DealBook reports that Fidelity Investments has agreed to buy back $300 million worth of auction-rate securities (ARS). This settlement is a first in the sense that the previous redeemers were ARS issuers. Fidelity is considered to be "downstream" from the issuers. And its decision to settle puts pressure on other downstream participants such as Oppenheimer and Raymond James.

Exactly what has Fidelity agreed to do? "According to the terms of the deal, the first struck with a 'downstream' seller of these securities, Fidelity will not pay a fine. The firm will buy back auction-rate securities from individuals, charities and institutional investors alike, making no distinction among investor classes, as previous settlements with other firms have," DealBook writes.

Of the $330 billion in ARS that were issued, only 10% have been redeemed so far -- "the big banks have repurchased more than $35 billion of the securities and paid more than $360 million in fines," according to DealBook. I am impressed that regulators are continuing to push hard to get ARS issuers to take care of these investors given all the distraction from the weekly collapse of one major financial institution after another.

Today was really about watching the oil ticker and seeing crude break down under the $124.00 mark. OPEC's president said in the right circumstances that oil could go back under $80.00. Median home prices fell almost 16% in May. The US's failed trade talks with China at the W.T.O. hardly mattered. It even looked like people on Wall Street were in a good mood today as the dollar hit a monthly high. After a near $3.00 drop to under $122.00 you have to wonder.... Can gasoline hit $3 again this year?

Here are today's unofficial closing bell levels:

DJIA 11,395.12 (+264.04)
S&P500 1262. 94 (+28.57)
NASDAQ 2319.62 (+55.40)
10-YR T-NOTE 4.044% (+0.026%)
52-WEEK LOWS
Top Analyst Upgrades
Top Analyst Downgrades

Kraft Foods Inc. (NYSE: KFT) saw another gain of 2% to $31.45 in the final minutes after yesterday's earnings gains. But the key to today's move besides the market was massive stock options trading.

Intuitive Surgical Inc. (NASDAQ: ISRG) develops, manufactures and markets robotic technologies designed to improve patient returns.

• ISRG is expected to report EPS on 10/18.
• Oppenheimer says: "We believe any competition ISRG faces is at least 7-10 years away. We believe the recent sell-off offers an opportunity. We continue to rate shares Buy and reiterate our $270 price target."
• ISRG October 250 straddle is priced at $30.90. ISRG overall option implied volatility of 80 is above its 26-week average of 48 according to Track Data, suggesting larger price risk.

Yahoo! Inc. (NASDAQ: YHOO) is expected to report EPS of 8 cents 10/16 according to Thomson First Call.

• Alex Brown has a Hold rating and a $24 price target on YHOO.
• Alex Brown says: "We expect YHOO to report 3Q results in-line to slightly below expectations, as US traffic declines of 9% and search volume slowdown may pressure growth."
• YHOO October 27.5 straddle is priced at $2.71. YHOO November option implied volatility of 51 is above its 26-week average of 36 according to Track Data, suggesting larger risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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Newell Rubbermaid Inc (NYSE: NWL) held it analyst day with the investment community on Tuesday. Yesterday, Newell was getting upgraded across the board.

We began blogging about the merits of Newell's turnaround back in April when the stock was trading at $26, today the stock is around $31, up 19%. Merrill, Smith Barney and Oppenheimer have raised its price targets to $34-to-$35 price range.

In my opinion, the analysts' price targets are too low. Estimates are for Newell to earn $1.95 per share, but Newell will most likely earn over $2.00. Also, as the company exceeds earnings expectations, the P/E investors are willing to pay will go from 18x to 20x. I see Newell's stock price approaching $40 by the end of 2007.