March S&P’s this morning are trading +6.90 points on improved bond insurer news and some short-covering. The US stock market yesterday traded lower most of the day until a late day pop left the indexes finishing mixed (Dow -0.37%, S&P 500 -0.34%, NASDAQ Composite +0.07%).
Bullish factors for stock prices yesterday included (1) the 7.9% rally in Ambac after CNBC reported the bailout plan for the world’s 2nd biggest bond insurer is progressing, (2) the 8.3% gain in Barr Pharmaceutical after a US judge invalidated a patent on Bayer AG’s Yasmin contraceptive which means Barr may be able to sell a generic version of the drug before Bayer’s patent expires in 2020, and (3) the over $2.00 a barrel drop in the price of crude oil on speculation OPEC won’t cut production when it convenes this week.
Bearish factors for stock prices yesterday included (1) the 4.3% drop in Citigroup to a nine year low after Merrill Lynch said they expect $18 billion of credit write-downs related to holdings of sub-prime mortgages and slashed their Q1 profit estimate for the bank to a loss of $1.66 a share from a profit of 55 cents a share and cut Citigroup’s 2008 profit forecast to 24 cents a share from $2.74, (2) the drop in the banking sector after Fed Vice Chairman Kohn said US banks face “challenging market conditions” that will likely hurt earnings and consumer lending, and (3) the comments from Dallas Fed President Fisher that US growth is likely to remain “sub-par” through the end of June and said his growth forecast is one of the most “bearish” of all of the FOMC members.
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