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Market Recap: Bulls Win The Day With Bailout Speculation


The last half hour erased the entire day's losses.

The bulls were happy to hear news on the bond insurers. The Dow Industrials added +96 points, or +0.79% to 12,381, the S&P 500 gained +10 points, or +0.79% to 1,353, and the Nasdaq Composite closed +3 points, or +0.16% to 2,303.

Stocks were negative for most of the trading day until commentators on CNBC said a consortium of banks could announce a deal early next week to bail out Ambac (ABK), the second-largest bond insurer. Stock futures surged on the news with the Dow Jones Industrial Average erasing as much as triple digit declines.

Stocks were under pressure for much of the day. Sentiment was hurt by Oppenheimer analyst Meredith Whitney, who was the first to accurately predict that Citigroup (C) would cut its dividend, said the bank would need to cut its dividend again and raise more capital. Further, she added that financials could fall 15% in a best case scenario and as much as 50% on a worst case basis. Toddo mentioned this in today's Freaky Friday Potpourri.

Financials were headed toward session lows until the rally in the last half hour of trading. Notable gainers included Bear Stearns (BSC) +3.56% to $85.16, Morgan Stanley (MS) +2.36% to $44.19, and Merrill Lynch (MER) +4.22% to $53.05. The Philadelphia Bank Index (BKX) gained +1.74% to $87.67. Check out Professor Jason Goepfert's article False Break Ahead?

Retail stocks also participated in the broad-based rally. Gainers were led by Amazon (AMZN) +2.40% to $71.65. Other notables included BJ's (BJ) +2.90% to $32.99, Costco (COST) +1.68% to $66.05. The broader retail ETF (RTH) added +1.23% to $91.72. Read Professor Jeff Macke's thoughts in Snowed in Stock Picks.

The steel sector also rose after Deutsche Bank analysts upgraded Arcelor Mittal (MT). The move came a day after the world's largest steelmaker raised prices on its products in Europe. Deutsche Bank analyst David Martin raised his rating from "hold" to "buy" citing concerns on margin pressures in key markets were eased due to these price initiatives. MT settled +3.51% to $78.18. Other stocks in the sector included U.S. Steel (X) +0.92% to $108.50, AK Steel (AKS) +4.06% to $50.79, and POSCO (PKX) +0.03% to $131.27.

Commodities were mixed. Crude oil added +0.85 to 99.08. Gold fell -1.40 to 944.70. Silver added to its gains closing +0.100 to 18.050, and copper fell -2.35 to 378.70.

The dollar index declined -0.106 to 75.495.

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: GFIG, FCSX, IBKR, STV, MCD, PAAS, SSRI, AAPL, CSCO, GOOG, MSFT, MOT, SNDK

Some bearish trade or investment ideas: BKX, NTRS, AEM, MA, WB, HL

Have an egg-cellent weekend! See y'all Monday!

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No positions in stocks mentioned.

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