Daily Market Recap

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The S&P 500 rallied with an increase of 0.61% after the sharp decline yesterday. The Dow was even stronger racking up a gain of 0.84%.

There are always “reasons” given for the daily movements in the markets. Here are some of the most often quoted reasons for the rally today:

  1. The Fed remains in accommodative mode. There has been an increase in concerns over the Fed prematurely withdrawing from their current program of asset purchases. Fed Chairman Bernanke largely put those fears to rest with his Senate testimony today.
  2. Apple provided a nice bounce in late day trading. Apple has a shareholder meeting tomorrow. The rumor mill was saying Apple will announce plans to split the stock and hike the dividend.
  3. Fears eased over the extent to which Italy's government will remain gridlocked.
  4. Retailers have continued to report earnings ahead of expectations. A common concern has been a reduced consumer spending due to higher payroll taxes and surging gas prices. These issues have not, thus far, negatively impacted retail earnings.

For the most part, after a huge risk off day yesterday buyers came back in. Homebuilders, retail, and semiconductors were leading areas. The December Case-Shiller 20-city index rose by 6.5%, ahead of expectations. January new homes sales came in at 437,000 against expectations of 383,000. Continued strength in housing sparked the risk appetite in buyers across all sectors today. Home Depot set a positive tone for the retail space as they reported better than expected earnings.

Industrials rose in line with the broad market today. Late cycle names like GE were the standouts. Early cycle names were also up across the board. Deere led a rally in agricultural equipment stocks with its increase of 1.5%.

The energy sector rose 1% today. Crude traded down by 0.5% with natural gas fractionally higher. Drilers and oil service names traded ahead of the overall sector.

Telecom names continued to see increased buying pressure. Money is rolling out of bonds and moving into stable equities that pay attractive dividends. AT&T and Verizon both moved sharply higher today.

Source: PFS Group

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