Stocks Finish Higher, Boosted by Financial, Homebuilding, Telecom, Software, Energy and Utility 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 Futures
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 Higher into Final Hour on Falling Credit Market Angst, Short-Covering, Less Financial Sector Pessimism

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Financial longs, Defense longs and Biotech longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is mixed as the advance/decline line is about even, most sectors are rising and volume is about average. Investor anxiety is high. Today’s overall market action is neutral. The VIX is falling 1.5% and is high at 25.53. The ISE Sentiment Index is slightly below average at 139.0 and the total put/call is slightly below average at .77. Finally, the NYSE Arms has been running around average most of the day, hitting 1.25 at its intraday peak, and is currently .75. The Euro Financial Sector Credit Default Swap Index is falling 2.92% today to 111.0 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is falling 3.87% to 135.73 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is falling .86% to 42 basis points. The TED spread is now down 422 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is rising 7.9% to 38.57 basis points. The Libor-OIS spread is falling 2.89% to 37 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 1 basis point to 1.70%, which is down 94 basis points since July 7th. The 3-month T-Bill is yielding .18%, which is up two basis points today. The US sovereign debt credit default swap index is falling another 4.76% today to 40.0 basis points, which is the lowest since May 21^st. (XLF) has traded well throughout the day and is at session highs, rising 1.3%. This financial sector ETF is right at its 200-day moving average and should break above it by week’s end. The Healthcare IT stocks(QSII, CERN, MDRX, ECLP, CPSI, etc) remain on fire after positive comments from Raymond James this morning. I continue to favor these shares. One of my longs, (ASEI), is breaking higher today after two weeks of consolidation. I still believe it is attractive at current levels. The main negative I see today is the relative weakness in large-cap tech leaders. This is likely a function of quarter-end profit-taking by traders rather than an indication of impending weakness for the sector. (MSFT) is an exception and continues to trade very well. Nikkei futures indicate an +207 open in Japan and DAX futures indicate a -5 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on lower long-term rates, short-covering, diminishing financial sector pessimism, declining credit market angst, quarter-end window dressing and investment manager performance anxiety.

Today's Headlines

Bloomberg:

- Bernard Madoff was sentenced to 150 years for masterminding the largest Ponzi scheme in history, six times longer than the penalties meted out to the chief executives of WorldCom Inc. and Enron Corp. Madoff appeared in court today before U.S. District Judge Denny Chin for the first time since his March 12 guilty plea for an epic swindle that may have reached $65 billion. “I don’t ask for any forgiveness,” Madoff, 71, told Chin. He said he deceived his brothers, his two sons and his wife, none of whom was in the court. The courtroom burst into applause as Chin imposed the sentence.

- The International Energy Agency, an adviser to oil-consuming nations, cut five-year forecasts for global crude demand because of the economic slump, predicting consumption won’t regain last year’s levels until 2012. The IEA cut its oil demand estimates for every year through 2013 by about 3 million barrels a day, it said in its Medium- Term Oil Market Report today. Consumption will average 86.76 million barrels a day in 2012, the first year it will rise above 2008’s level of 85.76 million barrels a day, according to the Paris-based agency. “There is so much uncertainty about the economic recovery and how fast it may happen,” Tanaka said in an interview after the report’s release in Paris today. “We may have a supply crunch again, just like last year, in 2014 to 2015. If the economic recovery is slower, we could have ample supply capacity.” In its “lower GDP scenario,” which assumes that a rebound in the global economy will be 3 percent a year, the IEA said global oil demand could fail to reach last year’s levels by 2014, standing at 84.92 million barrels a day, 6.34 million barrels less than predicted in December. “Many see the lower variant, or something close to it, as a more likely outcome, so profound could be the fallout from the recent financial and economic market turmoil,” the IEA said in the report. Consumption in developed economies will shrink 1.1 percent a year to 44.4 million barrels a day in 2014, even under the higher GDP scenario, according to the IEA estimates. According to the lower economic growth estimate, OECD demand may shrink as much as 1.5 percent.

- Silver investors should sell into this year’s 25% rally before speculators trim their record holdings of the metal, Barclays Capital said. Silver held in Barclays Plc’s iShares Silver Trust, the biggest physically backed exchange-traded fund of the metal, rose to an all-time high this month. Including similar products by Zuercher Kantonalbank and ETF Securities Ltd., assets total 348.7 million ounces, more than a third of the world supply estimated at 832.6 million ounces in 2008 by researcher GFMS Ltd. “Silver has got an overhang of speculative interest,” Kevin Norrish, a Barclays Capital analyst, said in London. “Fundamentals are very poor. There is an awful lot of supply coming on stream.”

- China, the world’s second-biggest energy consumer, may raise retail fuel prices tomorrow, three industry officials said. Diesel and gasoline prices may be increased by 600 yuan ($87.80) a metric ton, said the officials, who declined to be named before any government announcement. The government last raised prices on June 1 when gasoline and diesel prices were increased by as much as 8 percent.

- Commodity Rally May Falter on Supply, Speculators.

- China’s Growth May Slip in 2010 on Stimulus Cap, Deutsche Says.

- US Dollar to Rise Most Since 1981, Best Predictor Says.

- Manhattan’s office market may begin to recover in the next year as financial industry job losses abate and company executives gain confidence, SL Green Realty Corp.(SLG) Chief Executive Officer Marc Holliday said. “A lot of the correction has already occurred,” Holliday said in an interview in his Midtown office. “Everybody thinks the world is falling apart -- it is tough out there -- but I can see that in the next six to 12 months we’ll be at an inflection point.”

- I believe the rally that began in March is sustainable at least into early 2010. The main reason: The economy is recovering. The best-known index for predicting the U.S. economy, the Conference Board’s index of leading economic indicators, rose in April and May after falling in nine of the previous 10 months. Ned Davis Research Inc. has its own set of a dozen predictive indicators. It said this month that the final piece had fallen into place, so that all 12 indicators now point to a recovery. The firm expects the recession to end as soon as August.

- European retail sales declined in June for a 13th month as the region’s worst recession in more than half a century and rising unemployment curbed household spending, the Bloomberg purchasing managers index showed.

- Emerging market economies spanning Asia and eastern Europe may suffer a delayed recovery as the global recession stalls capital flows from industrialized nations, the Bank for International Settlements said. “There is a significant risk that economic recovery in emerging market economies will be delayed,” the Basel-based BIS said in its 79th annual report, released today. “In particular, there is a risk of a destabilizing negative feedback loop, the severity of the downturn could deter a recovery in capital flows, which could in turn further impair growth.”

- Fannie Mae and Freddie Mac’s federal regulator said home prices may be “bottoming” in the U.S. as government efforts to bolster the market gain traction. “We’re in a process where we may be seeing some bottoming,” James Lockhart, director of the Federal Housing Finance Agency, said in an interview on CNBC. “Certainly mortgage rates being down where they were, was helpful,” he said. “At 5.4 percent, they’re higher, but they’re still in a range that I think does achieve affordability.”

- TRW Automotive Holdings Corp.(TRW), the world’s biggest supplier of vehicle-safety equipment, surged the most since April after JPMorgan Chase & Co. upgraded the supplier and lenders eased terms of a credit agreement. TRW rose $1.67, or 19 percent, to $10.67, at 11:26 a.m. in New York Stock Exchange composite trading, after reaching $10.79 for the biggest intraday gain since April 2. The shares have almost tripled this year.

- The U.S. Supreme Court refused to revive a lawsuit brought by victims of the Sept. 11 attacks against Saudi Arabia and Saudi princes who allegedly channeled money to Osama bin Laden’s al-Qaeda network. The justices, without comment, today left intact a federal appeals court ruling that the kingdom, four princes and a Saudi charitable agency are shielded by the Foreign Sovereign Immunities Act. The lower court also threw out claims against a fifth prince. In rejecting an appeal by victims, the justices took the advice of the Obama administration, which urged the high court not to get involved.

- Natural gas futures declined in New York as bulging supplies of the power-plant and industrial fuel are expected to weigh on the market for the rest of the year. Gas fell after the International Energy Agency said U.S. production expanded 4 percent in the “early months” of 2009. Higher output and declining demand in the recession have put U.S. stockpiles 22 percent above the five-year average for this time of year, according to the Energy Department. “There’s plenty of supply and demand is bad,” said Peter Beutel, president of Cameron Hanover Inc., an energy consulting company in New Canaan, Connecticut. Natural gas for August delivery fell 13.6 cents, or 3.3 percent, to $3.969 per million British thermal units at 12:10 p.m. on the New York Mercantile Exchange. Gas is down 71 percent from a 2008 high of $13.694 per million Btu reached on July 2.

- Crude oil climbed above $71 and gasoline rose the most in six weeks after an attack by Nigerian militants shut a field operated by Royal Dutch Shell Plc, cutting output from Africa’s largest producer. Shell said it closed the Estuary field near the Forcados export terminal after the assaults. Hostilities in the Niger River delta have cut more than 20 percent of the country’s oil exports since 2006.

- Treasuries rose for a third day after Chinese central bank Governor Zhou Xiaochuan said his country, the largest overseas holder of U.S. debt, is sticking with its foreign-currency reserve policy for now. Ten-year yields were near the lowest level in four weeks after Zhou said yesterday the nation’s reserve policy is “always quite stable.” Foreign buyers are snapping up more U.S. debt, helping limit first-half losses for Treasuries that have been the biggest in at least three decades. “It’s a positive comment and something else to support Treasuries,” said Orlando Green, a fixed-income strategist in London at Calyon, the investment-banking arm of Credit Agricole SA. “We’re in an environment that’s still positive for bonds.”

Wall Street Journal:

- Some Republican members of Congress want the U.S. Census Bureau to end a 2010 Census partnership with Acorn, the community organizing group that was hit by accusations of voter-registration fraud in the 2006 and 2008 elections. Acorn, the Association of Community Organizations for Reform Now, signed up in February with the bureau to be a "2010 Census Partner," which includes, among other things, identifying job candidates, encouraging its members to participate in the count and distributing literature explaining the importance of the census. But in the wake of accusations that some former Acorn employees engaged in voter registration fraud in the 2006 and 2008 elections, the partnership isn't sitting well with some Republicans on Capitol Hill who worry that Acorn could skew results. There's a lot at stake since the census is used to dole out money to states and localities and to allocating seats in the U.S. House of Representatives. Rep. Patrick McHenry of North Carolina, the ranking Republican on the panel that oversees the Census Bureau, is demanding that the bureau explain how the partnership with Acorn fits its stated mission of selecting partners that will not "distract from the Census Bureau's mission."

- Fidelity Investments' Magellan mutual fund appeared to significantly boost its stake in Bank of America Corp. (BAC) in May while it added to its Goldman Sachs Group Inc. (GS) position, according to new records released by the mutual-fund giant. The fund - a one-time industry bellwether that lost some luster last year amid backfiring financial bets - also boosted its holdings in Wells Fargo & Co. (WFC) last month, according to Fidelity's data.

- The Supreme Court, voting 5-4 in a case that has been a lightning rod for high court nominee Sonia Sotomayor, invalidated a Connecticut city's decision to scrap the results of a firefighter promotion exam in which the white candidates scored better than their black peers. Justice Anthony Kennedy, writing the court's opinion, said the city of New Haven violated a section of the Civil Rights Act of 1964 that prohibits employment discrimination. "Whatever the city's ultimate aim -- however well intentioned or benevolent it might have seemed -- the city made its employment decision because of race," Justice Kennedy wrote. "The city rejected the test results solely because the higher scoring candidates were white."

- Iranian officials confirmed President Mahmoud Ahmadinejad's overwhelming victory over his reformist challenger Mir Houssein Mousavi Tuesday after a partial recount of its disputed elections.

- As Congress tackles President Barack Obama's top two domestic priorities -- climate change and health care -- he faces some of his most serious challenges from fellow Democrats. The narrow passage Friday of an environment bill came with nearly one in five Democrats defecting, and only after supporters from coal-producing and agriculture districts won concessions that eased the impact on business and aggravated some environmentalists. Prospects for the measure remain uncertain in the Senate, even though Democrats hold a 59-40 voting majority. Some Democratic defections were to be expected. Republicans' argument that the cap-and-trade program would effectively impose a national energy tax on consumers and businesses was a message likely to resonate in conservative congressional districts won by moderate Democrats in the past two elections. The friction is emerging despite the fact that Democrats hold the White House and overwhelming majorities in both the House and Senate. But Mr. Obama, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid are pressing an unusually ambitious agenda, and most of the Democrats' recent gains came from capturing seats in conservative areas, whose representatives are less likely to go along with his more far-reaching plans.

- American commanders and Iraqi officials and residents are watching with growing unease as U.S. combat forces end their duty in Iraq's urban areas this week, amid almost daily reports of violence. U.S. officials worry that as they continue to battle the remnants of an insurgency and efforts to reignite sectarian strife, they will be losing critical, on-the-ground intelligence gleaned from the neighborhoods they once lived in and patrolled. The boots-on-the-ground approach was crucial to the Pentagon's mostly successful surge strategy in Baghdad. Many Iraqis are still deeply suspicious of the sectarian leanings of the country's nascent security forces. For them, the pullout of American troops means the disappearance of an effective check on suspect Iraqi soldiers and police officers. In Khadra, a neighborhood in western Baghdad, those fears are already playing out.

CNBC:

- China is showing signs of asset price bubbles as a surge in new lending pushes up prices in the stock and real estate markets, the official Shanghai Securities News quoted a government think tank official as saying. Wei Jianing, a senior researcher at the State Council Development & Research Centre, was quoted as saying that nearly half of China's newly created liquidity has been circulating in the financial system instead of flowing into the real economy to support growth, thus pushing up asset prices. "There have already appeared some new early indications of asset price bubbles in China," Wei was quoted as telling a conference. The newspaper also quoted Cheng Siwei, an influential former Chinese lawmaker, as saying that about 2.4 trillion yuan ($351 billion) of new lending in the first quarter of this year was used for investment purposes, including stock and property investment. Separately, the People's Daily reports that China's torrent of bank credit is pouring too much money into big infrastructure projects and government-backed investments that sometimes have been poorly vetted. The People's Daily said the surge in lending has helped shore up growth but has also sowed potential risks that demand closer attention. It adds to a recent drum-beat of warnings about the potential long-term downside of China's credit-fuelled growth.

The Asset Magazine:
- Short sellers spark backlash.

paidContent.org:

- Amazon.com’s(AMZN) Kindle DX is now sold out “due to heavy customer demand” and is taking four to six weeks to ship, according to a message on the Amazon website that apparently went up this weekend.

Rassmussen:

- Just 18% of U.S. voters now say Congress is doing a good or excellent job, down from 23% in May. Forty-seven percent (47%) now say Congress is doing a poor job.

Reuters:
- Apple Inc(AAPL) Chief Executive Steve Jobs is back to work following a near six-month medical leave, the company said on Monday. "Steve is back to work," a company spokesman said. "He's currently at Apple a few days a week, and working from home the remaining days. We are very glad to have him back."

- Ford Motor Co (F) expects its U.S. sales for June will decline by less than 20 percent, giving it a higher share of the largest auto market amid early signs that demand has begun to stabilize, an executive said on Monday. George Pipas, Ford's chief sales analyst, speaking to reporters at Ford's headquarters, said economic indicators suggested that the worst could be past for both the U.S. economy and auto sales.

- Congress is eyeing ways to make sure speculative trading helps commodity markets rather than distorting pricing signals, U.S. Agriculture Secretary Tom Vilsack said in a Reuters Television interview Monday. "There are concerns," Vilsack said, noting he has spoken about the issue with Tom Harkin, chairman of the Senate Agriculture Committee. "I suspect that there will probably be an effort to make sure when there is trading that takes place on the market, that it's trading that actually assists the market, doesn't hurt the market, creates a robust trading scheme so that we get a good pricing signal," Vilsack said. Grain futures markets are bracing for more government regulation after a U.S. Senate probe blamed index funds for overinflating wheat prices last year.

La Lettre de L’Expansion:

- Michelin & Cie. Doesn’t expect an upturn in the production of tires for heavy vehicles before 2014 to 2016.

Caijing:

- China’s nonferrous metals industry is still facing overcapacity, citing Shang Fushan, vice chairman of the China Nonferrous Metals Industry Association. Overzealous local investment coupled with the failure to get rid of outdated plants has led to pressure from overcapacity, citing Shang. Local governments have been unwilling to shut the small and outdated operations and a small rise in prices has encouraged investment, swelling overcapacity, Shang was quoted as saying.

Chinamoney Magazine:

- The US dollar may continue to dominate as the global currency, Guan Tao, deputy head of the international payment department at the State Administration of Foreign Exchange, wrote. The US dollar’s dominance is supported by the US’s “super-strong comprehensive national power,” Guan said. A super-sovereign currency to replace the greenback needs a “complicated and huge” financial market that provides trading of the currency, the SAFE official wrote.

Bear Radar

Style Underperformer:
Small-cap Growth (+.21%)

Sector Underperformers:
Education (-2.13%), Road & Rail (-2.10%) and HMOs (-.70%)

Stocks Falling on Unusual Volume:
CBEY, SNDA, APOL, IPCM, PWRD, BIIB, CYOU, BWEN, ARL, ZN and WW

Stocks With Unusual Put Option Activity:
1) BIIB 2) AGU 3) MTB 4) SNY 5) ENER

Bull Radar

Style Outperformer:
Mid-cap Value (+.98%)

Sector Outperformers:
Software (+1.78%), Homebuilders (+1.76%) and Energy (+1.43%)

Stocks Rising on Unusual Volume:
IOC, MDRX, XCO, MCRS, SNP, ABB, CLMT, SI, UTI, PCAR, MRK, FUQI, HRBN, CHDX, KIRK, ARST, ZBRA, COMV, CSIQ, RGLD, RVBD, ASIA, DDRX, ONXX, CERN, TPP, TRW, SNY, ORH, NVO and XCO

Stocks With Unusual Call Option Activity:
1) PTEN 2) BIIB 3) EXPE 4) APOL 5) CMI

Links of Interest

Market Snapshot Commentary
Market Performance Summary
Style Performance
Sector Performance
WSJ Data Center
Top 20 Biz Stories
IBD Breaking News
Movers & Shakers
Upgrades/Downgrades
In Play
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
Chart Toppers
Real-Time Intraday Quote/Chart
HFR Global Hedge Fund Indices