Market Wrap-Up

January 29, 2008

DOW 12480.30 +96.41 (+0.77%) S&P500 1362.30 +8.33 (+0.61%)
NASDQ 2358.06 +8.15 (+0.35%) 10 yr Bond 3.658% +0.072

A nice durable goods report lifted stocks higher today at the open. December durable goods rose 5.2%, when economists were looking for only a 1.6% rise. Today’s strong report leads to the question is the US economy really heading for a recession?

Shares of JPMorgan Chase (JPM) $47.45 +1.88 (4.13%) traded higher on news that rumors that the bank was facing a big derivative loss are not true.

Conference Board today said January consumer confidence slipped to 87.9 from Decembers 90.6. Today reading actually top economist estimates which were 87.0

This market continues to punish any company not hitting expectations. Shares of VMware (VMW) $54.87 -28.13 (-33.89%) got killed after the company top earnings estimates on slightly lower revenue than expected. The company also gave 2008 guidance below analyst estimates.

Wal-Mart (WMT) $49.01 +0.30 (+0.62%) announced their own economic stimulus package today. The company said it will be reducing prices from 10% - 30% on thousands of items and they will be offering no interest for 18 months on purchases of $250.00 dollars or more.

The Wall Street Journal report today that the FBI has opened criminal inquiries on 14 companies in its subprime mortgage probe. This is something that should be watched since the government will want to make an example out of some CEO and other executives to make home owners feel better.

The market rallied today in anticipation of the FOMC lowering interest rates tomorrow another 50 basis points. Helping this feeling was the terrible new home numbers. The strong durable goods numbers should have had a negative affect on the market, but traders decided to interrupt it as good news that the economy was indeed still growing and not in a recession.

Tomorrow everything will be based on what the Fed does. I believe that if the Fed does not do anything or only cuts rates by only 25 basis points the market will sell off. But if the Fed cuts 50, I would expect the market to do little or rise slightly, since I believe that market has already priced in a 50 basis point cut in the Fed Funds Rate.