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Tepper's Spark Ignites a Blaze, Sending the S&P Through 1650

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Today's financial recap and tomorrow's financial outlook.

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Tuesday was an unusual day for the market as a serious rally appeared to have ignited on bullish comments from a hedge fund manager, despite a lack of obvious market-moving news.
This morning on CNBC, investment magnate David Tepper of Appaloosa Management issued an extremely positive outlook on the stock market, going so far as to say, "For guys that are short, they better have themselves a shovel to get out of the grave."
The initial positive reaction in US stock futures seemed like a simple countermove in the face of negative expectations, as it had been rumored on Monday that Tepper was set to come out as bearish.
However, momentum was ignited, and we saw a day that could most definitely be characterized as "risk-on," complete with the S&P 500 (INDEXSP:.INX) surging into the close to break the 1650 level for the first time in history.

Furthermore, the small-cap Russell 2000 Index (INDEXRUSSELL:RUT), which outperformed the S&P, finished at 985, putting it within striking distance of the 1000 level. We also saw US Treasury yields rise and significant outperformance in financial stocks. Goldman Sachs (NYSE:GS) was a notable outperformer in that group, surging over 3%.
However, the real standout mover of the day was Tesla Motors (NASDAQ:TSLA). Following its recent dramatic earnings report and news-driven surge (due to the extremely positive reviews of its Model S car), the stock rose a whopping 11% to $97.12 within the first two minutes of the market open.
By the afternoon, the stock fell as low as $81.15 before bouncing up to finish at $83.34, showing the dangers (and opportunities) in trading high-octane momentum stocks -- especially when they have 40%+ short interest level.
Over in economics, the April Import Price Index fell 2.6%, which was slighter better than the expected -3.1% reading, while the Export Price Index was in-line with expectations at -0.5%.
In international news, ratings agency Fitch upgraded its rating on Greece to B- from CCC, which drove some optimism in Europe.

However, note that many investors are keying in on the action in Japanese bonds as well as the yen, both of which have fallen sharply in recent sessions.

Tomorrow's Financial Outlook

In economics, we'll see a host of data coming out, including the MBA Mortgage Index at 7:00 a.m. EDT, the PPI at 8:30 a.m. EDT, and the Empire Manufacturing Index at 8:30 a.m. EDT. For a full economic calendar, please consult our Trading Radar.
We'll see a few major earnings reports out tomorrow, namely Deere (NYSE:DE) and Macy's (NYSE:M) in the morning, and Cisco Systems (NASDAQ:CSCO) after the close.
Looking forward, we suspect tomorrow's economic data reports could set the tone for the next move in the market. Despite positive sentiment indicators, market participants continue to seem overly cautious. As we've seen many times this year, weakness in data doesn't necessarily equate to weakness in stocks, so resist the urge to make snap decisions.

Twitter: @Minyanville

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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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