On Tuesday, the 30-stock Dow Jones industrial average closed down 17.53 points, or 0.18%, to 9,771.91.  The broad Standard & Poor's 500-stock index added 2.53 points, or 0.24%, to 1,045.41 and the tech-heavy Nasdaq advanced 8.12 points, or 0.40%, to 2,057.32.  On the NYSE, volume slowed to 1.38 billion shares.  

The news of a sale of 200 tons of gold to India sent gold futures surging $32.10 to $1086.  Treasury prices declined with the 10-year off 16/32 to 101-08/32 and the corresponding yield surging to 3.47% from 3.41% Monday.      

Burlington Northern (NYSE:BNI) surged 28% to $97 after the $26 billion offer from Berkshire.  Technology stocks were under pressure following a Morgan Stanley (NYSE:MS) analyst downgrade of semiconductor companies. Intel (NASDAQ:INTC), the world’s biggest computer-chip maker, fell 2.7% to $18.50 and Novellus Systems Inc. (NASDAQ:NVLS) declined 5.2% to $19.71.  Shares in basic materials, oil and gas and industrials rose 1.8%, 1.5%, and 1.3%, respectively in yesterday's trade.  Meanwhile, automakers reported October sales numbers mostly higher from a year ago.  General Motors (NYSE:GM) posted its first y/y sales gain, in nearly two years, as its sales rose 5%; Ford (NYSE:F) said its sales rose 3%; Toyota (NYSE:TM) sales, although flat, were ahead of estimates of a 6% decline.  Chrysler sales fell 30%.

Nevertheless, corporate earnings so far have continued to beat Wall Street estimates, with 84% of the S&P500's 358 firms reported so far currently beating Street estimates.  Meanwhile, the S&P 500 is currently trading 55% above its 12-year low hit on March 9. 

Today’s earnings calendar includes quarterly reports from the following: Comcast (NASDAQ:CMCSA), Time Warner (NYSE:TWX), News Corp. (NYSE:NWS), Prudential (NYSE:PRU), Qualcomm (NASDAQ:QCOM), Devon Energy (NYSE:DVN), and Becton Dickinson (NYSE:BDX).

Weakness in share sent Treasury prices higher, with the 10-year closing up 13/32, to 102 11/32.  The yield fell to 3.34%, from 3.39% late Monday.  On Tuesday, the 30-stock Dow Jones industrial average fell 50.71 points, or 0.50%, to 10,041.48.  The broad Standard & Poor's 500-stock index retreated 6.85 points, or 0.62%, at 1,091.06 and the tech-heavy Nasdaq composite index lost 12.85 points, or 0.59%, to 2,163.47.  Market breadth was negative.  On the New York Stock Exchange, declining shares beat those that rose in price two to one on volume of 1.24 billion shares.

After the close yesterday, Yahoo Inc. (NASDAQ:YHOO) and SanDisk Corp. (NASDAQ:SNDK) reported strong quarterly numbers that were well ahead of Street expectations.  Caterpillar (NYSE:CAT) was the leading gainer among the Dow 30 stocks, rising 3.4% after it reported estimate topping numbers.  Apple (NASDAQ:AAPL) shares climbed 4.7%.

Military contractor Lockheed Martin (NYSE:LMT) fell nearly 6% after it announced weak 2010 outlook.  Chemical maker DuPont (NYSE:DD) and UnitedHealth Group Inc (NYSE:UNH) reported better-than-expected numbers, helped by cost-cutting measures.  However, DuPont (NYSE:DD) shares fell 2.2% after the company reported lower-than-expected revenue, even as earnings came in above estimates and the firm raised its full-year outlook.

Coca-Cola's (NYSE:KO) shares dropped 1.3% as it reported revenue below estimates, even as earnings were inline with expectations.  The company noted, "We expect the consumer to continue facing economic uncertainties into 2010 and for consumer sentiment to recover slowly." 

Interestingly, the market’s measure of volatility, the CBOE Vix, continued its southward move, falling 2.75% to 20.90. All ten S&P500 sectors ended in the red, led by declines in utilities (-1.2%), health care (-1.1%), and basic materials (-1.0%).  Technology stocks showed some strength and eased 0.03%.

Oil prices rose to an intraday high of $80.05 yesterday, the highest level in a year, before retreating a little and ending the session off 52 cents at $79.09.  The drop came amid concerns that the world's largest oil consumer might face a weaker-than-expected recovery. Moreover, OPEC Secretary General El-Badri noted that prices above $80 could hinder economic growth.  El-Badri said he does not expect prices above $100 in the near future due to what he called "no shortage of oil supply."

Today's markets will see earnings from big names including Boeing (NYSE:BA), Eli Lilly (NYSE:LLY), Freeport-McMoRan (NYSE: FCX), Morgan Stanley (NYSE:MS), US Bancorp (NYSE:USB) and Wells Fargo (NYSE:WFC) before the market opens.

The Shanghai Composite Index, which had declined nearly 3% on Friday, plunged 6.7% to 2,697.  Hong Kong's Hang Seng retreated 1.9%. In Japan, the Nikkei 225 stock average, which was up 200 points earlier in the session, fell 41.61 points, or 0.4%, to 10,492.53.  In Yesterday’s landslide victory, the Democratic Party of Japan came to power ending an almost half-a-century rule by the Liberal Democratic Party.  The yen strengthened, helped by the election results.

This morning’s U.S. stock futures show Wall Street is headed for a lower opening.  Dow Jones industrial average futures fell 59, or 0.6%, to 9,477. Standard & Poor's 500 index futures fell 5.70, or 0.6%, to 1,021.70, while Nasdaq 100 index futures fell 11, or 0.7%, to 1,631.50. 

On Friday, U.S. stocks closed mostly lower after a report showing a drop in consumer confidence offset a rally in technology stocks that was fueled by better-than-expected results from Intel (NASDAQ:INTC) and Dell (NASDAQ:DELL).  Also, Apple (NASDAQ:AAPL) announced that it entered into a deal with China Unicom to launch the iPhone in the country.  The rally in tech shares was also helped by signs of a bottoming in the personal computer market after Intel (NASDAQ:INTC) raised its third quarter sales forecast to at least $8.8 billion from its prior forecast of $8.1 billion.  The firm also raised its outlook on gross margin expectations.

The Dow Jones industrial average lost 36 points, or 0.4%. The S&P 500 index retreated 2 points or 0.2%. The Nasdaq composite added 1 point, or 0.1% and rose to its fresh 2009 high, closing at the highest point since October 1.  Trading was light as most traders remained out of the market due to the summer vacations.

Among the S&P500 industry groups, financials led the gainers rising 1.2% during the week; consumer services shares rose 1.2%, followed by technology shares (+0.8%), industrials (+0.1%), and telecommunication stocks (+0.1%).  The week saw financial stocks recording huge gains, helped by advances in AIG (NYSE:AIG), Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE).

Among the week's losers, basic material and consumer goods shares fell 0.8%; utilities declined 0.7%; oil and gas shares dropped 0.3%, and health care issues retreated 0.2%. 

Gains in retail stocks helped shares of consumer services companies record some gains.  Luxury jeweler Tiffany (NYSE:TIF) reported better-than-expected earnings for the quarter, and also raised its full-year guidance. Housing shares showed some strength, helped by a report on new home sales, which revealed a more-than-expected, 9.6% advance in July.

The benchmark S&P 500 index closed up 1% at 989.67. The Dow Jones Industrial Average added 0.9% to 9,217.94 and the Nasdaq Composite index gained 1.3% to 1,955.92.  About four stocks advanced for every one that declined.  Volume was light with only 991 million shares exchanging hands.  With investors back among equities, Treasuries declined, as the 2-year fell 1/32 and its yield rose to 1.028%, and the price of the 10-year eased 12/32 in price and its yield increased to 3.517%. The measure of market volatility, the CBOE Vix, reversed Tuesday's near-15% jump, retreating 6.1% to 26.18.

With no clear sings of a near-future rebound, and a shaky U.S. consumer continuing to hold dollars, investors appear nervous about the next leg of a rally that many feel has gone too far too fast.  This morning’s U.S. stock futures indicate shares are set to fall at the opening.  Technology stocks are expected to remain under pressure following last night’s cautious projections from Hewlett-Packard (NYSE:HPQ).    

On Tuesday, financial, industrial and technology stocks showed strength.  Apple (NASDAQ:AAPL) rose 2.8%.  Among financial issues, Bank of America (NYSE:BAC) added 2.1%, while JPMorgan Chase (NYSE:JPM) rose 2.4%.  Key stocks yesterday fueled stock market gains.  The retail sector got a boost as Target (NYSE:TGT) reported better-than-expected results, helped by cost-cutting measures and lower inventories.  Home Depot (NYSE:HD) also beat expectations due to its lowered costs, and also raised its full-year guidance.

A number of shares also benefited from analyst upgrades, including American Express (NYSE:AXP), which was the leading gainer on the DJIA with its 4.3% advance.  The firm received a KBW upgrade to "outperform", citing "improving trends in credit."  Goldman Sachs (NYSE:GS) raised its rating of HSBC (NYSE:HBC) to "buy," noting its loan loss provisions may decline.  Broadpoint AmTech raised Microsoft (NASDAQ:MSFT) to "buy."

Gains were broad-based with nine of the ten S&P500 industry sectors recording gains.  Leading the gainers were basic materials (+1.8%), financials (+1.7%), industrials and technology shares (+1.5%) and oil and gas (+1.0%).  Only health care, a defensive sector, eased with a modest, 0.1% drop.

Meanwhile, Warren Buffett warned in a New York Times article that "Enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects."

Among the corporate results, Deere (NYSE:DE) and BJ Wholesale (NYSE:BJ) have reported their earnings. Limited (NYSE:LTD), Network Appliance (NASDAQ:NTAP), and Petsmart (NASDAQ:PETM) are also scheduled to report.

The Dow Jones industrial average retreated 32 points, or 0.3%. The S&P 500 index fell 3 points, or 0.3%. The Nasdaq dipped 8 points, or 0.4%. On the New York Stock Exchange, 1.09 billion shares exchanged hands and losers were ahead of winners by a narrow margin.

The two-day Fed meet that begins today is expected to keep interest rates near close to zero.  However, Bernanke and Co’s assessment of how the economy is faring could be decisive and therefore its moves would be closely watched. 

Seven of the ten S&P500 industry groups ended in the red, led by declines in basic material shares (-1.7%), industrials (-0.9%), financials (-0.8%), and technology stocks (-0.6%).  Health care (+0.7%) and utilities (+0.3%) showed strength as investors snapped up defensive plays.  Material stocks declined as the US dollar gained against a basket of currencies.  Basic material shares fell due to a decline in commodities.  Alcoa (NYSE:AA) shares retreated 2.4% and Freeport-McMoRan Copper & Gold (NYSE:FCX) dropped 1.6%.  Retailers also headed lower in the face of upcoming earnings reports by the majors, including Abercrombie & Fitch (NYSE:ANF), JC Penney (NYSE:JCP), Macy's (NYSE:M), and Nordstrom (NYSE:JWN). However, yesterday McDonald's (NYSE:MCD) reported a stronger-than-expected 4.3% rise in July same-store sales, reflecting its appeal to the value-conscious consumer.

Analysts’ adjustments also reflected on some stocks yesterday.  Eli Lilly (NYSE:LLY) dropped 3% after Goldman Sachs (NYSE:GS) downgraded the stock to "sell" from "neutral" and added the company to its Conviction Sell list, citing its risk at having the industry's largest "patent cliff." Merck (NYSE:MRK), however, rose 1.7% after being reinstated with a "buy" rating at Goldman Sachs (NYSE:GS).   Merck was also added to Goldman Sachs’ (NYSE:GS) American Conviction buy list on its current valuation and product pipeline.  Best Buy (NYSE:BBY) fell 5.3% after Goldman Sachs (NYSE:GS) downgraded the stock to "neutral." Research in Motion (NASDAQ:RIMM) shares plunged 4.9% as the possibility of an iPhone launch at Verizon (NYSE:VZ) led analysts at UBS (NYSE:UBS) to downgrade the shares from "buy" to "neutral."  UBS (NYSE:UBS) lowered its rating on Yum Brands (NYSE:YUM) to "neutral" from “buy" on concerns about "sluggish" sales.

Tuesday will also see the first of the $75 billion in Treasury auctions scheduled for the week. $37 billion in 3-years is slated for today, with $23 billion scheduled tomorrow and $15 billion on Thursday. The sales are not expected to find a lack of buyers.

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 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.

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).

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.

The Dow Jones industrial average closed at its lowest level since April 28, plunging 161 points, or 1.9%, to close at 8,163.60.  Among DJIA components, only four managed to register gains yesterday.  The S&P 500 index dropped below its 200-day moving average, losing 18 points or 2%, to close at its lowest point since May 1.  The Nasdaq declined 41 points, or 2.3%, to close at 1,746.17, its lowest close since May 27.  Declining shares outran advancing issues on the NYSE by a four-to-one margin as trading remained seasonally light.

All ten industry groups on the S&P 500 ended lower, with only defensive areas of consumer goods and healthcare recording declines of less than 2%.  Oil and gas issues fell 2.6% and technology stocks declined 2.5% as a number of ratings upgrades were ignored by traders. Industrials led the decliners with a 3.2% fall on concerns that the recent rally has gone ahead of any economic recovery. 

Alcoa (NYSE:AA), which reports its earnings after today’s close, tried to brush aside analyst worries, advising it was optimistic about its sales, as the Chinese economy and US automotive industry begin to recover. Barclays (NYSE:BCS) raised its price targets on Exxon Mobil (NYSE:XOM) and Murphy Oil (NYSE:MUR). Furthermore, traders will look toward this week's US and the International Energy Agency updates on demand forecasts, looking for indications of stabilization in their downward revisions.

According to Thomson Reuters (NYSE:TRI), analysts have lowered their second quarter earnings expectations to a 35.5% decline, inline with first quarter results.  Basic material shares are expected to register a 79% earnings decline, versus a year ago, while energy companies are expected to report a 65% slide and financials a 53% drop.

Bank of America/Merrill (NYSE:BAC) also raised its ratings on a number of semiconductor shares, including Intel (NASDAQ:INTC), noting recent macro trends suggest a "definitive turn in end demand." But Gartner Inc predicted a 6% fall-off in information technology this year. Financial stocks, however, are expected to face turbulence as a cautious Deutsche Bank (NYSE:DB) report estimates credit pressures likely to result in losses at ten of the sixteen banks covered.  The report also estimates losses for the second half of 2009 and much of 2010.  KeyCorp (NYSE:KEY), Marshall and Ilsley (NYSE:MI), SunTrust (NYSE:STI) and Zion Bancorp (NASDAQ:ZION) may show the weakest results.  However, Wells Fargo (NYSE:WFC) is expected to benefit from strength in its mortgage and trading operations; Meanwhile, KBW upgraded KeyCorp (NYSE:KEY) shares noting the bank has now exceeded Treasury requirements following its capital raising.

Today's calendar covers a G8 summit without Chinese President Hu Jintao who has rushed back home to attend to the Xinjiang crisis. Other items include the weekly MBA mortgage applications post, a 10.9% weekly gain, EIA Petroleum statistics, and consumer credit.

All ten industry groups in the S&P 500 suffered losses Thursday after the U.S. Labor Department reported an accelerated pace of job declines and unemployment rate jumped to 9.5%, highest in 25 years; nevertheless, it was below expectations of 9.6%.  The report said US employers cut 467,000 jobs from their payrolls in June.  According to one estimate, almost 6.5 million jobs have been lost since the recession began in December 2007.

American Express (NYSE:AEP) fell 6.3% to $22.27 and Caterpillar (NYSE:CAT) plunged 8.2% to $31.74.  Alcoa (NYSE:AA), which reports its earnings this week, lost 8.4% to $9.86.  Crude oil's decline to less than $67 per barrel hurt energy stocks. Exxon Mobil Corp. (NYSE:XOM) eased almost 3% to $68.49, National Oilwell Varco (NYSE:NOV) declined 6.8% to $30.84 and Hess (NYSE:HES) plunged 8.5% to $49.65.  Losses were broad based with energy, industrials, financials, technology and consumer-oriented shares bearing the brunt of the sell off. Among technology stocks, IBM (NYSE:IBM) was the leading decliner among Dow components, declining 3% to $101.73; Apple (NASDAQ:AAPL) eased 2% to $140.02.  Elan Corp. (NYSE:ELN) jumped 8.6% to close at $7.60, after Johnson & Johnson (NYSE:JNJ) said it agreed to pay $1 billion for an 18.4% stake in the company.

The earnings season begins this week with Alcoa (NYSE:AA) reporting its results on Wednesday.  Analysts expect a 34% earnings decline this quarter with all ten industry groups expected to post lower results.  The attention, nevertheless, will also be on any talks of sanctions on Iran, North Korean aggression and Afghanistan elections.

Stocks touched multi-month highs during the quarter, with the S&P surging 40% after plunging to 12-year lows on March 9.  The period from mid-March to mid-June saw the Dow average shooting up 34% on hopes that the US economy was coming out of a recession.  However, rising yields, worries of inflation and dismal economic numbers during the past two weeks failed to provide further boost to sentiments on the Street and the rally fizzled out.  Nevertheless, fears of a complete failure of the financial system were shrugged off by investors and many analysts believe stocks are on a more solid ground than they were before.  Tech-laden Nasdaq was by far the best performer, recording its fourth straight monthly gain.

On Tuesday, the Dow Jones Industrial Average fell 82.38 points, or 1%, to 8,447.00; the S&P 500 declined 7.90 points, or 0.9%, to 919.33, and the Nasdaq slid 9.02 points, or 0.5%, to 1,835.04.  On the New York Stock Exchange, declining issues beat advancing stocks three to two. 

The market's climb over the past quarter was led by a 30% jump among financial shares, 25% among basic material issues, 21% among technology stocks, and 21% among the industrials.  After plunging to 17-year lows in early March, financials have staged a spectacular comeback surging 97% amid hopes that the worst of the banking crisis is over. 

On Tuesday, the June Consumer Confidence index from the Conference Board, a private research group, declined to 49.3, from a revised 54.8 in May and was well below projections off 55.3.  After the Conference Board reported the figures, Caterpillar Inc. (NYSE:CAT) dropped 4.9% to $33.04; Expedia Inc. (NASDAQ:EXPE) lost 5.1% to $15.11 and Starbucks Corp. (NASDAQ:SBUX) declined 5.1% to $13.89.  All ten industry groups on the S&P 500 recorded declines, even as a home price gauge showed a lessening rate of decline and manufacturing barometer which indicated June's contraction was less than the prior month's and better than projected.       

Among Fed speakers, Evans speaks on the credit crunch at 11:15 AM ET today, following yesterday's remarks by Fed's Bullard, who noted, "I think deflation risks are abating," and Hoenig, tackling the question of "too big to fail," who noted "It will not be realistic for any authority in any regulatory structure to oversee a system where incentives remain to take on excessive risk." Janet Yellen suggested the Fed could hold interest rates near zero for the next several years, advising, "I expect that we will turn the growth corner sometime later this year, but I am not optimistic that the economy will spring back to normal anytime soon," adding further that unemployment will "remain painfully high for several more years."

Although Fed noted that the economic contraction is slowing, its decision to maintain the status quo was widely expected and unanimous.  The Fed also sounded a cautious tone, noting the economy "likely to remain weak for a time," as the consumer remains constrained and employment weak. Nevertheless, at the end of the two-day meeting in Washington, no plans for additional quantitative easing were announced.  At the same time, the central bank reiterated that it is likely to keep the interest rates at low levels for an extended period. 

Among S&P sector grouping, technology stocks led the gainers with a 1.4% rise, after Apple Inc. (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) advanced.  Oracle (NASDAQ:ORCL) jumped 7% to $21.26 after reporting better-than-expected results.  Legg Mason (NYSE:LM) jumped 11% and was the leading gainer on the S&P 500 after media reports said billionaire Nelson Peltz bough a stake in the company and would be looking for a breakup or sale.  On the downside, Supervalu Inc. (NYSE:SVU) led the decliners on the S&P 500 after it said first quarter earnings will be "substantially below" Street estimates.

Meanwhile, data continued to suggest that recession may be ending.  Durable goods orders unexpectedly rose for the second month in a row, up 1.8% in May, and up 1.1% excluding transportation. Estimates were for a 0.9% decline in total orders, and a 0.5% drop excluding transportation. Of greatest note, nondefense capital orders jumped 4.8%, rallying from the prior two months' falls of 2.9% in April and 1.4% in March.

Thursday sees Fed Chairman Ben Bernanke testifying before a House of Representatives Committee regarding Bank of America's (NYSE:BAC) acquisition of Merrill.  Companies reporting their results include ConAgra (NYSE:CAG), McCormick (NYSE:MKC), Micron Tech (NYSE:MU) and Lennar (NYSE:LEN).

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.

Pre-market futures suggest a flat opening as traders look for concrete signs of an economic recovery, amid fears of increased government interventions and a crushed economic rebound.

Commodities and financial shares led the decliners yesterday, but healthcare stocks rose after Democratic leaders began working on a healthcare overhaul that would make it mandatory for all Americans to have health insurance coverage.  Shares traded in a narrow range, swinging between gains and losses.  Among S&P industry groups, financials led the declining issues with a 2.2% fall.  Oil and basic materials both recorded a 1.6% fall.  Stocks of consumer services companies gained 1.1%, with drug retailers rising 2.3%.

Among financial sector issues, Bank of America (NYSE:BAC) fell 3.4%, Citigroup (NYSE:C) plunged 5.2% and Wells Fargo (NYSE:WFC) recording a 5.4% decline.  JP Morgan (NYSE:JPM), Goldman Sachs (NYSE:GS), State Street (NYSE:STT) and Morgan Stanley (NYSE:MS) repaid funds borrowed under the government's TARP program.  The Obama Administration's proposed plan for a major financial system overhaul to counter the "cascade of mistakes and missed opportunities of the past decade," however, could not boost sentiments, even as $68 billion of TARP funds were repaid on Wednesday.  S&P, on its part, cited less favorable conditions industry-wide and greater volatility in financial markets for its decision to lower ratings on banks. Banks mentioned included Regions Financial (NYSE:RF), Wells Fargo (NYSE:WFC), Capitol One Financial (NYSE:COF) and PNC (NYSE:PNC).

Technology stocks, nevertheless, showed some resistance, riding high on a number of analyst upgrades and a better-than-expected forecast from Adobe Systems (NASDAQ:ADBE). Merrill/BoA upended its rating on Texas Instruments (NYSE:TXN) from "underperform" to its US I Focus List with a $27 target, noting its expected margin expansion even as the firm faces only modest cyclical recovery prospects. Qualcomm (NASDAQ:QCOM) rose after Goldman Sachs (NYSE:GS) added the firm to its conviction buy list, citing a raised global handset forecast along with an undervalued royalty business.

Chevron (NYSE:CVX) shares declined 1.5% after weekly crude stockpiles showed a larger-than-expected decline of 3.87 million barrels.

Among corporate releases slated for today are JM Smucker (NYSE:SJM) and Discover Financial Services (NYSE:DFS); Research in Motion (NASDAQ:RIMM) is expected to report results after today's close. Treasury Secretary Geithner is scheduled to testify in a House committee hearing on financial regulation. Jefferies' Healthcare Conference continues for its third and final session.

Yesterday, Wall Street responded with a yawn to Obama Administration's announcement that 10 of the largest banks could repay $68 billion of government bailout cash.  Although Treasury Secretary Geithner, appearing before the Senate Appropriations Committee, noted the repayment of the bailout money was a sign of "financial repair," stocks swung back and forth in a narrow range, signaling the much-expected announcement from the Treasury packed few surprises.  Technology stocks, buoyed by Texas Instruments' (NYSE:TXN) better-than-expected earnings and sales outlook, pushed Nasdaq higher while the Dow Jones Industrial Average and broad based S&P 500 index ended the day mixed.  The Tech-heavy Nasdaq rose 17.73 points, or 0.96%, to close at 1860.13.  The DJIA slipped about 0.1% to close at 8,763.06.  The S&P added 0.4% to close at 942.43. 

Some big financial institutions have been eager to escape increased federal involvement and the restrictions that come with being part of the Troubled Asset Relief Program.  Although the Treasury did not name the banks cleared to pay back the TARP funds, the ten institutions quickly confirmed they have been allowed to exit the government's financial assistance program.  Morgan Stanley (NYSE:MS), American Express (NYSE:AXP), JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS), Bank of New York Mellon (NYSE:BK), BB&T (NYSE:BBT), Capital One (NYSE:COF), Northern Trust (NASDAQ:NTRS), State Street (NYSE:STT) and US Bancorp (NYSE:USB) were cleared to pay back the rescue funds.  Commenting on the move, JP Morgan Chase & Co (NYSE:JPM) CEO Jamie Dimon noted, "Paying back TARP at this time is the right thing for JPMorgan Chase, and it's the right thing for our country."  Financial sector shares edged up 0.4%, with American Express (NYSE:AXP) topping the list of gainers on the DJIA with a 5% jump, as traders were relieved that the industry's rising rates of card delinquencies and the potential for increased attendant loan losses had not prevented government approval of its repayments.

Following Texas Instruments' (NYSE:TXN) improved guidance, semiconductor shares rallied with Advanced Micro Devices (NYSE:AMD) closing up 3.1%, Intel (NASDAQ:INTC) rising 3.4%, and National Semiconductor (NYSE:NSM) closing up 4.4%. According to a Bank of America (NYSE:BAC) analyst note, Microchip Tech (NASDAQ:MCHP) has been witnessing improved China orders.  BofA raised its price target on the company to $23.

Crude prices went beyond $70 per barrel on hopes a stronger economy will lift demand.  Dollar prices continued to remain under pressure.  Although concerns linger over the state of the world economy, commodities have recorded sharp gains recently as investors have increasingly turned towards crude to hedge against a weak dollar.  Yesterday's $35 billion auction of 3-year Treasuries met with strong demand, however, as a yield of 1.96% topped expectations, and the bid-to-cover ratio equaled 2.8%. Today's calendar is for $19 billion in 10-year notes, with $11 billion 30-years slated for tomorrow.  However, investors remain concerned that rising short-term interest rates will squeeze banking industry's net interest margins, in a sector that has already seen a 73% price run-up over the past three months.

Meanwhile, late Tuesday, the Supreme Court rejected an appeal from three Indiana state funds, consumer groups and others, clearing the way for the sale of most of Chrysler's assets to Italy's Fiat Group SpA. 

Afternoon sentiment will reflect release of the Fed's latest take on regional economic conditions, revealed in its Beige Book at 2:00 AM ET. The report is likely to recount the well-aired areas of economic weakness, namely, depressed housing markets, soft consumer demand, deteriorating employment opportunities, and downward price pressures. Indications of an economic recovery's "green shoots" of growth may help boost sentiment.

Among S&P industry groups, financials were the leading gainers, rising 3.4% as traders took reports of a failed Latvian bond auction in their stride.  A Bernstein upgrade of Goldman Sachs (NYSE:GS) to "outperform" also helped financials and the effects of the failed bond auction were nowhere to be seen.  Bernstein suggested Goldman's capital strength will allow the firm to consolidate its position further in fixed income, currency and commodity markets. Fifth Third Bancorp (NASDAQ:FITB), which has been asked by regulators to raise $1.1 billion as part of the stress tests, reported sale of $1 billion common shares and said it is on track to raise the required amount. Keycorp (NYSE:KEY) jumped 20% after RBC Capital Markets cited the stock a "top pick." Today's reports suggesting the FDIC is pushing for an executive shuffle at Citigroup (NYSE:C) may imperil CEO Pandit's tenure, and provide another reason for firms to shun government funds and rush to pay back TARP monies.

Basic material shares continued their advance, rising 2.1%, with Alcoa (NYSE:AA), up 6.2%, leading the list of gainers on the DJIA.  Improved demand scenario, especially from China, helped the advance in Alcoa shares. Oil and gas sector shares gained 2.1%. Among stocks from the sector, Chevron (NYSE:XOM) and Exxon Mobil (NYSE:CVX) led the gainers as crude prices surged 4.1% to $68.81, a seven-month closing high. Bullish analysts at Goldman Sachs (NYSE:GS) upped their forecasts for crude to $85 per barrel in 2009 and $95 in 2010.

Technology stocks advanced 1.5%, helped by prospects for new product launches and analyst upgrades. Apple (NASDAQ:AAPL) rose after the iPhone-maker's profit and share-price target was increased by Oppenheimer. Some reports suggested CEO Steve Jobs was expected to return from his medical leave by month's end.  Citi (NYSE:C) raised Google (NASDAQ:GOOG) price target to $580 from $450, on expectations that second quarter results will meet estimates and the company will report better results next year. Advanced Micro Devices (NYSE:AMD) said the company expects fourth quarter sales to improve from a year ago, helped by better economic conditions. Intel (NASDAQ:INTC) announced plans to purchase Wind River Systems (NASDAQ:WIND) for an all-cash deal valued at $884 million.

Dismal retail sales numbers in May, with an estimated 75% of retailers falling short of targets, posting an estimated 8.6% average drop in same-store-sales, however, could not check the rally. Costco (NASDAQ:COST) reported a 7% drop, versus estimates of a 6.4% decline; Target (NYSE:TGT) comparable-sales fell 6.1% versus expectations of a 4.3% drop; Saks (NYSE:SKS) disappointed with a 26.6% sales fall versus an anticipated 14% drop; Macy's (NYSE:M), however, was slightly ahead of expectations with its 9.1% decline, less than the 9.3% anticipated.

Following the overseas gains, US stock futures suggest Wall Street is headed for a higher open.  Dow Jones industrial average futures rose 1.2% to 8,586. Standard & Poor's 500 index futures jumped 1.4% to 930.50, while Nasdaq 100 index futures gained 1.1% to 1,451.50.       

On Friday, a late-session rally pushed U.S. stocks to their biggest three-month run since 2007, as commodities recorded their highest monthly advance since 2007 and energy stocks rose, helped by a spike in oil prices.  The S&P 500 index, which recorded its steepest weekly loss since March during the prior week, rose 3.6% during the holiday-shortened week.  Sustained expectations that the economy is turning a corner have pushed global benchmarks higher and resulted in increased buying activity.  The Dow Jones Industrial Average jumped 223.01 points, 2.7% to 8500.33, capping an upbeat week for Wall Street.  Since hitting their 12-year lows in early March the indices have jumped nearly 30% on the DJIA, 36% on the S&P, and almost 40% on the NASDAQ.

All ten S&P industry groups recorded gains on Friday.  Since the beginning of the year, basic material shares have recorded the sharpest gains, up 23.8%, followed by a 20.5% jump in technology stocks. The Reuters/Jefferies CRB Index of 19 raw materials increased over 14% in May for its biggest monthly rise in 35 years.  U.S. Steel Corp. (NYSE:X) jumped 16% to $34.08 and Freeport-McMoRan Copper & Gold Inc., (NYSE:FCX) surged 13% to $54.43., leading gains among raw- materials companies.  Oil prices climbed above $66 to a six-month high.  Year-to-date, five sectors remain in negative territory, including: utilities, off 8.4%, telecom, down 6.7%, financials, off 4.1%, and industrials and health care, down 2.1%.

Shares of General Motors (NYSE:GM) plunged 48% to $0.75, the lowest since great depression, as the automaker appeared set to file for Chapter 11 bankruptcy protection. Some media reports suggested the company will sell most of its assets to a new entity. Late Sunday, a federal bankruptcy court cleared Chrysler to come out of bankruptcy and sell most of its assets to Italian car maker Fiat. 

Treasury Secretary Geithner travels to China for two-day talks with Chinese leaders, even as the weakness in US dollar keeps the focus on US economic health relative to its global partners. Traders, nevertheless, are expected to remain glued to developments on that front. Geithner, on his part, has tried to remain optimistic, noting, "The global recession seems to be losing some force; and "The financial system is starting to heal." Last week's OPEC meeting also revealed its members optimistic on the outlook for the economy and crude prices with Saudi oil minister Naimi asserted the world economy can withstand $75-$80 per barrel oil.

However, an increased appetite for risk has sent commodity prices higher, heightening fears of inflation. According to Barclay Capital's (NYSE:BCS) quarterly FX investor sentiment survey only 17.5% of the 605 central bankers, asset managers, hedge funds and international corporate clients interviewed expect the rally to continue, with six out of ten believing the rally is a bear market trap, and 69% describing a recovery as most likely to prove either u-shaped or w-shaped.

On Tuesday, U.S. stocks shot higher for the first time in five sessions as the Conference Board's consumer confidence index rose sharply in May, refueling hopes that the consumers are getting more optimistic about the economy.  The surprise rise in consumer confidence, which vaulted to 54.9 from 40.8 in April, offset dismal housing news and put investors back on buying track.  Traders, back after a long weekend, bought enthusiastically pushing every industry group on the S&P 500 stock index higher.  Nevertheless, declining home prices served a reminder that the economic outlook is yet to show signs of stabilization.  The consumer confidence index jumped to an eight-month high and marked its third rise in as many months. Volume on the NYSE was light as only 1.4 billion shares exchanged hands and advancing shares outpaced declining issues by a five to one margin.

The broad-based rally saw 28 of the 30 Dow components ending the day higher, with JP Morgan Chase (NYSE:JPM) leading the list of gainers, followed by a 5% rise in American Express (NYSE:AXP) shares.   Technology-focused Nasdaq surged 3.4%, helped by gains in computer manufacturers, Internet firms and search engines.  Apple (NASDAQ:AAPL) surged 6.7% after it was upgraded by Morgan Stanley (NYSE:MS) to "overweight."  Morgan Stanley (NYSE:MS) said analysts are underestimating demand for iPhones.  Qualcomm Inc. (NASDAQ:QCOM) jumped 4.8% to $43.29, after Barclays Plc raised its 2010 earnings estimates on the company.  Energy stocks also advanced as crude prices jumped to a six-month high, fueled by comments from Saudi Arabian Oil Minister Ali al-Naimi, who expects oil to hit as much as $75 per barrel between the third and fourth quarter on higher China consumption.  Exxon Mobil Corp. (NYSE:XOM) added 1.4% to $69.81.  Reuters expects crude inventory levels fell 1.1 million barrels over the past week, while gasoline levels dropped 1.8 million barrels. Tomorrow's OPEC meeting is generally expected to result in members maintaining current production levels.

Gains on the S&P 500 were led by financials and consumer-related stocks.  Financials were the leading gainers, up 4.1%.  Technology stocks rose 3.3%.  Industrials gained 3.3%.  Defensive areas of health care and consumer goods rose 1.6% and 1.2%, respectively.

J.C. Penny Co. (NYSE:JCP) rose 6.5% to $26.76 and Best Buy (NYSE:BBY) added 5.3% to $37.05.  Among financial shares, Wells Fargo (NYSE:WFC) added 5.5% to $25.65 and PNC Financial (NYSE:PNC) rose 5% to $43.25.  Restaurant chains and home builders also advanced.  Darden Restaurants Inc. (NYSE:DRI) rose 7.9% to $35.64. CKE Restaurants (NYSE:CKR) jumped 13.8% to $8.80.  Home builder KB Home (NYSE:KBH) rose 5.9% to $15.50, and DR Horton Inc. (NYSE:DHI) rose 5.1% to $9.47.

One of the bones of contentions of the past week had been the overhanging Treasury auctions scheduled for this week amid a ballooning budget deficit necessitating further sales to meet the $2 trillion in extra debt needs expected this year.  However, the record-tying $40 billion in 2-years auctioned yesterday met with bids 2.94 times the offered amount and the 2-year note sale received strong response, with $117.5 billion in bids coming in for $40 billion in debt.  The US dollar edged up 0.1% against a basket of currencies.

Today's data includes the expected turndown by General Motors' (NYSE:GM) bondholders of its offer to convert their holdings into company shares, making bankruptcy the foregone conclusion it has been for a while.

Financials were once again the leading gainers, with a 3.5% advance. JP Morgan (NYSE:JPM) shares jumped 4.4%, Bank of America (NYSE:BAC) added 2.7%, and Citigroup (NYSE:C) was up 4.1%. Wells Fargo (NYSE:WFC), fresh from its $8.6 billion stock sale, jumped 6.2% after Moody's (NYSE:MCO) raised its ratings on the company's preferred shares, saying there is an improved likelihood of maintaining the dividend payout. The rating agency put Bank of America (NYSE:BAC) on review for an upgrade on consideration of its financial strength. Fortress Investment Group (NYSE:FIG), however, lost 5.3% after the company said an offering of its 40 million shares was priced at $5 each.  The 3-month LIBOR witnessed its biggest drop in three months, declining to a record low of 0.85%.

On Thursday, basic material shares jumped 2.2% and technology stocks were up 1.5%.  Among material stocks, Dow Chemical (NYSE:DOW) surged 6.0%, AK Steel (NYSE:AKS) was up 2.9% and Newmont Mining (NYSE:NEM) added 1.7%.  CA's (NYSE:CA) better-than-expected results helped technology firms register a 1.5% advance.  Reflecting improved Chinese demand for commodities, such as iron ore, coal and grains, the Baltic Dry Index jumped to its highest level this year.

Consumer spending nevertheless remained a core area of interest as several better-than-expected returns boosted sentiment yesterday, after Wednesday's 0.4% drop in April retail sales disappointed investors.  Although Wal-Mart (NYSE:WMT) reported inline earnings, its revenues came in below expectations.  Whole Foods (NASDAQ:WFMI) shares, however, added 2.8% after the company's cost controls measures helped it post better-than-expected earnings. Nike (NYSE:NKE) announced plans to lay off 1,750 jobs.  Nordstrom (NYSE:JWN), up 3.4% Thursday, posted better-than-expected first quarter earnings on inline revenues, and raised its full-year guidance.

Today's consumer price report is expected to have shown no change in April, with a 0.1% increase in core prices. NY Empire Manufacturing data is expected to come in at a negative 15.00.  Industrial production is expected to show a 0.6% m/m drop, with capacity utilization coming in at 68.9% from 69.3% prior.

The Commerce Department reported yesterday that U.S. retail sales declined 0.4% in April.  Economists had expected the number to remain unchanged.  Purchases at U.S. stores had tumbled 1.3% in March.

On Wednesday, U.S. stocks declined with the New York Stock Exchange witnessing the broadest sell-off in three weeks.  The Dow Jones Industrial Average shed 184.22 points, or 2.2%, to 8,284.89. The S&P 500 Index declined for the third straight session, wiping off most of the gains it made last week.  The benchmark declined 2.7% to 883.92, and has lost 4.9% since the beginning of this week.  The tech-heavy Nasdaq declined 3%, or 51.73 points, at 1,664.19. Shares of industrial producers and consumer-related businesses bore the brunt. On the NYSE, volume was heavy as 1.76 billion shares exchanged hands and losing stocks outpaced advancing issues by a sixteen-to-one margin.

Treasury prices rallied as the unexpected decline in U.S. retail sales pushed investors towards risk aversion.  Dollar rose 0.7% against a basket of currencies.  Copper prices fell 3.2%; The DJ-UBS commodity index was off 1.2%.

Premarket futures are almost flat as inline earnings from Wal-Mart (NYSE:WMT) provided little boost to sentiments. According to a Financial Times article by a former US comptroller general, David Walker, the US' AAA debt rating is imperiled by the government's current excessive spending levels.

Optimism on the Street related to yesterday's retail sales was short lived as analysts failed to adequately assess the one-time, positive impact of January and February rebates from Social Security, which had helped revive consumer spending early this year.  Excluding autos, sales declined 0.5%.  As investors turned to cut positions, retail shares suffered, with Saks (NYSE:SKS) dropping 11.9%, Macy's (NYSE:M) plunging 6.7%, Target (NYSE:TGT) declining 4.8%, Costco (NASDAQ:COST) losing 2.3%, and Wal-Mart (NYSE:WMT) declining 1.2%. Office Depot (NYSE:ODP) shares plunged 15% after Moody's (NYSE:MCO) lowered the firm's debt rating.  Citigroup (NYSE:C) raised Home Depot (NYSE:HD) to "buy" from "hold," saying it expects the company to exceed this year's estimates; although fellow retailers declined, the shares bucked the trend with a 0.8% gain.

Basic materials led the declining sectors, off 5.8%, after weak demand assumptions from any economic recovery in the near-term hurt prospects. Alcoa (NYSE:AA) shares declined 8.8% on reports China may have restarted up to 1.4 million metric tons of capacity in April. Industrial shares fell 4.2%.  Caterpillar (NYSE:CAT) shares declined 5.2%, General Electric (NYSE:GE) lost 5.6%, 3M (NYSE:MMM) fell 4.4%, and United Technologies (NYSE:UTX) lost 4.2%.

Financial shares were once again under renewed pressure, falling 5.0%, as investors pondered over the banks' ability to raise fresh capital from private sources. Among DJIA components, Bank of America (NYSE:BAC) plunged 9.5%, Citigroup (NYSE:C) lost 6.8%, and American Express (NYSE:AXP) declined 5.3%. BB&T (NYSE:BBT) joined the growing list of banks tapping the market to raise funds, selling 75 million shares at $20 apiece, a discount to Tuesday's close of $22.50.  SunTrust (NYSE:STI) declined 6.9%, even as Goldman Sachs (NYSE:GS) upgraded the stock to "neutral" from "sell," citing better-than-expected stress test capital-raising needs.

Technology stocks showed signs of strength.  IBM (NYSE:IBM) said it expects 2009 earnings to be at least $9.20, versus consensus projections of $9.11, and noted it is "ahead of pace" to meet 2010 earnings projections of $10 to $12 per share.

Treasury Secretary Geithner's positive comments of "welcome signs" in the housing markets failed to convince investors as RealtyTrac reported increased foreclosures in April, with one in every 374 US homes receiving notices. Beazer Homes (NYSE:BZH) shares plunged 21.8%, and Hovnanian (NYSE:HOV) declined 12.2%.

Today's economic news covers wholesale prices for April, expected to show prices increased 0.1%. Besides the Wal-Mart (NYSE:WMT) inline post, weekly initial jobless claims are also expected to rate high on sentiment's Richter scale, with traders hoping for a continued diminished pace of claims.

The Dow Jones Industrial Average witnessed its steepest fall in three weeks, shedding 156 points, or 1.8% and the broader S&P 500 index declined 20 points, or 2.1%.  Volume on the NYSE was a moderate 1.49 billion shares.  Sentiment was negative as declining stocks beat advancing issues by a seven-to-three margin.

On Monday, U.S. Bancorp (NYSE:USB), Capital One Financial Corp. (NYSE:COF), KeyCorp (NYSE:KEY), Principal Financial Group Inc. (NYSE:PFG) and BB&T Corp. (NYSE:BBT) announced plans to sell stock. BB&T (NYSE:BBT) also announced plans to reduce its dividend.  Bank of America (NYSE:BAC) had also announced Friday to sell 1.25 billion shares. 

American Express (NYSE:AXP) declined 8.3% to $26.04 and JPMorgan Chase & Co. (NYSE:JPM), which does not need fresh capital infusion, dropped 8% to $35.83.  Goldman Sachs (NYSE:GS), JP Morgan (NYSE:JPM) and American Express (NYSE:AXP) announced plans to repay TARP funds through new share issuances. The firms, though, do not need to address stress-test needs with additional capital cushions.  Capital One (NYSE:COF) declined 14% to $27.10 and U.S. Bancorp (NYSE:USB) lost 9.9% to $18.50.  BB&T (NYSE:BBT) dropped 7.6% to $24.34.

Nevertheless, financial firms were not the only ones needing to raise cash.  Automaker Ford (NYSE:F) announced its intent to offer 300 million common shares in a public offering due to price after today's close.  The company hopes to raise $1.7 billion to $2 billion through the offering.  Anadarko Petroleum (NYSE:APC) also announced plans to sell 30 million new shares while Microsoft (NASDAQ:MSFT), for the first time in its history, sold $3.75 billion in bonds Monday, proceeds from which will be used to buy back its shares. Bank of America (NYSE:BAC) said it will sell its China Construction stake for $7.3 billion.  CEO Lewis also cited "business is really good" at its Merrill Lynch unit, adding the company would like to repay the US government's investment in the firm in "months, not years."

General Motors (NYSE:GM) declined 11% after CEO Fritz Henderson said a bankruptcy filing is probable.  Microsoft Corp. (NASDAQ:MSFT), for the first time in its history, announced plans to sell $3.75 billion of bonds.

Among DJIA's thirty components, only five moved higher yesterday: International Business Machines (NYSE:IBM) rose 1.4%, Hewlett-Packard (NYSE:HPQ) and Wal-Mart (NYSE:WMT) added 1.0% each, Intel (NASDAQ:INTC) edged up 0.5%, and AT&T (NYSE:T) added 0.4%.  Positive comments from German software maker SAP and a ratings upgrade from a Citigroup (NYSE:C) analyst helped technology stocks buck the trend of decliners, with a 0.1% gain.  Citigroup (NYSE:C) upgraded the software and services sector to "overweight" from "market weight," but cut chips and chip equipment stocks to "market weight" from "overweight."

Fed Chairman Bernanke's comments last night at the annual Fed conference were notably optimistic.  Bernanke noted banks are "well ahead" on feathering their capital nests with private sector funding. On the stress tests, he noted, "If it helps reduce uncertainty among investors regarding future losses and capital needs, and thereby improves the banking system's access to private capital, one of the key objectives of the program will have been achieved."  Bernanke noted risks of deflation are "receding," an inflation rate at 1.5-2% is "appropriate," and said he remains "certain" the greenback will remain the world's reserve currency.

March trade balance figures are expected to post at a negative $29.2 billion, up from a negative $26.0 billion prior. The Treasury budget for April is expected to swing from $159.3 billion to a negative $63.0 billion. Among key speeches are the Fed's Rosengren on risk management, and Treasury Secretary Geithner at a Social Security news conference.

Should you be investing in it?

Investors around the world are flocking to the yellow metal. The South African Rand Refinery which manufactures the popular Krugerrand coin, is now operating its plant 7 days a week to keep up with demand for its gold coins. Similarly, the Austrian mint has added weekend production.

In Perth, Australia, the Perth Mint has hired more staff and has doubled its coin production. About 80% of its business is done outside of Australia in North America, Europe and Asia.

The U.S. Mint recently announced it was temporarily suspending all sales of the 24-karat American Buffalo gold coins due to increasing demand as the Mint's inventories were depleted.

A few weeks ago, it also suspended sales of the American Eagle coins, also due to strong demand. American Eagle sales resumed, but only to a select group of designated dealers. The Mint will also resume sales of the Buffalo coins shortly.

But buying coins is different from buying shares in gold mining companies. The price of gold does not always correlate with earnings of mining companies. Stocks of gold mining producers sometimes decline even when gold prices are soaring.

Should You Buy Gold Mining Stocks Now?

The price of gold has been volatile, with big swings in the last two weeks. Gold stocks have also seen big moves up and down. Neither is for the faint of heart.

There are two categories of gold mining stocks: the junior miners and the large miners. The large miners have a longer history of earnings and are usually believed to be less volatile. The junior miners are riskier but that risk can pay off big if gold prices soar.

I did a screen on Research Wizard to find gold mining stocks that were at least a Zacks Rank #3 and had earnings growth.

Barrick Gold (ABX) is one of the world's largest gold producers with 27 mines on five continents. ABX, headquartered in Toronto, is a Zacks #3 Rank stock. It has surprised on estimates 2 out of 4 quarters by an average of 1.45%. Analysts expect earnings growth of 10%.

Newmont Mining (NEM) is also one of the world's largest gold producers with mines on 5 continents. Newmont was founded in 1921 and is headquartered in Denver. The company is a Zacks #3 Rank stock. Analysts expect earnings growth of 14.3%.

Drdgold Limited (DROOY) is a South African medium-sized gold producer with mines in South Africa. Drdgold is a Zacks #1 Rank (Strong Buy) stock. Analysts expect earnings growth of 42.15%.

Gold Stocks Not the Only Bet

Individual gold stocks may be too risky for your investing style. You can invest directly into gold itself through an exchange traded fund, SPDR Gold Shares (GLD), which was launched in 2004. This ETF tracks gold prices as determined by the London PM fix and actually holds gold as a custodian.

Investors flocked to GLD in September, pouring in an additional $4 billion, on top of the $17.4 billion in assets the ETF had at the end of August.

Don't Get Blinded by Gold's Shine

A gold-focused investment may be a way to diversify a portfolio, but that's all it should be: diversification. Don't place all your bets on one sector or asset class. It was that singular emphasis, on real estate and before that on technology stocks, that has tripped up investors in the past.

Gold has shone brightly during dark times before but as quickly as it soared, it also lost its luster.

Look at gold, and gold stocks, for what they are, a safer haven in a time of uncertainty. Invest accordingly.

Additional Ways to Find Gold Stocks

Zacks Custom Screener - This is the place to start to create your own free screens where you can search by sector.

Zacks Equity Research - Find out detailed stock information from Zacks analysts.

Research Wizard - Create your own customized portfolios.

[The author of this article owns shares of SPDR Gold Shares.]
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I realize that there are fears about a global economic slowdown. But, it's not like people are going to stop driving or eating. Furthermore, China and India are going to continue building, if for no other reason than the mere fact that their infrastructure still needs a lot of work.

Unfortunately, many traders are choosing to ignore those realties and sell anything that is even remotely tied to commodities.

Rising earnings estimates? So what.

Attractive valuations? It can get more attractive.

The market is being irrational. However, we need to respond to whatever conditions the market chooses to present. It's one thing to explain why a stock is fundamentally sound and another to sit idly while a stock is dropping quickly.

I don't like high turnover in the Focus List, but I hate big losses even more. In managing the Focus List, we're trying to maintain a good mixture of diversification, longer-term positions and, obviously, winning trades. The current market environment is making it difficult to achieve these goals.

What is particularly frustrating is the lack of leadership. Granted, financials recently showed a resurgence, but look at what price Fannie (FNM) and Freddie (FRE) are trading at now. Then there is Lehman (LEH), which apparently cannot value itself correctly.

If the lack of leadership continues, we'll tighten our stops and increase the turnover in the Focus List. It's not ideal, but the market environment is not ideal either.

Focus List Changes

Bluntly put, our timing for adding Fluor (FLR) and Metalico (MEA) was terrible. We thought both stocks had been beaten up enough when we bought them, but clearly they had further to fall. And they might continue falling because of the anti-commodity sentiment that is prevalent right now.

Fundamentally, both stocks are very sound. Earnings estimates are being revised higher, the valuations are good and business momentum remains positive. It's just that the companies are not getting any love from the markets.

CF Industries (CF) was a tough call and, ultimately, our decision to sell the stock could prove to be wrong. There is a shortage of fertilizer and unless people are going to stop eating or subsidies for ethanol are ended, the shortage will continue. Nonetheless, the most accurate estimate for the third quarter is below the consensus earnings estimate, implying negative upside.

Given the current market environment, I did not want to risk any further downside. CF has been very volatile, however, and a $20 to $40 rebound over the very near-term is not out of the realm of possibilities. That said, there is also the risk that CF could fall considerably lower as well.

At the end of July, Genco Shipping & Trading Limited's (GNK) had approximately 94% of its fleet's available days secured on contracts for the rest of 2008. Additionally, the company had secured 60% for 2009. The company describes these contracts at being at favorable rates.

Nonetheless, brokerage analysts trimmed their forecasts for this year and cut their forecasts for next. GNK and other shippers are also being adversely affected by fears that reduced demand for commodities will sink day rates.

The valuation on ConocoPhillips (COP) is extraordinarily attractive.

However, 3 out of the 10 covering brokerage analysts have recently cut their full year earnings estimates. Crude is dropping, while the crack spreads (an important metric for refiners) remain low.

We will consider repurchasing all of these stocks at a later date as we still like the companies. It's just not the right time to keep them in the Focus List now.

Timely Buys List

Though unusual, there are weeks when no changes to the Timely Buys List are made. Monday was one of them and no email was sent out.

Changes were made on Tuesday because of the deletions we made in the Focus List. I try to avoid making any changes to the Timely Buy List during the middle of the week, but exceptions do occur. This week was one of them.

The Markets

The S&P 500 remains stuck in its trading range. Next week brings Goldman Sachs (GS), a Fed meeting and quadruple witching, though I don't know if those events will provide enough volatility to get us out of the range.

Technology stocks have been notably weak as well. Last week, consulting firm Gartner cut its 2008 forecast for semiconductor sales and threatened to lower its 2009 projections as well.

(I was going to post a chart of the Nasdaq, until I saw what the chart of the Philadelphia Semiconductor Index (aka "the SOX") looked liked. The latter is far more interesting and, hence, is shown below.)

Charles Rotblut, CFA, is the Senior Market Analyst for Zacks.com. He can be reached at crotblut@zacks.com.
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Gloomy news on the employment front led today's market malaise. The number of Americans collecting unemployment benefits climbed to a 5-year high as claims rose 15,000 to 444,000 for the week ending Aug 30. Economists had expected only 420,000 new claims. The August payroll report from the Department of Labor is due out tomorrow morning. Stay tuned.

Even positive news did nothing to spur on bullish sentiment. The Institute for Supply Management index of non-manufacturing businesses actually rose to 50.6 in August. A reading over 50 indicates expansion in the service sector, which is 90% of the economy. But investors ignored this data as it was seen as being influenced by the federal stimulus checks.

Wal-Mart (WMT) was a bright spot in the retail sector as it reported that sales increased 3% in August, above analysts’ estimates, due to price cutting on groceries, back-to-school supplies and consumer electronics.

Oil continued to slide, falling $1.46, or 1.3%, to $107.89, the lowest close since Apr 4. Crude fell as the dollar showed strength for the sixth straight session. The euro fell 1.3% to $1.4319.

Natural gas had a volatile session but managed to gain 6.6 cents to $7.33 per million Btu.

The Focus List

Focus List stocks could not find refuge from Thursday’s market carnage. The portfolio was down 3.66% for the day. Holdings sold off on general market bearishness, and the commodities related stocks took a hit on lower commodities.

The decreases experienced by Central European Distribution Corp. (CEDC) have been perplexing. Though the fundamentals continue to look fantastic, the selling pressure on CEDC has been relentless. Therefore, we are selling the stock after having just added it on May 6.

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