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Market Recap: Stocks Rise Despite Poor Housing Data

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Investors traded tentatively today, shuffling positions in advance of the FOMC meeting tomorrow.

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Investors traded tentatively today, shuffling positions in advance of the FOMC's decision on interest rates slated for 2:15 pm tomorrow. The major indices were range-bound on light volume: the Dow Industrials finished higher by 96 points or 0.78% closing at 12,480, the S&P 500 finished up 8 points or 0.62% to 1,362 and the Nasdaq Composite gained 8 points or 0.35% ending the session at 2,358.

Although volatility was markedly lower in today's trading, gyrations under the surface of the markets were significant. VMWare (VMW) spooked tech investors by reporting strong earnings that fell short of analyst expectations. Professors Zucchi and Udall offered their thoughts on the company's prospects on today's Buzz and Banter and News and Views. VMW closed off 34.46% at 54.60 and former parent company EMC (EMC) closed down 5.68% to 15.95 despite reporting solid earnings of its own. The rest of the tech sector struggled, with the Nasdaq 100 trading flat on the day despite gains made by the broader markets. Yahoo (YHOO) reported earnings after the bell and is off more than 10% after issuing weaker than expected guidance for fiscal 2008. IBM (IBM) +1.07% to 106.10, Intel (INTC) +0.84% to 20.50 and Apple (AAPL) +0.78% +131.00 bucked the trend in large cap tech and traded to the upside.

Continuing its recent upward trend, the beleaguered bank sector rose today with the Philadelphia Bank Index (BKX) up 2.01% to 91.39. Standout banks were JP Morgan (JPM) +6.67% to 47.70, Washington Mutual (WM) +7.41% to 18.05 and Downey Savings (DSL) +10.51% to 31.45. Toddo mentioned on the Buzz today that the BKX has reached important resistance in the 90-91 range - especially important given the Fed meeting tomorrow.

Despite the S&P Case Shiller Home Price Index this morning which pointed to a roller coaster-like freefall in home prices in the last year, the Philadelphia Housing Index (HGX) ended higher by 2.92% to 148.87. Builders of note today included Meritage Homes (MTH) +24.49% to 14.54, Pulte Home (PHM) up 7.76% to 14.85 and DR Horton (DHI) up 3.77% to 16.50. All was not well in homie-land today, however, as the survivors of the current carnage would be well to pour a little out for Tousa Inc., the Florida-based homebuilder that filed for Chapter 11 bankruptcy today. Tousa made an ill-advised acquisition at the top of the market in 2005 and its $2.3 billion in assets could not support the $1.8 billion in debt on its balance sheet after two years of a weak market for new homes.

Solar stocks regained their lost momentum, as selected names made strong moves after weeks of selling pressure. Analysts are concerned that a weaker economy may hurt solar stocks in the near term, but offer that the long-term prospects for the industry are still bright. Industry leader FirstSolar (FSLR) rose 8.47% to 192.00 and SunPower (SPWR) added 2.49% to 74.00. Professor Tatro is nibbling on a few of his old favorites, Evergreen Solar (ESLR) and Suntech Power (STP).

Trading is likely to be light tomorrow morning into the Fed's decision in the afternoon, but fast and furious on the heels of the decision – whatever it may be. Toddo often opines often that the initial reaction to a Fed move is often the wrong one, so trade prudently Minyans!


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No positions in stocks mentioned.

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