Yesterday oil ran out of gas but the NADSAQ Composite couldn’t get out of neutral.

The good news is the Dow survived several speed bumps, which is easy when the movement is slow and deliberate. It was mostly an uneventful session but there were interesting things that stood out. Discount retailers were higher in part due to an upgrade on big names in the space, including Wal-Mart (WMT), Costco (COST) and BJ (BJS) but it was the smaller discounter that seemed most compelling.

After the bell VF Corp (VFC), the maker of Wrangler and Vans, upped its second quarter earnings guidance to a range of $0.88 to $0.90 from $0.80, which is what the Street was expecting.

The flip side of the VFC news was the earnings warning from Fortune Brands (FO). The maker of Jim Beam, Maker’s Mark, kitchen appliances and golf balls says second quarter earnings will be down in the high teens to 20% from the year-ago result of $1.51. The Street had been estimating a decline of just 10%.

The company lowered its full year expectations (I must say I thought alcohol was recession-proof), hurt by a 70% tax hike on ready-to-drink spirits in Australia. There's a cautionary tale there. The company missed earnings in the last quarter by three cents and estimates for FY'08 and FY'09 have been drifting lower of late. Speaking of cautionary tales, it's rare indeed when a company only misses the consensus once in a 52-week period.

And then there are the financials, hammered again and down on takeover rumors. Go figure, right? 
 

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The word on the Street yesterday was that Lehman (LEH) or Wachovia (WB) or both could be on the receiving end of a take-under, acquisition offers substantially lower than current quotes. I don’t believe that will happen but every investor has to respect the tape and the potential for fiction to become reality in the financial galaxy. In this galaxy the speed of light refers to how fast a stock could fall out of bed, black holes are the nicknames of executive suites and asteroid showers are the write-downs from the industry that never seem to stop raining down. After the bell Morgan Stanley upgraded Lehman to an “overweight,” by the way.

Talk about wishing on a star.

Speaking of dashed hopes, the NASDAQ Composite was smashed yesterday and I’m not sure why, other than pressure from financials (mostly regional banks). The semiconductors and biotechnology stocks were fine but didn’t counteract weakness with any strength. Still, the NASDAQ was the only major index that closed positive for the quarter. I don’t think it can outperform until the level of fear subsides. I think the NASDAQ will be pivotal to watch, once that index begins to rebound it will be a sign investors are willing to be less defensive and take a shot at making money, which is distinctly different from trying not to lose money.


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