plans to built its first new refinery in 30 years. The $9.1bn (£6.1bn) refinery is expected to come online in 2015. 

Even though Mexico is the world's sixth-biggest oil producer, it relies on US refineries to process a lot of its crude.

Stocks slump in early trading

     Wall Street retreats as worries about swine flu outbreak give investors a reason to step back after the rally. GM unveils restructuring.

 Stocks slipped Monday morning as fears about the economic impact of swine flu gave investors a reason to retreat after a rally that propelled the Dow industrials more than 20% in less than two months.

GM's restructuring plan was also in focus.

The Dow Jones industrial average (INDU) lost 80 points, or 1%, in the early going. The S&P 500 (SPX) index lost 9 points, or 1%. The Nasdaq composite (COMP) lost 17 points, or 1%.

Swine flu outbreak: The World Health Organization has called the outbreak of swine flu a "public health emergency of international concern." 

Mexico seems to be the center of the outbreak, although cases have spread to countries around the world.

As many as 103 deaths in Mexico are thought to have been caused by swine flu, CNN reported. In the United States, the largest number of cases has been reported in New York City.

Most U.S. airlines, including Delta (DAL, Fortune 500), American Airlines (AMR, Fortune 500), Continental (CAL, Fortune 500), United (UAUA, Fortune 500) and U.S. Airways (LCC, Fortune 500) have begun to waive fees for customers who have tickets to Mexico and wish to change their travel plans due to the flu outbreak.

"There are certain companies that are being affected by the flu, and people are worrying that this could mushroom into full-blown epidemic," said Peter Cardillo, chief market economist at Avalon Partners. "Obviously that would cut into GDP, and with global economies still in recession, that would add to economic woes."

Autos: General Motors (GM, Fortune 500) announced a restructuring plan Monday morning in an attempt to avoid entering bankruptcy. The company said it would cut 7,000 to 8,000 jobs in addition to its previously announced reductions, terminate its Pontiac line by 2010, cut more dealerships and restructure its debt. 

Shares of GM rose 20% in early trading.

On Sunday, Chrysler reached a tentative labor agreement with the United Auto Workers -- a key step in final efforts to help the automaker avoid bankruptcy. 

Market downgrade: Credit Suisse downgraded its rating on U.S. stocks one notch on Monday, saying the equities were expensive relative to those in other countries. The bank's report also said that first quarter earnings have been mediocre.

"Markets are also lower because Credit Suisse downgraded its rating on the U.S. market," Cardillo said. "Combined with the flu concerns, people have a reason they were looking for to take some profits off the table."

Cardillo said that many investors are worried that the seven-week market rally will end this week, as a number of economic reports -- including an initial report on first-quarter gross domestic product -- will likely pressure stocks. He believes the flu outbreak and market downgrade have given anxious investors the excuse to sell off some of their positions.

Earnings: Whirlpool (WHR, Fortune 500) on Monday reported profit fell 27% and sales dropped 23% in the first quarter. The company cut its outlook on exports.

Verizon Communications (VZ, Fortune 500) reported slightly higher earnings than a year earlier. Qualcomm (QCOM, Fortune 500) posted a net loss.

World markets: Concern about the economic fallout of the flu outbreak pressured airline and hotel stocks in overseas trading.

Most Asian shares tumbled, although Japan's Nikkei finished afternoon trading.

Oil and money: Oil prices tumbled, with U.S. light crude for June delivery falling $2.78 to $48.77 a barrel on the New York Mercantile Exchange.

The dollar edged higher against the euro and fell versus the yen. 

Stocks Slide After Drop in Home Sales

     quick pop at the open fizzled Thursday as economic data cast a shadow over the market and some better-than-expected earnings.

"I think there's nervousness back in the market," Art Cashin, director of floor operations at UBS, told CNBC. "The next several days will tell us whether it's going to be a significant pullback or just a cleanup of the overbought condition ... I'm leaning toward a significant pullback," he said.

Major U.S. Indexes







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Today's wobbly start followed a turbulent session Wednesday that left the Dow down about 1 percent. The tech-heavy Nasdaq, however, eked out a gain of 0.1 percent.

“We need about two to four weeks to recharge the batteries of the market … then we’ll be ready for the next leg higher,” Paul Schatz, president of Heritage Capital, told CNBC.

Existing-home sales dropped 3 percent to a 4.57 million annual rate in March, much lower than the 4.7-percent pace expected. February was downwardly revised to a 4.71 million pace.

And the Labor Department reported that initial jobless claims rose by 27,000 last week. The four-week moving average declined slightly but continuing claims shot up to a record 6.137 million.

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Most of the earnings of the past two days came in better than expected, which helped curb stocks' losses somewhat.

Apple [AAPL Loading... () ] shares rose after the technology giant late Wednesday delivered solid earnings, which showed sales of iPhones and iPods topped forecasts.

Fifth Third [FITB Loading... () ] also beat expectations, with a loss of 4 cents a share. Analysts had expected a more severe 27-cent loss.

Online auctioneer eBay [EBAY Loading... () ] reported its earnings fell but still beat expectations.

Defense contractor Raytheon [RTN Loading... () ] said its profit grew 14 percent in the first quarter. 

Hershey [HSY Loading... () ] reported its earnings rose more than expected, helped by price increases and market-share gains.

Radio Shack [RSH Loading... () ] also beat earnings expectations, after a dismal fourth quarter, helped by sales of digital-converter boxes.

But United Parcel Service [UPS Loading... () ], a bellwether for the economy, missed analysts' target. The package-delivery giant said the weak economy was dampening demand for the delivery service.

General Electric [GE Loading... () ] shares climbed after a contentious shareholder meeting in which shareholders blastede CEO Jeff Immelt for the 68-percent dividend cut. GE is the parent of CNBC.

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The auto sector remained in flux as the government wrangled with the struggling sector. US taxpayers are now likely to own a large stake in General Motors [GM Loading... () ] as the government could convert a $13.4 billion loan into common stock. The move could reduce the company's debt burden.

Meanwhile, Chrysler’s loans could also be converted into stock under Treasury plans, sources told Reuters. The Treasury offered the lenders $1.5 billion of first-lien debt and a 5 percent equity stake in the company in exchange for about $7 billion of debt they currently hold, according to the sources. 

And Fiat is apparently in talks to buy GM's Opel unit, though that is contingent on the outcome of its talks with Chrysler, the Wall Street Journal reported.

Among the other buzz in the market, Bank of America [BAC Loading... () ] CEO Ken Lewis claims to have come under pressure from Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Henry Paulson to keep quiet about the problems at Merrill Lynch and BofA, the Wall Street Journal reported. 

Johnson & Johnson [JNJ Loading... () ] shares fell even as the consumer-products company raised its dividend by 6.5 percent to 49 cents a share from 46 cents a share.

Still to Come: 

THURSDAY: Existing-home sales; Earnings from Microsoft, Amazon, AmEx and Burlington Northern after the bell
FRIDAY: G-7 meeting in Washington; durable-goods orders; new-home sales; Earnings from 3M, Honeywell, Schlumberger and Xerox

Stocks pull forward

   Stocks turned higher near midday Tuesday as investors shrugged off some early weakness following a mixed batch of quarterly results and attempted to revive the six-week market advance.

The Dow Jones industrial average (INDU) gained 30 points, or 0.4%, around 2 hours into the session. The S&P 500 (SPX) index gained 6 points, or 0.7%. The Nasdaq composite (COMP) gained 21 points, or 1.3%.

Stocks tumbled Monday, falling after a six-week run after Bank of America (BAC, Fortune 500) reported results that beat forecasts, but also warned about deteriorating credit quality. Despite better-than-expected results from JPMorgan Chase (JPM, Fortune 500), Goldman Sachs (GS, Fortune 500) and others, investors remain wary about bank results.

That wariness continued Tuesday, sending the KBW Bank (BKX) index down 3.5%.

Results: After the close Monday, IBM (IBM, Fortune 500) reported higher earnings that beat estimates on weaker revenue that missed estimates. The tech leader reiterated its goal of earnings of $9.20 per share in 2009 and said it is on track to meet its profit goal of $10 to $11 per share in 2010. Shares were little changed Tuesday. 

Also late Monday, Texas Instruments (TXN, Fortune 500) reported weaker quarterly sales and earnings that topped expectations. The chipmaker forecast first-quarter earnings per share above analysts' forecasts. Shares lost 2% Tuesday.

On Tuesday morning, Dow components Caterpillar (CAT, Fortune 500), Merck (MRK, Fortune 500), DuPont (DD, Fortune 500), Coca-Cola (KO, Fortune 500) and United Technologies (UTX, Fortune 500) all reported results.

Caterpillar reported its first quarterly loss since 1992, due to charges related to recession-tied layoffs. The heavy equipment maker also cut its full-year earnings and sales forecast, sending shares 3% lower in morning trading.

Merck reported weaker quarterly sales and earnings that missed analysts' forecasts, citing the global economic slowdown. The company also said its soon-to-be-completed purchase of Schering-Plough (SGP, Fortune 500) would help drive growth in the coming years. Merck shares fell 5.5%.

Separately, Schering-Plough reported higher-than-expected first-quarter earnings. 

DuPont reported weaker quarterly earnings that topped estimates on lower sales that missed forecasts. The chemical maker also cut its full-year 2009 earnings forecast and said it will take on most of its cost-cutting initiatives in the months ahead. Shares gained 3.5%.

Coca-Cola reported weaker quarterly earnings that met Wall Street's forecasts. The world's biggest soft-drink maker also reported lower quarterly revenue. Shares lost 3%.

United Technologies reported weaker quarterly earnings that met estimates on a drop in quarterly sales. However, the company said it expects to see profit growth in 2010, sending shares higher. Shares rose 4.5%.

Bonds: Treasury prices gained, lowering the yield on the benchmark 10-year note to 2.82% from 2.84% Monday. Treasury prices and yields move in opposite directions.