Reply #41: 1:24 with happy blather

[54anickel]

Dow 12,700.55 +130.33 (1.04%)
Nasdaq 2,351.95 +24.47 (1.05%)
S&P 500 1,382.48 +10.68 (0.78%)
10-Yr Bond 3.8930% -0.0090
NYSE Volume 2,174,254,500
Nasdaq Volume 1,343,721,750


1:05 pm : Financials (+1.0%) spiked suddenly on news that Moody's has confirmed MBIA's (MBI 15.16, +0.58) AAA rating. The sector traded in choppy manner on word that the bond insurer's outlook is negative, but financials currently remain at their best levels. In the most likely scenario, Moody's believes the company will incur lifetime losses of nearly $4 billion.

The S&P 500 and Dow are now posting slight gains for the month, both up 0.4%. Although this may not seem like much, when considering how far they were down it is more significant. From their monthly lows, the S&P is up 4.2% and the Dow is up 5.7%.DJ30 +144.74 NASDAQ +26.36 SP500 +12.97 NASDAQ Dec/Adv/Vol 838/1955/1.22 bln NYSE Dec/Adv/Vol 768/2259/733.4 mln

12:30 pm : The market pauses a bit and then spikes to new highs as Fed Vice Chairman Kohn's comments hit the news wires. All ten economic sectors are now in the green, and the Dow and Nasdaq are now posting a gain in excess of 1%. The Nasdaq's advance is notable, as the composite was a laggard in the early going, down as much as 0.7%.

Kohn said he does not expect elevated inflation rates to last, noting that growth risks are a bigger threat, according to Reuters. This is common to what the Fed has been saying lately, which indicates further rate cuts are to come. Fed funds futures price a 88% chance of a 50 basis point cut, with the rest of the bets on a 25 basis point cut. The fed funds rate currently stands at 3.00%.DJ30 +130.50 NASDAQ +24.62 SP500 +11.74 NASDAQ Dec/Adv/Vol 846/1956/1.09 bln NYSE Dec/Adv/Vol 763/2249/644 mln

12:00 pm : Tuesday is shaping up to be another busy day for market participants. The stock market opened modestly lower on higher than expected inflation reading, although there are some indications the market was not surprised by the number. Stocks then caught a bid on news a tech industry bellwether substantially increased its share buybacks. At the East Coast lunch hour, stocks are trading at their best levels, with decent-sized gains.

IBM (IBM 113.82, +3.74) lifted the market into positive territory after its press release stated the company has authorized an additional $15 billion in funds to buyback shares. This brings IBM's repurchase program to roughly $15.4 billion. The company also raised its full year earnings per share expectation to at least $8.25, marking 16% year-over-year growth. It previously expected earnings per share of $8.20 to $8.30. Of note, the increased earnings per share outlook is due to the buyback program, and not a forecast for increased growth. IBM shares spiked to their highest level since November, and gave the tech sector (+0.8%) a boost.

In regard to the inflation data, the January Producer Price Index (PPI) rose 1.0% month-over-month, compared to the expected rise of 0.4%. Excluding food and energy, PPI rose 0.4% month-over-month, higher than the consensus estimate that called for a rise of 0.2%. That leaves PPI up 7.4% year-over-year (highest level since Oct '81) and PPI ex-food and energy up 2.3%.

This reading is not good, but the market was not too surprised by the numbers as January CPI was already released. This was demonstrated by treasuries trading higher and gold trading with a slight loss shortly after the report. If the market was shocked by the inflation numbers, gold would have been higher and Treasuries would have sold off on the release. Of note, gold (+0.3%) is now trading slightly higher, but it rose in conjunction with the stock market's recovery and not on the data. The 10-year note continues to post a gain.

In other economic news, the Conference Board said February consumer confidence fell to 75.0 from the prior reading of 87.3. Economists expected a reading of 82.0. The market tends to overreact to these readings, as they are only surveys. Briefing.com puts more weight into the personal consumption data that comprise 72% of the GDP, which will be released later this week.

There were a number of earnings reports released, with retailers catching the most attention. The S&P Retailing Index (+1.5%) is handily outperforming after Auto Zone (AZO 123.73, +6.36), Macy's (M 25.93, +1.17), Nordstrom (JWN 38.53, +1.55) and Target (TGT 55.14, +1.89) all topped estimates. Home Depot (HD 28.97, +0.15) missed estimates, yet its stock is still posting a slight gain. Some of these companies provided somewhat poor outlooks, however the market shrugged off the news as much of the negativity is already priced into the stocks.

As a result, the consumer discretionary sector (+1.1%) is outperforming. Nine of the ten sectors are higher. Energy (1.2%) is posting the largest gain as crude is on the rise, hitting as high as $100.59 per barrel. Financials stand alone in the red, with a slight 0.1% decline.DJ30 +91.99 NASDAQ +16.59 NQ100 +0.3% R2K +1.3% SP400 +1.0% SP500 +6.88 NASDAQ Dec/Adv/Vol 871/1872/842 mln NYSE Dec/Adv/Vol 898/2083/556 mln