U.S. stocks posted modest gains Friday even as a surprisingly weak jobs report failed to deter investors from taking a broader view that the economy is improving.  Analysts’ upgrade of General Electric and Amazon.com helped the market keep its head above water as many on the Street averred the worst for the labor market was over.  Although the unemployment rate – at its highest level in 26 years – aggravated concerns about consumer spending, it nevertheless reassured some investors that the Federal Reserve will keep interest rates near historically low levels in the near future.      

On Friday, the Dow Jones industrial average rose 17.46 points, or 0.2%, to 10,023.42 and the Standard & Poor's 500 index added 2.67 points, or 0.3%, to 1,069.30.  The Nasdaq composite index advanced 7.12 points, or 0.3%, to 2,112.44.  For the week, the Dow and the S&P 500 index advanced 3.2%, while the Nasdaq

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• Starbucks (NASDAQ:SBUX) reported fourth quarter earnings of 24 cents a share, up from last year's 10 cents, above Zacks estimates of 21 cents, as revenues dropped 3.7% to $2.42 billion. The firm raised its 2010 guidance to 15-20% earnings growth from prior guidance of 13-18% growth

• Hyatt Hotels (NYSE:H) shares gained 12% on their NYSE debut.  The company sold 38 million shares at $25 per share

• JP Morgan (NYSE:JPM) lifted its price target on Ford (NYSE:F)

• The smartphone marketplace will watch today's launch of Verizon's (NYSE:VZ) much-heralded new "Droid" launch, using Google's (NASDAQ:GOOG) Android operating system

• AIG (NYSE:AIG) reported third quarter earnings of $2.85 ex-items

• Bernstein upgraded General Electric (NYSE:GE) and Amazon.com (NASDAQ:AMZN) shares

• JP Morgan (NYSE:JPM) upgraded Macy's (NYSE:M) shares

• Deutsche Bank (NYSE:DB) upgraded Blue Nile (NASDAQ:NILE) shares, lifting the price target from $30 to $50

Zacks Investment Research

• First Solar (NASDAQ:FSLR) will be added to the S&P500 to replace Wyeth (NYSE:WYE). • Bernstein initiated coverage of Bank of America (NYSE:BAC) at "outperform" with a $25 price target. • Nokia (NYSE:NOK) was downgraded at Piper Jaffray (NYSE:PJC) with a price target lowered to $14 from $16. • Costco (NASDAQ:COST) received an upgrade at Baird with a price target of $65. • Accenture (NYSE:ACN) issued downside first quarter revenue guidance of $5.3- $5.5 billion, off estimates of $5.54 billion. The firm expects fiscal 2010 revenues of between a 3% drop and 1% growth versus estimates for growth of 2% to $21.99 billion. The company forecast full-year earnings of $2.64 to $2.72 a share, off estimates of $2.77. The firm also upped buyback program by $4 billion and hiked the dividend 50% to 75 cents.Zacks Investment Research

div style="text-align: justify;"Sanford Bernstein is out downgrading span style="font-weight: bold;"American Intl Group (NYSE:AIG)/span to Underperform from Market Perform and maintaining their $10 tgt.br /br /Firm notes there are no changes to their thinking since their Q2 earnings writeup on August 10. Therefore, the downgrade is strictly a reaction to the big run up in AIG's stock price.br /br /Using their 3-part valuation model, Sanford can examine why they think AIG's current stock price allows very little chance for uncertainty, and fails to corporate considerable downside risk potential.br /br /span style="font-weight: bold;"− AIG's Q2 end book value per share to holders of common equity, after all Government stakes and support are eliminated, was $21.80./span They are using an estimated year-end book value per share of $14.30 as their starting assumption for other calculations. This amount included an announced charge of $5bn for Q3 as AIG accelerates amortization of its remaining ...

U.S. stocks rose for the fifth time in six days as analysts recommended buying bank stocks and oil prices rose again pushing energy stocks higher.  Investors also took heart from the drop in unemployment numbers and U.S. workers filing first-time claim for jobless benefits.  The Dow Jones industrial average added 75 points, or 0.9% to close at 8750 and the S&P 500 index rose 1.1% to close at 942.46.  The S&P is up 39% since hitting its 12-year low on March 9.  The tech-heavy Nasdaq continued its strong performance and rose 1.3%.

Among S&P industry groups, financials were the leading gainers, rising 3.4% as traders took reports of a failed Latvian bond auction in their stride.  A Bernstein upgrade of Goldman Sachs (NYSE:GS) to "outperform" also helped financials and the effects of the failed bond auction were nowhere to be seen.  Bernstein suggested Goldman's capital strength will allow the

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* Wal-Mart (NYSE:WMT) announced that it plans 22,000 new hirings in its US stores this year. Last year the firm added 33,800 jobs, a tally which includes Sam's Clubs, unlike the prior number. The company's annual meeting is scheduled for Friday

* Prudential (NYSE:PRU) shares declined 2.9% following its $1.25 billion share offering was priced at $39 per share

* Aluminum Corp. of China (NYSE:ACH) may revise its Rio Tinto (NYSE:RTP) $19.5 billion deal before the expiration of its June 14 deadline

* Ciena (NASDAQ:CIEN) reported a fiscal second quarter loss of 25 cents a share, a 16 cent miss, as revenues plunged 40.5% to $144 million* Costco's (NASDAQ:COST) reported its May same-store-sales dropped 7%, more than the expected 6.4% decline

* Goldman Sachs (NYSE:GS) received a Bernstein analyst upgrade due to its capital strength, permitting the firm to take advantage of improving conditions in fixed income, currency and commodity markets

* United Airlines (NASDAQ:UAUA)

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div style="text-align: justify;"span style="font-weight: bold;"Williams-Sonoma (NYSE:WSM)/span is getting two downgrades today:br /br /span style="font-weight: bold;"- Merrill Lynch/BAM /spanis downgrading WSM to Neutral from Buy with a $13 tgt noting that while WSM’s LT viability and strong brand identity remain intact the shares up substantially since December as a result of the realization of numerous factors, which are reflected in today's share price, the current risk/reward ratio is not as compelling. The balance sheet has strengthened, cash flows have improved, the dividend is intact, bank agreements have been renegotiated, inventory levels significantly reduced, capex reduced to a minimum, comps sequentially improved from Oct 2008 lows.br /br /span style="font-weight: bold;"- Sanford Bernstein/span is out with a U.S. Retail downgrade taking their rating down on WSM, HD and LOW (from OP to MP).br /br /Early cycle retail call is rapidly running its course, leading them to shift their overweight sectorbr /positioning to a ...

div style="text-align: justify;"Sanford Bernstein notes that despite span style="font-weight: bold;"Corning's (NYSE:GLW)/span strong results and near-term guidance, they are downgrading Corning to market perform because they believe that expectations and the stock price are now appropriately aligned. Firm's end-of-year estimates assume reasonably robust expectations for consumer demand and that leading Korean brands continue to use Taiwanese panel manufacturers as "swing capacity" (but less aggressively than in 1Q09). If their forecasts are in error, they think downside is more likely than upside.br /br /span style="font-weight: bold;"Despite the possible upside, in the near term, Bernstein is more concerned about downside risks including:/spanbr /br /span style="font-weight: bold;"Korea taking share or cutting Taiwanese orders more aggressively than the firm models. /spanWhile they believe Tier 3 brands will occasionally deliver hit products, they expect Samsung, Sony and LG to continue as leading brands throughout 2009. Primary manufacturing remains in Korea, and, ...

div align=”justify”Back in December, in a href=”http://www.deadcatsbouncing.com/articles/20081209″span style=”color:#990000;”Oil: From Bubble to Bust…and Back Again?/span/aem /emI again took a contrarian stance on oil, having turned ultra bearish last Spring as the speculative bubble peaked, stating that: ‘emA blind monkey throwing darts would beat the average investment bank oil analyst, whether forecasting weekly inventory levels or the future oil price. At the peak of the historic investment bubble in oil futures back in July, they were falling over themselves to predict $170-200 oil in 2009. Now it’s $25.’/em /divdiv align=”justify”Despite endless bearish news on the global economy, that call has come good, initially for non-WTI grades like Brent given the specific Cushing storage issue, but in recent weeks for Nymex crude as well, now up 9% YTD. As can be seen in the chart below, thanks to OPEC discipline (helped by a steep contango structure which makes keeping oil in the ground …

Greg Mankiw cites a study by Cogan, Cwik, Taylor, and Wieland to buttress his arguments that fiscal multipliers are small, especially when considering New Keynesian models. He also provides a startling graphic showing the dynamic multipliers from Romer-Bernstein versus the Taylor (1993) model, incorporating model consistent expectations; this graphic motivates Wieland et al. to remark:

We first show that the assumptions made by Romer and Bernstein about monetary policy -- essentially an interest rate peg for the Federal Reserve -- are highly questionable according to new Keynesian models. We therefore modify that assumption and look at the impacts of a permanent increase in government purchases of goods and services in the alternative model. According to the alternative model the impacts are much smaller than those reported by Romer and Bernstein.

Cogan et al. use a New Keynesian dynamic stochastic general equilibrium (DSGE) model, specifically the Smets-Wouter model (Working Paper version of AER paper here).

In

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