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 Post subject: March 20th Friday 2009
PostPosted: Sat Mar 21, 2009 1:03 am 
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AP
US stocks fall but Wall Street rises for 2nd week
Friday March 20, 5:05 pm ET
By Tim Paradis, AP Business Writer
US stocks fall on profit-taking but Wall Street logs second week of gains

NEW YORK (AP) -- Wall Street's mid-March rally is on hold, but the Dow Jones industrial average still managed its first two-week gain in close to a year.

After starting Friday mixed, stocks veered lower in the afternoon as financial stocks fell and investors collected profits from the advance that saw the Dow rise 14 percent over seven trading days. One reason for the market's pause after such a big surge: It ran out of upbeat economic and corporate news the past two days.

The major indexes did eke out a gain for the week. The Fed jolted the market this week with an announcement of plans to buy hundreds of billions of dollars worth of debt securities in hopes of reviving lending. Stocks initially jumped on Wednesday when the plans were announced but then fell Thursday and Friday as investors became concerned that the huge injection of money into the economy could cause inflation.

Other markets had a tumultuous week as well. In just two days, the dollar fell 5 percent versus the euro and 3 percent versus the yen. Oil prices soared 7 percent Thursday above $51 a barrel to the highest level this year.

Many analysts believe stocks were due for some retrenchment.

"You get a run-up like that you're going to get a pullback," said Doreen Mogavero, president of the New York floor brokerage Mogavero, Lee & Co.

The stock market began to rally off of 12-year lows beginning two weeks ago after several banks reported being profitable in the first two months of the year. Even after Thursday's retreat, the Dow was still up 13 percent from its lows, and the Standard & Poor's 500 index was up nearly 16 percent.

The question on Wall Street is whether there will be enough good news in the coming days to keep stocks rising.

Michael Binger, portfolio manager at Thrivent Investment Management in Minneapolis, said the market's overall move is signaling that the economy is hitting bottom. He said it shouldn't be too difficult for stocks to resume their climb because expectations have fallen so low.

"I think the stock market is saying that fourth quarter of 2008 and first quarter of 2009 may be the trough in negative news," he said.

The Dow industrials fell 122.42, or 1.7 percent, to 7,278.38.

Broader stock indicators also lost ground. The S&P 500 index fell 15.50, or 2 percent, to 768.54, and the Nasdaq composite index fell 26.21, or 1.8 percent, to 1,457.27.

The Russell 2000 index of smaller companies fell 13.15, or 3.2 percent, to 400.11.

Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange. Volume came to a heavy 2.5 billion shares as various types of options contracts expired, adding to trading levels.

For the week, the Dow rose 0.8 percent, its first back-to-back weekly increase since the period ended May 2, 2008.

The S&P rose 1.6 percent; it logged slight gains for two weeks in a row in December.

The Nasdaq added 1.8 percent for the week.

Bill Stone, chief investment strategist at PNC Wealth Management, said a retreat in financials wasn't surprising because they had jumped 60 percent from their lows in such a short time. "We had gone from way oversold to slightly overbought," he said.

Stone said investors' desire to lock in some profits as a rally gets going is typical of a bear market. Bear markets are generally defined as a fall of at least 20 percent from a peak.

Bond prices slipped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.65 percent from 2.60 percent late Thursday. The yield on the three-month T-bill rose to 0.21 percent from 0.18 percent.

Analysts have remained cautious over the past two weeks even as the market pushed higher since other rallies that looked like they could signal a market bottom have crumbled in the past year.

From late November until early January stocks rose 20 percent only to fall to new lows as fears grew about the health of the nation's biggest banks and prospects for the economy.

Market veterans say some skepticism among investors is healthy. They are also reassured by the step-stool approach the market has shown in recent weeks as big gains are followed by more modest moves. That gives traders time to make more reasoned assesments without simply diving into a market for fear of missing a big rally.

Investors also can expect some money managers will want to be doing some buying with the March 31 end to the first quarter approaching. Even with the recent gains stocks are still down by about half from their highs in October 2007.

While many traders contend a market bounce had been overdue after what felt like months of relentless selling there are others who say the underpinnings of the economy remain too weak to justify a sustained recovery.

The unemployment rate stands at 8.1 percent, its highest level since the wrenching recession of the early 1980s, and businesses and consumers are struggling to pay down debt. Many consumers who aren't hurting are still cutting back, fanning worries that the economy will only continue to shrink.

"All of these bounces in the last two years have run on emotion and this one has been no different," said Brian F. Reynolds, chief market strategist at WJB Capital Group.

Reynolds contends the sharp rallies after heavy bouts of selling trick investors into believing a recovery is at hand. "We bounce so hard off the bottom for these rallies that it just sucks people in because they want to believe," he said.

Some investors have still bought into the latest rally. As of midweek, investors had funneled $12 billion over the prior seven days into mutual funds that focus on U.S. stocks. That compares with $14.3 billion they pulled from these funds a week earlier, according to TrimTabs Investment Research.

Not all investors are willing to hold bets that troubled parts of the economy will soon recover. On Thursday and Friday, the financial stocks that led the latest rally pulled the market lower.

General Electric Co. tumbled Friday after several analysts lowered their earnings forecasts following the conglomerate's statements a day earlier that its finance arm could just break even this year because of the weak economy.

The company often trades like a bank stock because GE Capital makes a variety of loans for credit cards, real estate and big equipment. GE fell 59 cents, or 5.8 percent, to $9.54.

Citigroup Inc. said it was shifting Edward Kelly, the former head of global banking for Citi Private Bank, to the role of chief financial officer, and naming Gary Crittenden, who has been CFO, as chairman of Citi Holdings. Citi Holdings is the portion of Citigroup that holds the bank's riskiest assets. Citi rose 2 cents, or 0.8 percent, to $2.62.

Yahoo! Finance

4:25 pm : The major indices held near the unchanged mark for the first half of the session, but a wave of selling pressure sent stocks into negative territory.

Despite the 2.0% decline in the S&P 500, it was an overall slow session with no economic data, or major corporate news items. Trading was choppy and volume was on the heavy side, with 2.15 billion shares exchanging hands on the NYSE, due to the quarterly expiration of stock options, index options, index futures and single stock futures.

The headline event of the session, a speech by Ben Bernanke on the financial system, didn't give the market any big surprises. Bernanke said that issue of "too-big-to-fail" companies need to be addressed, as firms became complacent in their risk management. While he feels the government has had no real alternative to preventing failures, he does feel there are efforts that can be made going forward.

Bernanke feels we must "vigorously address the weaknesses at major financial institutions with regard to capital adequacy, liquidity management, and risk management." In addition, Bernanke believes compensation needs to be matched to risk and attention must be placed to financial firms other than just banks.

Meanwhile, at the same conference, FDIC Chairman Bair said that the fee hikes for banks on FDIC insured accounts is necessary to prevent the reserve from falling to zero.

Eight of the ten sectors posted a loss. Financials (-5.3%) fell the most, but are still up 40% since March 6. The industrial sector was also a laggard, with GE (9.51, -0.62) dropping despite several brokerages making positive comment about the company's liquidity and capital positions following yesterday's GE Capital business update.

Defensive sectors, which are underperformed for the week, outperformed this session. Consumer staples rose 0.1% and healthcare gained 0.2%.

For the week, the Dow, Nasdaq and S&P 500 rose 0.8%, 1.8% and 1.6%, respectively.DJ30 -122.42 NASDAQ -26.21 SP500 -15.50 NASDAQ Adv/Vol/Dec 887/2.41 bln/1868 NYSE Adv/Vol/Dec 751/2.15 bln/2307

3:30 pm : The major indices are off their worst levels, but losses remain substantial.



In commodity trading, as expected, it was a quiet day in the energy sector. April crude oil (51.06, -0.55), which expired at the close, and May crude oil (52.17, +0.13) both ended the day near the flat line. Neither contract was able to establish momentum, in either direction, after this week's run to the best levels in a month. April natural gas (4.235, +0.061) spiked to its best levels of the session, at $4.335, in mid-morning trade but soon after it fell from those levels back toward the flat line. It chopped along just above unchanged for the entire afternoon session. April RBOB gasoline gained 1.87 cents to settle at $1.456 while gas cracks ended higher by 84.5 cents to $9.602.



In metal trading, it was a quiet session for April gold (956.20, -2.60), which ended slightly lower. May silver (13.84, +0.32) extended its recent rally, after it closed just off its best levels of the session at $13.86. May copper lost 1.15 cents to close at $1.796... Top Gainers: Cotton +2.8%, Heating oil +2.3%... Top Decliner: None.DJ30 -82.60 NASDAQ -20.72 SP500 -10.66 NASDAQ Adv/Vol/Dec 790/1.86 bln/1842 NYSE Adv/Vol/Dec 800/1.59 bln/2216

3:00 pm : The major indices are trading near recently reached session lows. Reuters reports that U.S. lawmakers are asking the Federal Reserve to create a temporary lending facility for the municipal bond market.

Small- and mid-cap stocks are underperforming, with the Russell 2000 down 2.8% and the S&P 400 down 2.8%.DJ30 -106.17 NASDAQ -25.38 SP500 -13.88 NASDAQ Adv/Vol/Dec 711/1.69 bln/1903 NYSE Adv/Vol/Dec 664/1.49 bln/2347

2:35 pm : The major indices find some support, but remain near their recently reached session lows.

General Electric (GE 9.39, -0.74) is under pressure this session. GE Capital gave a business update yesterday, and most brokerage firms said that capital and liquidity looks adequate. Still, the stock is under pressure after nearly doubling from its 52-week low.DJ30 -108.96 NASDAQ -26.91 SP500 -14.91 NASDAQ Adv/Vol/Dec 740/1.56 bln/1855 NYSE Adv/Vol/Dec 712/1.42 bln/2295

2:00 pm : The stock market continues to trend lower. The only sectors that remain in the green -- consumer staples (+0.2%) and utilities (+0.1%) -- are well off their highs.

General Motors (GM 2.77, -0.10) traded higher this morning, but the struggling automaker has since reversed in the red. Bloomberg.com reported that U.S. Treasury chief auto adviser Steven Rattner said that GM and Chrysler may need "considerably" more financial support from the government than the original request for $21.6 billion.DJ30 -98.13 NASDAQ -29.21 SP500 -14.44 NASDAQ Adv/Vol/Dec 732/1.46 bln/1831 NYSE Adv/Vol/Dec 732/1.32 bln/2250

1:30 pm : The major indices extend their declines.

FDIC Chairman Bair said that an emergency fee on banks' FDIC insured deposits is needed to prevent the reserve from falling to zero, according to Bloomberg.com.DJ30 -65.79 NASDAQ -23.02 SP500 -11.18 NASDAQ Adv/Vol/Dec 791/1.34 bln/1756 NYSE Adv/Vol/Dec 859/1.24 bln/2117

1:00 pm : At midday, the major indices are trading at session lows after a quick drop from the unchanged mark. There move lower has been broad-based and does not appear to be related to a specific headline, but may be related to options/futures expirations.

Overall it has been a slow session with no economic data, or major corporate news items. Trading has been choppy, though the major indices have stuck to a tight trading range relative to recent sessions. Volume is on the heavy side, with 1.2 billion shares exchanging hands on the NYSE, due to the quarterly expiration of stock options, index options, index futures and single stock futures.

The headline event of the session, a speech by Ben Bernanke on the financial system, didn't give the market any big surprises. Bernanke said that issue of "too-big-to-fail" companies need to be addressed, as firms became complacent in their risk management. While he feels the government has had no real alternative to preventing failures, he does feel there are efforts that can be made going forward.

Bernanke feels we must "vigorously address the weaknesses at major financial institutions with regard to capital adequacy, liquidity management, and risk management." In addition, Bernanke believes compensation needs to be matched to risk and attention must be placed to financial firms other than just banks.

With regard to stocks, financials (-4.4%) have seen the most movement, falling as much as 4.9%. Still, the swings are small relative to the massive moves seen within the sector -- it's up 42% since March 6.

Defensive sectors, which are underperforming for the week, are outperforming this session. Consumer staples is up +0.8%, healthcare is up +0.6% and utilities are up +0.9%.DJ30 -38.71 NASDAQ -15.60 SP500 -8.18 NASDAQ Adv/Vol/Dec 899/1.23 bln/1613 NYSE Adv/Vol/Dec 976/1.17 bln/1977

12:30 pm : The stock market climbs back to the unchanged mark. Bernanke is currently giving his speech, which was already released in text form at 12:00ET.

In order to address companies that are "to big to fail", Bernanke feels we must "vigorously address the weaknesses at major financial institutions with regard to capital adequacy, liquidity management, and risk management." In addition, Bernanke believes compensation needs to be matched to risk and attention must be placed to financial firms other than just banks.DJ30 +18.95 NASDAQ -2.23 SP500 -1.50 NASDAQ Adv/Vol/Dec 995/1.12 bln/1470 NYSE Adv/Vol/Dec 1168/1.11 bln/1760

12:05 pm : The major indices are flat-to-modestly lower as Bernanke prepares to speak. In his prepared text, Bernanke said the government needs to address companies that are too big to fail, which recently were too complacent with risk. But he noted that there are no realistic alternatives to preventing them from failing.

Bernanke also commented on community banks, which he believes are doing better than many larger financial institutions.

Separately, Johnson & Johnson (JNJ 51.92, +1.86) is providing leadership to the consumer staples sector (+1.0%). Earlier today, UBS upgraded JNJ to Buy from Neutral, noting the potential of approval for the drug Rivaroxaban.

Goldman Sachs (GS 97.66, -1.64) said in a conference call that its total exposure to AIG (AIG 1.20, -0.42) was $10 billion, noting its original exposure was $20 billion but had deteriorated. The company held roughly $7.5 billion in collateral with AIG, and its current net exposure to AIG is roughly zero.DJ30 +6.05 NASDAQ -5.49 SP500 -3.25 NASDAQ Adv/Vol/Dec 936/1.03 bln/1491 NYSE Adv/Vol/Dec 1055/1.04 bln/1831

11:25 am : The major indices fall to session lows as all three trade in negative territory, but losses are modest. The pullback has been mostly broad-based, although financials (-4.6%) have seen the most selling pressure.

Investors are awaiting speeches from Fed Chairman Bernanke and FDIC Chairman Bair at 12:00ET.DJ30 -7.97 NASDAQ -5.34 SP500 -4.49 NASDAQ Adv/Vol/Dec 937/906 mln/1437 NYSE Adv/Vol/Dec 1009/956 mln/1855

11:00 am : After some early volatility, the major indices trade in a tight range near the unchanged mark. Meanwhile, Treasuries are also trading near yesterday's closing levels.DJ30 +45.16 NASDAQ +7.91 SP500 +1.75 NASDAQ Adv/Vol/Dec 1096/784 mln/1212 NYSE Adv/Vol/Dec 1260/876 mln/1546

10:35 am : Stocks are trading in a choppy fashion, but are sticking to a relatively tight range. The Dow and S&P are back in positive territory after briefly trading with a loss.DJ30 +36.47 NASDAQ +7.99 SP500 +0.83 NASDAQ Adv/Vol/Dec 1151/680 mln/1117 NYSE Adv/Vol/Dec 1289/806 mln/1487

10:05 am : The major indices bounce to session highs, led by the tech heavy Nasdaq and then quickly retreat to session lows, with the S&P 500 now posting a slight loss. Defensive sectors such as healthcare (+0.7%) and consumer staples (+0.7%) are outperforming, though they are underperforming on the week that has seen the S&P 500 surge roughly 4%.

Quarterly options and futures expirations has resulted in heavy volume, with the NYSE already seeing 662 million shares exchanging hands.

In commodity trading, energy and metals were all trading lower after their recent surge, but have regained some ground. The April crude oil (51.53, -0.08) futures contract, which expires today, and May crude oil (51.96, -0.08) are both in the red, though off session lows, following their massive gains in recent days. April natural gas (4.319, +0.78) reversed into positive territory. In precious metals, April gold ($957.80, -1.00) and May silver ($13.625, +0.105) are mixed as the dollar index (+0.4%) regains some ground.DJ30 +18.24 NASDAQ +8.50 SP500 -0.55 NASDAQ Adv/Vol/Dec 1391/448 mln/731 NYSE Adv/Vol/Dec 1566/662 mln/1074

09:35 am : The major indices get off to a slightly higher start. Eight of the ten sectors trade with a gain, though none are making substantial moves higher. Financials are under pressure for the second straight session, down 1.9%.

News is expected to remain slow, though there may be heavy trading volume and volatility due to the quarterly expiration of stock options, index options, index futures and single stock futures.DJ30 +28.51 NASDAQ +6.98 SP500 +1.65

09:25 am :

09:15 am : S&P futures vs fair value: +3.30. Nasdaq futures vs fair value: +1.80. Although S&P 500 futures only suggest a modestly higher start, they are near session highs and up roughly 13 points from their low reached around 6:00ET. Its been a very slow news day, with no economic data or major earnings reports. The only upcoming item is speeches from Fed Chairman Bernanke and FDIC Chairman Bair at a bankers conference at 12:00ET.

08:57 am : S&P futures vs fair value: +2.40. Nasdaq futures vs fair value: +2.00. Futures recently climbed to session highs, but ran into some modest resistance and were unable to make a significant advance higher.

08:35 am : S&P futures vs fair value: +2.30. Nasdaq futures vs fair value: +1.80. Futures continue to indicate a muted open. Fed Chairman Bernanke and FDIC Chairman Bair speak as part of panel at a bankers convention at 12:00ET, which is the only major event on this session's thin calender. In overseas news, European markets are largely unchanged after recovering from early losses, with London's FTSE down -0.1%, Germany's DAX up 0.3% and France's CAC up 0.3%... Asian markets closed lower following some disappointing earnings and cautious brokerage comments. Japan's Nikkei was closed for a holiday. Hong Kong's Hang Seng dropped 2.3% as China Mobile (CHL) fell 5.4%, dropping for a second session after its earnings miss on Thursday. But commodity stocks advanced following the surge in oil and gold, with gold miner Zijin Mining rallying 16.4%.

08:05 am : S&P futures vs fair value: +1.80. Nasdaq futures vs fair value: +1.50. Futures indicate a flat start to the trading session after catching some buying interest around 6:00ET. Overall it has been a slow news morning with no major earnings or economic data on the calender.

06:37 am : S&P futures vs fair value: -7.50. Nasdaq futures vs fair value: -7.30.

06:37 am : Nikkei...Holiday......... Hang Seng...12833.51...-297.40...-2.30%.

06:37 am : FTSE...3781.88...-35.10...-0.90%. DAX...4012.77...-30.70...-0.80%.


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