Taking Stock of Wall Street 2008-10-29

The market wanted to see whether the Fed would equal the forecast interest rate change to 1%. So,it started to crawl up to a high until FOMC decision was announced and then dumped it after that.

An example of buy the rumor and sell the news!

Had the FOMC taken a different decision that verged on the unexpected:

The market would have shot up if interest rate went below 1%.

The market would have dropped drastically if interest rate were, say 1.25%.

The actual FOMC decision just confirmed the expectation, so they just sold what they bought to make a small profit for the day.

GLOBAL PICTURE

Bank of Japan will cut its benchmark rate by 0.25%.

France is doing things we Americans may not be able to do being the highest form of socialistic sin. Subsidized job contracts (increased from the present 100,000 to 330,000)!

China slashed its lending rate from 6.93% to 6.66% - the third time in a row.

US GOVERNMENTAL ACTIONS

* FOMC decision: Fed slashed the benchmark interest rate to 1% from 1.5%. Discount rate was reduced from 1.75% to 1.25%.

* The Fed created dollar swaps with the central banks of Brazil, Mexico, South Korea, and Singapore averaging around 30 bln.

* Kudos to NY Attorney General Cuomo! Yesterday we talked about traitorous and greedy big bankers trying to steal taxpayers' money even after giving part ownership to the government. Cuomo moved fast within 24 hours of the news leak and ordered nine banks to submit details of payments to top management officials:

Goldman Sachs

JP Morgan

Merrill Lynch

Bank of America

Morgan Stanley

Wells Fargo

Bank of Mellon NY

Citibank

State Street

* The government has a new plan that will guarantee up to $500 bln of nearly 3 mln troubled loans. FDIC will use $50 bln from the bailout fund to convert them to low interest loans.

US ECONOMIC DATA

Durable Goods Orders for September - increased by 0.8% to $1.6 to $208 bln. The forecast figure was for a shortfall of -1.1%.

Inventories rose by $1.2 bln to $340 bln. Shipments were up by 0.2%.

The Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey for the week ended October 24 - The Market Composite Index rose by 16.8% to 476.7, an increase of from last week's 408.1 The four-week moving average for the seasonally adjusted Market Index is up 1.2 percent.

Purchase Index went up by 8.5%. But its four-week moving average went down by 0.1 percent.

The Refinance Index increased by 28.5% .The four-week average for the Refinance Index also rose by 2.9%,

Interest rate for 30-year fixed-rate mortgages decreased to 6.26% from 6.28%. That for 15-year fixed-rate mortgages decreased to 6.01% from 6.05%.

US Dollar Index - retreated slightlyby-1.62 (-0.02%) to 85.07

The dollar is down by 1.8% against a basket of currencies. Today it was the turn of the EU euro and the British pound to rise by about 3%. Japanese yen was the only one to drop with the dollar due to the expected interest cut by Japan.

EIA Weekly Petroleum Inventories

Crude oil reserves rose by 490,000 less than the forecast figure of 1,600,000.

Gasoline inventories fell by the expected 1,500,000 barrels.

Distillate reserves also increased by 2,300,000 barrels more than the 1,050,000 predicted.

Crude oil UP by $3.99 (6.28%) to $67.50

Gold UP by 13.15 (1.82%) to $754.00

CBOE Volatility (VIX) settled at 69.96,UP by 3.00 (4.48%) from the previous day.

STOCK MARKET INDICES

Dow was DOWN by -74.16 (-0.82%) to 8990.96

S&P 500 UP by 930.09 (10.42%) to 930.09

• Wisconsin Energy (WEC) will be the new component in S&P 500. It will replace MGIC Investment (MTG) from Friday.

Nasdaq UP by 7.74 (0.47%) to 1,657.21

NYSE

Daily Volume: 1.59 bln

A/D Ratio: 1727 stocks advanced against 1165 declined

52-week Hi/Lo: 16 stocks climbed to new Highs while 81 went down to new Lows

Nasdaq

Daily Volume: 2.75 bln

A/D Ratio: 2015 stocks advanced against 1176 declined

52-week Hi/Lo: 1 stock climbed to new Highs while 211 went down to new Lows

MARKET NEWS

Yahoo (YHOO) seems to be frantically looking for partnerships. Possibly, they are confused about selecting the suitable match. Now reportedly they are again talking to AOL (TWX). Their shareholders should be ruing the way they rejected the Microsoft (MSFT) offer when the share price was at $40 and decided that they are worth more than MSFT! Good techies need not be good analysts.

Comcast (CMCSA) is backing off from their plans to repurchase $4 bln of their shares.

GE (GE ) learned a lesson on talking with American media today - how they can make and break a company. Dow Jones reported that GE CEO told them 2009 profit of the company will be the same as 2008. Not only GE shares but market too started to fall. Then it recovered when another media group (CNBC) announced GE never told anybody anything.

Media can play games. But the truth is that many short-term investors who sold in panic would have lost money between the two announcements.

Qwest (Q) will be cutting 1,200 jobs.

Motorola's (MOT) is expected to cut more jobs than the earlier announced figure of 10,000.

Wabco Holdings (WBC) also announced job cuts by 1000 positions.

COMPANY RESULTS

* Companies that exceeded market's expectations on quarterly earnings:

Newmont Mining (NEM), Corning (GLW), Garmin (GRMN), Moody's (MCO), Uniphase (JDSU), Murphy Oil (MUR), Allied Waste (AW), Tesoro (TSO), Atmel (ATML), Amkor Technology (AMKR), Advance Auto Parts (AAP), Visa (V), First Solar (FSLR), CME Group (CME), Smith Micro Software (SMSI), Symantec (SYMC), CA Inc. (CA), Procter & Gamble (PG), Kraft Foods (KFT), Kellogg (K), Comcast (CMCSA) and Nexen (NXY).

* Companies that were in line with market's expectations:

TheStreet.com (TSCM), MetLife (MET), Ameriprise Financial (AMP), Prudential Financial (PRU), Corning (GLW), ValueClick (VCLK) and RealNetworks (RNWK).

* Companies that missed the forecasts:

Office Depot (ODP), Qwest (Q), Invesco (IVZ), MGM Mirage (MGM), Wabco (WBC), BorgWarner (BWA), Jones Apparel Group (JNY), Wisconsin Energy (WEC) and MeadWestvaco (MWV).

ANALYSTS' RATINGS

• Following stocks received upgrades:

Apollo Group Inc (APOL), AstraZeneca ADR (AZN), Bemis Co Inc (BMS), Biogen Idec Inc (BIIB), Blue Nile (NILE), Chicago Bridge & Iron Co NV (CBI), Citizens Financial Corp (CNFL), Coca-Cola FEMSA ADR (KOF), Constellation Energy Group Inc (CEG), Denny's Corp (DENN), First Bancorp (FBP), FPL Group (FPL), Gold Fields ADR (GFI), Gulfport Energy Corp (GPOR), Invitrogen Corp (IVGN), Kaydon Corp (KDN), LaSalle Hotel REIT (LHO), Manulife Financial Corp (MFC), Meritage Homes Corp (MTH), Nokia Corp (NOK), Nuance Communications Inc (NUAN), Owens & Minor Inc (OMI), Rogers Communications Inc (RCI), Sierra Wireless Inc (SWIR), Sterling Bancshares Inc (SBIB), Taiwan Semiconductor Manufacturing ADR (TSM) and Tuesday Morning Corp (TUES).

• Downgraded stocks are:

Aeropostale Inc (ARO), Dominion Resources Inc (D), Double-Take Software Inc (DBTK), First Mariner Bancorp (FMAR), Johnson & Johnson (JNJ), Lexicon Pharmaceuticals Inc (LXRX), Liberty Media Corp (LINTA), LodgeNet Interactive Corp (LNET), PNM Resources Inc (PNM), Sierra Wireless Inc (SWIR), SonicWALL Inc (SNWL) and Telecomunicacoes de Sao Paulo SA ADR (TSP), Theravance Inc (THRX), Ultimate Software Group Inc (ULTI), USG Corp (USG), Vistaprint Ltd (VPRT) and Vocus Inc (VOCS).