U.S. stocks surged to their 13-month highs Monday as a weaker dollar and a rebound in U.S. retail sales reinforced hopes that an economic recovery is indeed underway.  Stocks also got a boost after Fed chairman Ben Bernanke reiterated Fed’s intention to keep interest rates low for an extended period. 

Gold advanced 2% to fresh record highs; and the price of silver jumped 5.9%.  The initial gains in the equity prices followed strength in Asian markets yesterday.  Strength in Asia was partly helped by reports that said Japanese economy grew at its fastest pace in over two years, up 1.2% during the third quarter.  To add to the bullish mood in the region, leaders of the Asia Pacific Economic Cooperation promised to keep the stimulus measures in place.

On Monday, the 30-stock Dow Jones industrial average rose 136.49 points, or 1.33%, to 10,406.96. The broad Standard & Poor's 500-stock

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U.S. stocks ended mixed Wednesday after a late-session profit taking almost wiped off a 156-point rally in the Dow average that was fueled by the Fed’s encouraging assessment of the economy and its decision to keep interest rates low for an extended period.  The optimism was short-lived as investors appeared jittery ahead of the October jobs report on Friday. Fresh concerns over bank earnings resurfaced after the House of Representatives passed a bill curbing credit card rate increases.

After the house vote, financials slumped 1.5% and led the decliners among the S&P 500 industry groups.  Analyst Meredith Whitney noted the biggest U.S. banks may face declining values on home-loan bonds with government backing as the Fed moves towards ending its $1.25 trillion purchase program.  Whitney said bank earnings are far from approaching "normalcy," and will reflect regulatory changes for an extended period.  JPMorgan (NYSE:JPM) fell 1.2% to $42.21 and

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Stocks meandered at the start as uncertainty over the quarterly results this week kept investors from building positions.  Jittery investors, wanting to see more sings of an economic revival, sold off financial stocks after influential analyst Meredith Whitney downgraded shares of Goldman Sachs.  Whitney also lowered her earnings outlook for Bank of America and Citigroup.  Although late morning saw some strength, stocks struggled to stay afloat and ended the day mixed.   

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

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Although investors appeared hesitant and positioned themselves ahead of corporate earnings reports, the Dow Jones industrial average inched closer to the 10,000-level before some afternoon weariness saw indexes sinking sharply.  At the end of the session that was characterized by slow trading, the Dow managed to notch up some gains to remain in contention for the 10,000 mark – a level it last breached nearly a fortnight after Lehman’s fateful collapse in September 2008. 

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

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This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find interesting.

• John Authers (Financial Times): Triumph of common sense over benchmarks, October 3, 2009. Rather than watch everyone herd towards benchmarks, while charging fees for active management, in future perhaps a lot of money will be managed passively and the rest will be allocated to investors who can show they have skill, and who have the freedom to go wherever they believe they can profit.

• Randall Forsyth (Barron’s): Is this a real bull or “Red Bull” market? October 2, 2009. After the caffeine rush of the third quarter, stocks and Treasuries give way to less stimulating market action.

• Paul Krugman (The New York Times): Mission not accomplished, October 2, 2009. Stocks are up. Ben

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Ok, now I’m starting to get spooked.

Long-time readers know that I’ve frequently commented on the eerie similarities between how the financial markets behaved in 2008 and 2009. However, at this point, things are beginning to border on “conspiracy theorist.”

In both years, commodities bottomed first (Jan 23, 2008 vs. Feb 23 2009). In both years, the Feds stepped in with a major intervention in Feb/ March (Bear Stearns ’08 vs. Obama Stimulus ’09). This in turn kicked off a major rally in which both stocks and commodities soared higher together.

Both asset classes began to lose momentum in the early summer with the Baltic Dry Index peaking in late May ’08 vs early June ’09. Stocks and the Baltic then rolled over, falling into July:

June 1-August 5, 2008: Baltic collapses 28%

June 1-August 5, 2009: Baltic collapses 25%

Stocks first followed the Baltic, but then staged a massive reversal due to interventions/ short squeezes. …

After better-than-expected numbers from Goldman Sachs and Intel set off a broad weekly rally on Wall Street, stocks lacked direction Friday and ended the day little changed as investors braced for fresh corporate announcements.  Also fueling the rally was analyst Meredith Whitney’s bullish stance on Goldman as she assigned a “buy" rating on the bank.  That set the stage for a 7% market rally in just five sessions with the Dow Jones industrial average and the S&P 500 index posting their best weekly performance since the week ending March 13.

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

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I am experiencing Internet problems and have difficulty accessing my data sources. This week’s video compilation is therefore posted without the usual introductory paragraphs. But I’m sure the interesting clips will speak for themselves.

Wall St Cheat Sheet: AIG - writing stories about people who play “it” safe “Evidently, AIG is a company that plays ‘it’ safe (whatever the hell that means) and knows how to manage risk better than anyone else in the known universe. Don’t believe me? Take their word for it. We let corporations falsely advertise all the time, and here is a perfect example of the cost.”

Source: Damien Hoffman, Wall St Cheat Sheet, July 15, 2009.

Bloomberg: Shiller, Roubini discuss “anemic” economic recovery “Nouriel Roubini, professor at New York University’s Stern School of Business, and Robert Shiller, chief economist and co-founder

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Stocks highlighted in this article include: Goldman Sachs Group (...

By the time you read this column, Goldman Sachs will have probably reported a dazzling result for the second quarter. The rumors preceding this celebrated event sparked a stupendous 185-point rally on Wall Street yesterday.

But the trading day was not all about mere rumors. It was also about hearsay, hype and giddy optimism…

Meredith Whitney, “The Woman Who Called Wall Street’s Meltdown,” according to the Fortune Magazine cover of August 18, 2008, upgraded the shares of Goldman Sachs to a “Buy,” and predicted the stock would rise 30% from current levels. “Goldman has all the benefits of the capital markets in general,” said Whitney, “Without the ‘junk in the trunk’ as I like to call it.” Goldman shares jumped 5.3%.

Based on Whitney’s upgrade, and the subsequent market action, gullible investors could have deduced that the credit crisis has ended. The rest of us could have deduced that the

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