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Stocks Surge After Geithner Unveils Taxpayer Guaranteed Toxic-Asset Plan

US Session Key Developments

  • Treasury Announces $1 Trillion Toxic Asset Purchase Plan
  • S&P Surges 7.1%, Most Since Oct. 28, Biggest 10-Day Gain Since 1938
  • February Home Resales Rise 5.1%

Stocks Surge After Geithner Unveils Taxpayer Guaranteed Toxic-Asset Plan

Stocks surged 7.1% with the S&P 500 advancing by the most since Oct. 28 after U.S. Treasury Secretary Geithner’s toxic-asset plan jolted Wall Street. The sharp move ushered in the largest 10-day gain since 1938. Geithner’s plan will use $1 trillion to incentivize private investors to purchase many illiquid assets including mortgage securities and agency debt. The deal will employ 10% of this money to work as a taxpayer subsidy to many of these investors while also providing government guarantees in case the securities continue to falter. Not surpassingly, financials in the blue-chip index bulled-ahead 22.91%, marking a 50.1% advance in the sector over the last two weeks. JPMorgan and Wells Fargo performed the strongest gaining on average of 24% with Citigroup seeing its shares traded the most of any company in the index. But this rally may be short-lived. If the real economy continues to falter, the consumption habits of the public may continue to be dwarfed, disabling much wealth creation that would truly enlighten the banking sector.

Dow 30            7775.86                +497.48                  +6.84%
Financials in the blue-chip index rose surged 22.91%, led by JPMorgan’s 25% move. Industrials were the second-best performing sector with Caterpillar advancing 9.46%.

NASDAQ        1555.77                 +98.50                      +6.76%

Information Technology advanced 6.38% with leading names such as Microsoft and Cisco jumping 7.44% and 6.73%, respectively. Sun Microsystems was one of the few stocks that slipped, as investors took some of the profits earned from the IBM take-over news.

S&P 500         822.92                   +54.38                       +7.08%

Consumer Staples was the worst performing sector in the Standard and Poor’s index, managing to gain a still impressive 3.77%. Only seven stocks slipped on the day. Implied volatility on the index fell 2.66 points, or 5.8%.

Filed under: Stocks, , , , , , , , , , , , , , , , , ,

Sell Financial Stocks, Says Bank of America Analyst and Hedge Fund After Historic Rally

WIRE: “The history of bubbles shows quite well that financial sector consolidation is inevitable,” Bernstein, Bank of America’s chief investment strategist, wrote in a research note. “Financial stocks will be attractive when the government tries to speed up that inevitable process. However, to the contrary, the government continues to attempt to stymie that inevitable consolidation…”

WIRE: BlackRock Inc.’s global macro fund, the world’s second-best performer over two years among hedge funds that invest based on economic trends, is betting against this month’s equities rally and buying bonds as a recovery from the worst credit crisis since the Great Depression falters…

Filed under: Stocks, , , , , , , , , , , , , , , , , ,

Stock Bargains Everywhere as ‘Bull-Market’ Begins, Says Analyst

WIRE: The next “bull-market” rally has begun and there are bargains in every emerging market, Templeton Asset Management Ltd.’s Mark Mobius said, refuting predictions that the equities meltdown will continue.

“You have to be careful not to miss the opportunity,” said Mobius, who helps oversee about $20 billion of emerging- market assets at San Mateo, California-based Templeton. “With all the negative news, there is a tendency to hold back…”

Filed under: Economics, Stocks, , , , , , , , , , , , , , , , ,

Stocks Rally After Fed Decision to Pump $1.25 Trillion Into Economy

US Session Key Developments

  • Fed to Buy $1.25 Trillion of Treasuries and Mortgage Securities
  • IBM Seeks Sun Microsystems Takover
  • General Mills Earnings Disappointed

Stocks Rally After Fed Decision to Pump $1.25 Trillion Into Economy

Stocks snapped into positive territory within minutes of the Federal Reserve’s announcement that it would purchase $300 billion of longer-dated treasuries along with $750 billion in agency and mortgage-backed securities. Mortgage rates are closely linked to yields on 30-year U.S. government bonds and are hence expected to decline with the Fed’s new course of direction. “To provide greater support to mortgage lending and housing markets,” the Fed said. The news brought the S&P to close ahead for the sixth time out of the last seven trading sessions. Financials absolutely loved this news, surging 10.10% in the 500 stock index. Citigroup traded and finished above $3.0 for the first time in a month as central bank action alleviated doubts in the bank’s ability to continue having access to cash. Despite this spike in momentum, Citi may see a sell-off tomorrow as the once largest bank plans to see shareholder approval to issue 40 billion new shares. Bank of America also rallied 22.33% to finish at $7.67.

Dow 30              7486.58             +90.88                +1.23%
Dow stocks were primarily weighted to the upside despite two sectors, Consumer Staples and Information Technology, finishing the day down. The tech industry’s representation in the Dow took a hit after reports that IBM and Hewlett Packard, both blue-chip members, would be bidding on Sun Microsystems.

NASDAQ           1491.22               +29.11                  +1.99%
NASDAQ stocks performed the strong after the report of a takeover of Sun Microsystems sent the stock roaring by 78.87% to close the day at $8.89.

S&P 500            794.35                +16.23                 +2.09%
Consumer Staples was the sole sector to sell off today after General Mills, the second-largest U.S. cereal producer, reported that earnings fell to 79 cents per share despite analyst expectations of 89 cents per share. Traders saw this as a sign of industry health, leaving Kraft slipping 4.38%. The VIX volatility index was unable to finish the day below 40. Instead it dropped only 1.8% to 40.06.

Filed under: Stocks, , , , , , , , , , ,

Stocks Rally After GE Chief Says They Can Withstand Loan Defaults

US Session Key Developments

  • General Electric Can Withstand Loan Defaults
  • Housing Data Surprises to the Upside
  • Alcoa Slashes Dividend 82% to 3 Cents Per Share

Stocks Rally After GE Chief Says They Can Withstand Loan Defaults

Wall Street celebrated St. Patrick today by finishing the trading session deep in the green after General Electric’s Chief Executive Officer Jeffrey Immelt stated that the company had sufficient reserves to withstand loan defaults. The comments come as a relief after the conglomerate slashed its dividend three weeks ago for the first time since the Great Depression. Surprising Housing and Producer Price data surprised to the upside, leaving traders in an upbeat mood. The prices that manufacturers pay for raw materials rose 0.2% when excluding food and energy with economists expecting the figure to rise by only 0.1%. With these costs now higher, taxable income deteriorates, which in turn allows companies to be more profitable. Sentiment continued its upward trend after housing starts unexpectedly rose 22% in February. As such, KB Home, the fourth-largest U.S. homebuilder advanced 9.3% along with Home Depot, which rose 6.7%. The blue chips could have performed a bit stronger had it not been for an 82% dividend slash from Alcoa, the largest U.S. aluminum maker and a member of the Dow 30, which brought its quarterly cash payout to only 3 cents per share. Nonetheless broader optimism led Financials to perform the strongest. JPMorgan, Wells Fargo, and Citigroup all moved ahead by more than 7.0%.


Dow 30            7395.70         +178.73           +2.48%

The Dow fell in the minutes after opening bell only to rally from thereon. It closed near the day’s high with only one sector finishing the day down, Materials. The sector’s performance is not of particular surprise considering Alcoa’s stock tanked 8.66% after it slashed its dividend by 82% to 3 cents per share.

NASDAQ         1462.11           +58.09              +4.14%
NASDAQ stocks performed the strongest with Information Technology rallying 4.25%. Apple rallied 4.44% after it had let developers preview a beta of the iPhone OS 3.0, which includes cut and paste features and automatic updates.

S&P 500          778.12            +24.23              +3.21%

S&P 500 stocks saw every sector in the index rally by at least 1.74% with Financials surging 6.58%. General Electric was one of the most active stocks, trading 22.74 million shares after its CEO announced that it had adequate capital reserves to withstand loan defaults. The VIX fear gauge couldn’t find enough momentum to fall below the 40 mark; nonetheless it dropped 6.7% to 40.80. Overall, 476 stocks rose with only 24 finishing the day down.

Filed under: Stocks, , , , , , , , , , , , , , , , , , ,

Stocks Fail to Rally a Fifth Day After Profit Taking Brings Indices Down

US Session Key Developments

  • Bernanke: No More Bank Failures Under My Watch
  • American Express Reports Rising Credit-Card Defaults
  • Citigroup Surges 30.9% to $2.33

Stocks Fail to Rally a Fifth Day After Profit Taking Pushes Indices Down

Wall Street traded most of the day in positive territory with the Dow and S&P 500 rising as much as 2.34% before finally slipping into the red the session’s final hour. The early advance came after Federal Reserve Chairman Ben Bernanke said that he would not allow any banks from hereon to fail, in a 60 Minutes interview yesterday. Mid-day trading revealed bad financial news that seemed to have forced some of the selling. American Express erased an 8.1% advance after reporting rising credit-card defaults. Despite this, Citigroup surged 30.90% to $2.33 after having traded at $0.96 two weeks ago. Bank of America also rose, by 7.29% to $6.18. The session’s day was filled with mixed performance. In fact, only 210 stocks in the S&P 500 finished up while 286 ended down.

Dow 30                    7216.97                  -7.01                      -0.10%
The Dow opened the day and traded most of the day in positive territory, rising as much as 2.34% before profit-takers forced the index down into the red in the final hour of trading. Basic Materials outperformed, rising 3.60% while Health Care plummeted 1.26%. Citigroup was the most active stock after seeing 287.02 million shares of its stock traded through the New York Stock Exchange.

NASDAQ                 1404.02                  -27.48                   -1.92%
The NASDAQ performed the worst of three indices, spending most of the day in the red and rising by as much as only 0.96% but closing near the day’s lows. SanDisk may have led the slide in tech-stocks after a Bank of America analyst report downgraded the stock’s performance to ‘underperform.’

S&P 500                  753.89                     -29.38                   -0.35%
The S&P 500 had a mixed day, with only 210 stocks rising and 286 ending the day below par. The fear gauge, which shows the implied volatility of call options on the S&P 500, rose for a second straight day, by 3.25% to 43.74.

Filed under: Stocks, , , , , , , , , , , , , , , ,

Stocks Have Biggest 3-Day Gain Since Nov. On Bank of America Profit Outlook

US Session Key Developments

  • Bank of America’s Chief Says Company Profitable First Two Months
  • Retail Sales Better Than Expected
  • General Electric Rating Cut to AA+

Stocks Have Biggest 3-Day Gain Since Nov. On Bank of America Profit Outlook

Stocks in the S&P 500 posted the largest 3-day gain since November with a 10.96% surge since Tuesday after Bank Of America Chief Executive Officer Ken Lewis followed the footsteps of his counterparts at Citigroup and JPMorgan. Indeed, Lewis announced that his bank was profitable in the first two months of the year to reporters after a speech given in Boston. The recent trend of CEO profit announcements has allowed Financials in the S&P to rise 33% on the week. General Electric added 13% after losing its AAA credit rating by less than expected. The conglomerate slashed its dividend for the first time since the 1930s two weeks ago in an effort to save the company billions of dollars so that it could prevent its own credit deterioration. Wal-Market advanced 3.1% after government Retail Sales estimated that purchases from such stores had done better than economists had anticipated. The figure for February fell -0.1% while forecasts called for a -0.5% decline.

Dow 30                     7170.06                 +239.66                    +3.46%
Financials pummeled through the remaining short-sellers, surging ahead 13.07%. Even the worst performing sector in the index, Technology, moved up 2.0%. JPMorgan saw 31.73 million shares traded to end the day up $2.80 or 13.73% at $22.30.

NASDAQ                  1426.10                  +54.46                        +3.97%
Technology stocks have become a smaller portion of index after being one of the worst performing sectors in composite. Nonetheless, the industry rallied 2.85% with Apple and Intel jumping about 4.0%.

S&P 500                  750.74                    +29.38                        +4.07%

The S&P 500 had its biggest 3-day again since November, rallying 10.96% since the surge began. Every sector in the index shared the sentiment with Financials rushing ahead 9.94%. Implied volatility on the index dropped 5.57% or 2.43 points to 41.18, leaving the fear gauge under 50 for the fifth straight trading session.

Filed under: Economics, Stocks, , , , , , , , , , , , , ,

Stocks Trade in Tightest Range Since Early February on JPMorgan Profit Outlook

US Session Key Developments

  • JPMorgan’s CEO Echoes Citi, Announces Profits
  • S&P 500 Trades in Tightest Range Since Feb. 2nd
  • Volatility Remains Under 50 For Fourth Day

Stocks Trade in Tightest Range Since Early February on JPMorgan Profit Outlook

Stocks in the S&P 500 traded in the tightest daily range since Feb. 2nd, but nonetheless finishing the day just inches above ground. The marginal gain extended yesterday’s 6.40% surge in the 500 stock index as speculation that Citigroup would be announcing much better than expected profits for the first quarter. Interestingly enough, JPMorgan Chief Executive Office Jamie Dimon echoed comments by his Citigroup counterpart, saying that his company would be profitable in January and February. Indeed, Citigroup continued to jump, by 6.21% to $1.54. JPMorgan extended gains by 4.62% to $20.40. But the broad market didn’t react as enthusiastically as they had just yesterday. This may be due to the fact that Moody’s Investor Service stated that the bank, which bought Bear Stearns last March and Washington Mutual in October, would see its credit rating outlook slashed to ‘negative’ last week.

Dow 30              6930.40                  +3.91                    +0.06%

Sector performance was mixed in the Dow with four slipping and five finishing the day ahead. The best performing one was the Financials, which rose 2.35%, while the worst one, Energy, slipped 1.69% after crude had its worst day since Mar. 2nd.

NASDAQ           1371.64                    +13.36                  +0.98%

The NASDAQ was the best performing index of the three major U.S. benchmarks, rising as much as 1.89% before profit-taking forced it down. Apple jumped ahead by 4.51% after it introduced a newer, smaller, talking iPod Shuffle that will sell for $79 Ebay also performed strongly, advancing 4.77% to $11.63 after the Silicon Valley-based company announced plans to expand the global presence of its PayPal online payment system.

S&P 500            721.36                      +1.76                     +0.24%

The S&P 500 traded in its tightest daily range since February 2nd after having its greatest day since early November. Financials were the best performing sector, advancing 2.40% as Citi and JPMorgan continued to surge more than 4.60%. The VIX volatility index dipped slightly, by 0.90% to 42.61 and marked the fourth consecutive session that the fear gauge remains under 50.

Filed under: Economics, Stocks, , , , , , , , , , , , , , , ,

Stocks Surge Most Since late November, S&P Ahead 6.1% on Citi Optimism, ‘Uptick Rule’

US Session Key Developments

  • Citigroup to Have Best Performance Since 2007, Says Pandit
  • Sen. Barney Frank to Reinstate ‘Uptick Rule’
  • Financial Shares Surge 15.58%
  • Dow and S&P Stocks Best Performance Since November


Stocks Surge Most Since Late Nov., S&P Ahead 6.1% on Citi Optimisim

U.S. stocks surged by the most since late November after an internal memo from Citigroup’s Chief Executive Officer Vikram Pandit stated that his bank would be having the best quarter since 2007. The memo stated that the company realized a substantial gain in profits in the first two months of the quarter/year. Indeed, Financials bulldozed through any pessimism to finish the day up 15.58%. Citigroup shares showed the strongest performance, racing ahead by 38.10% to finish the day at $1.45. JPMorgan and Bank of America basked in the glory, rising 22.64% and 27.73%. General Electric also rose 20.0% on improved credit outlook. Surprisingly, comments by Senator Barney Frank of Massachusetts helped sustain the rally. During questioning of Federal Reserve Chairman Ben Bernanke, he stated that the “uptick rule” would be reinstated after having been removed in July 2007. The uptick rule requires that a stock rise in price before it can be sold short. Reinstating this rule would make the practice of borrowing and selling a stock, (short-selling) in order to profit from the fall in share prices, less accessible.

Dow 30                        6926.49               +379.44                  +5.80%
The Dow had its best day since Nov. 21st with financial shares jumping 20.96% ahead. Even the worst performing sector, Consumer Staples, rallied by 2.06%. All 30 stocks in the index finished the day in the green, with Citigroup, Bank of America, and JPMorgan performing the best.

NASDAQ                     1358.28                +89.64                     +7.07%
The NASDAQ performed the best of the three major U.S. equity indices. Information Technology also surged despite being hardest hit throughout yesterday’s trading session. Intel and Microsoft rose 10.92% and 9.70%, respectively.

S&P 500                     719.60                    +43.07                        +6.37%
The S&P 500 had its best day since November 21st. It surged ahead with only 13 stocks finishing the day in the red; only five of those lost more than 1.0%. The VIX volatility index plummeted, by 5.31 points or 10.70% to finish the day at 44.27. Short interest on the S&P

Filed under: Economics, Stocks, , , , , , , , , , , , , , ,

Banking Shares Surge on FDIC Power Expansion

US Session Key Developments

  • Bernanke, Geithner Ask Congress to Ease FDIC Borrowing Limits
  • Bank of America, Wells Fargo Surge Over 15.80%

Banking Shares Surge on FDIC Power Expansion

Banking shares jumped today despite an overall down day after Fed Chairman Ben Bernanke and Treasury Secretary Timothy Geithner asked Congress to expand the Federal Deposit Insurance Corp.’s borrowing power. Last week, FDIC head Sheila Bair announced that the consumer bank insurer would possibly run out of funds, sending financials tumbling down. The requested legal authority would allow the FDIC to borrow as much as $100 billion from the Treasury, up from $30 billion as of February. Banks as a sector surged ahead by 10.72%. Bank of America and Wells Fargo were two of the greatest beneficiaries of the positive sentiment as the stocks rallied $0.61 or 19.43% and $1.36 or 15.80%, respectively. Warren Buffet also stated that in 3 years the San Francisco based Wells Fargo will have prospects “better than ever.”

Dow 30                6547.05                 -79.89                    -1.21 %
The Dow had a mixed day with four sectors actually finishing the day in the green. Financials jumped 3.23% with Bank of America leading the pact. Health Care and Telecommunication Services tumbled nearly -4.0% each as risk appetite saw money shifting over to the riskier, banking, stocks.

NASDAQ              1268.64                  -25.21                     -1.95%
The NASDAQ saw every sector in the index sell off today. Information Technology was the hardest hit, finishing down -2.39%.

S&P 500                676.53                   -6.85                       -1.00%
The S&P 500 also saw a mixed day with Financials and Energy being the only two sectors to finish the day ahead. The VIX volatility index rose slightly, by 0.35 points to finish at 49.68.

Filed under: Economics, Stocks, , , , , , , , , , , , , , ,

Stocks Give Back Yesterday’s Gains as Troubled Mortgages Rise to Nearly 12%

US Session Key Developments

  • JPMorgan Credit Outlook Slashed By Moody’s
  • Troubled Mortgages Jump to Nearly 12%
  • FDIC Chief Says Funds May Dry Up
  • Citibank Shares Trade Under $1

Stocks Give Back Yesterday’s Gains As Troubled Mortgages Rise to Nearly 12%

Stocks were pummeled today with Financials continuing their slide after President Obama’s mortgage bailout plan was revealed to benefit only those whose home loans were owned by Fannie Mae or Freddie Mac. Banks like Wells Fargo, which owns 16% of the mortgage market, will likely not directly benefit as a result. As such, any confidence that Obama’s plan would help stabilize the banks went down the drain. If that wasn’t enough to bring down the financial sector, JPMorgan’s credit outlook was slashed by Moody’s yesterday in after-hours trading. Indeed, the bank which was first hailed as a beacon of financial stability may now be in danger. The credit rating agency stated that JPMorgan’s health was at risk due to its direct exposure to bad loans and credit defaults.

Housing data continued to plague the industry. Data showed that Mortgage Delinquencies jumped 7.88% in the final quarter of 2008. Overall, nearly 12% of all mortgages are either late, delinquent, or are in foreclosure.

Sheila Blair, the Chairman of the Federal Deposit Insurance Corp. (FDIC) said that the pool of money that it holds to insure consumer banking accounts for up to $100,000 could dry up by the end of the year. In response to a swarm of letter that the corp. received as a result of FDIC fee increases she stated “without these assessments, the deposit insurance fund could become insolvent this year.” All this inertia led Citigroup, which was once the largest bank by market capitalization, to trade under $1 per share for about 40 minutes today. Shares of the embattled bank reached a low of 97 cents. Citigroup ended the day down -9.73% at $1.02 per share with JPMorgan finishing down -13.99% at $16.60.

Dow 30                   6594.44                      -281.40                      -4.09%
Every sector in the Dow Jones Industrial Average took a beating with Financials seeing the worst of the storm. The sector dove -12.90% with Materials tanking -9.08% with it.

NASDAQ               1299.59                       -54.15                          -4.00%
NASDAQ sector performance was more evenly distributed with Financials dipping -6.68% and Information Technology falling -3.58%. Microsoft and Cisco were the most actively traded stocks, declining -5.27% and -4.59%, respectively.

S&P 500                682.55                         -30.32                        -4.25%
The S&P plummeted as much as 4.9% on the day before profit-taking forced the index to close the day down -4.25%. The most active stock was JPMorgan which saw 33.61 million stocks traded as it fell -13.99%. The VIX volatility index jumped to 50.17 or by 5.49%.

Filed under: Economics, Obama, Stocks, , , , , , , , , , , , , , , , , , , , ,

Stocks Soar on Chinese Stimulus; Banks Plummet on Obama Mortgage Plan

US Session Key Developments

  • Stocks Reverse Course After Five Straight Brutal Sessions
  • China to Add to 4 Trillion ($585 Billion) Stimulus
  • Obama Unveils Mortgage Plan; Banks Plummet

Stocks Reverse Five Day Losing Streak on Chinese Stimulus Expansion

Stocks soared today, breaking a five-day losing streak, after former a former-official stated that Chinese Premier Wen Jiabao would add to the 4 trillion Yuan ($585 billion) stimulus package that he had announced in October of last year. Industrials surged as the Chinese stated their intent to expand military spending by 14.9% as part of the package. The plan, which has been seen to possibly benefit the entire world with the easing of export and import tariffs, will likely boost demand for steel and other raw materials produced abroad. Alcoa and Caterpillar surged ahead by at least 12.8% each. President Obama released his long-awaited mortgage plan only to see Banking stocks plummet by -6.59% after it was revealed that only those whose home-loans are owned by either Fannie Mae or Freddie Mac would be eligible. Indeed, Wells Fargo led the slide with its 16% market share of the mortgage market.

Dow 30                 6875.84                 +149.82                  +2.23%
The Dow saw Materials and Industrials lead the gain, rising 5.94% and 4.21% respectively after it was revealed that China would add to its history stimulus package. Financials, however, lost -5.23% after details of President Obama’s mortgage plan revealed that only those whose loans are owned by Freddie Mac or Fannie Mae would benefit.

NASDAQ              1353.74                  +32.73                    +2.48%

The NASDAQ rallied with Information Technology spiking 2.65% with Semiconductors jumping 4.45% on optimism from the Chinese stimulus package.

S&P 500               712.87                     +16.54                     +2.38%
The S&P gained as much as 3.95% in the last hour of trading before slipping at the end. Price action saw only the Financials sector finish in the red. VIX, or the fear index, fell -6.6% to finish under 50 for the first time this week.

Filed under: Economics, Obama, Stocks, , , , , , , , , , , ,

Bernanke Warns of ‘Considerable Uncertainty’ As Stocks Slip a Fourth Straight Day

US Session Key Developments

  • Bernanke Warns of ‘Considerable Uncertainty’ Over Budget
  • Pending Home Sales Fall More Than Expected
  • Small-Caps Substantially Under-Perform Large-Caps

Stocks finished lower for a fourth straight day leaving the index closing sequentially in the red seven of the last eight trading sessions. Price action actually stayed in positive territory for about half of the session with the NASDAQ rising as much as 1.74% before quickly reversing course in the final hour of trading. All eyes were on Chairman Bernanke’s testimony to U.S. lawmakers today. In his remarks, Bernanke stated his case for the $30 billion bailout of AIG, saying “we really had no choice…bankruptcy is just not a good option.” When pressed about the economy, he stated that there was “considerable uncertainty” in many of the assumptions made by President Obama’s budget. Macroeconomic news continued to paint a bleak picture with Pending Home Sales slipping -7.7% with economists expecting less than half of that. December’s estimate was revised substantially lower, from 6.3% to 4.8%. While overall stocks finished the day relatively flat compared to previous days, small-cap stocks actually took a much larger toll when compared to their large-cap counterparts. The top 10 stocks by market capitalization actually rose today by an average of 0.53% while the bottom 10 stocks by market capitalization plummeted by an average of -9.37%.

Dow 30                6726.02                -37.27                  -0.55%
The Dow began the day in the green before a rollercoaster day sent the index in a negative direction. Despite most sectors performing poorly, the Financials actually rose by 1.75% with American Express leading the way after spiking 6.87%.

NASDAQ                1321.01                -1.84                     -0.14%
The NASDAQ grew was much as 1.74% before being weighted down in the final hour of trading. Individual sector performance was diverse in that two-thirds actually finished higher. Information Technology and Health Care finished a hair above water.

S&P 500               696.33                  -4.49                  -0.64%
Utilities in the S&P performed the worst, plummeting -3.58% while Information Technology and Telecommunications rose. Energy also finished the day up after oil jumped $1.50 or 3.74% per barrel. The VIX ultimately fell because the equity indices traded above water for a substantially period. The volatility index fell 3.26% to 40.93.

Filed under: Economics, Stocks, , , , , , , , , , , , ,

S&P 500 Falls to Lowest Since Oct. 1996 After AIG Record Losses

U.S. Session Key Developments

  • AIG Reports Record $61.7 Billion Loss
  • Berkshire Hathaway Profits Plummet 96%
  • S&P 500 Dips Below 700, First Since Oct. 1996
  • General Electric May Lose AAA Credit Rating


S&P Falls to Lowest Since Oct. 1996 After AIG Record Losses

Stocks continued to take a beating after AIG reported the largest loss in U.S. history of $61.7 billion. Sentiment went into the open weighed down after Warren Buffet’s Berkshire Hathaway recorded its worst earnings in history after having seen profits plummet 96% in the fourth quarter. Indeed, in his accompanying statement as the head of Berkshire, Buffet stated that the economy would remain “in shambles” throughout 2009. Furthermore, investor confidence suffered from General Electric’s failed attempt to secure its AAA credit rating after it had slashed its dividend for the first time since 1938. On Friday, Moody’s stated that it was still reviewing the credit status of GE and that it would still consider cutting the rating of the Dow’s only original component. Overall the extremely negative sentiment being projected throughout the weekend saw traders sell in mass hysteria. At the end of it all, the S&P closed at its lowest level since October 1996 while the Dow closed below 7000 for the first time in nearly 12 years.

Dow 30              6763.29                  -299.64                      -4.24%
The Dow began the day in negative territory and remained there for the entire trading session. Every sector in the index finished the day bleeding with Materials and Financials performing the worst, decapitating each by -8.24% and -8.20%, respectively.

NASDAQ            1322.85                     -54.99                     -3.99%
The NASDAQ performed the best of the three major U.S. equity indices, losing slightly less than 4.0%. Surprisingly the sectors that lost the most were not the Financials, but rather Energy, which lost nearly 10% and Telecommunications Systems, which lost 9.43%

S&P 500              700.82                     -34.27                     -4.66%
The S&P was by far the worst performing index of three majors. It closed the day at its lowest level since October 1996 allowing the VIX volatility index to rise above 50 for only the second time in nearly two months after having jumped 13.6% to finish the day at 52.65

– LG

Filed under: Economics, Stocks, , , , , , , , , , , , , , , , , ,

Stocks Reach Critical Support Level, The Bottom Is Here! (Charts)

The chart featured below, the Dow Jones Industrial Average from May of 1982 through today’s close presents two critical support levels using weekly data. Today’s closing price, 6,763.29, rests peacefully at the level formulated by the linearly upward trending support line, in beige, that began at the point at which the market began to rebound after the crash of 1987. The second one, in white, presents a longer-termed trend that I will dub the “down-side risk.” As one can see, should the Dow close below the beige support line on a single weekly basis, the index will likely crash all the way down to the white support level — around 5,900! That’s another 12.76% decline!

Dow Jones Industrial Average 05/1982 - 03/02/2009; Prepared by Luis Gil using Bloomberg

Dow Jones Industrial Average 05/1982 - 03/02/2009; Prepared by Luis Gil using Bloomberg

The S&P 500 chart, however, paints a more optimistic picture. The two same support lines that are featured on the Dow chart are also drawn on the S&P one. However, it appears as though the S&P 500 has no alternate support levels that are presented at any point lower than that at which the index is currently located. That is, the index, at today’s closing price of 700.82 lies at what would be the equivalent to what I called the Dow’s “down-side risk.” Since the two indices have a correlation of .998, should the Dow crash through its current level then the S&P will likely plummet as well. But since the S&P has no lower visible support, the index can only, at the least, bottom out at this level — keeping the Dow at bay for now.

S&P 500 05/1982 - 03/02/2009; Prepared by Luis Gil using Bloomberg

S&P 500 05/1982 - 03/02/2009; Prepared by Luis Gil using Bloomberg

Please keep in mind, that this analysis does not take into account the underlying fundamentals that have been driving equity markets and the overall economy.

– LG

Filed under: Economics, Stocks, , , , , , , , , , , , ,

Stocks Slip For Second Straight Day on Obama Budget, $1 Trillion Tax Hike

US Session Key Developments

  • President Obama Offers $3.75 Trillion Budget; $1 Trillion Tax Hike
  • Durable Goods Orders Plummets More Than Forecast
  • Aflac, AIG Surge 17.69% and 13,04% on $316 Billion Medicare Cut

Stocks Slip For Second Day on Obama Budget, $1 Trillion Tax Hike

Wall Street was not happy today after President Obama unveiled a $3.75 trillion budget that would include $1 trillion in new taxes. Indeed, the new tax plan would lift Bush’s $338 billion tax cuts for the top two income tax brackets. As far as accounting standards are concerned, the Obama tax plan would also repeal the LIFO (last in-first out) tax rule in an effort to raise $61 billion. Macroeconomic data continued to paint a bleak picture of the economy. Durable Goods Orders fell by 5.2% in January after economists had anticipated the number to fall by only 2.3%. The previous month’s number was revised substantially downward, from -2.6% to -4.6%. When excluding transportation, December’s figure was revised downward from -3.6% to -5.5%. New Home Sales helped alleviate some of the pain. Despite falling by 10.2% from the previous month, December’s figure was actually revised substantially upward; it was revised from -14.7% to -9.5%. Overall most of the equity losses came from Health Care and Consumer Discretionary with the latter reacting to the Durable Goods news. Financials surprisingly swung upward for a second straight day. Some of the biggest movers in the sector were the insurers as Obama vowed to slash $316 billion from Medicare. With Medicare having less money to compete with its competitors in the private sector, it was likely seen that the insurers would pick up some of the market share that Medicare would lose. As such, Aflac and AIG surged 17.69% and 13.04%, respectively.


DJIA        7182.08      -88.81        -1.22%

The Dow started the day off in positive territory but then moved into the red half-way through the trading session. Health Care, a defensive sector, slipped by 3.97; making it the worst performer in the index. Financials actually rallied for a third straight day despite overall negative sentiment.


NASDAQ      1391.47      -33.96         -2.38%

The NASDAQ saw only the Energy and Financial sectors rally today, by 0.96% and 0.50%, respectively. Health Care tanked more than it did from within the Down, sinking more than 5.0%.


S&P500      752.8          -12.07        -1.58%

Financials in the S&P 500 were led by insurance giants. Aflac, AIG and Metlife, each gained 17.69%, 13.04%, and 8.80%. Volatility dipped just a tad, from 44.67 to 44.66.

Filed under: Economics, Obama, Stocks, , , , , , , , , , , , , , , , , , , , ,

Tumbling Stocks Fail To Respond to Obama’s, Bernanke’s Comments

US Session Key Developments

  • Bernanke: Stress-Tests By April; No Nationalization
  • Existing Home Sales Underscore Forecasts
  • Financials Finish The Day Ahead

Tumbling Stocks Fail To Respond to Obama’s, Bernanke’s Comments

Stocks failed to rally for a second consecutive session in the day after President Obama addressed a special joint session of the U.S. legislature. In his speech the President made his case for facilitating a rescue package aimed at stemming the plague caused by the mortgage crisis. Federal Reserve Chairman Ben Bernanke spoke on Capitol Hill today offering words that were a bit less optimistic than those he chose to use just yesterday. In this testimonial, Bernanke stated that stress-testing would occur on the nation’s top 19 banks and that they would be completed by late-April. He warned that these 19 financial institutions would be required to raise new capital within six months, but failed to address the consequences to the contrary. Nonetheless, the chairman reiterated yesterday’s statements that the U.S. does not plan “anything like” nationalization. Macroeconomic data abetted the sell-off with housing figures continuing to paint a bleak picture. Existing Home Sales for the month of January rose less than had been expected. The rate at which these houses left the open market fell to 5.3% from December. Despite the negative sentiment plaguing the ‘street, Financials were able to finish the day ahead – by 1.22% in fact.

DJIA            7270.89      -80.05        -1.09%
A rocky day on Wall Street saw the Dow dip as much as 2.63% as housing data and profit taking pushed price action downward. While the market opened and remained in negative territory for most of the trading session, stocks were able to buoy their heads above water for nearly an hour in the final hours of the day. Despite the negative sentiment plaguing the ‘street, Financials found the ability to finish the day ahead – by 1.22% in fact.

NASDAQ      1425.43      -16.40         -1.14%
Every sector in the tech-laden NASDAQ slipped today with Industrials falling the most – by 5.04%. Information Technology only lost 0.40% off yesterday’s close, preventing the index from plummeting further.

S&P500      764.90        -8.24        -1.07%
All but one sector finished the day in negative territory in the 500 stock index. Indeed, Telecommunication Services rose 1.01% with AT&T and Qwest rising nearly 2.0% each. Interestingly, the VIX volatility index actually fell, despite a negative day for stocks. The ‘fear’ gauge fell to 44.67. – LG

Filed under: Economics, Stocks, , , , , , , , , , , , ,

Stocks Rally Most in a Month On Bernanke’s Optimism, No Nationalization

Stocks Rally Most in a Month On Bernanke’s Optimism, No Nationalization

US Session Key Developments

  • Bernanke: Recession May End in ’09; No Nationalization
  • Home Prices Fall to 2003 Levels
  • Consumer Confidence Falls to Lowest in At Least 30 Years

Stocks rallied today after Federal Reserve Chairman Ben Bernanke offered positive light to a market weighed down by fears of bank nationalization. In a testimonial to the U.S. Senate, Bernanke stated that the economy could shed its recession by the end of 2009. He further added that he does not see “any reason to destroy the franchise value or to create the huge legal uncertainties of trying to formally nationalize a bank when it just isn’t necessary.” The breath of fresh air comes after traders feared that the Obama administration would cease certain banks over the coming days. Bernanke’s comments overshadowed negative macroeconomic news. Home Prices fell to their lowest levels since the end of 2003. In fact, they tumbled by 18.23% in the final quarter of 2008. Consumer Confidence fell to the lowest in at least 30 years, when records began. -LG

DJIA                 7350.94                 +236.16                 +3.32%
Every sector in the Dow Jones Industrial Average finished the day in the green. In fact, each category rose at least 1.96%. Financials saw the larges gains, rallying 11.30%.

NASDAQ                1441.83                 +54.11                   +3.90%
Financials and Telecommunications led the NASDAQ’S rally, seeing each sector rise 6.46% and 5.20% today.

S&P500                773.14                   +29.81                   +4.01%
Volatility tumbled today, seeing the VIX index plummet 13.54% to finish the day at 45.49. The S&P 500 also saw every sector in the index finish the day above water.

Filed under: Economics, Stocks, , , , , , , , , , ,

$837B Stimulus Slides Through Senate

Stocks Shed as Much as 5.21% on Senate Stimulus

Stocks Shed as Much as 5.21% on Senate Stimulus; S&P falls the most since Dec. 1st

61-37, now it’s time for it to clear the House – Politico.com

Obama Calls It ‘Good News’ – AP

Wall Street RUNS RED

Geithner: $500 billion for real estate loans, $1 trillion for consumer financing

Filed under: Economics, Obama, Stocks, , , , , , ,

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