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Stocks started the session in negative territory before making their way higher to tout gains in excess of 3%. Although another late selling effort pared gains, the stock market still finished higher. Friday’s advance put an end to the month-long streak of failing to register back-to-back gains.

Earnings announcements were relatively light ahead of the opening bell, causing market participants to turn to other corporate announcements and economic data.

Integrated oil giant Chevron (CVX 74.60, +0.42) traded in choppy fashion after posting better-than-expected third quarter results. Its net income more than doubled, thanks largely to record high oil prices.

Oil prices were down more than 4% at their session low, but made a rallied late in the day to close roughly 3% higher near $68 per barrel. Despite the rally in crude prices, energy remained a laggard. It ended the session just 0.6% higher, up 13.3% for the week.

Tech (+0.1%) was also a notable laggard. Semiconductors fell 0.4% after Intel (INTC 16.03, -0.14) indicated current financial conditions could have a negative impact on operations.

Internet search companies Yahoo! (YHOO 12.82, -0.11) and Google (GOOG 359.36, -0.33) posted mixed results after reports suggested a business deal between the pair is looking unlikely due to regulators’ requirements.

Financials emerged to provide leadership after lagging in the prior session. The sector closed 5.5% higher, more than any other sector, as every one of its industry groups advanced. Financials finished the week 11.6% higher.

Failing to participate in the gains, though, was Barclays (BCS 10.73, -2.88). Shares of the British bank sunk after it received nearly $12 billion in capital from a group of Middle East investors, according to reports.

Separately, Fed Chairman Bernanke stated in a prepared speech that the idea of privatizing GSEs and letting them compete as private mortgage insurers and securitizers has been discussed. He also stated that at least under the most stressed conditions, some form of government backstop may be necessary to ensure continued securitization of mortgages.

Many pundits continue pointing to the need to shore up the housing industry and, in turn, mortgage exposure on banks’ balance sheets before the economy can get back on track.

Still, central banks continue using traditional tools to stimulate growth. Most recently, Japan’s central bank announced a key overnight lending rate target cut to 0.3% from 0.5%.

In other economic data, the core PCE deflator was up 0.2%. Total PCE deflator was up 0.1%, as energy prices dipped. The third quarter employment cost index provided good news from an inflation standpoint, and with a softer labor market, there is reason to expect the favorable trend to persist.

September personal income and spending numbers were down 0.3%, reaffirming what was indicated in the advance third quarter GDP release.

For the week, investors pushed stocks more than 10% higher, whcih marks the best single-week advance in recent years. However, the stock market finished the month almost 17% lower, marking one of the worst monthly performances in decades.

 Stocks are trading with healthy gains after opening the session in negative territory. Only defensive-oriented sectors exhibited resilience early on, but now seven of the 10 economic sectors are showing gains.

Should the stock market end the session higher, it would be the first back-to-back advance in over one month. Currently, the S&P 500 is poised to conclude the week 10.0% higher, though it is facing a loss of 17% for October.

Market participants received another dose of economic data this morning. The core PCE deflator was up 0.2%. Total PCE deflator was up 0.1%, as energy prices dipped. The numbers are likely to be lower in upcoming months. Additionally, the third quarter employment cost index provided good news from an inflation standpoint. With a softer labor market, there is reason to expect the favorable trend to persist in the fourth quarter.

September personal income and spending numbers were down 0.3%, which was not surprising after yesterday’s advance third quarter GDP release. Despite indications of softer consumer spending, retailers are outperforming the broader market. They are currently up 2.7% this session. Retailers are likely to benefit from lower oil prices as fewer dollars at the fuel pump means more money for discretionary purchases.

A stronger dollar is helping put pressure on oil prices. The greenback is up an impressive 1.7% this session, when measured against a basket of foreign currencies. The U.S. dollar is up 12.1% year-to-date.

The dollar’s recent strength is owed to international investors seeking safety from economic turmoil. Such turmoil has prompted central banks across the globe to cut interest rates. Most recently, Japan’s central bank announced a key overnight lending rate target cut to 0.3% from 0.5%.

Crude prices are down 2.5% midsession. The commodity most recently traded hands for little more than $64 per barrel.

Crude oil prices hit an all-time high of $147 per barrel in the third quarter, helping Chevron (CVX 73.85, -0.33) more than double its net income. The company posted better-than-expected third quarter results.

Elsewhere in corporate news, Yahoo! (YHOO 13.12, +0.19) may be barred from reaching a search deal with Google (GOOG 357.83, -1.86), given regulators’ trust concerns.

The financial sector (+2.7%) has emerged as a leader, after trailing in recent sessions.  Barclays (BCS 10.91, -2.70) is a laggard, though, after disclosing it received a nearly $12 billion capital infusion from a group of investors from the Middle East, according to reports.

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The stock market settled with a 1.1% loss Wednesday after late-session surge made in the final hour following an FOMC rate cut was reversed in the final minutes of trade after headlines hit the wires that raised concerns regarding General Electric’s (GE 19.20, -0.29) revenue in 2009. Meanwhile, commodities made one of the strongest gains on record as the dollar got hammered.Specifically, the S&P 500 was up 3.1% with 10 minutes left in the session and then quickly sank to a 1.8% loss before settling with a decline of 1.1%. Small and mid-cap stocks outperformed with gains of 1.7% and 1.8%, respectively.

With regard to GE, Dow Jones reported that the conglomerate is aiming to keep 2009 profit the same as 2008, even if revenue declines 10-15%. The profit outlook is good news given the current consensus estimate anticipates a 9% decline year-over-year. However, the revenue view doesn’t say much about the economic outlook and implies that GE will cost cuts to meet its profit goal.

This was disappointing to the market when thinking of the demand outlook for this global company, sparking a sweeping decline in other multi-national companies in the final minutes of the trading session.

After the close, however, CNBC noted that GE said the comment was not new and shares of GE were trading up in the after hours session.

The Federal Open Market Committee cut the fed funds rate by 50 basis points to 1.00%. This marks the lowest level since June 2004. The discount rate was reduced by 50 basis points to 1.25%. Both actions were unanimously approved. The Fed said the pace of economic activity has “markedly” slowed as consumer expenditures declined, while inflation pressures are expected to moderate due to the drop in commodity prices and weaker economic prospects.

The FOMC believes that over time this action, along with the Fed’s other measures, will help promote moderate economic growth. The announcement did not give any surprises, and left the possibility for further rate cuts.

Separately, the Fed established temporary currency swap lines with the central banks of Brazil, Mexico, South Korea and Singapore. The move is meant to improve liquidity and complement the Fed’s current swap lines with ten other central banks.

Seven of the ten sectors posted a loss.

Consumer staples stocks trailed the broader market even though Procter & Gamble (PG 61.33, -1.90), Kraft (KFT 28.47, -0.41 ) and Kellogg (K 50.02, -0.66) all reported better-than-expected quarterly earnings results.

The telecom (-3.3%) sector was laggard after Qwest (Q 2.33, -0.27) reported worse than expected quarterly earnings and said it was cutting 1,200 jobs, or 3% of its workforce.

The consumer discretionary sector outperformed on a relative basis with a decline of 0.1%. Casino and gaming stocks soared 11.5% after MGM Mirage (MGM 13.75, +3.42) reported an earnings drop and outlook that was better-than-feared.

Commodities rallied across the board in a rebound trade that was compounded by a 2.7% drop in the dollar. Crude oil prices spiked 9.8% to $68.90 per barrel, getting an added lift after the government’s weekly energy report showed a smaller-than-expected increase in crude inventory levels.

As a result, the energy (+2.3%) and material (+2.7%) posted the largest gain this session.

In economic news, September durable goods orders rose 0.8%, better than the expected decline of 1.1%. Excluding transportation, durable goods orders fell 1.1%, which was better than the expected decline of 1.5%. However, nondefensive capital goods excluding aircraft, which is a proxy for business investments, fell 1.4%.

Stocks are flat, commodities are rallying and the dollar is being clipped ahead of the FOMC policy announcement at 2:15 PM ET.

Fed funds futures fully price in a 50 basis point rate cut, and suggest a 48% chance of a 75 basis point cut. The fed funds target rate is currently at 1.50%, although the effective fed funds rate has been under 1.00% for the last nine sessions.

The dollar is getting hammered, falling 2.6% against a basket of world currencies as the euro gains 3.5% and the pound rallies 4.5%.

The weakness in the dollar is helping to fuel a rally in commodities (+5.9%). Crude oil prices are up 9.0% to $68.38, aided by a lower-than-expected increase in inventory levels.

The gain in crude and other commodities is helping the energy (+5.2%) and material (+2.4%) sectors outperform.

In economic news, September durable goods orders rose 0.8%, better than the expected decline of 1.1%. Excluding transportation, durable goods orders fell 1.1%, which was better than the expected decline of 1.5%. However, nondefensive capital goods excluding aircraft, which is a proxy for business investments, fell 1.4%.

Quarterly earnings results were mostly better-than-expected, although several companies issued downside guidance. Procter & Gamble (PG 61.21, -2.02), Kraft (KFT 29.02, +0.14) and Kellogg (K 50.89, +0.21) all posted better-than-expected results. Corning (GLW 10.52, -0.90), Garmin (GRMN 22.34, +0.92) and Moody’s (MCO 21.07, +0.46) all beat, but issued downside outlooks. Office Depot (ODP 2.00, +0.11), MGM Mirage (MGM 13.06, +2.73) and Qwest (Q 2.38, -0.22) reported worse-than-expected earnings. The latter company also said it plans to cut 3% of its workforce, or 1,200 jobs.

Overseas markets rose, aided by the late session rally in U.S. stocks on Tuesday. The Euro Stoxx 600 is up 6.4%, with leadership in banking stocks. Japan’s Nikkei rose 7.7%, boosted by continued reports that the Bank of Japan may cut its bench mark lending rate by 25 basis points to 0.25%.

S&P futures vs fair value: +2.00. Nasdaq futures vs fair value: +8.50.  Futures recover early losses and currently point to slightly higher open ahead of the FOMC announcement at 2:15 PM ET.  Fed funds futures fully price in a 50 basis point rate cut, and suggest a 42% chance of a 75 basis point cut. In earnings news, Procter & Gamble (PG) earned $1.03 in its fiscal third quarter, a 14% year-over-year increase, which was $0.05 better than expectations.  Comcast (CMCSA), Kraft (JFT) and Newmont Mining (NEM) also topped expectations.  Corning (GLW) and Garmin (GRMN) and Moody’s (MCO) beat for their latest quarter, but issued downside guidance.  Office Depot (ODP) and Qwest (Q) reported worse-than-expected earnings.  In overseas trading, Japan’s Nikkei rose 7.7% on continued reports that the Bank of Japan will cut its benchmark rate by 25 basis points. The Euro Stoxx 600 is up 5.1% with banks leading the way.

A volatile session gave stock market bulls something to cheer about, with the Dow surging 889 points on Tuesday, as bargain hunting and short-covering offset the weakest consumer confidence reading on record.

The S&P 500 rose 3.9% shortly after the opening bell, buoyed by strength in overseas markets. The index then fell to a loss of 0.4% due to the bearish consumer confidence news, only to rally into the close at session highs with a gain of 10.8%.

Strength was broad-based with all ten economic sectors posting a gain of at least 7.5%.

Retailers rallied 13.6%, with Target (TGT 38.44, +5.75) gaining 11.7%. Pershing Square Capital Management shared ideas with Target related to an alternative ownership structure of Target’s real estate. The consumer discretionary sector rose 13.1%.

The energy sector rose 11.9%, lifted by better-than-expected results at Occidental Petroleum (OXY 49.77, +7.69) and Valero Energy (VLO 16.83, +1.72). The sector also received an indirect boost from BP (BP 45.52, +6.37), which posted stronger-than-expected earnings and revenue growth.

On a related note, the materials sector climbed 12.6%, aided by better-than-expected earnings at U.S. Steel (X 32.25, +4.43)

Boeing (BA 48.85, +6.49) climbed 15.3% after it reached a four-year tentative labor agreement with its striking machinist union. The union, Boeing’s largest, has been on strike since the beginning of September due to disagreements on compensation, benefits and job security. The industrials sector rose 10.0%.

In overseas trading, Asian markets rallied with Japan’s Nikkei closing up 6.4% and Hong Kong’s Hang Seng surging 14.4%. European stocks rose 2.3%. Germany’s DAX surged 11.3% as Volkswagen spiked 81.7%, marking a two-day gain of 348% due to a short-covering fueled rally after Porsche said it was increasing its stake in the automaker on Sunday.

The gains in Volkswagen sparked some volatility in the U.S. market, with Goldman Sachs (GS 94.59, +1.71) dropping as much as 11% on speculation that it was exposed to Volkswagen short positions. CNBC reported Goldman’s sources said the company had no significant losses related to Volkswagen. The financial sector rose 12.5%.

In economic news, it was expected that consumer confidence would fall in October given the recent market turmoil, but the severity of the decline was not anticipated. Specifically, consumer confidence plummeted 23.4 to 38.0 in October, according to the Conference Board’s survey. This was worse than the expected reading of 52.0. It marks the lowest level on record, which dates back to 1967.

August home prices in 20 major metro areas fell 16.6% year-over-year, according to the S&P/Case-Shiller Index, which matched expectations. Home prices have fallen on a year-over-year basis for 20 straight months.

In currency trading, the dollar soared 4.1% against the yen after reports indicated that the Bank of Japan is considering cutting its benchmark interest rate to 0.25% from 0.50%.

Stocks started the session on a strong note as global markets rallied, but the lowest consumer confidence reading on record prompted a pullback.

At midday the S&P 500 is up 1%. The index was up as much as 3.9% shortly after the bell and was down as much as 0.4% at 11:00 AM ET.

Economists expected that consumer confidence would fall in October given the recent market turmoil,  but the severity of the decline was not expected. Specifically, consumer confidence plummeted 23.4 to 38.0 in October, according to the Conference Board’s survey.  This was worse than the expected reading of 52.0. It marks the lowest level on record, which dates back to 1967.

In other economic news, August home prices in 20 major metro areas fell 16.62% year-over-year, according to the S&P/Case-Shiller Index, which matched expectations.  Home prices have fallen year-over-year for 20 straight months.

Nine of the ten sectors are posting a gain.

The energy sector is leading the way, buoyed by better-than-expected results at Occidental Petroleum (OXY 44.25, +2.17) and Valero Energy (VLO 16.31, +1.20).  The sector is also getting an indirect boost from BP (BP 43.23, +3.08), which posted stronger-than-expected earnings and revenue growth.

The financial sector (-0.1%) is a notable laggard as investment banks fall -3.9% and multi-line insurance companies decline 1.8%. There is not a specific news item to account for the selling, which appears to be caused by market rumors and speculation.

In overseas trading, Asian markets rallied with Japan’s Nikkei closing up 6.4% and Hong Kong’s Hang Seng surging 14.4%.  European stocks as whole are up 1.4%, but their advance was cut short as U.S. stocks gave up opening gains.