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Market Recap: Paulson Leads Tape Higher


Investors are pleased with the sounds of Hank's changes.


U.S. stocks gained on the last day of the first quarter. The Dow Industrials gained +46 points, or +0.38% to 12,262, the S&P 500 added +7 points, or +0.57% to 1322, and the Nasdaq Composite finished +17 points, or +0.79% to 2279.

Financials and homebuilders moved higher after Treasury Secretary Hank Paulson proposed a massive overhaul of the U.S. financial system. According to Bloomberg, Paulson proposed giving the Federal Reserve more power by expanding its oversight to financial services beyond banks. The new system would allow the Fed to collect information from commercial and investment banks, insurance companies, as well as private equity and hedge funds allowing the central bank to go "any place" it needs to preserve financial stability.

Wachovia (WB) added nearly 4% to close at $27.00 followed by UBS (UBS), finishing +3.7% to $28.80. Morgan Stanley (MS) and Merrill Lynch (MER) both added 2% to close at $45.70 and $40.74 respectively. Read Toddo's Monday Morning Quarterback: Remember Deflation. Also check out Professor Bennet Sedacca's Who Will Be Next Bear?

In housing, nearly all stocks finished green. Meritage Homes (MTH) added +5.8% to $19.32. Beazer Homes (BZH) finished +7.7% to $9.45, and Hovnanian (HOV) closed +6.1% to $10.60. The broader Homebuilders ETF (XHB) gained +3% to $21.70. See Professor John Mauldin's column, Calls For Housing Bottom Premature.

In economic data, the Chicago Purchasing Managers Index, which gives economists insight into manufacturing activity in the region, came in at 48.2. Consensus estimates called for 46.0. Read Professor Prieur du Plessis' column, Prieur Perspective: New Lows For Economic Sentiment.

Although the pharma sector performed well today, two stocks did stand out. Shares of Merck (MRK) and Schering-Plough (SGP) plunged after doctors said the millions of people taking cholesterol pills Vytorin and Zetia should switch to older, cheaper drugs. According to Bloomberg, sales of both drugs reached $5.2 billion last year. MRK plunged -15% to $37.95, and SGP dropped -26% to $14.41. Gainers in the sector included Pfizer (PFE) +2.1% to $20.93, Genentech (DNA) +1.4% to $81.18, and Eli Lilly (LLY) +2.5% to $51.59.

Commodities were hit hard today. Crude oil declined -3.94 to 101.68. Gold fell -15.60 to 915.00. Silver dropped -0.680 to 17.260, and copper lost -1.80 to 383.80.

The dollar index added +0.084 to 71.762.

For more Buzz insight, check out 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: FXI, GS, MRB, NGD, GOOG, AMG, XHB, LEN, MTH, NVR, DHI, SPX, Crude

Some bearish trade or investment ideas: SGP, SLB, MRK, AGU, MON, GLD, AKAM, DE, HSBC debt

Have a great night, Minyans. See y'all in the morning!

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No positions in stocks mentioned.

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