Market Recap: Rally Caps Were On
Stocks recover from an ugly day.
Stocks opened lower this morning with Intel (INTC) weighing on the minds of investors. The world's largest chipmaker said yesterday after the bell that 1Q profit forecast would be lower due to the recent drop in NAND flash memory. INTC said its gross profit margins would come in around 54% vs. prior expectations of 56%. The news prompted many brokerages to cut their earnings forecast for the company and the stock fell in pre-market trading. Yet not all were as concerned. "A happy, well-adjusted tape would have regarded it as a reasonable adjustment for a company earning greater than 50% margins," said Professor Jeff Macke. "This tape regards it as a chilling portent of doom. The truth, as always, lurks somewhere in the middle."
Toddo also was skeptical of the bear argument given that the negative news had such a minor effect on stock futures. "I want to be more bullish for a trade," Toddo said, "given the mad rush to cut estimates in the financials, the negative gross margin guidance by Intel and the general malaise that is omnipresent." Yet, stocks were weak for much of the day and it wasn't until a rally late in the session led by the big betas that helped stocks recover from session lows. Leaders included Apple (AAPL) +2.21% to $124.41. Research In Motion (RIMM) added +4% to $104.20. Biadu (BIDU) finished +2.29% to $246.01.
INTC fell -0.20% to $19.98. Another notable decliner was Google (GOOG) falling -2.89% to $443.80. Read today's Answers I Really Wanna Know.
The financial sector also recovered to close near the highs of the day. Toddo had been eyeing the big banks. "Note Goldman (GS) Morgan (MS), Merrill (MER)... They're trying to turn the tide and skin Boo's hide. I did, in the interest of full disclosure, fade (read: buy) some Morgan Stanley calls into the opening abyss. Pure trade and defined risk (below $40)." GS closed -0.90% to $163.60; MS finished -0.55% to $41.35; and MER settled +2.45% to $49.83. For more, read Toddo's Random Thoughts.
In other news, Fed Chairman Ben Bernanke was on the tape this morning urging lenders to forgive portions of mortgages held by homeowners at risk of defaulting. In a speech in Florida, Bernanke gave dire warnings on the housing sector saying the "situation calls for a vigorous response." The statements helped give a positive lift to the homies. Gainers include Toll Brothers (TOL) finishing +3.55% to $21.32. Ryland Group (RYL) added +2.9% to $27.81. Hovnanian (HOV) closed +8% to $9.11, and KB Homes (KBH) gained +3.5% to $22.83. For more analysis, read Professor Kevin Depew's Five Things You Need To Know.
Commodities fell sharply. Crude oil declined -2.49 to 99.91. Gold fell -20.20 to 964.00. Silver lost -0.428 to 19.645, and copper dropped -10.40 to 382.70.
The dollar index declined -0.039 to 73.662.
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: AAPL, MS, BIDU, MF, CAT, CAT, RIMM, ICE, FCSX, GFIG, MA
Some bearish trade or investment ideas: GOOG, DBA, GLD, GS, (WFC, LEH, BSC, GS Preferred), C
"Topsy-Turvy!" says Minyanville Editor Andrew Jefferies. It was definitely an exhausting day. Have a great night and see ya in the morning!
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