Stocks Finish Sharply Higher, Boosted by Gaming, Hospital, Bank, Networking, Alt Energy, REIT and Homebuilding 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 Sharply Higher into Final Hour on Falling Credit Market Angst, Diminishing Economic Fear, Declining Financial Sector Pessimism, Short-Covering

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Biotech longs, Medical longs, Retail longs, Technology longs and Financial longs. I added to my (URBN) long and took profits in another long today, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, every sector is rising and volume is about average. Investor anxiety is above average. Today’s overall market action is very bullish. The VIX is falling 5.45% and is very high at 35.93. The ISE Sentiment Index is below average at 121.0 and the total put/call is slightly below average at .74. Finally, the NYSE Arms has been running about average most of the day, hitting .94 at its intraday peak, and is currently .61. The Euro Financial Sector Credit Default Swap Index is falling 3.81% today to 150.0 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 5.17% to 168.79 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is rising 1.13% to 93 basis points. The TED spread is now down 370 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is unch. at 55.50 basis points. The Libor-OIS spread is falling 1.23% to 83 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is up 3 basis points to 1.54%, which is down 110 basis points since July 7th. The 10-year TIPS spread bottomed at .65% in October 1998 during the Asian financial crisis and at 1.24% in October 2001 during the technology bubble-bursting meltdown. The 3-month T-Bill is yielding .09%, which is down 3 basis points today. The euro financial sector credit default swap index appears to be rolling over again technically, which is a large broad market positive. Moreover, the North American Investment Grade Credit Default Swap Index is breaking down to the lowest level since October 7^th of last year, which is a major positive. The S&P 500 is now only -2.3% lower for the year after this month’s 9.7% surge higher. I still see much evidence that many large funds are positioned net short or seriously underexposed to US stocks. A close above 880 in the S&P 500 would likely trigger another meaningful round of short-covering. Nikkei futures indicate an +400 open in Japan and DAX futures indicate an +25 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on less economic fear, short-covering, declining financial sector pessimism, investment manager performance anxiety and diminishing credit market angst.

Today's Headlines

Bloomberg:

- The U.S. economy plunged again in the first quarter, making this the worst recession in at least half a century. Gross domestic product dropped at a 6.1 percent annual pace, weaker than forecast, after contracting at a 6.3 percent rate in the last three months of 2008, the Commerce Department said today in Washington. The report, which reflected a record slump in inventories and further declines in housing, comes hours before Federal Reserve officials decide how much money to pump into the economy. Smaller stockpiles may set the stage for a return to growth in the second half of the year amid signs Fed efforts to reduce borrowing costs and unclog lending are starting to pay off. “Businesses are running about as lean as they possibly can be. It sets up the reality that any sort of increase in demand will cause firms to have to increase production.” As a result, Naroff predicted growth won’t “be nearly as bad in the current quarter, and will probably be reasonably good.” Consumer spending, which accounts for about 70 percent of the economy, climbed at a 2.2 percent annual pace last quarter, the most in two years.

- Dendreon Corp.(DNDN)than doubled in market value, wiping out yesterday’s 45 percent plunge that caused a trading halt before the biotechnology company said its lead drug candidate worked against prostate cancer. The shares climbed to $23.76 at 12:45 p.m. New York time, from $11.81 yesterday, when the Nasdaq Stock Market halted trading in the company at 1:27 p.m. The drug, Provenge, extended the lives of men with advanced prostate cancer by four months in a study that Seattle-based Dendreon presented yesterday to a meeting of the American Urological Association in Chicago. Provenge, if approved, would be the first drug designed to train the body’s immune system to attack cancer cells like a virus. The medicine stands to generate $2 billion a year in revenue, said Joel Sendek, an analyst for Lazard Capital Markets Ltd. in New York.

- The U.S. economy is “leveling off at a low level” and doesn’t need a second fiscal stimulus package, said former Federal Reserve Chairman Paul Volcker, one of President Barack Obama’s top economic advisers.

- Companies worldwide are likely to rebuild inventories through September, spurring a surge in production of goods and services, according to Tim Rocks, an equity strategist at Macquarie Group Ltd. “The largest restocking cycle in living memory is under way,” Rocks wrote. “Production should now bounce.” Transportation, technology and capital-goods companies may benefit most from the recovery, he wrote, as they tend to have “an easing of earnings pressure” in times of inventory growth. Banks and real-estate companies may be in a similar position.

- Lending to euro-region companies and households declined for a second month in March, extending the worst drop since records began 18 years ago and threatening to exacerbate a recession. Loans fell 0.2 percent from February, when they declined 0.1 percent, the European Central Bank said in Frankfurt today. While a separate report showed banks expect to tighten credit standards less forcefully in the second quarter, the European Commission said consumers now expect prices to fall for the first time since at least 1990. “The hard lending data shows that the ECB is facing a deflation problem and will have to act more aggressively,” said James Nixon, an economist at Societe Generale SA in London and a former ECB forecaster. “Unfortunately, the Governing Council will probably latch on to the more positive bank survey and do a lot less than is necessary in the current environment.”

- European Central Bank Executive Board member Juergen Stark said the bank will only implement additional non-standard policy measures once interest rates have reached a floor. “We will decide about the remaining moderate room for maneuver on interest rates” at the next policy meeting on May 7, Stark today said today in a speech in Siegen, Germany. “At the same time we will make a decision about additional non- standard measures, which we will implement when the lower interest-rate limit is reached.”

- At least six of the 19 largest U.S. banks require additional capital, according to preliminary results of government stress tests, people briefed on the matter said. While some of the lenders may need extra cash injections from the government, most of the capital is likely to come from converting preferred shares to common equity, the people said.

Wall Street Journal:

- The Securities and Exchange Commission, hoping for a better shot at catching the next big fraud, is working on plans to set up teams of specialists who focus on specific kinds of wrongdoing.

- Hillary Clinton dropped out of the presidential election last June, but her campaign committee continued to raise millions of dollars this year by selling access to a valuable asset: Mrs. Clinton's vast list of political supporters. In the first three months of 2009, Mrs. Clinton's presidential campaign brought in $4.5 million by selling or renting out the list, which has contact information for more than a million people.

- The World Health Organization said Wednesday that a deadly new strain of swine flu is moving closer toward becoming a pandemic, as it continues to spread to new corners of the globe and as the U.S. reported its first death from the disease.

- Spain's top investigative magistrate opened an investigation into the Bush administration Wednesday over alleged torture of terror suspects at Guantanamo Bay. Judge Baltasar Garzon said documents declassified by the new U.S. government suggest the practice was systematic. Judge Garzon said he was acting under Spain's observance of the principle of universal justice, which allows crimes allegedly committed in other countries to be prosecuted in Spain. Judge Garzon's move is separate from a complaint by human rights lawyers that seeks charges against six specific Bush administration officials they accuse of creating a legal framework to permit torture of suspects at Guantanamo Bay and other U.S. detention facilities.

NY Times:

- As Washington pushes banks to mend their finances, the banks are pushing back. Emboldened by newfound profits and eager to shake off federal control, a growing number of banks are resisting the Obama administration’s proposals for fixing the financial system. Lenders that skirted disaster only months ago with the help of taxpayer dollars are now balking at government prescriptions. Despite pressure from federal regulators, industry executives are taking issue with major elements of the president’s bank plan.

- London Ponders Its Future as Financial Powerhouse.

MarketWatch:
- Shares of Time Warner Cable Inc.(TWC) were up 8% Wednesday morning after the company showed that subscriber growth is improving after recent quarters of decline and that it has been able to keep its costs under control. The stock was up $2.08 at $29.33.

CNNMoney.com:

- It's been a busy few weeks for Gilead Sciences(GILD). Since Fortune last checked in on it, the biotech has reported record first-quarter revenues, completed its all-cash acquisition of CV Therapeutics, and launched the Phase II trials of its most promising pipeline product, the four-in-one, once-daily HIV "quad pill." Now Gilead is in the spotlight again. As governments formulate their responses to the deadly swine flu outbreak, which has already claimed over 100 lives in Mexico and triggered a worldwide public health emergency, Gilead is one of the drugmakers that could benefit.

WCBSTV.com:

- A furious President Barack Obama ordered an internal review of Monday's low-flying photo op over the Statue of Liberty. CBS 2 HD has discovered the feds will have plenty to question. Federal officials knew that sending two fighter jets and a 747 from the presidential fleet to buzz ground zero and Lady Liberty might set off nightmarish fears of a 9/11 replay, but they still ordered the photo-op kept secret from the public. In a memo obtained by CBS 2 HD, the Federal Aviation Administration's James Johnston said the agency was aware of "the possibility of public concern regarding DOD (Department of Defense) aircraft flying at low altitudes" in an around New York City. But they demanded total secrecy from the NYPD, the Secret Service, the FBI and even the mayor's office and threatened federal sanctions if the secret got out. "To say that it should not be made public knowing that it might scare people it's just confounding," Sen. Charles Schumer said. "It's what gives Washington and government a bad name. It's sheer stupidity." The cost of the frivolous flight was about $60,000 an hour and that was just for the presidential aircraft. That doesn't include the cost of the two F-16s that came along. The flight by the VC-25, a modified Boeing Co. 747, and two F-16 fighter jets cost $328,835, Air Force spokeswoman Vicki Stein said. The NYPD was so upset about the demand for secrecy that Police Commissioner Ray Kelly vowed never to follow such a directive again and he accused the feds of inciting fears of a 9/11 replay.

Politico:

- A hedge fund with some ties to Vice President Joe Biden's family was shuttered by the Securities and Exchange Commission Monday due to allegations of fraud. The finance blogger John Hempton was the first to note that Biden family company, Paradigm Global Advisors, which is led by Biden's brother James and his son Hunter shares an address with the closed fund, Ponta Negra. The Wall Street Journal reported that the Biden company -- a fund of hedge funds -- also shares a marketing company with Ponta Negra -- a marketing company that also marketed funds for alleged Ponzi schemer Alan Sanford.

Reuters:
- European Central Bank Governing Council member Ivan Sramko said the bank may have to revise down its growth forecast fort the euro area. “Risks have been identified that it will go further down,” Sramko said.

- Goodyear Tire & Rubber Co (GT) posted a narrower-than-expected quarterly loss on Wednesday as it accelerated cost cuts and reduced inventory in response to a deep economic downturn, sending its shares up nearly 12 percent.

- Goldman Sachs Group (GS) on Wednesday sold $2 billion of notes not backed by a government guarantee, in a sign of an incipient thaw in credit markets, analysts said. "That's a good sign for the banking sector," said William Larkin, portfolio manager with Cabot Money Management in Boston, with both Goldman and JPMorgan starting to issue bonds that are not backed by the U.S. government after a virtual drought of such issues, Larkin said.

- German companies generally regard their inventories as being too high, so industry cannot expect a boost any time soon from firms rebuilding stocks, an economist at the Ifo think tank said on Wednesday. laus Abberger said the Munich-based institute's monthly survey of some 7,000 companies showed that most more focused on reducing stocks before rebuilding them.

Bear Radar

Style Underperformer:
Large-cap Growth (+2.10%)

Sector Underperformers:
Restaurants (+.55%), I-Banks (+.63%) and Drugs (+.84%)

Stocks Falling on Unusual Volume:
LGCY, VFC, PNRA, BWLD, PMTC, OTEX, TRLG, ENDP, ANW, CRI, AET, ROC and TSS

Stocks With Unusual Put Option Activity:
1) AN 2) TRMB 3) ETFC 4) GMCR 5) LTD

Bull Radar

Style Outperformer:
Small-cap Value (+3.19%)

Sector Outperformers:
Hospitals (+7.06%), Disk Drives (+4.59%) and Banks (+4.08%)

Stocks Rising on Unusual Volume:
TWC, AMX, BCS, SI, HES, OXM, HBI, AZN, DNDN, PFWD, SPWRA, MPWR, SVVS, ULTI, SLAB, ATLS, ASCA, PSYS, LIFE, PEET, QLGC, TRMB, WRLD, CERN, GMXR, WBSN, AUXL, DWA, CBI, WXS, TBH, E, AMX and DSG

Stocks With Unusual Call Option Activity:
1) QLGC 2) BYD 3) RFMD 4) CHS 5) MDT

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