Stocks Finish Sharply Higher, Boosted by Retail, Homebuilding, Financial, REIT, Internet, HMO and Construction Shares

Evening Review
Market Summary
Top 20 Biz Stories
Today’s Movers
Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Style Performance
Commodity Movers
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Commentary
After-hours Movers
After-hours Real-Time Stock Bid/Ask
After-hours Stock Quote
After-hours Stock Chart
In Play

Stocks Soaring into Final Hour on Short-Covering, Bargain-Hunting, Lower Energy Prices, US Dollar Strength

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Computer longs, Biotech longs, Medical longs and Gaming longs. I covered all my (IWM)/(QQQQ) hedges and some of my (EEM) short this morning, thus leaving the Portfolio 100% net long. The overall tone of the market is very bullish as the advance/decline line is substantially higher, almost every sector is rising and volume is about average. Investor anxiety is about average. Today’s overall market action is very bullish. The VIX is falling 11.6%, but remains above average at 22.6. The ISE Sentiment Index is a depressed 71.0 and the total put/call is about average at .91. Finally, the NYSE Arms has been below average most of the day and is currently a low .55. Considering the mixed performance in Asia overnight and today’s news, action is even more impressive. China’s benchmark Shanghai Composite fell another -4.1% last night and is now down -36.7% so far this year. The DJIA is now down only -4.1% year-to-date after today’s rally. The TED spread is falling another 8 basis points today and has plunged 75 basis points over the last week to the lowest level since late February. The three-month T-bill yield is up another 7 basis points and has surged 100 basis points over the last week. The Bear Stearns High Yield Index is up 1.3% over the last five days. If emerging market stocks and commodities remain relatively weak, we should begin to see significant money flows into US stock funds for the first time in years, which would be a major broad market positive. This would also continue to help boost the US dollar. It is becoming increasingly likely that the lows for the year in US stocks are in place. Nikkei futures indicate an +600 open in Japan and DAX futures indicate an +112 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower energy prices, less pessimism, US dollar strength, diminishing credit market angst and bargain-hunting.

Today's Headlines

Bloomberg:
- The cost to protect corporate debt from default fell the most in a week after Lehman Brothers(LEH) sold $4 billion in shares and UBS AG made plans to raise the equivalent of $15 billion to shore up capital depleted by the US housing slump. Credit-default swaps on the Markit CDX North America Investment Grade Index of 125 companies dropped 10.5 basis points to 133 basis points.
- The US dollar rose the most against the euro in almost two weeks as UBS AG and Lehman Brothers(LEH) said they’re raising $19 billion, bolstering investor confidence in the world’s largest financial institutions.
- Lehman Brothers(LEH) rose the most in a week in NY after raising $4 billion from a stock sale aimed at quelling speculation it’s short of capital.
- Commodities fell for a third day, led by oil, copper and soybeans.
- Stock hedge funds sat on a record amount of cash as the industry posted its biggest quarterly decline in almost six years. Equity managers, who oversee about one-third of the $1.9 trillion in hedge funds, held an estimated $64.8 billion in cash in February, according to data compiled by Merrill Lynch analyst Mary Ann Bartels. That was down from $90 billion in January. The last time equity funds held cash outside of their trading accounts was in 2004, according to Merrill Lynch. “The data indicates to us the equity hedge funds have de-leveraged and have record cash balances,” she wrote

Wall Street Journal:
- China has a serious inflation problem.
- Microsoft(MSFT) Unlikely to Raise Yahoo(YHOO) Offer.
- MBIA’s(MBI) Brown Sees No Immediate Need to Raise Capital.
- Wall Street Argues Over Effect of ‘Uptick’ Rule.

NY Times:
- Hamas’s Virulent Attacks Against Jews Block Peace.
- AMR(AMR), UAL(UAUA) Boost Revenue Selling Frequent Flier Miles.

Xinhua:
- South China’s Guangxi Zhuang Autonomous Region became the 10^th Chinese locality to have replaced gasoline and diesel oil with bio-ethanol fuel on Tuesday out of environmental and energy efficiency concerns.

Haaretz.com:
- In a Hamas TV production for Palestinian children, a puppet stabs US President Bush to death in revenge for American and Israeli actions.

UBS Credit Default Swap Graph

(click on image to enlarge)

BOTTOM LINE: Despite this news, the UBS AG(US) credit default swap is plunging 29.6 basis points today to 112.50. As well, the stock is soaring 13.8% on heavy volume. This type of action is extremely positive and indicates the worst may well be over for the heavily-shorted financial sector.

Bear Radar

Style Underperformer:

Small-cap Growth +1.79%

Sector Underperformers:

Gold (-2.31%), Coal (+.12%) and Tobacco (+.39%)

Stocks Falling on Unusual Volume:

TRP, CALM, MDAS and AIR

Stocks With Unusual Put Option Activity:

1) SYMC 2) ITMN 3) POZN 4) LVLT 5) WAG

ISM Manufacturing, Construction Spending Beat Estimates

- ISM Manufacturing for March rose to 48.6 versus estimates of 47.5 and a reading of 48.3 in February.

- ISM Prices Paid for March rose to 83.5 versus estimates of 75.0 and a reading of 75.5 in February.

- Construction Spending for March fell -.3% versus estimates of a -1.0% decline and an upwardly revised -1.0% decline in February.

BOTTOM LINE: Manufacturing in the US beat analysts’ estimates last month, easing concern over the possibility of a deepening economic slump, Bloomberg reported. The New Orders component of the index fell to 46.5, while the Exports component rose to 56.5 versus 56.0 in February. The Inventory component fell to 44.9 versus 45.4 the prior month. The Orders Backlog component rose to 47.5 versus 45.0 in February. The Employment component rose to 49.2 versus 46.0 the prior month. While US growth likely turned mildly negative during 1Q, I continue to believe the US will avoid recession as growth accelerates back into positive territory this quarter on inventory rebuilding, fiscal/monetary stimuli, a likely end to the American Axle strike, booming exports and lower energy prices.

Spending on US building projects fell in February less than analysts anticipated, Bloomberg reported. Private Residential construction spending fell .9% versus a 1.9% drop the prior month. Non-Residential construction rose .1% versus a .8% decline the prior month. Building of factories jumped 2.7%. Construction spending will continue to remain muted over the intermediate-term as home builders work down inventories and commercial building slows. The 10-year yield is jumping 13 basis points and the US Dollar Index is surging 1.01% on today’s data. Moreover, the odds the Fed lowers the benchmark fed funds rate by 50 basis points at the upcoming April 30^th meeting are falling to 30.0% from 52.0% yesterday. The odds of a 25 basis point cut are rising to 70.0% from 48.0% yesterday.