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Market indices regain nearly half of Monday’s losses on strength in financials. The Dow ($INDU) added 270.00 points, or 3.31 percent, to close at 8,419.09. The S&P 500 ($SPX) gained 32.60 points, or 3.99 percent, to finish the session at 848.81. The Nasdaq ($COMPQ) tacked on 51.73 points, or 3.70 percent, to 1,449.80. Volume was moderate on the session with 1.61 billion shares traded on the NYSE and 2.10 billion shares exchanging hands on the Naz. Market breadth was positive by a 24-to-6 and 20-to-8 margin on the Big Board and Naz respectively.

Monday’s huge declines came on the heels of disappointing economic news and an official announcement that a recession in the U.S. began in December 2007. This news really took a toll on financial stocks, but this group was able to recoup some of these losses on Tuesday. The Financial Select Sector SPDR (XLF) gained 8.2 percent to close the session at 11.41. However, the XLF lost 17 percent on Monday’s debacle. Bank of America (BAC) and Citigroup (C) both saw solid gains, up 11.8 percent and 11.9 percent respectively. Recent news out of the banking sector has many more jobs getting cut, especially at firms that have joined forces. Ironically, Goldman Sachs (GS), usually considered the strongest of the investment banks, fell 1.2 percent on reports the company will lose money in the quarter for the first time since going public 10 years ago.

Shares of General Electric (GE) rose 13.61 percent Tuesday to a price of $17.61 after the conglomerate stated that it will maintain its dividend in 2009. The company will also scale back its finance arm, GE Capital. This news allowed GE to see its strongest one day gain in nearly 25 years. Nonetheless, the stock sits well off its 52-week high of $38.52.

Shares of automakers gained ground on hopes the Big Three will get bailout money from the government. These automakers pleaded their case before Congress once again Tuesday, but this time provided specifics as to what they need and why they need it. Shares of General Motors (GM) rose 5.66 percent to $4.85 with Ford (F) shares gaining 5.84 percent to $2.70.

Internet portal Yahoo (YHOO) saw its shares rise more than seven percent on rumors former AOL chief Jonathan Miller is trying to put together a group to buy part or all of YHOO. There have been rumors for weeks now that Microsoft (MSFT) is interested in buying Yahoo’s advertising business.

Economic news was light Tuesday, but will pick up once again on Wednesday with data from the ISM Non-Mfg. Survey; several reports on the employment situation; productivity and costs data; and the Fed Beige Book.

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

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