Market Recap: Markets Soar On Three Prime Ingredients
Lehman, Goldman and the Fed spark the biggest rally in over five years.
The Dow Industrials added +420 points, or +3.5%, to 12,392 the S&P 500 finished +54 points, or +4.24% to 1330, and the Nasdaq Composite closed +91 points, or +4.19% to 2268.
Earnings from Lehman Brothers and Goldman Sachs sparked a strong rally in the financials. Both companies reported this morning before the opening bell lifting stock futures higher. The numbers eased investors concern of a failing financial system and banking stocks surged on the news. Lehman led the rally, with shares jumping +46% to $46.49. According to Bloomberg, GS gained the most in nearly nine years, adding +16.27% to $175.59. Bear Stearns (BSC) also jumped +22.87% to $5.91 as investors placed bets that BSC shareholders weren't satisfied with JPMorgan's (JPM) $2 a share takeover. The Philadelphia Bank Index (BKX) finished +7.24% to $81.31. Read Toddo's Random Thoughts: Rally or Reality.
Later in the afternoon the Fed announced a 75 basis point rate reduction in the overnight Fed Funds rate to 2.25%. In its statement text, the FOMC said the outlook for economic activity had worsened and growth in consumer spending had slowed. Labor markets softened with the financial markets remaining under considerable stress. Stock futures immediately dipped after the announcement as many traders had expected the Fed to cut its target by 100 basis points. But soon afterwards, the markets recovered and rallied right into the closing bell, marking the biggest gains in five years. For context, see Professor Kevin Depew's Five Things You Need To Know.
Shares in tech moved higher. Apple (AAPL) gained +4.6% to $132.52. Research In Motion (RIMM) added +6.8% to $104.75. Yahoo (YHOO) also moved higher after the company projected sales growth for 2009 and 2010 above analysts estimates.
"Yahoo affirms its quarter? Now that's a positive surprise," said Professor Sean Udall. "I think it could help Google (GOOG) as much if not more than Yahoo."
Google closed +4.79% to $440.00, and Yahoo finished +7.16% to $27.70. Read Professor Jeffrey Cooper's Instant Karma Silences The Wolves.
In commodities, gold declined bringing along with it gold shares. Agnico Eagle Mines (AEM) fell -7% to $74.10. GoldCorp (GG) dropped -6.58% to $41.31. Yamana Gold (AUY) closed -6.64% to $17.86, and the gold miners ETF (GDX) fell -4.69% to $52.39. Gold futures fell -24.60 to 978.00
Silver fell -0.522 to 19.700. Crude oil gained +2.96 to 108.64, and copper added +3.80 to 375.00.
The dollar index added +0.460 to 71.919.
For more Buzz insight, check out 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: XLF, AAPL, NYX, MRVL, GOOG, YHOO, FCSX, AZZ, JASO, SGP
Some bearish trade or investment ideas: LEH, UBS, MER, BIDU, DLB, AEM, GLD, SLB, Semiconductors
Tomorrow we find out if Hoofy has anything left in his tank. Have a great night!
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