• Analog Devices (NYSE:ADI) reported better-than-expected fiscal fourth quarter earnings of 36 cents a share, 10 cents above Zacks estimates, on revenues of $572 million, which beat projections of $523 million, but fell short of last year's $660.7 million. The firm expects fiscal first quarter results of 36 cents to 37 cents a share

• Heinz (NYSE:HNZ) reported fiscal second quarter earnings of 76 cents a share, beating estimates of 69 cents, on revenues of $2.67 billion, above estimates of $2.63 billion. Full-year guidance was raised to $2.72-$2.82 from earlier expectations of $2.60 to $2.70 a share

• Medtronic (NYSE:MDT) reported better-than-expected third quarter results of 77 cents ex-items, 3 cents above estimates, on revenues of $3.84 billion, which topped estimates of $3.75 billion. The company expects fiscal 2010 adjusted earnings of $3.17-$3.22, above Street projections of $3.15

• Reports said Citigroup (NYSE:C) is selling its Diners Club credit card enterprise to Bank of Montreal for about $1 billion

• UBS (NYSE:UBS) downgraded Union Pacific (NYSE:UNP) to "neutral" but maintained a $67 price target

• National Semiconductor (NYSE:NSM) was added to Citigroup's (NYSE:C) Top Picks Live List, with a $20 price target

• JP Morgan (NYSE:JPM) reiterated its "overweight" rating on General Electric (NYSE:GE) on improvements in fundamentals

• Citigroup (NYSE:C) plans to sell Bellsystem 24, a Japanese telemarketing company, to Bain Capital for $1 billion, bringing to $10.8 billion the dollar amount Citi has raised from sales of Japanese assets

• Hedge fund Paulson & Co. reported in a September 30 filing Citigroup (NYSE:C) holdings of 300 million shares, valued at $1.45 billion

• Cisco (NASDAQ:CSCO) raised its bid for Tandberg ASA to $3.4 billion, or about an 11% increase, and extended its offer to December 1

• According to a Bloomberg report, Mitsubishi UFJ has hired JP Morgan (NYSE:JPM) and Morgan Stanley (NYSE:MS) to manage an $11 billion secondary offering, Japan's largest ever. The company plans to sell about 2.5 billion common shares

• Bristol-Myers Squibb (NYSE:BMY) said it plans to spin off its 83% stake in Mead Johnson Nutrition Company

• JP Morgan (NYSE:JPM) said it is offering to purchase the remaining 50% of stockbroker Cazenove, placing a valuation on the firm of $3.32 billion

• General Motors (NYSE:GM) plans to start repaying its Treasury loan early, beginning by yearend with $1 billion quarterly installments to the US and $200 million quarterly to Canada

• General Motors' (NYSE:GM) third quarter revenues bettered estimates at $28 billion versus $22.9 billion expected, rising $4.9 billion from the second quarter. Inventories dropped 158,000 to 424,000

• Lowe's (NYSE:LOW) reported inline third quarter earnings of 24 cents on revenues of $11.38 billion, versus Zacks estimates of $11.27 billion.  The company said, "We are beginning to see signs of improved performance in some of the hardest-hit housing markets including California, Florida and areas of the desert Southwest."

• JP Morgan (NYSE:JPM) plans to reinstate 401K matching programs starting with 2009 as well as plans to hire 1,200 mortgage officers

• Yahoo (NASDAQ:YHOO) CEO Bartz said the company is hiring again as the firm expects to increase its operating profit margin to the 15-20% range on cost cutting and sales growth

• Adobe Systems (NASDAQ:ADBE) said it plans to cut 680 jobs, or about 9% of its workforce, as part of a restructuring plan.  The company said the move would result in pre-tax charges of $65 million to $71 million, with $18 million to $20 million to be taken in the fourth quarter

• Monsanto (NYSE:MON) confirmed its full-year 2010 earnings outlook and said it still sees a 2012 gross profit of at least $8.6 billion, claiming an accelerated launch of new corn and soybean products

• Bond insurer, Ambac Financial Group (NYSE:ABK) warned of a possible bankruptcy protection filing in its 10-Q

• Reports said General Electric (NYSE:GE) is in talks with United Technologies (NYSE:UTX) to sell its security systems unit for over $1.5 billion

• Wells Fargo (NYSE:WFC) upgraded Toll Brothers (NYSE:TOL) with a price target range of $24-$26

• Deutsche Bank (NYSE:DB) upgraded Smithfield Foods (NYSE:SFD) raising the price target from $12 to $20 due to an improving pork market

• Flowers Foods (NYSE:FLO) reported inline earnings of 34 cents a share on revenues of $603 million, off Zacks estimates of $617 million

• 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

Bank of America (NYSE:BAC) said it lost $2.2 billion during the quarter after it wrote down almost $10 billion in bad loans and General Electric’s (NYSE:GE) revenue numbers were below Street projections.  Higher loan losses aggravated investors’ concerns as Citigroup (NYSE:C) and JP Morgan (NYSE:JPM) had also reported higher loan losses during the quarter.  General Electric’s (NYSE:GE) results were impacted by lower earnings at its GE Capital unit.    

The 30-share Dow Jones industrial average fell 67.03 points, or 0.67%, to close at 9,995.91. The broad Standard & Poor's 500-stock index retreated 8.88 points, or 0.81%, at 1,087.68.  The tech-heavy Nasdaq composite index lost 16.49 points, or 0.76%, to 2,156.80.

Last week only 61 of the S&P500 released results, too early to signal trends, although the results were mainly above projections.  This week hundreds of companies report their earnings, and that could signal where the economy is headed in the times to come.  So far most earnings reports have beaten expectations.

Although nine of the ten S&P 500 industry sectors dropped Friday, on the week eight of the ten sectors managed gains.  Financials dropped 2.4% Friday, and ended off 0.2% for the week.  Oil and gas shares were the leading gainers during the week, up 5%, for a 20.2% year-to-date increase, as crude prices continued their advance, rising 95 cents Friday to $78.53 per barrel.  Crude prices have been rising on promising economic signs as well as the dollar's decline.  This morning China announced that its economy grew at a rate of more than 7% during the first nine months of the year and said it was comfortably placed to achieve its full-year target of an 8% GDP growth.  The greenback rose slightly Friday from a 14-month low.

This week 75 S&P500 firms are due to report their earnings, including today's results from Apple (NASDAQ:AAPL) and Texas Instruments (NYSE:TXN) after the close.  On Tuesday results are due from: Caterpillar (NYSE:CAT), Coca-Cola (NYSE:KO), DuPont (NYSE:DD), Pfizer (NYSE:PFE) and United Technologies (NYSE:UTX).  On Wednesday: Boeing (NYSE:BA), Freeport-McMoRan (NYSE:FCX), Morgan Stanley (NYSE:MS) and Wells Fargo (NYSE:WFC).  On Thursday: 3M (NYSE:MMM), AT&T (NYSE:T), Credit Suisse (NYSE:CS), Dow Chemical (NYSE:DOW), McDonald's (NYSE:MCD), Merck (NYSE:MRK), and Travelers Cos (NYSE:TRV). Microsoft (NASDAQ:MSFT) reports its numbers on Friday.

The Dow Jones industrial average closed above the 10,000 level for the second-successive day, edging up 47 points, or 0.5%.  The S&P 500 index edged up 4 points, or 0.4% and the tech-heavy Nasdaq composite ended the day virtually flat.  The gains in the Dow average were led by Microsoft (NASDAQ:MSFT) whose shares jumped 2.9%.  The Windows 7 is slated for release on October 22.

Among energy stocks, Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) shares climbed 1.6% and 1.5%, respectively, as crude prices jumped to their highest levels of the year.  Meanwhile, the US Department of Energy said gasoline stockpiles fell 5.2 million barrels per day last week, well below expectations of 700,000 decline.

Pfizer (NYSE:PFE) rose 1.7% after it completed its acquisition of Wyeth.

Nevertheless, weakness in financial sector shares, off 0.6%, hurt sentiment even as Goldman Sachs (NYSE:GS) reported estimate-topping numbers.  Citigroup's (NYSE:C) strong trading returns were overcome by increasing consumer loan losses.  Citi's (NYSE:C) CEO Vikram Pandit warned, "US consumer credit remains the number one issue affecting our near-term results." JP Morgan (NYSE:JPM) CEO Jamie Dimon warned that level of loan losses are likely to remain high. 

Tech shares also failed to advance, even as IBM (NYSE:IBM) raised its earnings outlook and reported numbers that were above Street projections.  Advanced Micro Devices' (NYSE:AMD) narrower-than-expected loss and the return of its core chip-making operations to profitability failed to lift sentiments either.  However, Google's (NASDAQ:GOOG) better-than-expected results were helped by return to sequential quarterly growth, a 5% increase in average cost-per-clicks over the second quarter, and a positive impact from the declining dollar.  Shares in Google (NASDAQ:GOOG) rose 3.6% in after-hours trading as CEO Eric Schmidt noted, "While there are a lot of uncertainties about the pace of [the] economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future."

Today's expected results include a number of significant results from companies such as Bank of America (NYSE:BAC), Genuine Parts (NYSE:GPC), General Electric (NYSE:GE), and Mattel (NYSE:MAT). Also reporting are: Halliburton (NYSE:HAL) and First Horizon National (NYSE:FHN).

On Wednesday, the Dow Jones industrial average jumped 144.80 points, or 1.5%, to 10,015.86, its biggest one-day gain since August 21 and highest close since October 3 last year.  The Standard & Poor's 500 index rose 18.83 points, or 1.8%, to 1,092.02, it new 2009 high.  The Nasdaq composite index surged 32.34 points, or 1.5%, to 2,172.23.  Since hitting their 12-year lows in March of this year, the S&P 500 has jumped more than 61% as of Wednesday's close, and the Dow is up 53%.

Amid an improving global economic sentiment, the Dow’s brush with the 10,000-mark was a foregone conclusion but the seven-month old rally has made many wonder if a sharp correction is in the offing.  That correction, though, is yet to materialize and investors have jumped to buy on dips, helping stocks continue their advance.  Nevertheless, it remains to be seen where the markets are headed amid lingering threats like rising unemployment, a weak housing market and sloppy consumer spending.  

Yesterday, crude prices went above the $75 level to close at $75.18 a barrel, its highest close of the year. Gold prices hovered near the $1,065 per ounce level.  Meanwhile, safe-havens such as US Treasuries fell, with the 10-year closing the session off 23/32, as its yield rose to 3.423%.

The fuel for Wednesday's rally was provided by promising earnings results from Intel (NASDAQ:INTC) and JP Morgan (NYSE:JPM), and further helped by CSX’s (NYSE:CSX) strong numbers.  Intel's (NASDAQ:INTC) quarterly results beat expectations, and the chipmaker offered better-than-expected fourth quarter revenue guidance.  JP Morgan’s (NYSE:JPM) better-than-expected results came on the strength of its underwriting revenues offsetting credit card and consumer loan losses; profits rose nearly seven times.  This morning Goldman Sachs (NYSE:GS) reported numbers that was well above estimates, coming in at $5.25 per share, versus Zacks projections of $4.14 per share, and sharply above last year's $1.81.

Today's schedule contains numbers from such companies as Goldman Sachs (NYSE:GS), IBM (NYSE:IBM), Google (NASDAQ:GOOG), Advanced Micro (NYSE:AMD), Harley-Davidson (NYSE:HOG), Safeway (NYSE:SWY).

• JP Morgan (NYSE:JPM) reported better-than-expected third quarter earnings of 82 cents a share, up from 9 cents a year ago, and ahead of Zacks estimates of 49 cents a share on strong underwriting revenues

• Altera (NASDAQ:ALTR) reported inline quarterly earnings of 19 cents a share, down from 31 cents a share a year ago on revenues of $268 million, which missed estimates of $282 million

• Piper Jaffray (NYSE:PJC) raised its price target on Intel (NASDAQ:INTC) to $26 from $21

• Host Hotels (NYSE:HST) reported third quarter earnings of 11 cents a share, ahead of Zacks estimates of 8 cents a share, on revenues of $912 million

Gains in commodity prices helped some mid-session buying in energy and material shares but the overall weakness in financial and healthcare stocks kept sentiment in check.  Shares of UnitedHealth Group Inc. (NYSE:UNH) and Aetna Inc. (NYSE:AET) fell more than 3% as the Senate Finance Committee approved an $829 billion plan to overhaul the U.S. health system.  Johnson & Johnson (NYSE:JNJ) fell 2.4% after the company reported revenue that was below the Street expectations.  However, the company reported higher quarterly earnings, helped by cost-cutting measures and a one-time tax benefit; Johnson &Johnson also raised its full-year guidance.  Nevertheless, shares of the company led the decliners on the DJIA.

The Dow Jones industrial average, which traded 70 points lower in the morning, recovered some ground to close at 9871.06, off 0.2% or 14.74 points, its first decline in four sessions.  The S&P500 retreated 0.3% from a new 2009 high set on Monday.  The tech-heavy NASDAQ, however, finished the day virtually unchanged.  On the NYSE, 1.14 billion shares exchanged hands with decliners ahead of advancing shares by a three-to-two margin.

After Whitney’s downgrade, shares of Goldman Sachs (NYSE:GS) fell 1.5%, with Bank of America (NYSE:BAC) easing 1.2%, and Morgan Stanley (NYSE:MS) down 2.0%.

However, after the close, Intel's (NASDAQ:INTC), a DJIA component, results offered to ease some worries.  The company reported third-quarter earnings of 33 cents a share, versus Zacks estimates of 27 cents a share; the company reported revenues of $9.4 billion that was off 8.1% from last year, but bettered Zacks estimates of $9.0 billion.

CSX (NYSE:CSX), joining Intel (NASDAQ:INTC) in painting an upbeat picture.  The company announced third quarter earnings of 74 cents a share, down from 94 cents a year ago, but above Zacks estimates of 71 cents a share as revenues of $2.36 billion bettered estimates of $2.33 billion.

This morning, however, JP Morgan’s (NYSE:JPM) results showed an upside surprise as losses from the firm’s credit cards and other consumer loans businesses were offset by strong underwriting revenues.  Third quarter results were well ahead of Zacks estimates at 82 cents and were sharply up from last year's 9 cents a share.

The US dollar remained under pressure, falling to a fresh 14-month low yesterday.  Strong demand for $30 billion in 3-month and $30 billion in 6-month notes helped support Treasury prices.  Gold prices jumped $7.50 to $1073 and crude prices hit $74.

Companies reporting their results include: Abbott (NYSE:ABT), WW Grainger (NYSE:GWW), Host Hotels and Resorts (NYSE:HST) and Xilinx (NASDAQ:XLNX).

The Dow Jones industrial average, which rose as high as 9931.82 points in the morning, gained 20 points to close at 9885.80.  The broad S&P 500 index rose 4.70 points, or 0.44%, to close at 1,076.19 and the tech-heavy Nasdaq ended the day little changed.  Bond markets were closed for the Columbus Day holiday.  On the New York Stock Exchange, 16 stocks were higher in price for every 14 that fell.

Eight of the ten S&P500 sectors finished higher in yesterday's session. Oil and gas shares led the gainers, adding 1.2% following a 2.1% rise in crude prices to $73.55, its highest since August 24.  DJIA components Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) rose 1.3% and 1.2%, respectively.

Meanwhile, equity prices appear to be taking into consideration upside surprises in last quarter's numbers.  The National Association for Business Economics' survey of its members showed majority believed the recovery has begun, but concerns remain over federal debt and rising unemployment.  Nevertheless, the greenback’s decline is expected to help results of multinational firms with significant overseas exposure.

Also, news emerging from the geopolitical front appears to be less motivating as the head of Homeland Security noted Al-Qaeda members likely within US borders and North Korea reportedly shot off five missiles off its east coast; the reports said the country is preparing to fire more.  Although stocks have had their steepest rally in more than 70 years, doubts remain over an exit strategy from simulative policies amid increasing unemployment levels and housing worries.

Black & Decker (NYSE:BDK) jumped 7.6% Monday after the company's raised its third quarter earnings guidance to 91 cents a share from 35- 45 cents a share on better-than-expected sales, operating margins and tax rate. UBS (NYSE:UBS) downgraded SanDisk (NASDAQ:SNDK) shares to "sell" from "neutral," on concerns of peaking chip demand leaving little scope for price increases.  Ford (NYSE:F) shares jumped 7% after the automaker reported that European sales jumped 12% on strong sales of its subcompact models Ka and Fiesta. Google (NASDAQ:GOOG) shares rose 1.5% after Goldman Sachs (NYSE:GS) raised its price and earnings target, saying the firm will benefit from next year's recovery in online activity.

Financial shares continued their upward run, adding 0.7%.  A number of banks report their earnings in the coming sessions, including JP Morgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C).  According to analyst Dick Bove, large-cap banks are expected to perform well, helped by strong trading activity, but Bove noted regional banks could be under pressure due to commercial real estate losses. 

Meanwhile, shares of Deutsche Bank (NYSE:DB) fell 1.6% yesterday after the company’s CEO Ackermann’s comments raised concerns of a capital raising.  This morning influential analyst Meredith Whitney took a cautious stance on Goldman Sachs (NYSE:GS) and lowered her rating on the bank to "neutral" from "buy" with a $186 price target. 

Today's list of releases includes quarterly earnings reports from companies such as Altera (NASDAQ:ALTR), CSX (NYSE:CSX), Intel (NASDAQ:INTC), and Johnson & Johnson (NYSE:JNJ).

After a two-week selloff, fueled in part by concerns that the seven-month old rally had gotten ahead of any economic recovery, stocks got a boost last week following better-than-estimated economic numbers and Alcoa’s (NYSE:AA) surprise quarterly profit.  That helped investors set aside worries and extend the rally.  Meanwhile, White House economic adviser Lawrence Summers reiterated the Obama administration’s commitment to a strong dollar, citing recent comments by U.S. Treasury Secretary Timothy Geithner.

This morning’s stock futures show markets are headed for a higher opening as the busy week of earnings commences. Ahead of the market's open, Dow Jones industrial average futures are up 59 points, or 0.6%, to 9,866.  Standard & Poor's 500 index futures gained 7.30 points, or 0.7%, to 1,075.40, while Nasdaq 100 index futures rose 11 points, or 0.6%, to 1,736.50.

On Friday, the Dow Jones industrial average rose 78 points, or 0.8%, to 9,864.94 -- its highest closing level in a year.  The S&P 500 index gained 6 points, or 0.6%, to 1,071.49 and the Nasdaq climbed 15 points, or 0.7%, to 2,139.28.  On the New York Stock Exchange, advancing issues beat those that declined in price by a three-to-two margin.  For the week, the DJIA rose 4% and the S&P 500 index gained 4.5% - their best performance since July.  The Nasdaq advanced 4.5% during the week.

Last week's rally saw all but one of the S&P500 industry sector recording gains.  Only telecommunications shares failed to advance, and fell 5.9%, following AT&T's (NYSE:T) announcement that it plans to allow internet-based phone calls on phones including Apple's (NASDAQ:AAPL) iPhones.  The gains last week were led by basic materials (+8.4%), oil and gas (+7.6%), financials (+6.3%), industrials (+5.0%), tech (+4.9%), consumer services (+4.5%), consumer goods as well as utilities (+2.9%), and health care (+2.7%).  Financials rose after a Goldman Sachs (NYSE:GS) report recommended large-cap banks. Gains in industrial shares were helped by last week’s fall in dollar and Caterpillar's (NYSE:CAT) announcement that it plans to hike prices globally in 2010.  Retail shares rose after firms reported better-than-expected comparable monthly sales numbers.

This week sees the release of the first big batch of third-quarter earnings.  Companies reporting their numbers include Johnson & Johnson (NYSE:JNJ), Intel (NASDAQ:INTC), JP Morgan (NYSE:JPM), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), Nokia (NYSE:NOK), Google (NASDAQ:GOOG), IBM (NYSE:IBM), Bank of America (NYSE:BAC), and General Electric (NYSE:GE).

Australia's decision dented demand for the U.S. dollar, which, in turn, raised commodities prices.  US energy and materials stocks moved up, oil also rose, and gold reached a record high.  Stock investors cheered the drop in the dollar because it boosts corporate profits by making U.S. goods cheaper for overseas buyers. Companies can also get a bump in profits when they convert sales made in foreign currencies to dollar terms. The dollar has been falling for months so that added to expectations for positive corporate profit reports.

Five stocks rose for each that fell on the NYSE.  Producers of energy and raw materials had the two biggest advances in the S&P among 10 industries, rising about 2.1% and 1.9% respectively.

Financial sector shares (up 1.1%) received another boon, over and above Goldman's (NYSE:GS) upgrade of large-cap banks on Monday, as Bank of America/Merrill (NYSE:BAC) upgraded European banks to "overweight".  Gains in the financial sector included a 2.5% increase in JP Morgan (NYSE:JPM), 3.2% in Morgan Stanley (NYSE:MS) and 2% in Wells Fargo (NYSE:WFC).

Deal activity has also picked up steam, lifting confidence in financial markets.  Banco Santander (NYSE:STD) raised over $8 billion in an IPO of its Brazilian subsidiary.  ExxonMobil (NYSE:XOM) announced its has agreed to pay $4 billion for Kosmos Energy's 23.49% stake in the Jubilee oil field off the coast of Ghana.  Societe Generale said it intends to raise $7.1 billion in new shares to repay the French government, buy the 20% of Credit Nord it doesn't currently own, and improve its Tier 1 ratio.

Gold futures advanced as high as $1,045 an ounce in New York, topping the 18 month record of $1,033.90, on speculation that anticipated accelerating inflation will spur demand for the precious metal as a store of value.

The U.S. dollar index was off 0.31 at 76.33 in late trading, but up from its 76.22 session low after the Saudi Arabian central bank chief denied an Independent newspaper report that the Saudis and other Arab producers planned to price oil on a basket of currencies, instead of the dollar.

Observers believe that the decline of just over 4% on the S&P 500 prior to this week’s stellar stock movement seemed to give investors the entry point they were looking for to build positions on stocks.  "I think that most people believe that stocks are going to generally keep drifting higher for the next few months," said Gary Webb, CEO at Webb Financial Group. "So while nothing fundamental has changed this week, investors are taking opportunities to buy on the lows."

Nobel Prize winning economist Joseph Stiglitz added that US unemployment will keep rising and should be the focus for policy makers.  Gains in the stock market show that investors have been “irrationally exuberant" about a recovery.  

New York Fed President William Dudley said a tepid economic recovery should allow the Fed to keep interest rates at rock-bottom lows for a prolonged period.  Because the U.S. economy faces many headwinds, including an anemic labor market and a fragile banking system, Dudley said, inflation will not become a problem in the foreseeable future. "The recovery will turn out to be moderate by historical standards," Dudley said in a speech at Fordham Law School. He added that "the banking system has still not fully recovered."

Earnings are due today from Costco (NASDAQ:COST), Family Dollar (NYSE:FDO) and Alcoa (NYSE:AA).

The chart below shows the Counterparty Risk Index (CRI) history since the beginning of 2008. The index is an unweighted average of the credit default swap spreads of 14 major financial institutions. The left-hand scale gives the cost (in basis points) of insuring against default for a five-year term.

The three big spikes on the chart mark the near-failure of Bear Stearns (in March 2008), the Lehman default (September 2008) and renewed concerns over bank safety at the market’s nadir in March 2009.

If crises appeared at six-monthly intervals since last spring, this time we appear to have broken out of the cycle.

What about the individual banks that make up the index? Here is a chart, courtesy of CMA Datavision, of the CDS spreads of the U.S. bank members of the index, plus Barclays and Deutsche Bank, the leading players in the U.S. exchange-traded note market.

Citigroup now ranks as the riskiest U.S. bank, and JP Morgan as the least risky, though it’s fair to say that the CDS spreads have converged significantly and there is far less difference between individual names than there was a year ago.

For the record, here are the levels from earlier today, ranked from least to most expensive to insure against default: JP Morgan (72bp), Barclays (76bp), Deutsche Bank (82bp), Goldman Sachs (107bp), Bank of America (120bp), Merrill Lynch (137bp), Morgan Stanley (140bp) and Citigroup (200bp).

(The fact that the Merrill Lynch CDS trades at a slight premium to that of Bank of America, its owner, is interesting.  This reflects speculation that the broker may yet be spun off from the parent bank, in which case the CDS would follow the reference entity, Dave Klein of Credit Derivatives Research told me.)

The levels should matter to exchange-traded product investors: All of these banks except Citigroup underwrite exchange-traded notes.

Is the worst now over? As Gillian Tett noted in a column in last week’s Financial Times, the concentration of overall (gross) risk in the credit derivatives market amongst the leading banks has actually risen since the AIG bailout of last September, and regulators are still finding it difficult to assess whether banks are handling their net risk exposures sensibly.

And, in what sounds like the ultimate reinsurance spiral, banks have become net sellers of protection on sovereign debt; hardly reassuring if one remembers that the banks are themselves propped up by the governments concerned. Lloyd’s, anyone?

So, while the reduction in overall default risk so far this year will come as a reassurance to investors, these are charts that are worth keeping an eye on.

The 30-share Dow Jones industrial average finished higher by 51 points, or 0.52%, at 9,829.87. The broad Standard & Poor's 500-stock index gained 7 points, or 0.66%, at 1,071.66 and the technology-laden Nasdaq composite index gained 8.26 points, or 0.39%, to 2,146.30.  Treasury prices rallied after the government’s successful auction of $43 billion in two-year notes.

Meanwhile, dollar continued its downward spiral against other major currencies, sending energy and material shares higher.  Gold and crude prices also advanced.  Gold reached $1014 per ounce, up $12.50, and oil, after a 3.3% plunge Monday, went above the $70 level, rising 2.6% to $71.55.  Volume on the NYSE was a modest 1.27 billion shares, with advancing shares ahead of decliners by a seven-to-three margin.

Among the ten S&P500 industry sectors, seven closed higher, led by financial shares (+2.2%), basic materials (+1.9%), industrials (+0.8%).  On the downside, telecommunication shares fell 0.6%, health care stocks eased 0.3%, and utilities edged 0.1% lower.

Twenty of the DJIA's thirty components finished higher yesterday.  On the Dow average, JP Morgan (NYSE:JPM) was the leading gainer, rallying 4.3% to $46.47 after analysts at Bank of America (NYSE:BAC) lifted their third-quarter earnings estimate on the firm to 49 cents per share from 46 cents per share.  Caterpillar (NYSE:CAT) shares jumped 3.6%, following the expected weak dollar benefit to foreign sales.  Bank of America (NYSE:BAC) rose 2.1% after Rochdale Securities’ Richard Bove raised the shares' price target to $25 from $19 due to the firm's recent moves to exit two federal guarantee programs.  However, rumors that CEO Ken Lewis might resign over the Merrill bonus saga kept the stock’s move in check.  Alcoa (NYSE:AA) rose 2.3% after analysts at Goldman Sachs (NYSE:GS) raised price target on the firm, citing projections for higher aluminum prices.

Analyst upgrades also benefited shares of Macy's (NYSE:M) (+5.1%); Citigroup (NYSE:C) lifted its rating on the shares to "buy" from "hold" on higher revenue expectations.  US Steel (NYSE:X) shares increased 4.6% after Bank of America (NYSE:BAC) changed its recommendation on the stock to "neutral" from "underperform," citing expectations the firm should return to profitability in 2010. Clorox (NYSE:CLX) shares gained 2.6% on speculation of a potential Procter & Gamble (NYSE:PG) bid.  AIG (NYSE:AIG) shares fell 5.4% in a late-session sell-off on talks of a possible secondary offering.  Goldman (NYSE:GS) shares rose 1.7% to $185.52, closing at its highest level since July 2008.

Of key interest today would be the much-expected FOMC policy report, due out at 2:15 ET.  Expectations that the Fed will maintain record low interest rate levels of zero to 0.25% are intact. Most expect the Fed language to support an ongoing accommodative stance.  Moreover, President Obama cautioned that unemployment could even get a little worse in coming months. Therefore, the Fed's $1.75 trillion asset purchase program is likely to remain in place to encourage the recovery's traction.

• Valero Energy (NYSE:VLO) topped the list of yesterday's S&P500 gainers, up 6.6%, as Credit Suisse's (NYSE:CS) analyst asserted US refiners likely to see renewed interest based on the increase expected in energy demand

• Citigroup (NYSE:C) analysts upgraded Procter & Gamble (NYSE:PG) shares to "buy" from "hold," lifting the price target to $66 from $54 

• Piper Jaffray raised its rating on Starbucks (NASDAQ:SBUX) to "overweight" nad upped the price target to $24 from $13. The analyst expects earnings to grow at least 17% over the next two years

• JP Morgan (NYSE:JPM) raised its rating on KB Homes (NYSE:KBH) to "overweight" and its price target to $25.50 from $10

• Texas Instruments (NYSE:TXN) increased its quarterly dividend 9% to 12 cents from 11 cents a share

According to JP Morgan, it extended $338 million for 598 loans to mid-sized companies, corporations and government and non-profit agencies, up 58% sequentially. The total loan origination increased 49% sequentially to $59.9 million in 236 small business loans.

During the quarter, the company lent nearly $150 billion nationally to consumers, corporations, small businesses, municipalities and non-profit organizations. It also directed approximately $15.1 billion to small and medium-sized firms across the country, up 50% from the prior quarter.

After providing $5.3 billion in auto loans and leases to more than 544,000 vehicles during the quarter, JP Morgan claimed to be the largest auto lender in the country in the first half of 2009.

JP Morgan is in a relatively good shape from a capital perspective. Management remains focused on managing asset levels efficiently during this vulnerable period of market stress. We expect the company’s capital position to be a major differentiator going forward vis-à-vis its peers as it implies a lower risk of additional capital raises and more opportunity for market share gains.

JP Morgan repaid the full $25 billion in preferred capital received as part of the Troubled Asset Relief Program (TARP) during the quarter. Its loan loss reserves are now about double that of the overall industry. The company further strengthened its credit reserves by $2 billion to $30 billion. As a result of this addition to reserves, JP Morgan saw an extremely high loan loss coverage ratio of 5%. We expect the company to continue build capital over the next couple of years, resulting in a better capital position.

We expect continued synergies from the company’s diversification and strong capital position, though increasing provisions and worsening credit quality will be a drag on upcoming results.

• Apple's (NASDAQ:AAPL) San Francisco event once again saw the shares move lower, this year off 1%, despite the welcome appearance of Jobs, and iPod price cuts and improvements.  An 8 GB iPod Nano will include built-in video and an FM radio; price cuts of as much as $120 were made.  This morning JP Morgan (NYSE:JPM) upped its rating on Apple to "outperform" from "market perform," with a $200 price target

• Texas Instruments (NYSE:TXN) raised its third quarter earnings and sales guidance, with third quarter guidance increased to 37 cents to 41 cents a share from prior range of 29 cents to 39 cents a share; revenues guidance was lifted to $2.73 billion to $2.87 billion from prior $2.5 billion to $2.8 billion, with estimates at $$2.68 billion

• Vivus (NASDAQ:VVUS) noted its experimental obesity drug showed dramatic results in two late-stage clinical trials

• Disney (NYSE:DIS) reported improvements in local ad markets with increased activity from automakers nationally, although still anticipating lower theme park hotel bookings for the September quarter

• Monsanto (NYSE:MON) said it continues to see 2009 results from continuing operations at the lower end of its prior guidance of $4.40-$4.50; the Street has expected $4.41. For 2010 the company expects $3.10-$3.30, off consensus estimates of $4.12

• Yahoo (NASDAQ:YHOO) shares were upgraded by Bank of America (NYSE:BAC) to "buy," with a price target hike to $19 from $17

• BP (NYSE:BP) shares were lowered to "neutral" by analysts at HSBC (NYSE:HBC). The company's Tiber Field, last week's "giant discovery" 9km beneath the Gulf seabed, is unofficially estimated to contain 500m-1 billion recoverable barrels of oil

The greenback remained near its year lows against a basket of currencies while gold prices eased a little to settle at $995.30.  Crude prices were slightly up ahead of the September OPEC meeting.

The Dow Jones industrial average, which rose as much as 80 points earlier in the session, pared some gains to close at 9,547.22, up 49.88 points.  The broad S&P 500 index advanced 7.98 points, or 0.78%, to close at 1,033.37, its best finish so far this year, and the tech-heavy NASDAQ rose 22.62 points, or 1.11%, to close at 2,060.39.  On the NYSE, volume was a moderate 1.24 billion shares as advancing stocks outpaced those that fell seven to three.

Even as unemployment levels continuing to remain vexing, the Fed’s Beige Book revealed “signs of improvements" in 11 of the 12 districts.  Meanwhile, OPEC also exited its monthly meeting with soothing words, leaving production levels unchanged, and asserting current prices were within their desirable range.  Nevertheless, fears of a jobless recovery have given rise to worries that the economic recovery might be reversed after inventory builds and government assistance end.

Apple (NASDAQ:AAPL) shares declined even as CEO Steve Jobs made a much-awaited comeback after his almost six-month long medical leave.  The company announced the launch of new products and slashed prices of existing iPod Touch models.  SanDisk (NASDAQ:SNDK) jumped 6.1% to $19.32, its highest close in 11 months; Palm (NASDAQ:PALM) shares declined more than 8.7% after the company announced the launch of its Palm Pixi phones.  The stock was downgraded by Credit Suisse to “neutral" from “outperform."   

Among the S&P500 industry groups, nine recorded gains with industrials (+1.5%) and financials (+1.4%) topping the list.  Among the industrial conglomerates, General Electric (NYSE:GE) advanced 2.6% to $14.87, its highest level since January and Illinois Tool Works (NYSE:ITW) jumped 5% to $43.93.  Goldman (NYSE:GS) raised Illinois Tool Works (NYSE:ITW) to “conviction buy" from “neutral."  Caterpillar (NYSE:CAT) rose 3.1% to $48.41.  GE also benefited from an analyst upgrade from JP Morgan (NYSE:JPM), and a hiked price target from Goldman Sachs (NYSE:GS).  Boeing (NYSE:BA) shares added 2.1% following the firm's projection of a return to growth in global air traffic next year.  United Technologies (NYSE:UTX), which rose 1.4%, was also upgraded by Goldman Sachs (NYSE:GS).  3M (NYSE:MMM) rose 2.1%

• Talbots (NYSE:TLB) reported an adjusted fiscal second quarter loss of 33 cents a share, versus estimates of a 52 cents per share loss on revenues of $304.6 million, versus estimates of $309.34 million.  The firm said it sees third quarter losses of 24-30 cents a share, ex-items

• JP Morgan (NYSE:JPM) upgraded UPS (NYSE:UPS) to "overweight" from "neutral" and raised the price target on the firm to $70 from $57

• Goldman Sachs (NYSE:GS) downgraded DuPont (NYSE:DD) on valuation concerns with a price target of $32

• Goldman Sachs (NYSE:GS) upped Illinois Tool Works (NYSE:ITW) and added the firm to its Conviction Buy List with a $55 price target

• Palm (NASDAQ:PALM) cut prices on its Pre smartphone, introducing a cheaper and thinner model, "Pixi"

• Apple's (NASDAQ:AAPL) San Francisco event is expected to see a fresh iPod launch, new iTune offerings, an Apple TV tune-up, with hopes of a Steve Jobs appearance

The 30-share Dow Jones industrial average rose 56 points, or 0.6%, to 9,497.34 and the S&P 500 index added 9 points, or 0.9%, to 1,025.39, its highest close in 11 months.  The tech-heavy NASDAQ added 19 points, or 0.94%, to close at 2,037.77 points. On the New York Stock Exchange, advancing issues outpaced those that declined three to one on volume of 1.32 billion shares.  However, a jump in the CBOE Vix volatility measure, which rose 1.4% to 25.62, added a note of caution to the upbeat mood.

Dollar’s plunge to an 11-month low was also due to a Monday release from the United Nations, which again called for less dependence on the greenback as the premier global reserve currency. Indications that China would diversify some of its interests into gold also hurt the dollar, although the size of China's reserves mitigates against much impact.  Nevertheless, the news helped gold prices.  This morning's news indicated Barrick Gold (NYSE:ABX) is planning to raise up to $3.5 billion through a new share offering priced at $36.95 per share.

Yesterday, General Electric (NYSE:GE) was the leading gainer on the DJIA after being upgraded by JP Morgan (NYSE:JPM).  Costco (NASDAQ:COST) advanced 2.3% after two brokerages upgraded the stock. Among tech issues, IBM (NYSE:IBM) retreated 0.3% after it was downgraded; however, the firm noted it is "well ahead" of its 2010 earnings target of $10-$11 per share.  Advanced Micro Devices (NYSE:AMD) surged 14.6% as Barclays Capital (NYSE:BCS) upgraded the shares to "outperform."  AIG (NYSE:AIG) shares slumped 10.5% after Credit Suisse (NYSE:CS) downgraded the stock to "underperform," noting "little to no value for common equity" remains.

Nine of the ten S&P industry groups recorded gains Tuesday , with oil and gas (+2.7%) and basic material shares (+2.1%) leading the list of gainers.  Only healthcare shares registered declines, declining 0.3%.  Crude prices spiked $3.31 to $71.33 on expectations today's OPEC meeting will see no change in the production levels.  Moreover, Goldman Sachs (NYSE:GS) maintained a favorable long-term view on the group, saying there is an "increasing evidence of a stronger-than-expected recovery in global industrial activity."  Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) shares gained 2.2% and 2.1%, respectively.  Among basic material issues, Alcoa (NYSE:AA) rose 3.5% to $12.60.

In today's Presidential appearance before a rare joint session of Congress, President Obama will attempt to resuscitate his healthcare reform package and counter the groundswell of centrist opposition, which has driven his ratings to a low 52% point.

• AIG (NYSE:AIG) was downgraded to "underperform" at Credit Suisse (NYSE:CS), with its price target lowered to $15 from $30, and 2009 estimate cut to a $13.98 loss, with 2010 initiated at an estimate of $5.70

• Smithfield Foods (NYSE:SFD) reported a fiscal first quarter loss of 56 cents a share, three cent under expectations versus last year's 17 cent loss, on revenues of $2.7 billion, off estimates of $2.8 billion

• Kraft (NYSE:KFT) advised its will continue to pursue its unsolicited offer for Cadbury (NYSE:CBY), after Cadbury rejected the firm's $16.7 billion cash and stock bid

• Airbus turned positive, projecting an air passenger volume rebound. In 2009 passenger volume is estimated to drop 2%, in 2010 to climb 4.6%, and in 2011 to soar 7%

• Goldman Sachs (NYSE:GS) upgraded Red Hat (NYSE:RHT) to "buy," and raised the price target to $28 from $18

• Citigroup (NYSE:C) analysts lowered their rating on Abercrombie and Fitch (NYSE:ANF) to "sell" from "hold" and cut the price target to $24 from $33

• Costco (NASDAQ:COST) received an upgrade from JP Morgan (NYSE:JPM)

• H&R Block (NYSE:HRB) reported fiscal first quarter loss from continuing operations of 39 cents a share, a bit worse than the Zacks expectations of a 37 cent loss, as revenues grew 1.3% to $275.5 million, off estimates of $281 million. The firm, however, maintained full year projections of $1.60-$1.80

• Cooper Companies (NYSE:COO) reported third quarter earnings of 54 cents a share ex-items, missing Zacks estimates of 62 cents a share, but up from last year's 39 cents, as sales gained to $285 million, though slightly off estimates of $287 million

• S&P upped ratings on Constellation Brands (NYSE:STZ) too BB from BB-, with outlook positive

• Collective Brands (NYSE:PSS) reported a fiscal second quarter earnings miss, with results of 29 cents a share, in line with Zacks projections, as revenues fell 8.3% to $836.3 million, missing estimates of $850 million

• FBR Capital raised its target for WW Grainger (NYSE:GWW) to $104 from $93, reiterating its "outperform" expectations

• Elan (NYSE:ELN) faced a Federal court ruling that its Johnson & Johnson (NYSE:JNJ) deal for multiple sclerosis drug Tysabri violates a joint marketing deal with Biogen Idec (NASDAQ:BIIB)

Yesterday, the 30-stock Dow Jones industrial average finished higher by 63.94 points, or 0.69%, at 9,344.61.  The broad Standard & Poor's 500-stock index rose 8.49 points, or 0.85%, at 1,003.24, closing above 1,000 for the first time since Monday; the technology-laden Nasdaq composite index gained 16.13 points, or 0.82%, to 1,983.20.  Twenty two of the thirty DJIA components advanced.

Although stocks traded in a tight range yesterday, the final hour of trading witnessed activity as traders picked up technology and financial stocks.  Better-than-expected results from retailers signaled consumers were beginning to open their wallets.  Gold prices extended their recent gains, and almost touched the psychologically-significant $1000 level, before giving up some gains to settle at $995.80, its highest since February.  The Vix volatility measure eased 6.2% to close at 27.10, signaling the moods were more sanguine than before.  On the New York Stock Exchange, 1.16 billion shares exchanged hands.

Nevertheless, retailers surprised yesterday.  Retailers' comparable sales data posted ahead of expectations for a 3.8% decline in August, although still off 2.9%.  Retailers' shares rose 2% as a group, with Gap (NYSE:GPS) up 7.6%, Saks (NYSE:SKS) rising 7.5%, Aeropostale (NYSE:ARO) 7%, Costco (NASDAQ:COST) 6.6%, Target (NYSE:TGT) 1.7%, Wal-Mart (NYSE:WMT) 1.6%.  Shares of Abercrombie and Fitch (NYSE:ANF) dropped 3.5%. 

The advance in the DJIA was led by financials and basic materials shares, with Bank of America (NYSE:BAC) rising 3.5% and JP Morgan (NYSE:JPM) up 3.1%.  Among the ten S&P500 industry groups, financials and basic material shares advanced 2.2%, and were the leading gainers. Indications that credit markets are showing sings of softening helped financial stocks.  Meanwhile, resource stocks rallied on expectations for continuing China growth. Alcoa (NYSE:AA) jumped 4.0% and the company’s CEO raised China's aluminum demand projection to 4% growth this year from flat.  Caterpillar (NYSE:CAT) rose 3.5% to $45.04.

Trading may remain subdued as the Labor Day weekend approaches.  Nevertheless, today’s trading could benefit from last afternoon’s optimistic FOMC minutes coupled with improved growth expectations from the Organization for Economic Cooperation and Development and Chairman of China’s Securities Regulatory Commission advising regulators will promote stable markets.  China’s Shanghai Composite Index jumped 4.8% in an otherwise normal day for Asian bourses.  This morning’s stock futures are pointing to a higher opening on the Wall Street as investors turn their focus towards reports on jobs and consumer spending. 

Yesterday, the 30-stock Dow Jones industrial average retreated 30 points, or 0.3% and the S&P 500 index slid 3 points, or 0.3%.  The Nasdaq composite edged up a paltry 2 points, or 0.2%.  During the last three sessions, the DJIA has lost almost 270 points.  On the NYSE, volume slowed to 1.38 billion shares and declining stock beat those that advanced three to two.  Gold prices jumped 2.3% to $978.50.

The decline was broad based as all but six DJIA components declined.  Those leading the Dow lower were Merck & Co. (NYSE:MRK), which declined 3.1% to $30.81 and JP Morgan (NYSE:JPM), which closed down 1.9% to $40.86.  Coca-Cola (NYSE:KO) and Cisco Systems (NASDAQ:CSCO) were the leading gainers, rising 2.62% and 1.8%, respectively.  Alcoa (NYSE:AA) eased 0.4%.  The company said it sees an 8% aluminum demand growth for the second half, due to China's stimulus measures.  

The FOMC report released last afternoon showed the economic recovery will likely start gaining momentum in 2010, although there still remains "considerable uncertainty" about its pace.  The report noted inflation is likely to stay subdued over the next few years, with some pointing to risks of "substantial disinflation."

Chain store comparable sales reports could be of importance in today's trading, especially considering the recent spike in shares of retailers. Early to report, Costco (NASDAQ:COST) announced a 2% drop in monthly sales. Wet Seal's (NASDAQ:WTSLA) same-store-sales fell 11.2% in August; Children's Place (NASDAQ:PLCE) sales dropped 8%; Limited Brands (NYSE:LTD) fell 4%.

• Baker Hughes (NYSE:BHI) announced plans to purchase rival BJ Services (NYSE:BJS) for $5.5 billion in a cash-and-stock deal to expand its international business

• Los Angeles-based Capital Group Companies has accumulated a 4.38% stake in UBS (NYSE:UBS) at an undisclosed price

• Huntsman Corp (NYSE:HUN) said it agreed to acquire certain assets of bankrupt Tronox (TRXAQ.PK) for $415 million

• Sun Microsystems (NASDAQ:JAVA) reported a fourth quarter loss of 20 cents a share, a 14 cent miss, on revenues of $2.6 billion versus $2.9 billion

• Staples (NASDAQ:SPLS) reported inline second quarter earnings of 16 cents a share versus 21 cents a share a year ago, on sales of $5.53 billion versus $5.07 billion

• Big Lots (NYSE:BIG) reported second quarter earnings of 35 cents a share, 4 cents higher than Zacks estimates, versus 32 cents a year ago, on sales of $1.09 billion versus $1.11 billion. The firm raised its 2009 guidance to $1.92 to $2.02 a share from $1.85 to $1.95 a share

• JP Morgan (NYSE:JPM) analysts downgraded mining stocks on valuation concerns, saying the shares appear less attractive after their 75% run-up since December 3. Meanwhile, telecom shares were upgraded as more attractive based upon their 50% relative discount on a price to earnings basis

• Medtronic (NYSE:MDT) reported first quarter adjusted earnings of 79 cents a share on revenues of $3.9 billion, up from Zacks estimates of $3.82 billion

• Burger King (NYSE:BKC) reported adjusted fourth quarter earnings of 43 cents a share, 10 cents ahead of Zacks projections, as revenues missed estimates of $638 million, coming in at $629.9 million. Comparable sales fell 2.4%

Shanghai's main index jumped 126 points, or 4.5%, to 2,911.58, while Japan's Nikkei 225 stock average climbed 179.41 points, or 1.8%, to 10,383.41.  Hong Kong's Hang Seng rose 374.63, or 2%, to 20,336.36.  South Korea’s Kospi advanced 2% to 1,576.39.

Stock futures pointed to a higher open on Wall Street Thursday.  Dow Jones industrial average futures rose 24, or 0.3%, to 9,300. Standard & Poor's 500 index futures edged up 3.70, or 0.4%, to 1,000.80, while Nasdaq 100 index futures rose 3.50, or 0.2%, to 1,602.25.

On Wednesday, the unexpected drop in crude inventories helped U.S. stocks wipe off early losses and finish the day with gains of less than 1% as investors looking for reassuring sings picked up oil and other commodity stocks.  Rumors that the Obama Administration was considering a second stimulus package also helped sentiments on the Street yesterday.  However, the rumors were later dismissed, with White House spokesman Gibbs noting, "There is no imminent economic announcement."

The 30-stock Dow Jones industrial average added 61 points, or 0.7%, to close at 9,279.16.  The NASDAQ added 13.32 points, or 0.7% for a close at 1,969.24, and the S&P500 ended 6 points higher at 996, up 0.7%.  Volume remained light with only 988 million shares trading on the NYSE and advancing shares ahead of decliners by a 3-to-2 margin.

On the earnings front, the picture was mixed as Hewlett-Packard (NYSE:HPQ), Deere (NYSE:DE) and PetSmart (NASDAQ:PETM) reported earnings that beat expectations, but outlook from these companies disappointed.  Some retailers, though, were optimistic, with BJ's Wholesale (NYSE:BJ) and Limited (NYSE:LTD) offering improved yearly outlook.

Among S&P500 industry sectors, oil and gas shares advanced 1.9% and were the leading gainers.  DJIA components Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) moved higher, up 1.8% and 2.3%, respectively.  Commodity-related issues were not far behind, with basic material shares up 0.9%, following the broad-based gain in commodities. Freeport-McMoRan (NYSE:FCX) shares surged 2.7%.  However, Alcoa (NYSE:AA) led the decliners on the DJIA after Goldman Sachs (NYSE:GS) downgraded the stock, citing Alcoa's (NYSE:AA) recent appreciation and advised rolling positions into Freeport-McMoRan (NYSE:FCX), which is on its Conviction Buy List.

Health care issues advanced 1.3%, as Merck's (NYSE:MRK) 2.5% advance led DJIA component gains. A New Jersey court upheld the firm's patent for asthma drug Singulair, and ruled against Teva Pharmaceuticals (NASDAQ:TEVA).

Despite the day's reported increase in weekly mortgage applications, financial shares failed to gain in the market advance, and eased 0.03%. News of last week's rise in mortgage applications on increased refinancing requests did not have an impact on financial shares.  Bank of America (NYSE:BAC) shares dropped 0.9% and JP Morgan (NYSE:JPM) eased 0.7%.

Retailers scheduled to report include: Barnes and Noble (NYSE:BKS), GameStop (NYSE:GME), HJ Heinz (NYSE:HNZ), Hormel Foods (NYSE:HRL), Ross Stores (NASDAQ:ROST), Sears Holdings (NASDAQ:SHLD), and Gap (NYSE:GPS).

The Dow Jones industrial average added 37 points, or 0.4%, and closed at its highest point since November 4.  The broad S&P 500 index added 7 points, or 0.7%, and closed at its highest level since October 6.  The tech-heavy Nasdaq gained 10.63 points, or 0.5%, ending at its highest point since October 1.  On the New York Stock Exchange 776 million shares exchanged hands and advancing stocks outpaced those that fell two to one.  The Vix "fear factor" index, fell 2.9% to 24.71.

Treasury prices rose after an auction of $15 billion 30-year bonds met with strong demand.  The 30-year rose 1 20/32 in price and its yield declined to 4.432%; the 10-year was up 30/32 in price as its yield declined to 3.604%. This week the government issued a total of $75 billion of debt. 

Financials led the gainers yesterday on news that John Paulson’s hedge fund bought stakes in Bank of America (NYSE:BAC).  Bank of America shares surged 6.7% to $17 and were the leading gainers on the DJIA.  Basic material shares rose 2.7%.  On the DJIA Alcoa (NYSE:AA) shares gained 5.8%.  An increase in metal prices sent shares of Freeport McMoran (NYSE:FCX) up 4.9% and Newmont Mining (NYSE:NEM) 2.5%.  Ford (NYSE:F) shares increased 2.6% on its announced plans to increase current quarter production by 100,000 vehicles, with additions to the fourth quarter as well.

Technology shares advanced 1%.  Barclay's (NYSE:BCS) raised its price target on Apple (NASDAQ:APPL) shares to $208, citing its product pipeline. JP Morgan (NYSE:JPM) raised its price targets for Dell (NASDAQ:DELL) to $13 from $10 and Hewlett-Packard (NYSE:HPQ) to $49.50 from $40.

Nevertheless, consumer spending, which accounts for a whopping 70% of the US economy, remains a concern.  Yesterday’s report which showed a surprise 0.1% fall in retail sales, versus estimates of a 0.8% growth, did raise some doubts on demand side growth assumptions from the consumer sector.  The drop indicated that the "cash for clunkers" program may have stolen from alternative purchases and perhaps from future purchases as well.

Chase, the US consumer and commercial banking brand of JPMorgan Chase & Co., now has a total of 239 branches and 1,025 ATMs in Florida.

Chase also upgraded products and technology to connect the former WaMu branches in Florida and six other states with its own network, giving customers full service at 4,200 Chase branches in 21 states.

So far this year, Chase has converted and rebranded 1,037 former WaMu branches in 11 states. By the end of 2009, about 1,800 former WaMu branches across the country will be operating under the Chase brand and on the Chase computer system, allowing customers to conduct their business at more than 5,100 Chase branches in 23 states.

After Washington Mutual was declared bankrupt last September, JP Morgan acquired its banking operations (minus unsecured debt or equity claims) from the Federal Deposit Insurance Corp. (FDIC) for $1.9 billion.

The Dow Jones industrial average lost 25 points, or 0.3% and the broader S&P 500 index fell 5 points, or 0.6%. The technology-focused Nasdaq retreated 20 points, or 1%.    

This morning, the July jobs report surprised as the Labor Department reported that U.S. employers shed fewer jobs in July.  That unemployment rate dipped to 9.4% against expectations of a 9.6% fall helped calm shaky nerves and pushed stock futures sharply higher.  The Labor Department noted that US employers cut 247,000 jobs in July, the fewest in a year.  Dow Jones industrial average futures are up 61, or 0.7%, at 9,290. Standard & Poor's 500 index futures are up 8.30, or 0.8%, at 1,003.20, while Nasdaq 100 index futures are up 16.50, or 1%, at 1,617.75.

Yesterday, poor July retail sales data and apprehension about the monthly non-farm payrolls report sent S&P500 shares lower and the index retreated back under the 1000 level.  Only utilities, up 0.1%, and industrials, up 0.04%, showed some strength as even financials, a major support sector over the past five sessions, headed lower.  Health care sector and telecommunications issues declined 1.1%, with oil and gas, consumer goods, and technology issues easing 0.9%.  Crude prices eased three cents to $71.94, following the downward drift of equity prices and US dollar gains.

Among the DJIA components, Procter & Gamble (NYSE:PG), off 4.5%, continued to decline as investor remain concerned over its sales outlook.  Copper prices declined sending Alcoa (NYSE:AA) down 3.6%.  Cisco's (NASDAQ:CSCO) cautious outlook weighed on technology stocks as Hewlett-Packard (NYSE:HPQ) eased 2.4%.  JP Morgan (NYSE:JPM) shares dropped 2.5%, despite news Deutsche Bank (NYSE:DB) had initiated its coverage with a "buy" rating.  American Express (NYSE:AXP) rose 3.1% after Citigroup (NYSE:C) upgraded the stock on news of a slowing pace of credit loans losses. 

In a Thursday CNBC interview, Goldman Sachs (NYSE:GS) strategist Cohen announced, "We do think the new bull market has begun," setting sights on a rise in the S&P500 of as much as 10% by year-end.

The Dow Jones industrial average declined 39 points, or 0.4%, the Standard & Poor's 500 lost 3 points, or 0.3%, and the tech-heavy Nasdaq composite retreated 18 points, or 0.9% after disappointing data on private payrolls and the services sector dented some optimism.  However, the Commerce Department reported an unexpected 0.4% rise in orders for manufactured goods in June.  On the NYSE, volume was a moderate 1.53 billion as decliners outpaced advancing shares by 8 to 7

Treasuries fell, with the 10-year declining 19/32 and the corresponding yield rising to 3.762%. Commodity prices rose, with crude prices up 55 cents to $71.97 per barrel, rebounding from initial declines posted after weekly inventory stats showed a larger-than-estimated build of 1.67 million barrels.

Seven of the ten S&P industry groups declined.  Financials again were the leading gainers on the S&P 500, rising 2.9%, as investors assessed the favorable impact of gains in mortgage applications and expectations that loan losses may have reached their peak. On the DJIA, Bank of America (NYSE:BAC) rose 6.5% and was the leading gainer in the Dow average. American Express (NYSE:AXP) added 5.8% and JP Morgan (NYSE:JPM) increased 3.9%. American Express (NYSE:AXP) reported a 5.8% increase in credit card defaults, representing a smaller pace for the second straight month, due in part to a lower-than-anticipated number of bankruptcies.  This morning, Keefe, Bruyette & Woods analysts noted that Bank of America (NYSE:BAC) may report slight losses in the third and fourth quarter before turning profits in 2010.

Procter & Gamble (NYSE:PG) slid 2.8% after the company reported an 18% decline in quarterly profit.  World’s second-largest video game publisher Electronic Arts (NYSE:EA) fell 6.8%.

On the S&P 500, troubled-insurer AIG (NYSE:AIG) shares rallied 62.7% as Radian's (NYSE:RDN) $231.9 million quarterly profit helped sentiments.  Radian's (NYSE:RDN) shares surged 83%.  AIG is expected to report quarterly results on Friday.  Fannie Mae (NYSE:FNM) rose 29.8% and Freddie Mac (NYSE:FRE) jumped 31.1% on news of the impending resignation of the director of the Federal Housing Finance Agency. Citigroup (NYSE:C) trading action marked a one-day, single-stock NYSE record Wednesday as 347 million shares traded. The firm launched its $2.5 billion 5-year note sale.

Leading the decliners on the S&P 500 were telecommunications (off 1.6%), health care (-1.3%), oil and gas  (-1.1%), utilities, consumer goods and technology (-0.9%), industrials (-0.8%), consumer services (-0.5%).  Helped by a rise in commodity prices, only basic material shares showed some strength, adding 0.6%.

As expected, the Bank of England held benchmark interest rates unchanged at 0.5%; however, it also expanded its asset purchase plan $84 billion. Meanwhile a Chinese central banker indicated interest rates could go up, advising of plans to "fine tune" credit policy. As global rate talk swings between hawkish and accommodative, risk assumptions may sway as well, with the more hawkish tone suggesting brighter recovery prospects near at hand.

An unfavorable weather is expected to have hurt retailers' comparable sales results last month, with Costco's (NASDAQ:COST) sales down 7%, Big Lots’ (NYSE:BIG) declining 2.4%, Stage Stores’ (NYSE:SSI) declining 11.9% and Limited Brands’ (NYSE:LTD) decreasing 7%.

• American Electric Power (NYSE:AEP) beat estimates with second quarter earnings of 68 cents a share, 7 cents above Street expectations, as revenue dropped 8.6% to $3.2 billion

• Constellation Energy (NYSE:CEG) beat estimates by 32 cents a share as second-quarter earnings reached $1.08 a share, even as revenue dropped 18.8% to $3.86 billion. The company said it sees full-year earnings of $3.10 to $3.30 a share, versus estimates of $3.01

• JP Morgan (NYSE:JPM) downgraded Disney (NYSE:DIS) shares to "underweight" from "neutral." Disney (NYSE:DIS) reported lower-than-expected fiscal third quarter earnings of 51 cents a share versus 66 cents a year ago off estimates of 50 cents on a 7% revenue drop to $8.6 billion

• This morning’s report indicate Amgen (NASDAQ:AMGN) and GlaxoSmithKline (NYSE:GSK) have agreed to jointly market an osteoporosis treatment, that could generate $2 billion in annual sales within ten years if given regulatory approval

• Barclays (NYSE:BCS) cut Boeing (NYSE:BA) shares to "equal weight" from "overweight", on delays and undetermined cost overruns in its Dreamliner program. Price targets were cut from $60 to $46

• Goldman Sachs (NYSE:GS) raised its rating on the US steel sector to "buy" from "neutral," noting a faster-than-expected recovery in world markets and a leaner US supply chain. Analysts upgraded US Steel (NYSE:X) in advance of today's earnings release to "buy" from "neutral" with a $52 price target

• Reports said IBM (NYSE:IBM) plans to acquire SPSS (NASDAQ:SPSS) in an all-cash deal valued at $50 per share

• Under Armour (NYSE:UA) reported second quarter earnings of 2 cents per share, one cent above estimates, on a 5.1% revenue advance to $164.7 million, topping Street estimates of $159.1 million. The firm said it sees 2009 earnings of 80-82 cents a share, versus estimates of 79 cents, with revenues of about $810 million, up from estimates of $804.85

• JP Morgan (NYSE:JPM) upgraded shares of Air Products and Chemicals (NYSE:APD) to "overweight" from "neutral"

Net revenues for the quarter were $5.4 billion, compared with $6.1 billion in the second-quarter 2008. The consensus estimate called for a loss of 49 cents per share.

The results were in contrast to very strong results from competitors like Goldman Sachs (GS) and JP Morgan (JPM), which have adopted a more aggressive approach and have been gabbing market share after the financial crisis.

The results were negatively affected by a $2.3 billion, or $1.32 per diluted share, accounting charge related to the tightening of its credit spreads (improving credit worthiness) and an $850 million or 74 cents per diluted share, negative adjustment related to TARP repayment.

Investment banking delivered strong results with underwriting revenues up 19% year-over-year to $855 million. There were strong gains in both equity and debt underwriting. During the quarter, many companies (mostly financial companies) have tapped equity and debt markets to raise capital, which helped the results of Morgan Stanley and its competitors.

The company also saw improvements in prime brokerage, cash equities as well as in investment grade and distressed debt trading and in wealth management. However, there was weakness in other key areas of fixed income trading and in asset management.

The company recorded $700 million in charges related to losses on its investments in real estate. It's exposure to the Commercial Real Sector, which is deteriorating rapidly, will remain a cause for concern in the coming quarters.

Large banks, including WFC, Bank of America (BAC), Citigroup (C) and JP Morgan (JPM), have benefitted from the surge in mortgage refinancing during the last two quarters. However, this revenue source is expected to taper off as the rates are creeping up now. WFC reported mortgage banking income of $3.0 billion.

Credit quality deteriorated further and losses rose sharply during the quarter. The bank expects credit losses and nonperforming assets to increase further, though some moderation was visible. Net charge-offs rose to $4.4 billion (2.1% of average loans) from $3.3 billion (1.54%) in the prior quarter. Nonperforming assets grew to $18.3 billion (2.2% of loans) from $12.6 billion (1.5%) in the prior quarter.

Credit-loss provisions were $5.09 billion, up 69% from a year earlier and 11% from the prior quarter. The allowance for credit losses totaled $23.5 billion at Jun 30, 2009, compared with $22.8 billion at Mar 31, 2009.

Due to its integration with Wachovia, WFC is heavily exposed to the still-deteriorating housing sector (large portfolio of option adjustable-rate mortgages) and sharply weakening commercial real estate sector. As a result we expect higher credit losses in the coming quarter. We also think that the reserve build by the bank should have been larger to cover the future losses.

The bank said that it intends to pay back TARP funds "at an appropriate time while maintaining strong capital levels". It has so far generated $14.2 billion towards the $13.7 billion capital buffer required after the stress test, and expects to generate additional capital internally in the third quarter.

Chicago, IL – July 21, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Goldman Sachs (GS), JP Morgan (JPM), AIG (AIG), Bank of America (BAC) and Citigroup (C).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Monday’s Analyst Blog:

Do We Cheer Banks’ Earnings?

It appears that the divide in the banking landscape between the “haves" and “have-nots" is increasing. Even among the big banks, there is now a clear two-tier system.

On one hand, we have Goldman Sachs (GS) and JP Morgan (JPM), which delivered record profits from their trading and investment banking revenues. There is no doubt that these two managed their affairs well, have increased their market share after the collapse of Lehman and Bear Stearns and also have benefitted tremendously from the various programs by the Treasury and the regulators. And, we should not forget the generous AIG (AIG) payout to Goldman.

On the other hand, the second-quarter profits of Bank of America (BAC) and Citigroup (C) were reliant on several one-time gains, resulting from asset sales etc, while weaknesses in some businesses and continued credit deterioration showed that there is more pain to come.

Bank of America’s credit-card unit lost $1.6 billion amid rising delinquencies, compared with a year-ago profit of $582 million. Its home-loan and insurance unit lost $725 million. The bank reported $8.7 billion in credit losses, up from $3.6 billion in the year-ago quarter. Its nonperforming loans jumped to 3.3%, up from 1.1% a year ago.

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Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Chicago, IL – July 21, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Morgan Stanley (MS), American Express (AXP), U.S. Bancorp (USB), Goldman Sachs (GS) and JP Morgan (JPM).

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Here are highlights from Monday’s Analyst Blog:

3 Things to Watch This Week

1. Reaction to Bank Earnings - Nearly 1 out every 4 reports will be from the financial sector. Many of these are well-known firms such as Morgan Stanley (MS), American Express (AXP) and U.S. Bancorp (USB).

Big positive surprises from Goldman Sachs (GS) and JP Morgan (JPM) did not move the market last week, and if bank earnings are met again with apathy this week the market will have a hard time sustaining its rally.

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

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For the week, the DJIA jumped 597.42 points, or 7.3%, to 8,743.94 points and the S&P 500 rose 7% to 940.38.  The tech-heavy Nasdaq Composite Index rose for eight consecutive sessions, its longest run since 2005, ending the week up 131 points, or 7.4% to 1,887.

As Goldman announced earnings of $4.93 a share, well above analysts’ estimate of $3.57 per share, financials rallied and the gains spilled over to the broader market.  JP Morgan's (NYSE:JPM) second quarter earnings of 28 cents a share were 24 cents ahead of Street estimates, as revenues grew 2.9% year-over-year to $27.7 billion. The firm, however, warned of credit card losses this year and next as well as commercial real estate losses over the next several quarters.  Bank of America (NYSE:BAC) CEO Kenneth Lewis also sounded a grim note, cautioning "difficult challenges lie ahead from continued weakness in the global economy, rising unemployment and deteriorating credit quality that will affect our performance for the rest of the year and into 2010." Nevertheless, BofA’s second quarter earnings of 33 cents a share, bettered Street estimates of 28 cents a share, on revenues of $32.77 billion, versus estimates of $33.1 billion.

Intel's (NASDAQ:INTC) second-quarter numbers were also better than expected, as the company reported second-quarter earnings of 18 cents a share, versus expectations of 8 cents a share, as revenues of $8.0 billion beat estimates of $7.3 billion.  Most importantly, Intel’s third-quarter outlook for stronger-than-expected revenues had technology stocks rallying.  Dell (NASDAQ:DELL) warned of gross margin pressure in the second quarter, likely to generate only slight sequential revenue gains versus estimates of 1.6% growth. Although Dell said it expected stabilization in its IT product demand YoY, the firm stated profits were affected by "the result of higher component costs, a competitive pricing environment, and an unfavorable mix of product and business-segment demand." IBM (NYSE:IBM) shares gained 3.2% ahead of its earnings release.  After the markets closed, the company reported earnings of $2.32 per share versus expectations of $2.01 a share, even as revenue fell 13% hurt by corporate spending cutbacks.  Nevertheless, the Big Blue noted that it will comfortably meet its 2010 earnings target of $10 to $11 per share. Google (NASDAQ:GOOG) beat estimates of $5.08 a share, reporting second-quarter earnings of $5.36 a share versus $4.63. Johnson and Johnson's (NYSE:JNJ) second quarter bettered consensus estimates as well, posting at $1.15 down from $1.17 a year ago and beating estimates of $1.11 a share; the firm reiterated 2009 adjusted earnings guidance of $4.45 to $4.55 a share.

Companies due to report earnings today include Eaton (NYSE:ETN), Halliburton (NYSE:HAL), Hasbro (NYSE:HAS), while Texas Instruments (NYSE:TXN) and Legg Mason (NYSE:LM) are due to report after the close.

Chicago, IL – July 20, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Bank of America (BAC), Goldman Sachs (GS), JP Morgan (JPM), Biogen Idec (BIIB) and Acorda Therapeutics (ACOR).

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Here are highlights from Friday’s Analyst Blog:

BofA “Beats," But…

Bank of America (BAC) reported its 2Q09 income at $3.22 billion, or $0.33 per share, down from $3.41 billion, or $0.72 per share, a year earlier. The results were down 5.5% on higher merger charges and credit costs, but were ahead of analysts' expectations of $0.28 per share.

We may add that the analysts’ estimates ranged from a loss of 11 cents per share to a profit of 70 cents per share, and with so many one-time items it is difficult to conclude which items were included or excluded in the estimates and whether the results actually exceeded the expectations.

Results were driven by strong performance in the wholesale capital markets and home loans businesses, gains on the sale of China Construction Bank shares and the sale of the company's merchant processing business to a joint venture, but were partly offset by high credit costs, and a special FDIC assessment.

During the current year, banks have seen record revenues from trading actives, as we saw in the recent results of Goldman Sachs (GS) and JP Morgan (JPM) and also from the ongoing boom in mortgage financing. For BAC, sales and trading revenue rose to a record $6.7 billion during the quarter. The bank funded $110.6 billion in first mortgages, of which approximately 29% were for purchases and rest for refinancing.

Biogen Beats Consensus

Yesterday, Biogen Idec (BIIB) reported financial results for the second quarter of 2009. Non-GAAP diluted earnings per share (EPS) came in at $0.75, beating the consensus estimate of $0.68. EPS declined on a y-o-y basis due to a $110 million charge (EPS impact of $0.32) taken by Biogen related to its recently signed deal with Acorda Therapeutics (ACOR). GAAP EPS, which includes stock-based compensation and amortization of intangibles, declined 30% to $0.49.

Although EPS declined from the year-ago quarter, revenues jumped 10% to 1,093.3 million, slightly above ours and the Street’s estimate of $1.07 billion. Avonex and Tysabri were the primary growth drivers.

Avonex sales increased 12% to $591.2 million (U.S. sales increased 20%; ex-U.S. sales increased 2%). New long-term efficacy data and increased promotional efforts should drive Avonex sales going forward.

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

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Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com 

The Dow Jones industrial average gained 94 points, or 1.1% and the S&P 500 index increased 8 points, or 0.9%. The NASDAQ index jumped 24 points, or 1.3%.  Volume remained moderate with only 1.2 billion shares exchanging hands on the New York Stock Exchange and advancing shares outpacing declining issues by a seven-to-three margin.  Stocks have rallied this week as better-than-expected earnings from Goldman Sachs (NYSE:GS) and Intel’s (NASDAQ:INTC) robust third quarter outlook have lifted sentiments on the Street.

Helping the sentiment further were reports that said New York University professor Nouriel Roubini who noted the recession is nearing its end.  However, after the markets closed, Roubini came out with clarifications saying a second stimulus package of $200 billion to $250 billion might be needed to improve labor market conditions and assure a less than anemic recovery.  Roubini said he still predicts the recession will end early next year.

Among the ten industry groups, nine recorded gains Thursday led by a 2.5% rise in basic material shares, 1.6% gains in technology stocks, and 1.0% increase in oil and gas stocks. Only telecom issues bucked the trend, closing off 0.3%.  Over the past five days, however, all sectors have moved higher, led by a 10.5% surge in basic material stocks, 8.9% in consumer services, 8.5% in financial shares, with tech and oil and gas issues up 6.6%.

Among DJIA components, American Express (NYSE:AXP) led with gains of 3.9% after JP Morgan Chase (NYSE:JPM) upgraded the stock to "neutral" from "underweight" noting second quarter results will be cushioned by a reduction in expenses and loan loss provisions, despite a fall in revenues.  IBM (NYSE:IBM) shares gained 3.2% ahead of its earnings release.  After the markets closed, the company reported earnings of $2.32 per share versus expectations of $2.01 a share, even as revenue fell 13% hurt by corporate spending cutbacks.  Nevertheless, the Big Blue noted that it will comfortably meet its 2010 earnings target of $10 to $11 per share. Disney (NYSE:DIS) shares added 3% after Sanford Bernstein upgraded the stock to "outperform" from "market perform," saying the stock is "too attractive to ignore" at current levels.  Alcoa (NYSE:AA) shares continued higher, up 3% on the back of general increases in economically-sensitive, commodity-related shares.

Ahead of today’s results, Bank of America (NYSE:BAC) shares fell 1.9%. Citigroup (NYSE:C), which is also expected to report earnings today, declined 2.8%. JP Morgan (NYSE:JPM) fell 0.4% despite is better-than-expected numbers on concerns regarding the firm's forecast of losses from its credit card business this year and in 2010, as well as higher commercial real estate losses over the next several quarters.

Mounting speculation over CIT Group (NYSE:CIT) could result in willingness to shelter profits today ahead of the weekend.  Two terrorist explosions in Jakarta and reports of a drop in US fuel demand to an 11-year low are also likely to weigh on sentiments.

• Fastenal (NASDAQ:FAST) reported second quarter earnings miss at 29 cents per share, 4 pennies off Street estimates of 33 cents, as revenues fell short of the $487.10 million target, posting at $474.9 million

• Dell (NASDAQ:DELL) warned of gross margin pressure in the second quarter, likely to generate only slight sequential revenue gains versus estimates of 1.6% growth.  Although asserting stabilization in its IT product demand y/y, the firm stated profits were affected by "the result of higher component costs, a competitive pricing environment, and an unfavorable mix of product and business-segment demand"

• CSX (NYSE:CSX) reported better-than-expected earnings of 72 cents a share from continuing operations, a dime ahead of estimates, versus 95 cents a year ago, despite a 21% fall in shipping volume and lower fuel surcharge recovery as expenses were slashed by 27%

• Oppenheimer upgraded Best Buy (NYSE:BBY), asserting the shares currently oversold and not reflective of market share improvement from Circuit City's bankruptcy

• OSI Pharmaceuticals (NASDAQ:OSIP) reported successful completion of a Phase III study, showing increased survival following initial chemotherapy treatment in patients suffering advanced non-small cell lung cancer

• Citigroup (NYSE:C) upgraded shares of Blue Nile (NASDAQ:NILE) to "buy" from "hold," maintaining a $50 price target

• Burger King (NYSE:BKC) was downgraded by Bank of America (NYSE:BAC) to "neutral" with a lowered price target of $19 from $22

• Masco (NYSE:MAS) was downgraded at JP Morgan (NYSE:JPM) to "underweight" from "overweight," with its price target cut to $6.50 from $7.50

• Owens Corning (NYSE:OC) received an upgrade from JP Morgan (NYSE:JPM) to "overweight" from "neutral," with a price target of $15, up from $13.50

However, CIT Group Inc. (NYSE:CIT) plunged 11.8% after the commercial finance lender said its failure would put prospects of 760 manufacturing clients in jeopardy and precipitate a crisis for about 300,000 retailers.  American International Inc. (NYSE:AIG) rallied 24% and was the leading gainer among S&P 500 stocks after media reports said Primus Financial Holdings Ltd. is looking to make a $2 billion bid for the firm’s Taiwan life insurance unit. 

Stock futures pared gains this morning, despite better-than-expected results from Goldman Sachs (NYSE:GS), as a government report said wholesale prices rose more than estimated in June.

Market breadth was positive. On the New York Stock Exchange, advancing shares beat declining issues five to one on volume of 1.19 billion shares. The market’s measure of volatility, the CBOE Vix, tumbled 9.3% to 26.31.  Crude prices sank to an eight-week low, off $0.20 to $59.69.

All ten S&P500 industry groups recorded gains, led by a 5.9% rise in financial stocks.  Financials rose, following Whitney’s "buy" rating on Goldman Sachs (NYSE:GS), that was issued a day before the firm reports its first-quarter earnings.  Goldman Sachs (NYSE:GS) is expected to beat consensus estimates of earnings of $3.48 per share, helped by its lucrative bond trading operations.  Bank of America (NYSE:BAC) jumped 9.3%, following Whitney’s comments.  General Electric (NYSE:GE) surged 6.3% ahead of its earnings release on Friday, after Goldman Sachs (NYSE:GS) said the company is likely to beat Street projections.  JP Morgan (NYSE:JPM), expected to report on Thursday, jumped 7.3% on expectations of better-than-projected earnings.

Yesterday's Treasury Budget statement for June of a slightly less-than-expected, but still onerous $94.3 billion deficit, sent the year-to-date cumulative deficit to a record $1.08 trillion. Treasury Secretary Geithner, however, countered suggestions of additional programs, noting, "...we're just beginning to come to the point when you're going to see the largest effective boost to the employment-intensive parts of the stimulus coming on stream," as he stated, "...we're starting to see a better basis for recovery."

Company earnings reports slated for release today include: Altera Corp (NASDAQ:ALTR), Goldman Sachs (NYSE:GS), Intel (NASDAQ:INTC), Johnson & Johnson (NYSE:JNJ) and Yum! Brands (NYSE:YUM).

• Goldman Sachs (NYSE:GS) added Discover Financial Services (NYSE:DFS) to its Conviction Buy List, taking off shares of Bank of New York Mellon (NYSE:BK)

• Goldman Sachs (NYSE:GS) posted positive comments ahead of Friday's forthcoming General Electric (NYSE:GE) numbers, saying it sees it earnings to beat Street estimates of 23 cents a share

• CIT Group (NYSE:CIT) warned of a possible "crisis" for 30,000 retailers should its failure to raise funds drive the firm into bankruptcy as it attempts to improve its near-term liquidity position

• Microsoft's (NASDAQ:MSFT) annual partner conference in New Orleans begins today, with reports expected on online software versions as well as plans for its "cloud" operating system, its next Office Suite software version, and pricing and plans for its Azure operating system

• Philips (NYSE:PHG), Europe's largest consumer electronics firm, surprised with second quarter earnings of $62 million, down 94% from a year ago, but ahead of Street estimates for a loss of $175 million, as well as offering optimistic comments of an improved second half helped by cost-cutting measures

• Rockwell Automation (NYSE:ROK) was upgraded by JP Morgan (NYSE:JPM), with a price target of $35, up from $29

On Friday, US stocks registered their fourth-straight week of declines as a dip in consumer confidence and Chevron’s (NYSE:CVX) bleak profit outlook highlighted concerns about the health of the global economy.  The Dow Jones Industrial Average lost 37 points, or 0.4%. Tech-heavy Nasdaq rose 3 points or 0.2% and the S&P 500 index eased 3 points or 0.4%.  Volume remained light with only 922 million shares trading and advancing issues ahead of decliners by a narrow margin.  For the week, the Dow slipped 1.6%, the S&P 500 fell 1.9% and the Nasdaq declined 2.3%.       

Although Alcoa (NYSE:AA) launched second-quarter earnings season with a smaller-than-expected loss, Chevron’s (NYSE:CVX) profit warning heightened concerns about second-quarter earnings and investors sold off stocks.  Crude prices continued their decline, remaining near $60 level.  Exxon Mobil Corp. (NYSE:XOM) slid 4.9%. 

Among the S&P 500 industry groups, telecom companies were the worst performers.  AT&T (NYSE:T) fell 4.7% to $23.44, and Verizon Communications Inc. (NYSE:VZ) declined 5.2% to $28.62 after Sanford C. Bernstein & Co. cut profit estimates for these companies, citing declining revenue from corporate customers.  Technology stocks got a boost after Goldman Sachs upgraded the U.S. hardware and software sectors to "attractive" from "neutral," citing potential growth in demand from businesses.  Goldman (NYSE:GS) also raised its price target on Apple Inc (NASDAQ:AAPL) to $160 from $145.  Apple rose 1.6% to $138.52.

Among the financials, results are expected from Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC), Citigroup (NYSE:C) and JP Morgan (NYSE:JPM).  Analysts expected Goldman Sachs (NYSE:GS) to report second-quarter profit of more than $2 billion on strength in the firms' bond, currency and commodity trading operations.  Among the technology companies due to report their earnings are: Intel (NASDAQ:INTC), Google (NASDAQ:GOOG), Nokia (NYSE:NOK) and IBM (NYSE:IBM).  Also among the key companies reporting this week are: Johnson & Johnson (NYSE:JNJ), General Electric (NYSE:GE), CSX (NYSE:CSX), and Abbott Labs (NYSE:ABT). S&P500 second quarter earnings are projected to have declined 35% in the quarter, compared with a 33% first quarter drop.

• Goldman Sachs (NYSE:GS) downgraded shares of IBM (NYSE:IBM) to "neutral" from "buy"

• Infosys Technologies (NASDAQ:INFY) beat estimates by 8 cents, posting fiscal first-quarter earnings of 55 cents a share as revenues fell 2.9% y/y to $1.12 billion.  The company expects second quarter earnings of 50 cents to 51 cents a share and full-year earnings of $1.97 to $2.00

• Barclays (NYSE:BCS) upgraded KLA Tencor (NASDAQ:KLAC) shares to "overweight"

• General Motors (NASDAQ"GMGMQ) exits bankruptcy today

• Nissan Motor (NASDAQ:NSANY) CEO Ghosn warned 2010 is likely to prove "as difficult as 2009," with Europe expected among the slowest areas to recover worldwide

• Credit Suisse (NYSE:CS) upgraded Western Union (NYSE:WU) shares to "outperform" from "neutral"

• Citigroup (NYSE:C) warned AIG (NYSE:AIG) investors may have little left after the US government is paid back. JP Morgan (NYSE:JPM) has opted for a public determination of its warrants' valuation in order to pay back government borrowings

• BMO Capital noted mildly positive data for May from Las Vegas Strip gaming revenues

The same activity, undertaken in Russia or China in the not-too-distant past, could easily lead to a bullet in the head, or at least a 10-year stretch in the gulag.

For those of us trading in the “free” markets of the West, it’s just a matter of money. Unfortunately, getting stung by having the rules of the game changed when you’re already set in a trading position is a painful reality. It happened to me last July when I had a short position in JP Morgan shares, and the SEC’s emergency order against “naked” short selling (whatever that is) in the securities of Fannie Mae, Freddie Mac and 17 primary dealers caused a huge price spike in all those companies’ shares.

The US$10 jump in JP Morgan’s shares that resulted was enough to blow through my stops, turning a decent profit into a loss. Tough luck for me, but it’s still galling in hindsight, when you see that those short-selling restrictions didn’t do a whole lot of good for investors in Lehman Brothers, Fannie Mae or Freddie Mac, to name three of the companies on the list, and the reason for the introduction of the rules was given as the need to prevent downward pressure on the banks’ share prices.

So when you see the CFTC start to take a look at position limits in futures for all “commodities of finite supply”, watch out. Incidentally, the only commodity I can think of that is not in finite supply is helicopter Ben Bernanke’s US dollar, but I suppose it’s too much to ask for the US authorities to turn that tap off.

We’ll have to wait a bit longer to see what the CFTC comes up with, but if they are in the business of trying to stop energy price “manipulation”, why don’t they take a look at the oil price recommendations put out by Goldman Sachs since the beginning of last year?

To recap, the US bank forecast a “super spike” in the price of crude to $150-200 a barrel last May, not long before the oil price hit a peak of $147. Then, in January this year, the bank predicted a dip in prices to below $30 a barrel, just before the bottom in the crude price. On 4 June, it raised its 2009 price forecast to $85 a barrel, showing uncannily wrong timing again, since the price of WTI crude has since fallen back from over $73 a barrel to the current $60.

Suggestions that the bank has been saying one thing and trading in the opposite direction itself are not new—Forbes ran a story on this a few months ago—but are notoriously difficult to prove. Let’s just say that, if the bank’s proprietary traders had been following their own analysts’ advice, it’s unlikely that the press would be talking about record bonuses in 2009 for Goldman employees.

I’m not holding my breath that the regulators will even turn an eye to this—after all, conflicts of interest in large securities firms have long been endemic. Unless regulators are willing to bite the bullet and fully separate trading and investment banking activities from advisory ones, markets can hardly be seen as a level playing field. Eliot Spitzer had a go at changing things a few years ago, but with little success.

From past experience, unfortunately, complaints against “speculators” are likely to be used as an excuse to favour one group of market participants over another. And the small guys that invest in index-tracking products are unlikely to wield the same clout as the big players in determining how these rules are set.

The Dow Jones industrial average rose 44.13 points, or 0.5%, to 8,324.87, and the broader Standard & Poor's 500 index edged up 2.30 points, or 0.3%, to 898.72. The technology-laden Nasdaq declined 9.12 points, or 0.5%, to 1,787.40.  Among DJIA components, 19 closed higher while six of the ten S&P 500 industry groups advanced.  On the New York Stock Exchange, declining issues beat advancing ones by a three-to-two margin.

Among DJIA components, American Express (NYSE:AXP), up 5.6% and Merck (NYSE:MRK), up 3.3% led on the upside.  American Express gained after Stifel Nicolaus upgraded its rating on the firm (NYSE:AXP), noting the company the best positioned of credit-card issuers to endure the regulatory changes, advising as well that worries of bad debt are easing.  Dupont (NYSE:DD) shares added 2.2% and Proctor & Gamble (NYSE:PG) gained 2.1% on their safety play appeal.  However, as commodities declined, Alcoa (NYSE:AA) slid 6.1% ahead of its quarterly post after the markets closed Wednesday.

Bank of America (NYSE:BAC) shares declined 3.9% following a Credit Suisse (NYSE:CS) report that warned of worse-than-expected loan losses likely impacting the company's second-quarter results. Nevertheless, financials rose 1% with Bank of NY Mellon (NYSE:BK) adding 2.9%, Goldman Sachs (NYSE:GS) gaining 2.1% and JP Morgan (NYSE:JPM) rising 1% on news that Moody's (NYSE:MCO) may lift its rating on Brazil debt, lowering banks' exposure risk.  FedEx (NYSE:FDX) gained 3.2% to $56.04 after head of the company's international business said he saw signs of an economic rebound in the second half of the year.

Amid lingering worries about the pace of an economic recovery, commodity and material issues proved to be a drag as crude prices plunged to a five-week low of $64.05 after hitting an eight-month high of above $73 per barrel last week.  Among the ten S&P500 industry groupings, basic material shares fell 1.9% and oil and gas declined 1.3%. Technology shares eased 0.5%, as Apple (NASDAQ:AAPL) fell 1.0% and Microsoft (NASDAQ:MSFT) edged 0.7% lower, even as chipmaker Samsung projected a fivefold profit increase for the quarter.  A bullish report on semiconductors was also issued this morning, as Bank of America/Merrill (NYSE:BAC) upped its ratings on the sector, estimating 21% 2010 revenue gains versus 14%, and upgrading Intel (NASDAQ:INTC), Marvell (NASDAQ:MRVL) and LSI (NYSE:LSI) to "buy" and Maxim Integrated Products (NASDAQ:MXIM) and National Semiconductor (NYSE:NSM) to "neutral."  Sprint Nextel (NYSE:S) jumped 3.5% after receiving a ratings upgrade on strength of its Boost prepaid mobile telephone contracts.

Remarks from Obama advisor Tyson who noted a second stimulus package should be planned "on a contingency basis," and aimed at infrastructure investment may underscore remarks from Vice President Joe Biden Sunday complaining of a worse-than-anticipated economic legacy from ex-President Bush as well as the possibility of a second stimulus.

The total-market Russell 3000 Index has seen some sizable changes in its sector weightings, although the top 10 remain very much the same. Figure 1 shows the new 2009 sector weightings according to the Russell sector classification system. Not surprisingly, financial services is no longer the largest sector: It now takes second place to technology, which is weighted at 16.19% versus financials at 15.27%. In 2008, those sectors were reversed, with financials at 17.24% and tech at 14.19%.

Health Care saw its weighting increase to 13.41% from 11.52%, popping it up to the third position from No. 5. It displaced energy, which fell from the third slot to the fourth, declining to 11.97% from 13.42%; presumably, declining oil prices had something to do with that. Consumer discretionary also fell: It was the fourth-largest sector after the 2008 rebalance, at 12.94%, but is now the fifth-largest, with a weighting of 11.86%. Producer durables, consumer staples, utilities and materials & processing maintained their same positions (six through 10, respectively).

The top 10 stocks in the Russell 3000 are by and large the same, except for one: ConocoPhillips was displaced by JPMorgan Chase & Co.—a financial company, of all things. Of course, JP Morgan did acquire two former giants in the field of finance last year: Bear Stearns and Washington Mutual. And it has been one of the least-scathed of the financial services companies.

While the other members of the top 10 remained largely the same, some of their positions did not. ExxonMobil is still at the top of the heap, like it was last year, but General Electric fell from the second-largest weighting in the Russell 3000 to the tenth-largest, with a weighting of 1.27%. Microsoft moved up from the third slot to the second, with a weighting of 1.87%. And Johnson & Johnson jumped to No. 3, befitting its strong performance.

Russell 2000

In the Russell 2000, financial services is still the top sector, increasing its weight to 21.10%. A surprising result, perhaps, but the sector was boosted by having hard-hit banks move out of the Russell 1000 and into the smaller index. Technology claims the second-largest slot, with a 16.75% weighting, displacing consumer discretionary, which falls to the No. 3 position, with a 14.68% weighting. That’s down from 17.65% in 2008. Energy only fell one spot, to No. 9, and saw its weighting nearly halved, falling from 8.60% to 4.52%, further emphasizing the differences between the large- and small-cap worlds.

US stocks had declined Tuesday after an unexpected decline in consumer confidence sparked a sell off, but the S&P 500 index managed to end the quarter with a 15.2% gain, its best quarterly performance in a decade.  Volume was markedly low with only 948 million shares trading.  Advancing stocks beat decliners by a three to one margin.  The CBOE Vix, the measure of market volatility, eased 0.5% to 26.22.  Thursday, markets will turn their focus towards the employment scenario, as the Labor Department releases its June jobs report.   

Among ten S&P industry groupings, eight moved higher while financials and healthcare stocks led on the downside.  Shares of consumer-related companies led with modest gains of 1.9% while utilities added 1.4%.  On the DJIA, Kraft (NYSE:KFT) jumped 5%, the most since December, after rival General Mills (NYSE:GIS) reported better-than-expected fiscal fourth quarter earnings on strong sales of its cereal and dough products and upbeat yearly guidance. Yum! Brands Inc. (NYSE:YUM) surged 5% after it was recommended by Goldman Sachs (NYSE:GS).  Intel (NASDAQ:INTC) added 3% after it was upgraded to "market perform" from "market underperform." On the downside, shares of Bank of America (NYSE:BAC), American Express (NYSE:AXP) and JP Morgan (NYSE:JPM) moved lower, declining at least 1.0%.  Shares of Chevron Corp (NYSE:CVX) rose 0.4 percent to $66.52, while Exxon Mobil (NYSE:XOM) added almost 1 percent to $70.56.

Although the attention will be on today's jobs report, weekly jobless claims and factory orders are also likely to draw attention. ECB President Trichet's comments will be scoured for any change in plans to increase asset purchases, although interest rate levels as expected to have remained unchanged.

Chicago, IL - July 2, 2009 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Goldman Sachs (GS), JP Morgan (JPM), BB&T (BBT), US Bancorp (USB) and Morgan Stanley (MS).

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Here are highlights from Wednesday's Analyst Blog:

SEC Approves "Say on Pay" Rule

The disclosure of the executive compensation was last approved by the SEC in 2006. That move required companies to disclose their executives' pay and perks in greater detail, and required noting the date of stock option grants. The SEC is now seeking to improve the reporting of stock and option awards.

One of the reasons for the financial crisis was the executive compensation structure that encouraged excessive risk-taking. The Obama Administration is trying to revamp compensation policies of financial firms as a part of the broader regulatory reforms package.

Restrictions on executive compensation have been the main reasons behind the repayment of TARP money by some of the major banks like Goldman Sachs (GS), JP Morgan (JPM), BB&T (BBT), US Bancorp (USB) and Morgan Stanley (MS).

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With the second-quarter scheduled to end early next week, financials with gains of more than 25% over the past three months are expected to report strong second-quarter earnings, as successful equity offerings of more than $259 billion that tripled the previous quarter's offering show the sector's strength.  However, toxic assets plaguing the balance sheets of financial firms continue to worry analysts.  Also, JP Morgan (NYSE:JPM) expects a 5% to 10% correction in the S&P 500.         

On Friday, a Commerce Department report said personal spending rose a modest 0.3% in May, but savings rate jumped to 6.7%. The news troubled investors as the jump in savings indicated consumers were opting to be very careful with their expenses.  Although higher savings is good for individuals, it may hurt the prospects of a nascent economic recovery. 

The Chairman of Obama's Council of Economic Advisers, Christina Romer, this morning noted that the Obama Administration's $787 billion fiscal stimulus package will boost growth over the next few months; however, Ms. Romer warned against prematurely cutting off monetary easing measures.

* Quantas Airlines cancelled orders for 15 Boeing (NYSE:BA) 787 Dreamliners scheduled for 2014-2015 delivery, and deferred orders for 15 more, citing the tough economic environment

* Potash (NYSE:POT) lowered its earnings guidance for the second quarter from $1.10-$1.50 to 70 cents, citing substantially lower than expected potash sales volume on deferrals by its global customers and lower realized prices for phosphate fertilizers

* UBS (NYSE:UBS) warned of a second quarter net loss, announcing $3.48 billion in capital-raising with a 293.3 million share offering at $11.91, a 6.9% discount to yesterday's close

* Goldman Sachs (NYSE:GS) lowered its 2010 earnings estimate and price target on Monsanto (NYSE:MON), citing lower glyphosate profits and lower seed price gains. The 2010 estimate was cut 50 cents to $4.30, and 45 cents for 2011 to $4.65, with the price target lowered to $80. The firm held its "neutral" rating

Today's premarket futures suggest a mixed opening on news that Australian airliner Quantas Airways has canceled orders for 15 Boeing 787s, citing tough economic conditions. 

Lennar's (NYSE:LEN) report on order improvements suggested the housing scenario is improving.  Gains were broad-based yesterday as basic material shares jumped 3.0%, healthcare and consumer services were up 2.7%, industrials rose 2.5%, and oil and gas advanced 2.3%.  Commodity-related shares also rose and healthcare issues advanced on news that Senate negotiators had restrained the price tag on Obama's proposed healthcare reform bill to a target of $1 trillion over ten years.  DJIA components Merck (NYSE:MRK) rose 4.4% and Pfizer (NYSE:PFE) advanced 4.1%.  Technology issues advanced 2% after Micron (NYSE:MU) reported better-than-expected earnings and Palm's (NASDAQ:PALM) loss was smaller-than-expected.

As consumer spending is being increasingly considered as the cornerstone of an economic recovery, a 14% jump in Bed Bath and Beyond's (NASDAQ:BBBY) first quarter earnings and a JP Morgan (NYSE:JPM) upgrade of JC Penney (NYSE:JCP) to "overweight" with an increased price target of $33 from $28, provided a boost to retailers.  Shares of retailers advanced 3.8%, led by gains in Bed Bath and Beyond (NASDAQ:BBBY) of 9.5%, Saks (NYSE:SKS) of 6.7%, and JC Penney (NYSE:JCP) of 6.0%.

With the second-quarter scheduled to end early next week, most money managers have begun their window dressing by selling some equities on losses and buying this quarter's some of best stocks.  That is likely to increase volatility in the coming sessions.

Among the number of economic posts that are due today, investors are likely to take a cue from Federal Reserve's interest-rate policy announcement that is due at 2.15 ET.  Expectations are that the central bank will hold the interest rates steady.  Also, May new home sales report is due out after the start of trading.  Monday saw increased risk-aversion in the market after the World Bank's report and the Vix volatility measure jumped 11.4%. 

But as governments across the world have geared up to prevent a collapse of the financial system, and a full-blown depression has been avoided, investors will now look toward the Fed for guidance on its exit strategy, on any expansion of its $300 billion Treasury purchase plan, as well as its views on rising yields. A bullish view form the Fed would likely put equities back on track to resume its three-month rally.

Among S&P sector groupings, six recorded moderate declines yesterday, with utilities down 1.0%, consumer services off 0.7%, consumer goods off 0.3%, industrials and tech down 0.2%, and health care off 0.1%.  Basic material sector shares jumped 1.9% and oil and gas edged up 0.7%  Financials, taking a cue from FBR Capital's raised earnings projections and price target on Goldman Sachs (NYSE:GS), advanced 1.4%.

According to the National Association of Realtors, existing home sales gave further evidence that housing may be stabilizing as falling prices, increased foreclosure activity and government tax breaks attracted buyers, sending sales 2.4% higher in May, though slightly lower than an expected 2.6% increase.

* Reuters reported 100,000 of Apple (NASDAQ:AAPL) iPhone 3Gs were sold via preorders, explaining away some of the launch's diminished excitement level. Some news reports said Steve Jobs underwent a liver transplant two months ago in Tennessee, and is still due back at month's end

* Walgreen (NYSE:WAG) is expected to report fiscal third-quarter earnings of 56 cents a share

* UBS (NYSE:UBS) upgraded Vulcan Materials (NYSE:VMC) to "buy," based upon housing and infrastructure recovery

* JP Morgan (NYSE:JPM) upgraded Verisign (NASDAQ:VRSN) to "overweight" from "neutral"

* According to a Wall Street Journal report, Amazon.com (NASDAQ:AMZN) may stop conducting businesses with some retailers in states, which would force sales tax payments on online transactions

Although financials have been a drag this week, Thursday saw the sector recording gains after a three-day losing streak and leading the list of gainers among the 10 S&P 500 industry groups with an advance of 2.5%.  Discover Financial Services (NYSE:DFS) rose 4% after reporting a less-than-anticipated growth in bad loans.  Lincoln National (NYSE:LNC) jumped almost 7% after it was upgraded by Credit Suisse (NYSE:CS).  Bank of America (NYSE:BAC) surged 4.9% and JP Morgan (NYSE:JPM) added 4.4%.  However, a WSJ report said there was a possibility that General Electric (NYSE:GE) may choose to spin off its financial unit rather than accept the burden of government oversight of its non-financial operations, sending its shares down 1.5%.  However, volume remained light at 1.1 billion. 

The Department of Labor's report yesterday showed number of people collecting unemployment benefits after the initial week recorded its biggest decline since November 2001.  New jobless claims, however, were up slightly as expected. 

With massive treasury auctions due next week, Treasury prices declined, sending yields higher. The Treasury has announced plans to sell a record $165 billion debt next week, including $31 billion 13-week, $30 billion 26-week, $40 billion 2-year notes, $37 billion 5-years and $27 billion 7-years, to help fund stimulus spending. However, traders are increasingly getting worried that massive government spending could push food and energy prices higher, and eventually lead to inflation.  As protection against a possible inflationary spiral and US dollar weakness, traders have bid up crude and other commodity prices, even as demand remains weak. Goldman Sachs (NYSE:GS), however, recently advised oil prices could hit $95/barrel by late 2010.  Further pressuring the outlook for inflation, No one expects the supply train to dwindle soon.
 
Utilities gained 2.2% yesterday as investors sought higher-yielding investments.  Healthcare stocks rose 2.2% as traders picked up defensive plays.  Technology stocks declined after Needham & Co. downgraded SanDisk (NASDAQ:SNDK) to "underperform," citing weakness in the NAND flash sector. SanDisk (NASDAQ:SNDK) shares plunged 6.1%, and Advanced Micro Devices (NYSE:AMD) fell 5.6%; Broadcom (NASDAQ:BRCM) was off 3.2%.  After the market close, Research in Motion (NASDAQ:RIMM) reported better-than-expected results, but gave an outlook at the low end of Street targets. 

Today being the end of the two day "quadruple witching" period, which marks the June expirations of stock futures and options with positions rolled into September contracts, trading is expected to remain volatile. CarMax (NYSE:KMX) is due to report quarterly earnings.