The market experienced some choppiness when trading opened on Monday as the bears were looking to add to Friday’s sell-off. Futures were pointing towards a weak start but the Dow managed to hold off its initial drop until succumbing to the early selling pressure. However, things quickly turned around as the bulls started buying at the lows.
Trading was in a tight range until the afternoon session which is when the bulls got a lift following news that the Securities and Exchange Commission’s (SEC) vote to sue Goldman Sachs (GS, $163.32, up $2.62) wasn’t unanimous.
The Financial sector was able to stage a strong rebound and added 1% after the SEC’s decision to follow-through on with charges of fraud against Goldman was only secured by a 3-to-2 vote. The news excited Wall Street as some analysts wondered if the case might not be so convincing.
As a result, the Dow managed to extend its gains to finish with a 73 point pop, or 0.7%, and settled at 11,092. The S&P 500 added 5 points, or 0.5%, and closed at 1,197. Both indexes closed at their highs but the S&P failed to crack the 1,200 level.
We were a little concerned that Tech failed to make up any gains from Friday’s sell-off as the Nasdaq ended the session with a 1 point loss, or 0.1%, and closed at 2,480.
Although the Financial sector made a nice recovery, these stocks will continue to be volatile if the SEC goes after other sellers of collateralized debt obligations (CDO). They may or may not have a case but we are hearing Merrill Lynch, which is now part of Bank of America (BAC, $18.39, down $0.02), could be named in the coming weeks.
Goldman Sachs reported earnings this morning and said it earned $5.59 a share on revenue of $12.8 billion as trading buoyed its profits for yet another quarter. This was well above Wall Street’s expectations of $4.01 on revenue of $11.1 billion. Shares of Goldman are up over $3 in early action.
And this just in…Intel (INTC, $24.00, up $0.08) came out this morning and said it sees even higher gross margins for its current quarter…
All of this good news has futures pointing towards a slightly higher open this morning. Dow futures are up 17 points to 11,061 while the S&P 500 futures are up 5 to 1,200. The Nasdaq 100 futures are higher by 8 points to 2,020.
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