Stocks Soar Most in 4 Years as Fed Unexpectedly Slashes Rates 50 Basis Points

Indices
S&P 500 1,519.78 +2.92%
DJIA 13,739.39 +2.51%
NASDAQ 2,651.66 +2.71%
Russell 2000 806.63 +3.97%
Wilshire 5000 15,239.90 +2.92%
Russell 1000 Growth 609.96 +2.70%
Russell 1000 Value 853.05 +3.08%
Morgan Stanley Consumer 734.34 +2.35%
Morgan Stanley Cyclical 1,049.51 +3.90%
Morgan Stanley Technology 651.96 +2.52%
Transports 4,932.86 +3.92%
Utilities 504.87 +2.01%
MSCI Emerging Markets 139.42 +2.67%

Sentiment/Internals
Total Put/Call 1.05 +1.94%
NYSE Arms .29 -74.36%
Volatility(VIX) 20.35 -23.15%
ISE Sentiment 118.0 +24.21%

Futures Spot Prices
Crude Oil 82.29 +2.1%
Reformulated Gasoline 207.76 +1.63%
Natural Gas 6.53 -1.73%
Heating Oil 226.02 +1.41%
Gold 732.50 +1.20%
Base Metals 233.63 -.38%
Copper 349.0 +2.06%

Economy
10-year US Treasury Yield 4.47% +1 basis point
US Dollar 79.18 -.67%
CRB Index 326.79 +.59%

Leading Sectors
Homebuilders +6.12%
Steel +6.06%
Retail +5.3%

Lagging Sectors
HMOs +1.64%
Hospitals +1.51%
Foods +.47%

Evening Review
Market Performance Summary
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Sector Performance
ETF Performance
Style Performance
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In Play

Afternoon Recommendations
Citigroup:
- Reiterated Buy on (VECO).

Afternoon/Evening Headlines
Bloomberg:
- US stocks rallied the most in four years, gold climbed to a 27-year high and two-year Treasury notes gained after the Fed cut its benchmark lending rate by half a percentage point to keep the economy from slowing.
- The Fed lowered its benchmark interest rate by a half point to 4.75%, the first cut in four years.
- Bill Gross, manager of the world’s biggest bond fund at PIMCO, said the Fed may cut interest rates another 2 percentage points.
- The SEC is examining hedge funds for signs of insider trading, demanding information about relationships between managers, employees, family members and public companies.
- Brokerage stocks had their biggest gain in more than a year after the Fed cut its benchmark lending rate to keep the real estate slump from dragging down the US economy and Lehman(LEH) reported a smaller-than-expected drop in profit.
- Hogs fell to a six-month low after China said it will spend $200 million to boost domestic production in a bid to curb high pork prices and food inflation.
- Crude oil climbed above $82/bbl. to a record in NY after the Fed reduced US interest rate more than economists expected.
- US options prices plunged the most since June 2006 on speculation the Fed’s first interest-rate cut since 2003 will calm share-price swings and prevent a recession.
- Best Buy(BBY), the largest consumer-electronics retailer, reported an unexpected rise in profit and increased its yearly earnings forecast on computer and international sales. The shares had their biggest gain in a year.

Advertising Age:
- Google Inc.(GOOG) hired Andy Berndt, co-president of Ogilvy & Mather’s NY office, to head a new unit that will work with marketers, ad agencies and entertainment companies, citing executives.

AP:
- The National Weather Service will narrow areas covered by storm warnings, thanks to a technology that promises to more accurately predict which places are in danger.

BOTTOM LINE: The Portfolio finished higher today on gains in my Retail longs, Biotech longs, Semi longs, Internet longs and Medical longs. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was very positive today as the advance/decline line finished substantially higher, every sector rose and volume was above average. Measures of investor anxiety were slightly above-average into the close, despite today’s gains. Today's overall market action was very bullish. Many stocks and sectors rose substantially more than the major averages. Moreover, the best predictor of long-term inflation, the 10-year yield, is only 1 basis point higher, to 4.48%, on the Fed's move, and the yen is at session lows vs. the U.S. dollar. Fed fund futures now imply an 86% chance of another 25-basis-point cut in October. The 10-year swap rate fell 8.1% today, to 62.63 basis points, over Treasuries. This is the lowest reading since July 5 and a large positive. November home price futures ticked up to $212,800 from $212,200 today. Nikkei futures are now indicating an up 500 open in Japan tonight. The S&P 500 busted free from its 50-day moving-average today and is only 1.8% from its record high reached in July. Many growth stock managers I know are up 30%-40% year-to-date, at their performance highs for the year. Once again, it didn't pay to panic when the usual suspects were screaming about bear markets, crashes and depressions right at the bottom. It is always important to remember that there has never before in U.S. history been so many investors that actually need the market and economy to implode for their style to make sense, and this was never more evident than during the latest correction in this major bull run. It is also one of the main reason sthat stocks likely have much further upside from current levels.