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Trader Talk: Techs, Energy Lead Market as Bernanke Speaks

Bob Pisani is off; this post was written by CNBC reporter Brian A. Shactman.

Stocks are modestly higher on a fairly broad advance this morning (3-1 in favor of advancing stocks), with techs and energy stocks leading the way.

The markets appear to be holding on to their gains despite a disappointing January New Home Sales report (309,000 vs. 355,000 consensus).

Once again, traders are awaiting Fed Chairman Ben Bernanke’s semi-annual report on monetary policy in front of the House Financial Services Committee. However, they suspect that his comments will lack new insights on the Fed’s thinking, since the chairman spoke on Capitol Hill just two weeks ago detailing the Fed’s current exit strategy.

The glut of retail earnings and the surprisingly weak consumer confidence number yesterday placed the focus on retail and the U.S. consumer. More insight was given today:

1) H&R Block plunges 16 percent after warning it won't reach its 2010 guidance. The reason? Tax returns are down more than 6 percent. CEO Russ Smyth noted that because of the challenging economic environment, the firm has lost customers due to a “greater shift to do-it-yourself tax preparation methods.”

2) J.M. Smucker beat on the top and bottom lines, led by strength in its Folgers coffee business — indicating that perhaps the trade-down theme for the U.S. consumer isn't dead. Brewing at home is still cheaper than that $4-dollar latte.

3) Chico’s falls 2 percent despite doubling analysts’ earnings estimates and instituting a new 4-cent dividend. The women’s apparel company is a prime example of what happens when a retailer both manages costs AND stimulates sales effectively.

Same-store sales jumped 15 percent, as sales were very strong at both its Chico’s and White House | Black Market stores. Margins significantly improved too as the retailer managed inventories and costs and relied on fewer markdowns.

4) While it didn’t see sales growth (comps down 4.8 percent), Saks too saw margins jumped in the last quarter, from just over 21 percent in the year-ago period to more than 36 percent.

With such strong cost control, incremental sales growth in the future could bring bigger profits.

Looking ahead, Saks sees comps growing low to mid single digits in 2010, with a little more strength in the second half of the year.

5) Toll Brothers rises 3 percent after reporting a narrower Q1 loss. On the housing market, the builder noted that it has “seen some improvement in the last four weeks, and more so in the last week.”

Good news: The number of signed contracts nearly doubled in the quarter from the year-ago quarter, while the cancellation rate (6.7 percent) hit its lowest level since Q3 2005.

For the current year, Toll raised the low end of its delivery outlook to 2,100-2,750 homes. However, average selling prices are seen between $540,000 and $560,000, slightly lower than last year.

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