Stimulus Pkg Talk, JPMorgan Help Make Modest Rally
Stocks are rallying modestly off their mid-morning lows on several events:
1) Stimulus package talk--A stimulus package is a big topic on the Street today after House Majority leader Steny Hoyer said a stimulus package could be law within a month. Stocks like Freddie Mac and Fannie Mae briefly rallied on rumors (hopes) that the conforming loan limit might be raised from $417,000 to as much as $650,000, but the Dept. of the Treasury said they would not back increasing the limits without broad reforms at both organizations--reforms which have been caught in a partisan quagmire for years.
2) Financials rally on JP Morgan earnings, short covering. Remember, the Street is net short financials, but a small group are sitting around picking at the edges, trying to call a bottom; JP Morgan clearly causing some short covering and there are rumors some big shops are urging clients to cover part of their shorts in retail and financials today. Merrill will be key tomorrow; they want a big writedown to give the impression they are throwing everything into the fourth quarter and will not have more problems with subprime.
3) Weaker commodities helping retailers, others. Commodities hit hard as the dollar has been rallying big today; this reduces packaging costs, helps retailers.
4) Options expiration. Yes another one. Not a quadruple witching expiration, but still an options expiration.
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