Thursday Market Wrap-Up

Includes: BAC, GE, MRK, PFE
by: Santosh Sankar

The markets scored a three-day rally as the Dow Jones Industrial Average rose 3.5% to settle well above the 7,000 mark. The S&P and NASDAQ closed up 4.07% and 3.97%, respectively. Crude ended the day up over $4.00 to close at $47.03 a barrel while gold has closed up at $927.50.

The 10 year saw yields shrink to 2.86% as investors snapped up everything from equities to bonds.The markets enjoyed another great day as the banks were up once again: Bank of America (NYSE:BAC) rose 19% on news that the bank will not need any more government funds, as did Citigroup (NYSE:C), JPMorgan (NYSE:JPM) and Wells Fargo. Analysts warn that short-term profitability does not mean anything until writedowns are reported at the end of the first quarter.

General Electric (NYSE:GE) lost its coveted AAA credit rating as Standard and Poor’s cut it to AA+, surprisingly causing the stock to rally. This cut is said to be insignificant as analysts do not expect GE’s borrowing costs to increase. GE Capital is the primary user of any debt issued by the conglomerate. The downgrade was caused by the high probability that GE will suffer more write downs from its Capital Finance arm.

The healthcare sector experienced a great close to many mergers and acquisitions today. Pfizer (NYSE:PFE) and Merck (NYSE:MRK) also saw their share prices appreciate as Pfizer received good news on a drug used to alleviate pancreatic problems.

In the midst of the market rally, all investors kept an eye on the Madoff case as Mr. Madoff pleaded guilty this morning and was immediately sent to jail. Sentencing will occur in June, but this case sets a precedent for the Stanford case as well as any other firms who swindled their clients. One could hope that investor confidence returns as the population sees how fraudulent investment advisors are handled when they break the law.

That’s all for today, be sure to come back tomorrow as we hope to extend our rally.

Disclosure: The mutual fund the author is associated with is long JPM.