Gains continue Thursday following positive data on the economy. The Dow ($INDU) gained 212.67 points to close the session at 11,715.18. The S&P 500 ($SPX) tacked on 19.02 points to 1,300.68. The Nasdaq ($COMPQ) added 29.18 points to 2,411.64. Volume was moderately higher, but still very light on the session with 956.1 million shares traded on the NYSE and 1.61 billion shares exchanged on the Naz. Market breadth was sharply positive by a 25-to-6 and 21-to-8 margin on the Big Board and Naz respectively.

On Wednesday, gains for stocks ensued following a better than expected durable goods orders report. Thursday’s session followed a similar path, rising on the strong 2^nd quarter GDP data. The first revision to 2^nd quarter GDP was lifted to growth of 3.3 percent, well above the initial figure of 1.9 percent. This also easily topped forecasts for a reading of 2.7 percent. Strength was found in exports and durables consumption. Though the economy still has problems to overcome, talk about a recession in 2008 has subsided. Nonetheless, economists do feel that we will see some slowing in the third and fourth quarters of the year.

Financial stocks got a boost from MBIA (MBI) with the bond insurer seeing its shares rise 34.8 percent to $16.15 on the session. The company announced it would reinsure $184 billion of municipal bonds issued by Financial Guaranty Insurance Co. This news helped show that despite rumors of its demise, MBI is still able to attract business. Competitor Ambac Financial (ABK) also benefited from the news, rising 41.6 percent to $7.42 a share. Fannie Mae (FNM) and Freddie Mac (FRE) continued their gains today up 22.7 percent and 11.2 percent respectively.

Retail stocks were mixed on the session with Sears Holdings (SHLD) up 4.2 percent, Tiffany’s (TIF) up 10.7 percent, but Williams Sonoma (WSM) off 7.7 percent. WSM cut its earnings forecast by a third for the year, leading to declines. However, SHLD shares gained ground despite announcing a 62 percent drop in profits and warning the future earnings would be below expectations. TIF did see strong earnings results with profits nearly doubling and the company raising its outlook. Overall, the S&P Retail Index ($RLX) rose 2.12 percent to 400.43.

After the bell, computer maker Dell (DELL) reported that its profits fell 17 percent in the quarter. Both earnings and margins fell short of expectations and the stock is paying the price in afterhours trading. This could put some pressure on tech stocks Friday, although Dell doesn’t seem to get the attention from traders that it once did.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site

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