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Minyanville's Market Recap: Credit Concerns Ease, U.S. Markets Rally Into the Weekend!


Home Depot closed its sale giving markets confidence and boosting the bulls into the weekend!

U.S. stock markets ended the week in strong fashion as credit jitters were relieved for the time being. The Dow gained 1.08% to finish at 13378, Nasdaq gained 1.38% to finish at 2576, and the S&P gained 1.15% to end at 1479.

U.S. stock futures began the day lower as investors around the globe were reluctant to take on additional risks going into the weekend. The Bank of China surprised investors in Hong Kong when it was revealed that it had a $9.7 bln exposure to subprime securities. The surprise resulted in a punishing 6.4% slide.

European markets rallied towards the end of its session as new home sales data for the U.S. came out more bullish than expected. Sales of single family homes increased by 2.85 on a m/m basis. The data can be quite volatile, however, and the housing picture will take a long time to play out as Professor Zucchi suggested on the Buzz and Banter today. You can access it with his article Handling The Homebuilders. In addition, please continue to review our Subprime package for more context of continued turmoil in the housing markets.

Steel stocks performed exceptionally today. Notable mentions include Nucor (NUE), Steel Dynamics (STLD), AK Steel (AKS), and U.S. Steel (X). Lehman Brothers released a note this morning forecasting the price of steel would increase by 25% on a y/y basis. The note did warn of the fundamentals of the companies, yet the stocks continued to surge by an average of 5%.

In other news, Home Depot, (HD), also known as Hot Dog (read Toddo's Freaky Friday Potpourri), calmed investors as many were watching for continued turmoil in the credit markets. The stock finished the day with a healthy 1.94% gain on news that the sale had closed even though it was for a reduced amount. Please read Professor Matt Ford's article The Liquidity Addiction for better understanding of the current turmoil in the credit markets.

Retail stocks gained today, led by Gap (GPS). The company beat estimates for the second quarter and suggested the company was on track for a turnaround. Professor Macke disagreed in his article Mid-Day Musings and adding on the Buzz that the company "needed to fix the fashion and it doesn't seem to have any idea how."

Below is a recap of the idea flow on today's Buzz and Banter. Please note that stocks may appear on both bullish and bearish categories due to long and short term trades by our many Minyanville professors. In addition please click on our Buzz Bits for a more in-depth summary of what happened during the trading day.

Some bullish trade or investment ideas: ANAD, INTC, HMSY

Some bearish trade or investment ideas: GPS, BAC, QQQQ, BCSI, CHKP

It's been a long week. We warned you not to be fooled by the light radar. Make sure you read Professor Tatro's Sector Rotation or New Bear Market as he provides a great debate on what type of market we are experiencing. Have a good night and enjoy the weekend!
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No positions in stocks mentioned.

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