Reply #46: And the close, for those inquiring mind types (some interesting bits in the blather)

[54anickel]

Dow 13,358.31 92.84 (0.70%)
Nasdaq 2,583.28 21.04 (0.82%)
S&P 500 1,473.91 14.96 (1.03%)
10-yr Bond 4.8040% 0.0160
30-yr Bond 4.9590% 0.0120
NYSE Volume 4,132,302,000
Nasdaq Volume 2,406,511,000

4:20 pm : A day after the Dow, S&P 500 and Nasdaq plunged 1.5% on average, and turned in their worst weekly performances in more than four years, it wasn't overly surprising to see stocks exhibit some sort of a bounce.

However, while today's relief rally was commendable, especially since the beaten-down Financial sector (+1.2%) finally garnered some much needed interest from buyers, the S&P 500 and Nasdaq struggled to even halve Friday's sizable declines.

Before the bell, fears of a possible credit crunch signaling an end to the LBO buyout boom was further echoed by the fact that today didn't mark a Monday of any blockbuster deal making. The day's biggest deal involved Ingersoll-Rand (IR 51.68 +3.54), which agreed to sell some of its business units (e.g. Bobcat) for $4.9 bln in cash. That helped renew some enthusiasm throughout the Industrial sector (+1.5%), but the recent downturn in equities reflecting legitimate concerns about tightening credit conditions was still fresh on investors' minds.

That is until a handful of positive developments began to hit the wires shortly after the afternoon session got underway. A surprise upgrade on Morgan Stanley 's (MS 64.45 +0.08) credit rating, which was raised to "AA-/A-1+" from "A+/A-1" at Standard & Poor's, was the initial catalyst restoring confidence on Wall Street.

Investors also embraced reports that Chicago's Citadel Investment Group is buying the credit positions of Sowood Capital. The Boston-based hedge fund said Friday its bonds lost value as investors fled riskier debt used to fund LBOs; and Citadel's interest suggested there's still plenty of liquidity waiting to be put to work.

Finally, with subprime concerns also acting as a headwind of late, some reassurance on that front gave the market an added boost late in the day. GMAC, which posted a $305 mln loss for Q1 after its home lending unit (ResCap) showed an increase in defaults on subprime loans, reportedly said it had a Q2 gain of $293 mln. The belief that GMAC's upbeat results will bolster earnings for Dow component General Motors (GM 32.62 +1.52), which reports tomorrow morning, fueled a rally throughout the underperforming Auto group and helped keep a bid in a market that languished all morning and, at best, was shaping up to be another victory for the bears. BTK -0.3% DJ30 +92.84 DJTA +1.1% DJUA +0.8% DOT +0.9% NASDAQ +21.04 NQ100 +0.9% R2K +0.8% SOX +1.7% SP400 +0.9% SP500 +14.96 XOI +1.7% NASDAQ Dec/Adv/Vol 1367/1706/2.15 bln NYSE Dec/Adv/Vol 1263/2059/1.86 bln

3:30 pm : The major averages continue to turn in a respectable performance going into the close as the bulk of industry leadership remains positive. However, while stocks are exhibiting a healthy bounce, the market still hasn't recovered the extensive damage realized on Friday. Not to mention, today's best performers, like Tires & Rubber (+5.6%) and Autos (+3.7%), are among this month's biggest laggards.

That further underscores the desire to selectively pick up bargains and rotate out of areas like Internet Retail, the best performing S&P industry group in July (+12.8%). Amazon.com (AMZN 82.63 -1.41) was mentioned unfavorably in Barron's. Meanwhile, the Financial, Discretionary, and Industrial sectors have recouped more than everything that was relinquished in the previous session; but gains of 0.7% and 0.8% from Health Care and Technology barely halve what was lost a day earlier. DJ30 +118.93 NASDAQ +27.32 SP500 +17.39 NASDAQ Dec/Adv/Vol 1299/1762/1.86 bln NYSE Dec/Adv/Vol 1197/2107/1.58 bln

3:00 pm : After breaking through a key technical level of 13355 about an hour ago, the Dow has been trading relatively sideways, with a 1.5% in one of the price-weighted index's most expensive names -- IBM (IBM 113.92 -1.70) -- is preventing a more compelling bounce from Friday's 1.6% sell-off.

IBM's pullback accounts for 14 Dow points. Blue chips are getting the bulk of their support from Boeing (BA 105.89 +2.18), which is soaring 2.1% (or a 17-point Dow contribution) after saying it sees India orders reaching $86 bln over the next 20 years.

The S&P 500 and Nasdaq are trading higher and turning in better intraday performances than the Dow; but they are now running into key resistance levels around 1472 and 2583, respectively. DJ30 +78.79 NASDAQ +20.69 SP500 +12.34 NASDAQ Dec/Adv/Vol 1351/1680/1.73 bln NYSE Dec/Adv/Vol 1253/2023/1.47 bln

2:30 pm : More of the same stocks as the indices garner some notable support around their best levels of the session. Of the 10 economic sectors trading higher, Materials still paces the way and is now up more than 2.0%. The Industrials sector is up 1.4% while Financials (+1.0%) turning in the next performance is truly the key behind today's recovery.

After recently touching a one year high of $77.33/bbl, oil since turning negative without Energy (+0.9%) sacrificing much in the way of upside leadership is also noteworthy. The sector ranks fourth in terms of intraday performance while Telecom's 0.3% advance remains the day's laggard. Its gain has been minimized after Verizon Communications (VZ 41.30 -0.70) merely matched expectations and said Verizon Wireless, its joint venture with Vodafone, will buy Rural Cellular (RCCC 42.61 +10.80) for about $2.7 bln. Telecom only accounts for 3.8% of the total weighting on the S&P 500.DJ30 +82.02 NASDAQ +19.26 SP500 +11.68 NASDAQ Dec/Adv/Vol 1364/1645/1.59 bln NYSE Dec/Adv/Vol 1264/1995/1.35 bln

2:00 pm : Equities are extending their reach to the upside as buying remain widespread across most areas. All three indices rising in synch with each other and logging roughly the same percentage gains (+0.3%) suggest that the triggering of a buy program trade is contributing to the latest wave of broad-based interest.

While today's relief rally is commendable and speaks to the underlying bid that was readily apparent in the market just a couple of weeks ago, the major indices are still only about half way to recouping Friday's average drubbing of 1.5%. DJ30 +95.92 NASDAQ +18.49 SP500 +12.90 NASDAQ Dec/Adv/Vol 1443/1548/1.42 bln NYSE Dec/Adv/Vol 1564/1670/1.20 bln