IBD's Top 10 - Tuesday

Stocks Surge On Oil, Wells Fargo

1 Investors cheered a 2nd straight tumble in crude prices and Wells Fargo's results. The Nasdaq soared 3.1%, its best gain since April 1. The Dow and S&P 500 burst 2.5%, the NYSE composite 2.1%. But volume fell. Financial and transportation stocks led the advance while energy firms retreated. The 10-year Treasury yield rose 13 basis points to 3.96%.

Crude Dives For 2nd Day In Row

2 Aug. crude, which crashed $6.44 on Tue., fell $4.14 more to $134.60 a barrel. The market was surprised to learn that supplies rose last week by 2.95 mil barrels, defying views for a decline. Gasoline futures sank 10.54 cents to $3.2794 a gallon on weak demand and an unexpected supply build. Heating oil fell 7.8 cents to $3.841 as distillate inventories also climbed.

June Consumer Prices Rose 1.1%

3 That's the biggest gain in 26 years outside of a post-Katrina spike in Sept. '05, led by soaring energy costs. Year over year, consumer prices rose 5%, the most since '91. Core prices also were a little hot, up 0.3% vs. May and 2.4% vs. a year earlier. Worker pay isn't keeping up: Real weekly wages fell 2.4% vs. June '07.

Wells Fargo Beats, Shares Soar

4 The No. 5 U.S. bank's Q2 EPS fell 21% to 53 cents, beating views by 3 cents and triggering a sector rally. Revenue rose 16% to $11.5 bil, also over views. Wells Fargo WFC hiked its dividend by 10%, even as many rivals slash their payouts. The bank had less exposure to subprime mortgages than many of its peers. Wells Fargo shot up 33%; the SPDR Financial ETF jumped 13.1%.

U.S. May Cut Troop Levels In Iraq

5 Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, said he's likely to recommend further troop reductions this fall, saying "security is unquestionably and remarkably better." His remarks came as presidential candidates John McCain and Barack Obama spar over Iraq policy. Cutting troop levels in Iraq also make it easier to beef up deployments to Afghanistan.

Mining Consolidation Continues

6 Cleveland-Cliffs CLF will buy coal producer Alpha Natural Resources ANR for nearly $10 bil, about $128 a share, making the iron and coal miner the top supplier to U.S. steel makers. The deal follows recent mining takeovers by steel giants ArcelorMittal MT and Posco PKX to secure iron ore and coke supplies. Cleveland-Cliffs fell 7%. Alpha rose 11% to 104.93.

EBay Beats, But Outlook Is Soft

7 The online auctioneer's Q2 EPS rose 26.5% to 43 cents ex items, beating forecasts by 2 cents. Revenue rose 20% to $2.2 bil, above views. EBay EBAY touted a surge in new listings and a share buyback. But the Web giant sees Q3 EPS of 39-41 cents ex items on revenue of $2.10 bil-$2.15 bil. vs. views for a 41-cent gain and $2.18 bil in sales. EBay shares fell 7% in late trading.

Bernanke: 'Rough Time' For U.S.

8 Fed chief Ben Bernanke told a House panel that the economy is going through a "rough time" and acknowledged that inflation is "too high." For a 2nd straight day, he urged lawmakers to approve Treasury Dept. proposals to back up mortgage markets. "The housing market is really the central element of this crisis," he said.

Factories Sluggish, Housing Soft

9 June industrial output rose 0.5%, better than expected. But manufacturing production rose a modest 0.2% after declines in the prior 2 months. It fell 0.4% vs. a year earlier. Meanwhile, the Nat'l Assoc. of Home Builders' confidence index fell 2 points to a fresh record-low of 16 in July. That suggests no recovery in housing activity.

Yum Brands Beats, Shares Drop

10 The operator of KFC, Pizza Hut and Taco Bell lifted Q2 EPS by 16% to 45 cents, beating views by 3 cents. Sales grew 12% to $2.65 bil, above views. China same-store sales rose 14% vs. 2% in the U.S. and 4% overall. But Yum Brands YUM said rising commodity costs are hurting margins. U.S. operating profit fell 12%. Shares fell 5% in late trading.