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Market Recap: Banks Help Bulls Recover From Recession Fears


Stocks rallied late in the day with Bear Stearns setting the way.

Stocks rallied in late-day trading to close near the highs of the day. The Dow Industrials fell -28 points, or -0.23% to 12,348, the S&P 500 inched higher +1.13 points, or +0.08% to 1,349, and the Nasdaq Composite fell -10 points, or -0.46% to 2,321.

Stock futures plunged before the bell as more signs emerged that the U.S. economy was slipping into a recession. This morning the Federal Reserve reported manufacturing in the New York area contracted this month for the first time in almost three years. The Empire Manufacturing index declined to -11.7 in February from 9.0 in January. U.S. consumer confidence also fell to a 16-year low coming in at 69.6 vs. economist expectations of 76.0. See Professor Kevin Depew's analysis in today's Five Things You Need To Know.

But financial stocks rallied on rumors that Bear Stearns (BSC) would receive a takeover bid. Toddo noted the signs early in the trading day. "You can learn a lot just by watching! We spied Bear Stearns this morning as a dry eye in the crimson sky and the stock has since tacked on seven percent." Although the rumors were dispelled, banking stocks still managed to end in the green. BSC closed +5.5% to $82.79. Goldman Sachs (GS) added +1% to $178.41, Merrill Lynch (MER) gained +1.8% to $51.64, and JPMorgan Chase (JPM) gained +1.5% to $43.25. Read Toddo's Random Thoughts.

Retail stocks were mixed. The scene was set by Best Buy (BBY) when the company cut its full-year profit forecasts. "The Electronics king blamed soft traffic in January and says that Same Store Sales will be negative for the period," Professor Jeff Macke stated on the Buzz, "Some day I'll trade the retailers long again. Just not today." The same sentiment was reflected in the markets. BBY dropped -2.51% to $44.62. Other declines included Amazon (AMZN) -3.85% to $72.85, and Wal-Mart (WMT) -1.06% to $53.07. The broader Retail holders ETF (RTH) declined -0.11% to $91.50.

Coal stocks fell after analyst at Goldman Sachs downgraded the sector citing stocks were overvalued trading at historically high multiples. Leading the declines were Consol Energy (CNX) fell -6.01% to %75.08, Massey (MEE) -4.5% to $39.82, and Arch Coal (ACI) dropped -4.2% to $49.40.

In commodities, crude oil gained +0.14 to 95.60. Gold fell -4.80 to 902.60. Silver lost -0.115 to 17.140, and copper ended the day higher +5.00 to 353.80.

"All the fundies and stuff I read support the idea of being long gold and I tend to agree with what I hear," said Professor Jeffrey Cooper offering his thoughts on gold, "However, what I see is different. The cycles suggest otherwise."

The dollar index fell -0.106 to 76.049.

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: SPX, GEF, BSC, MS, WYNN, AAPL, EXPE, HGX, CSCO, MFN

Some bearish trade or investment ideas: WB, SPX, AEM, CRM, AAPL, SPX, GLD, DKS, EXPE, Retailers

Three day weekend! Have fun and be safe!
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No positions in stocks mentioned.

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