Monday's Closing Update: Housing, Financials Rally Broader Market

-NYSE up 202.9 (3.5%) to 5,865.87.

-DJIA up 239 (2.9%) to 8,508.

-S&P 500 up 26.7 (3%) to 909.62.

-Nasdaq up 52.2 (3.1%) to 1,732.

GLOBAL SENTIMENT

Hang Seng up 1.38%

Nikkei down 2.44%

FTSE up 2.26%

UPSIDE MOVERS

(+) State Street (STT) selling convertible debt.

(+) Bank of America (BAC) added to Goldman's Conviction Buy list.

(+) Lowe's (LOW) beats with earnings.

(+) Wal-Mart (WMT) gains as WSJ says retailer looking to boost share of electronics market.

(+) J.A. Solar (JASO) firming with broader market despite analyst downgrade.

(+) IDM Pharma (IDMI) sold to Takeda Pharma for $2.64 per share.

(+) Hemispherx Biopharma (HEB) says no material events to account for unusual stock activity.

(+) MGM Mirage (MGM) upgraded at JP Morgan.

(+) Hartford Financial (HIG) is keeping Life, P/C Insurance units: Bloomberg

(+) Dillard's (DDS) reports surprise profit.

DOWNSIDE MOVERS

(-) Exploration Company (TXCO) to file for Ch. 11.

(-) Allegheny Energy (AYE) downgraded at Wachovia.

(-) Nordstrom (JWN) downgraded to Sell at Goldman.

MARKET DIRECTION

Stocks close in the upper end of the day's range, with the major averages all up around 3%, as home-building sentiment data lifted the mood on Wall Street. Earlier, better-than-expected results from home retailer Lowe's (LOW) lifted investor sentiment.

Buying accelerated later after the National Association of Home Builders said its housing market index rose for the second month in a row in May, the highest level in eight months.

More key economic data will be released Tuesday on housing construction and Thursday on regional manufacturing.

Financial shares were broad gainers.

Bank of America (BAC) helped to lift financial shares after some analysts issued positive comments on the stock, and Goldman Sachs added it to its "conviction buy" list.

State Street Corp. (STT) said it plans to raise funds through stock and debt offerings as part of an effort to repay $2 billion from the government. While the move will dilute stockholders, analysts see it as a positive sign that banks are able to raise capital in the private markets.

Insurer American International Group (AIG) is said to be speeding up plans to list its Asian subsidiary through an IPO that could raise more than $4 billion. AIG is also anxious to pay back government bailouts.

Technology stocks gained in step with the broader market. Marvell Technology (MRVL) is helping lead technology stocks higher, specifically chip stocks, after the company was upgraded to Buy from Neutral at Credit Suisse.

Crude futures rose nearly 5% Monday as U.S. stocks rallied and as concerns increased that militant unrest in Nigeria may disrupt supplies from Africa's biggest oil producer.

Crude for June delivery gained $2.69, or 4.8%, to $59.03 a barrel on the New York Mercantile Exchange. Monday's gain erased the 4% loss crude from last week.

Comments

[frosty]

Hard to believe people are bullish because they think we need more new houses.

2009 May 18 04:41 PM

[Archman Investor]

Psst.
Just to be clear here.

S & P 500 volume was barely half the daily average today.
Considering last week was a minus 5% loss for the index, if todays bounce was real, volume should have been much closer to average or above average to show that people really "wanted" stocks.

Sorry. Just telling you what you need to hear, not what Wall Street and the financial media wants you to hear.

2009 May 18 04:47 PM

[Archman Investor]

Cetin:

Just to be clear, I am just presenting information for informations sake. I do not mind the market going up. No, not at all.

You are right. The gains are there (though not "locked in") until the sellers drop the prices below where people bought them. Unfortunately for the average mom and pop investor, and as per a very good WSJ article this morning, most people let gains turn into losses and sell out AFTER they have lost a lot of money or sell out right at the bottom.

Unless someone bought near the bottom, or like me, lost only about 15% last year and does not "need" stocks to shoot back to DOW 14K tomorrow, I do not need to chase any rally, and I can afford to look for more than just one or two bits of positively spun news before I commit more money to this market.

2009 May 18 05:47 PM

[marketman54]

Thank you archman, I do not need to chase this rally either. I shorted this market from May 08 to December 08 and I still can't believe that this market moved 2000 points.

I still don't get it, everything is less bad. Unemployment at 7 million but it could be worse. Toxic assets no longer on the books for the banks, but they still exist. Mortgage foreclosures increasing geometrically, but not astronomically. The auto industry is collapsing, but it hasn't done it yet. Commercial real estate losing tenants and cannot refinance, but it hasn't totally collapsed yet. Credit card payment default increasing monthly, but it hasn't peaked. Auto loan payments defaulting, but we don't count repos. Consumers are not consuming and sales are bad, but they are not at "O" yet so I guess they are not bad.

We are coming to a grinding halt and yet Washington and Wall Street continues to blow smoke up my ASS. Pretty soon the smoke will blow back.

2009 May 18 06:24 PM

[victoralpha]

Not soon enough. How does JPM rally with 70% of normal avg volume then someone buys 10mil A/H at $37.26. WFC rallies with 60% of its avg volume and someone buys 12mil A/H at 26.93. Is the treasury market makers now and Tarp is being paid back with tarp funds? This seems to be a sham but what is the end game? One bubble already blew and they are creating another.


On May 18 06:24 PM marketman54 wrote:

> Thank you archman, I do not need to chase this rally either. I shorted
> this market from May 08 to December 08 and I still can't believe
> that this market moved 2000 points.
>
> I still don't get it, everything is less bad. Unemployment at 7 million
> but it could be worse. Toxic assets no longer on the books for the
> banks, but they still exist. Mortgage foreclosures increasing geometrically,
> but not astronomically. The auto industry is collapsing, but it hasn't
> done it yet. Commercial real estate losing tenants and cannot refinance,
> but it hasn't totally collapsed yet. Credit card payment default
> increasing monthly, but it hasn't peaked. Auto loan payments defaulting,
> but we don't count repos. Consumers are not consuming and sales are
> bad, but they are not at "O" yet so I guess they are not bad.
>
> We are coming to a grinding halt and yet Washington and Wall Street
> continues to blow smoke up my ASS. Pretty soon the smoke will blow
> back.

2009 May 18 06:55 PM

[Market Sniper]

Bear market rallies are built on hope. Everyone "hopes" the worst is behind us, everyone "hopes" that the big problems are solved and everyone "hopes" that the market will now just go up. Bull markets climb the wall of worry and bear markets slide down the slope of hope. The tragic thing about a generational bear market is that as investments are devastated, market participants, once the losses become unbearable, sell out at the actual bottom. The pain is so great, they puke up their shares at any price just to stop the pain. We have not seen anything close to that, as yet. Those participants then vow NEVER to put a dime in the stock market again.

2009 May 18 07:07 PM

[Buttons]

Amazing how the stock market went up since the Treasury Secretary returned from the Bilderburger meeting over the past weekend.

2009 May 18 07:21 PM

[User 383693]

This is a scam on the Public. This smoke and mirror Bull run has escalated to and made so much money for the Banks that most banks are at a point of repaying all TARP $. No fundamentals just alot of paper moving back and forth. No improving in the economy nothing that holds marit for a 2000 point jump. GS, BOA and the rest of these little rascals have accomplished a great trick. Unless they keep playing these shenanigans after paying Tarp, which I doubt, I forsee the market going way south right after all TARP is paid to the goverment. Hope Im wrong.

2009 May 18 07:48 PM

[Harry Tuttle]

I thought we were up because of the elections in India.

Made more sense to me than "hoping" on home-builders. Why? because although I have no clue about what goes on in India, I do understand that we have a HUGE oversupply of houses.

If people want to believe that things are getting better, who am I to spoil their fun by asking questions.

Party on Garth!

2009 May 18 08:43 PM

[dano123]

I am a home builder. It's been a long winter just scraping by. I now have 2 small energy efficient houses to build. Feeling better about the economy. I Needed a 3rd car because of teenager. Bought a Camry Hybrid new today. I wonder if I am an anomoaly, or is my experience typical of thousands or perhaps millions of consumers?

2009 May 18 09:21 PM

[bricki]

The key thing I think is to not get wrapped up in a particular point of view or dogma - be it positive or negative, but rather make hay when the sun is shining and have a good umbrella for when it is raining.

On May 18 05:47 PM archman82011 wrote:

> Cetin:
>
> Just to be clear, I am just presenting information for informations
> sake. I do not mind the market going up. No, not at all.
>
> You are right. The gains are there (though not "locked in") until
> the sellers drop the prices below where people bought them. Unfortunately
> for the average mom and pop investor, and as per a very good WSJ
> article this morning, most people let gains turn into losses and
> sell out AFTER they have lost a lot of money or sell out right at
> the bottom.
>
> Unless someone bought near the bottom, or like me, lost only about
> 15% last year and does not "need" stocks to shoot back to DOW 14K
> tomorrow, I do not need to chase any rally, and I can afford to look
> for more than just one or two bits of positively spun news before
> I commit more money to this market.

2009 May 18 10:29 PM

[The Aft Deck]

Sound Advice, Long term investors will not lose out buying here and there is plenty of movement for traders. I still think we will see 7500 again soon, but of course we will also see 10 000+ no later than 2010


On May 18 10:29 PM bricki wrote:

> The key thing I think is to not get wrapped up in a particular point
> of view or dogma - be it positive or negative, but rather make hay
> when the sun is shining and have a good umbrella for when it is raining.
>
>
> On May 18 05:47 PM archman82011 wrote:

2009 May 19 12:49 AM

[upgrayed]

How's this for a conspiracy theory. Goldman Sachs and JP Morgan engineered the current market rally bankrolled with TARP money with the explicit encouragement of the treasury so that the money could be paid back ASAP and be deployed elsewhere. The fact they are paying back now means they have doubled up and are now out of the game. To me it is somewhat questionable as whether this price level can be supported without their 'lubrication'

2009 May 19 08:13 AM