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Market Recap: Stocks Gain on Positive Economic Data, SIV Plan Scrapped

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Bill Gross said the U.S. economy is already in a recession. Yet bulls still rallied. Dow gained 200 points.

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Stocks rallied on expiration Friday. The Dow Industrials added +209 points, or +1.58% to 13454, the S&P 500 added +24 points, or +1.70%, and the Nasdaq Composite added +51 points, or +1.94% to 2691.

Comments by the Bond King Bill Gross, founder of the world's largest fixed-income firm PIMCO, failed to shake the confidence of bulls today. The FT reported this morning that Gross believed the U.S. economy began a recession in December. Gross also predicted that the recession would last four to five months, but could be prolonged should the government fail to take "unperceived and unforecasted measures in terms of fiscal stimulation."

But stock futures started the morning in positive territory and received more of a bounce with the release of this morning's economic data. This morning the Commerce Department reported a 1.1% increase in consumer spending versus expectations of a +0.7% gain for November. The rise in November market the largest gain in more than two years even as consumer confidence fell in December by the most in two years. Yet the PCE deflator, a key measure of inflation, came in slightly higher than expected at +3.6% versus +3.4% consensus on an annualized basis. Figures on a monthly basis were inline at +0.2%. For more, read Professor Depew's Five Things You Need To Know.

Super-SIV Plan Scrapped

Late in the day the WSJ reported that Bank of America (BAC), Citigroup (C), and JP Morgan (JPM) were abandoning the Super-SIV Plan. The banks, led by the Treasury Department and Treasury Secretary Hank Paulson, had been working for months to set up the fund also known as the Master-Enhanced Liquidity Conduit (or M-LEC), but a lack of interest and fundraising difficulties them to scrap the plan. Nonetheless, banking stocks finished strong. The Philadelphia bank Index gained +2.08%. Toddo said on the Buzz, "… it's prolly not all that impactful considering the Global Coordinated Liquidity Injection last week and the $500 bln since tossed in. Net/net? It's semantics – they just changed the methodology of the bail-out." Read more of Toddo's ideas in today's Random Thoughts and The Blame Game.

RIMM Lifts Tech

Shares of Research In Motion (RIMM) surged 10% today. The company reported results for the third quarter of $0.65 EPS versus expectations of $0.62. Revenues rose 21.9% to $1.67 bln versus $1.65 bln consensus. The company issued upside guidance for 4Q with EPS in the range of $0.66-o.70 versus expectations of $0.65. The company sees 4Q net subscribers to be approximately 1.82 mln. Further the company stated in its conference call that emerging markets were showing a strong interest in RIMM's products particularly in Brazil, Russia, and Asia/Pacific as well as strong adoption and brand recognition in Europe. Other tech stocks gained as well. Apple (AAPL) closed +3.34%, Yahoo (YHOO) added +1.10%, and Garmin (GRMN) added +2.14%.

Commodities

Crude oil gained +2.30 to $93.36. Gold added +12.40 to 811.60. Silver added +0.15 to 14.34, and copper added +13.50 to 309.35.

Gold specialist Professor Lance Lewis was pleased with the bounce in gold. "Not quite a break out yet in gold, but certainly encouraging. The gold shares, on the other hand, finally appeared to have ended their correction, though, and are rallying strong on the option expiration (which probably played a big part in causing their overshoot to the downside versus the metal to begin with)... Copper and other GDP sensitive base metals are just bouncing in my opinion. The Gold/base metals ratio continues to favor gold at this point in the US credit cycle."

For more 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: CSCO, LNN, WLT, TIVO, QSFT, ROL, HLS, SRCL, CTRP, EXPE, MON, CLF, C, DAR, SID, CME, FCEL, MON, X, PCLN, RIG, GENZ, JBL, SLX, MT, PBR

Some bearish trade or investment ideas: IWM, C

TGI Friday Minyans! Join us at the Bull and Bear for Happy Hour if you get some time! Merry Christmas and have a great weekend!
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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