Stocks briefly lost a little bit of steam as Fitch downgraded the state of California's long-term general obligation bond rating to "A-" from "A" and placed the bonds on Rating Watch negative "based on the magnitude of the state's financial and institutional challenges and persistent economic and revenue weakening."
Earlier, a broad advance midday, with strength in retail, healthcare, industrials, and energy, with gains due to:
1) Bernanke aggressively defending his recordand even going on the offensive at some point, insisting that his actions prevented the global economy from going into an even steeper decline;
2) a strong 7-year Treasury auction, joining the strong 2- and 5-year auctions this week;
3) consolidation in the retail space with the Tween Brands - Dress Barn deal, and talk of more cost-saving deals to come;
3) Hertz comments about car rentals stabilizing. Hertz up 13 percent, Thrifty up 23 percent, Avis up 17 percent. Hertz says U.S. and European demand is stabilizing and the outlook for summer reservations has improved. Full year guidance is well ahead of Street estimates, and seems to be based on an actual improvement in demand, not just cost savings or higher prices.
