S&P Surges More Than 4%
S&P 500 SURGES MORE THAN 4%
Stocks jumped on Wednesday, rebounding from a two-month low, after a surprisingly healthy earnings report from IBM fueled optimism that technology may fare better than other sectors during the recession.
Financial stocks outperformed as well on the strength of earnings surprises from Northern Trust and PNC Financial Services , which helped the sector reclaim some of Tuesday's massive losses.
Big money center banks also enjoyed a rebound on Wednesday with Citigroup and Bank of America both making solid gains.
That’s after Bank of America CEO Kenneth Lewis said he spent about $1.2 million to buy 200,000 common shares, which investors took as a sign of confidence in prospects for the bank.
Lewis has come under fire for his acquisition of Merrill Lynch which critics say happened before Lewis fully examined its risks.
And after the bell, JP Morgan CEO Jamie Dimon revealed that he too has purchased shares of his own firm.
What do the bank insiders know that you don't?
Insider buying creates an increased level of confidence, explains Pete Najarian. And Treasury Secretary nominee Timothy Geithner also added confidence to this market when he talked about more transparency at his confirmation hearing. I'd keep an eye on Northern Trust, Najarian counsels. It made a 52-week high.
And be careful of the European banks. adds Tim Seymour. They probably have more room on the downside -- I’d take profits in Santander or Deutche Bank on any pop.
BIG ROTATION OUT OF GOVT. DEBT INTO STOCKS
The drop In iShares Barclays 20 Yr. Treas. and jump in S&P 500 SPDR ETF suggests to the traders that there was a big rotation into stocks on Wednesday.
It seems to me something Geithner said in his testimony sparked the move, muses Karen Finerman.
AFTER HOURS ACTION: APPLE:
Apple , which was expected to report a decline in quarterly profit, surprised Wall Street with a slight earnings uptick that easily beat expectations. After hours shares surged as much as 8%.
Last night on Fast Money Gene Munster said he anticipated strength from Apple, reminds Pete Najarian. I bought calls on that news. Apple numbers as well as Palm and RIM numbers are impressive, he adds. Seems like people are spending on gadgets.
They sandbagged their numbers again, bristles Jeff Macke. That’s what they always do.
I also find the Apple numbers impressive, adds Karen Finerman. The quarter they reported is when consumers really took it on the chin.
BIG BLUE BREAKING OUT
Shares of IBM surged on Wednesday after the firm issued a 2009 profit outlook that blew past Wall Street expectations. The market took it as a sign big blue would easily weather the global downturn.
I’m impressed by the recurring revenue that IBM shows, says Pete Najarian. And Ericsson might be worth watching.
OIL JUMPS 6.6%
Oil settled up 6.6 percent to above $43 a barrel on Wednesday as OPEC supply cuts outweighed additional evidence that a deepening global slowdown is crushing demand for fuel.
It seems to me that oil prices are starting to stabilize, says Tim Seymour. I’d keep an eye on BP.
Meanwhile, gold ended slightly lower on Wednesday as traders took profits after early gains, but prices held above $850 an ounce as interest in the metal as a haven from risk supported prices.
I have no interest in the materials names, bristles Jeff Macke. Just because they look better today doesn’t mean they are better.
IS GE'S DIVIDEND SAFE?
Shares of General Electric tumbled to a 13-year low intra-day as investors feared the conglomerate might need to cut its dividend. Meanwhile, UBS has placed a ‘short term sell’ on the stock.
If they have to cut the dividend it will be a huge embarrassment, muses Karen Finerman. They came out a short while back and said they would not cut.
I find their balance sheet to be one big black box, says Jeff Macke.
BATTLE THE BEAR: PHARMA
Genentech said on Wednesday that results from the latest Avastin drug trials could be known as early as mid-April. Some investors speculate it could put pressure on Roche to up its bid for the biotech.
Roche may want to move quickly because if the drug results are strong it could make the merger prohibitively expensive, explains Pete Najarian. I’d watch this deal closely.
I think Roche will bid, adds Karen Finerman.
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Trader disclosure: On Jan. 21th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (MCD), (BAC), (C), (TM), (MSFT); Seymour Owns (AAPL), (BAC), (F), (EEM), (FXI), (TSO); Finerman's Firm Owns (DNA), (AEO), (MSFT), (PM); Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO); Najarian Owns (EEM) Call Spread; Najarian Owns (FCX) & (FCX) Short Calls; Najarian Owns (MS) Stock; Najarian Owns (MS) Short Calls & Short Put Spread; Najarian Owns (NVLS) Calls; Najarian Owns (PALM) Call Spread; Najarian Owns (XME) Long Calls; Najarian Owns (APPL) Call Spread; Najarian is Long (PALM) Call Spread; Najarian Owns (GGB) Long Calls
CNBC.com with wires