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Market Recap: MBIA Lifts the Tape, Google Falls


MBIA said it was OK. Google dropped as much as 6% in after hours trading!

Investors were determined to end the month on a winning note. The Dow Industrials added +207 points, or +1.67% to 12650, the S&P 500 added +22 points, or +1.68% to 1378, and the Nasdaq Composite added +40 points, or +1.74% to 2389.

The major indexes opened lower this morning as MBIA (MBI) reported a greater than expected loss. The company reported 4Q loss of -$3.30 EPS when analysts had expected a loss of -$2.98. Stocks climbed steadily throughout the day; however, as concerns that the ratings agencies would not cut the ratings of MBIA were relieved during the conference call. MBI CEO Gary Dunton said that although the company will realize significant losses, he did not see anything to justify the 80% decline in the share price since last year. The statements sparked a broad-based rally in the financial and homebuilding sectors. The Philadelphia Housing Index (HGX) gained +6.07% to 153.36. Individual stocks included Pulte Homes (PHM) +20% to 16.35, Lennar (LEN) +12% to 20.54, D.R. Horton (DHI) +10% to 17.26, and Meritage Homes (MTH) +17% to 16.04.

In the financial sector the SPDR Financial ETF (XLF) added +3.4% to 28.95 and the Philadelphia Bank Index added +3.55% to 94.39. Notable performances included Bank of America (BAC) +4.60% to 44.15, Wachovia (WB) +4..9% to 38.47, Washington Mutual (WM) +6.5% to 19.87. MasterCard (MA) surged on the day as well. The stock closed +9.5% to $207. Professor Depew mentioned this stock in his daily column Five Things You Need To Know.

Just before the close, however, stocks took a dip as news hit the tape that private bond insurer Financial Guaranty (FGIC) had its financial strength cut to "AA" from "AAA" by Standard & Poors. The move somewhat confirmed skeptics' beliefs as the Dow dropped nearly 100 points on the news.

"Given the banks and homies – the most oversold sectors – led the lift, is that cause for pause in the Matador camp?" asked Toddo. "Particularly since the banks rallied 26% in a week? And the S&P retraced 50% of the decline from all-time highs?" For more, read Toddo's Answers I Really Wanna Know and Random Thoughts.

In tech, all eyes were watching Google's (GOOG) quarterly performance. The company reported after the bell 4Q EPS of $4.43, below expectations of $4.45 cons. Revenues were also lighter than expected coming in at $3.39 bln. Google shares fell as much as 6% in after-hours trading. Professor Adam Warner had expected a volatile move in the stock. "…if the pundits breathlessly report GOOG is moving like 20-30 points after the number, note that a number like that is pretty unexceptional and already more than anticipated by the market." For another perspective, check out Minyanville Editor Andrew Jeffery's Gearing Up For Google.

Although the numbers will likely have an effect on the sector tomorrow, most of the major high-beta tech names managed to finish up on the day. Apple (AAPL) added +1.06% to 133.50. Garmin (GRMN) gained +2.57% to 71.80, but Research In Motion (RIMM) fell -1.23% to 92.60.

In commodities crude oil fell -0.58 to 91.75. Gold added +2.10 to 922.70. Silver added +0.235 to 16.995, and copper moved higher as well, +7.35 to 328.95. The dollar index gained +0.187 to 75.219.

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: HRS, HOLX, GFI, C, MER, QCOM, QQQQ, LM, SGP, BIDU, GOOG, AAPL, ARAY, BYD, XHB, S, CLWR, homies

Some bearish trade or investment ideas: LLY, BSC, C

See you next month! Good night!

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No positions in stocks mentioned.

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