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Market Recap: IBM Paves The Way For Stocks


Bulls overcome ugly day of econ data to finish with a gain.

Stocks popped for a third consecutive day. The Dow Industrials added +114 points, or +0.91 % to 12,684, the S&P 500 closed +9.49 points, or +0.69%, and the Nasdaq Composite gained +17 points, or +0.75% to 2,344.

At first glance this morning, the picture seemed bleak for bulls with stocks opening in the red on inflation and recession concerns. The Labor Department reported Producer prices for the month of January rose more than forecasts climbing 1.0% above expectations of 0.4%. Core PPI figures were higher as well gaining 0.4% vs. expectations of 0.2%. Further consumer confidence fell to its lowest level in five year with the index dropping more than forecasted to 75.0 from 87.3 in January.

Adding to the woes was the release of the S&P/Case-Schiller home-price index which shoed prices in 20 metropolitan areas fell in December by the most on record and repossessions increased 90% last month vs. the same period in the prior year. Read Professor Kevin Depew's analysis in his daily column Five Things You Need To Know.

Yet a reversal seemed to give way when IBM (IBM), the world's largest computer-services company, announced a buy-back program of up to $15 billion and raised its forecasts. IBM shares closed +3.91% to $114.38, but not everyone was as enthusiastic. "I wonder how many executives will sell into that?" asked Toddo possibly taking a clue from other tech stocks which ended mixed on the day. Apple (AAPL) closed -0.33% to $119.10. Research In Motion (RIMM) fell -1.01% to $107.51, and Google (GOOG) lost -4.76% to $463.05. For more, read Toddo's Random Thoughts.

Even homebuilders managed to shake off the negative economic data. Notable advancers included Standard Pacific (SPF) +9.40% to $4.89, Lennar (LEN) +8.68% to $20.41, and D.R. Horton (DHI) +6.0% to $16.43. The broader Philadelphia Housing Index (HGX) gained +3.55% to 146.14. Read Professor Jeffrey Cooper's article How Market Reacts To News.

In commodities, crude oil moved higher +1.71 to 100.94. Gold gained +8.50 to 946.10. Silver added +0.700 to 18.785, and copper settled +4.40 to 378.55.

The dollar fell to multi-year lows with the DXY dropping -0.742 to 74.785.

"The DXY (dollar index) is flirting with the lowest level since 1998," Toddo stated on the Buzz in real-time. "A break here would suggest – but in now way guarantee – a fresh leg down that particular path… the smartest folks I know believe that all roads lead to deflation and, given our DNA, I'm in lockstep agreement. I'm simply trying to identify the path that we take to get there."

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

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: BIDU, ASIA, AAPL, GLD, AXYS, NOK, WMT, WWE

Some bearish trade or investment ideas: SPX, GOOG, MBI, DXY

Y'all have a great night! See you in the morning!
No positions in stocks mentioned.

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