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12:10pm (EST)
The bulls are still running, albeit at a slow pace, as the market is higher for the third consecutive day. The Dow is currently enjoying a 20 point pop and is at 10,328. The S&P 500 is back at 1,100 and is up a point while the Nasdaq is higher by 4 and is trading at 2,229.
The Dow started off in negative territory but got a lift after the Philadelphia Federal Reserve Bank said its business activity index rose to 17.6 from 15.2 in January. It was better-than-expected news as new orders jumped to their highest in more than five years. The boys on the Street were expecting a reading of 17.
Elsewhere, the index of leading economic indicators rose 0.3% last month but was weaker than the 1.2% rise in December and a 1.1% rise in November. It was also the smallest of the index’s 10 straight monthly gains and short of the 0.5% growth that was expected. Despite the weaker-than expected results, it still showed that the economy continues to chug along.
Toyota Motors (TM, $73.71, down $0.39) continues to feel the heat as another model has been called into question. The Corolla may have a potential power-steering problem that could involve up to a half million vehicles.
The U.S. Transportation Department plans to open a formal investigation despite Toyota saying it has received fewer than 100 complaints with the Corolla, the world’s best-selling car.
This could put Toyota’s recalls in the double-digit millions…the company has already recalled 8.5 million of its cars because of problems with sticking gas pedals, floor mats and braking systems.
We wanted to send today’s update out a little early because we have a NEW TRADE that we profile in our Members Area. The options are already up 10% but we think we can squeeze a double out of the trade by mid-March.
Market Gets A Curveball
Friday, February 19th, 2010
9:00am (EST)
The market extended its winning streak to four on Thursday but the drive for five may have ended after yesterday’s closing bell.
The Dow rallied 84 points, or 0.8%, and went out near its high as the index closed at 10,393. The S&P 500 closed above 1,100 for the first time in over two weeks as it added 7 points, or 0.7%, to settle at 1,106. As for the Nasdaq, it also added 0.7%, or 15 points, and closed at 2,241.
All three indexes look poised to blow through their recent resistance levels but last night the Federal Reserve decided to boost the rate banks pay for emergency loans. The emergency discount rate was bumped up from 0.50% to 0.75% and will go in effect today.
Futures were weak all night but have come off their worst levels.
The action is part of a broader move to pull back the extraordinary aid the Fed has provided to fight the financial crisis. It will be interesting to see how the market holds up in the first hour of trading as the modifications are not expected to lead to tighter financial conditions for households and businesses. In other words, if calmer heads prevail then the bulls could continue their winning ways.
The Fed had signaled for weeks that a higher discount rate was coming, though the timing of Thursday’s decision caught everybody by surprise.
As we head to press, Dow futures are off by 10 points to 10,364 while the S&P 500 futures are lower by 3 to 1,102. The Nasdaq futures are down 2 to 1,819. This is a MAJOR improvement from last night as the Dow futures were off nearly 100 points at 2am. And you thought we didn’t work overtime…
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