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Market Recap: Subprime and Inflation; Last Minute Buyers Save the Day


Stocks were down much of the day, but last minute buying saved the day again.

Last minute buying again pushed stocks into the green. The Dow Industrials added +44 points or +0.33% to 13518, the S&P 500 added +1.8 points or +0.13% to 1488, and the Nasdaq Composite fell -2.6% or -0.10% to 2668.

Bears were in control for much of the day as subprime concerns and inflation continued to weigh on investors minds. Lehman Brothers (LEH) did little to assuage concerns even though it reported earnings of $1.54 vs. $1.42 cons. Revenues came in at $4.4 bln vs. $4.26 bln cons. Lehman Brothers fell -0.73% as well as other stocks in the sector. Credit Suisse (CS) fell -1.9%, Merrill Lynch (MER) fell -1.67%, and Bear Stearns (BSC) lost -2.4%. Mortgage lender Countrywide (CFC) dipped into the single digits before slightly recovering. Toddo noted CFC's performance. Read his Random Thoughts.

In economic data today, retail sales came at +1.2 vs. +0.6 cons, but higher PPI helped offset the news. The Producer Price Index came in at +3.2% vs. +1.5% cons on a month-over-month basis. Annually PPI came in +7.2% vs. +6.0% cons; Core PPI came in at +2.0% vs. +1.8% cons. The weekly initial jobless claims came in at 333k vs. 335k cons. For more on the PPI figures, read Professor Depew's Five Things You Need To Know.

In the tech sector, shares of Ciena Corporation (CIEN) fell -13% as the company reported earnings for the fourth quarter. Quarterly performance came in at $0.48 EPS above expectations of $0.42. Revenues came in at $216.2 mln vs. $211.3 cons. Yet Professor Depew noted the company booked $13 mln in losses and warned of additional losses in fiscal 2008.

In commodities, Professor Krueger noted on the Buzz that Goldman Sachs (GS) released its 2008 Commodity forecast which remains "overweight." "The firm is raising crude and grains forecasts while lowering base metal forecast. I have written about crude… and grains… and happen to agree. As for the metals, I might agree short-term … but I am long equities in the space because I think their shares may continue to be in demand and we're inching close… toward industry rattling interest from sovereign wealth funds."

Crude oil fell -1.89 to 92.50. Gold fell -14.80 to 804.00, silver fell -0.58 to 14.23, and copper lost -7.50 to 296.10.

For more Buzz summaries, click on Minyanville's Buzz Bits.

Idea Flow

Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.

Some bullish trade or investment ideas: HUI, PHM, CSCO, CIEN, COST, BAK, CSR, NDAQ, NYX, T, JNPR, HES, X, BMRN, PHM, AKAM, DNDN, MER, gold

Some bearish trade or investment ideas: RUT, SPX, CLF, DECK, AGO, VMW, AXP, ABK, ODP, NILE, TIF, GES, C, IFN, AAPL, CM

The longest week of the world is almost over. Have a good night.
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No positions in stocks mentioned.

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