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Market Recap: Absorbing The Bear


Stocks recovered opening jitters to close respectably.

The markets closed out a volatile session while digesting the news of J.P. Morgan's (JPM) takeover of Bear Stearns (BSC) for $2 per share and the Fed's decision to cut the discount rate by 25 basis points to 3.25%. Fear gripped the markets early in the session but stocks pared their losses and rallied into the closing bell.

The Dow Industrials managed to finish higher +21 points, or +0.18% to 11,972. In a day where stocks finished over 5 to 1 to the downside, Professor Depew noted how the Dow performed relatively well compared to the other indices. "The price-weighted components is the answer.

Of the 30 Dow stocks, more than half are green. This includes JP Morgan (JPM) of course, adding 27 points to the index, with Johnson & Johnson (JNJ), 3M (MMM), AT&T (T), Verizon (VZ), and Merck (MRK) each adding more than six points."

The S&P 500 closed -11 points, or -0.90% to 1276 and the Nasdaq Composite closed -35 points, or -1.60% to 2177.

The headlines of the Bear Stearns takeover put obvious pressure on the financial sector.
Notable decliners included Lehman Brothers (LEH) which plunged as much as -50% from Friday's close. LEH settled -19% to $31.75. National City (NCC) opened eyes falling -42% to $7.52. A few of the minor brokers were hurt in today's drubbing. MF Global (MF) plunged -65% to $6.05 taking along with it GFI Group (GFI) -22% to $51.01, and FC Stone (FCSX) -40% to $21.44.

"The outcome fore these companies seems rather binary to me," said Professor Fil Zucchi. "Either they fail because the system seizes-up on them, or they thrive… As Mr. Practical would say 'risk is very high.'" For more on the Bear Stearns story, check out Todd's The Bear Scare.

In other areas, some tech stocks seemed to close respectfully. Apple (AAPL) managed to close higher +0.31% to $127.30. Garmin (GRMN) closed +0.68% to $57.36. And, tech giants Intel (INTC) and Microsoft (MSFT) both managed to add 1% on the session. For other potential safehavens, see Professor Kevin Depew's Five Things You Need To Know.

Commodities opened higher but failed throughout the rest of the day. Crude oil fell -4.29 to 105.92. Gold added +6.50 to 1006. Silver fell -0.579 to 19.995, and copper fell -11.45 to 373.25.

See Professor Mish Shedlock's perspective in Now Presenting: Deflations!

The dollar index fell -0.211 to 71.447.

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: JPM, GOOG, AAPL, SGP, JOYG, FLR, SYMC, SPX, MCHP, DUG (inverse), TITN, WY, LEH, AXP, tech

Some bearish trade or investment ideas: AMGN, AEM, Preferreds (JPM, GE, NCC, GS), Gold, Drillers

Another big day tomorrow. Rest up. Have a good night.
No positions in stocks mentioned.

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