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Yesterday, stocks were slightly lower. Today, stocks were flat, and that shouldn't be surprising.
There were no blockbuster revelations in a full day of Senate hearings about JPMorgan Chase's (JPM, news, msgs) takeover (with Federal Reserve assistance) of a collapsing Bear Stearns (BSC, news, msgs). Also, many traders were reluctant to make big bets before Friday's payrolls report from the Labor Department.
That report, which comes out before the stock market opens, is expected to show a decline of 50,000 jobs nationally. If the number is smaller than 50,000, a rally could erupt. A number that's bigger than 50,000 may set off a round of selling.
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So, the Dow Jones industrials closed up 20 points, or 0.2%, to 12,626. The Nasdaq Composite Index was up 2 points, 0.1%, to 2,363, and the Standard & Poor's 500 Index was up 2 points, or 0.1%, to 1,369.
The market had been modestly lower for most of the morning until a Japanese newspaper reported that Merrill Lynch (MER, news, msgs) CEO John Thain had said the company doesn't need to raise fresh capital. Merrill Lynch closed up 1.2% to $45.89.
Crude oil fell $1 a barrel to $103.83. Gold rose 1% to $909.60.
Materials and metals stocks led the market as metals prices, including gold, silver and copper, moved higher. Aluminum giant Alcoa (AA, news, msgs) led the 30 Dow stocks with a 5.8% gain to $38.54. A factor in the price rise, CNBC's Matt Nesto said, was speculation that Alcoa may be a takeover target.
Agricultural stocks moved higher in reaction to higher prices for corn, soybeans and wheat. Potash of Saskatchewan (POT, news, msgs) jumped 4.1% to $167.67. Seed-and-chemical company Monsanto (MON, news, msgs) rose 5.2% to $117.79.
At the same time, Research In Motion (RIMM, news, msgs) was the biggest factor pushing the Nasdaq-100 Index higher today, with a 5.9% gain to $122.58, after a stronger-than-expected earnings report from Wednesday night. But Cisco Systems (CSCO, news, msgs) was a drag on the same index after a downgrade knocked the stock down 2.9% to $24.23.
While some investors might complain that a boring market is, well, a boring market, a little praise is probably due. While the Dow was up 391 points on Tuesday, a market bottom appears to have formed starting in late January, and it seems to be getting stronger.
The S&P 500 is now trading a bit more than 2% above its 50-day moving average, and the moving average is moving higher for the first time since November. If it moves above 1,380, a big rally could erupt.
| Thur. | Wed. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $103.83 | $104.83 | -$1.00 | 2.22% | 8.18% |
| Heating oil (per gallon) | $2.9228 | $2.9510 | -$0.0282 | -4.15% | 10.32% |
| Natural gas (per million BTU) | $9.4170 | $9.8320 | -$0.4150 | -6.77% | 25.85% |
| Unleaded gasoline (per gallon) | $2.7243 | $2.7736 | -$0.0493 | 4.13% | 9.37% |
A Bear collapse would have collapsed everything
Regulators and the principals in the JPMorgan-Bear Stearns deal defended their actions in testimony today before the Senate Banking Committee. Had Bear Stearns filed for bankruptcy on March 17, they said, the U.S. credit markets may well have collapsed, and the U.S. and global economies would have been tossed into chaos.Given that Bear didn't file for bankruptcy protection, one can argue that Federal Reserve Chairman Ben Bernanke and Timothy Geithner, the president of the Federal Reserve Bank of New York, were overstating the problem. But they would not concede the point today.
"A sudden, disorderly failure of Bear would have brought with it unpredictable but severe consequences for the functioning of the broader financial system and the broader economy, with lower equity prices, further downward pressure on home values, and less access to credit for companies and households," Geithner said in his prepared testimony.
But didn't JPMorgan get a sweetheart deal? No way, JPMorgan CEO Jamie Dimon said. The Fed financed $30 billion of the deal, and the collateral the Fed took consists "entirely of loans that are current and domestic securities rated investment-grade," Dimon said. "We kept the riskier and more complex securities in the Bear Stearns portfolio for our own account."
Bear Stearns CEO Alan Schwartz continued to insist, as he did the week before the rescue, that his company had plenty of liquidity and capital before Bear Stearns' final implosion. But mere rumors of problems mushroomed quickly into a run, he said. Because of "the unprecedented speed at which rumors and speculation travel and echo through the modern financial media environment, the rumors and speculation became a self-fulfilling prophecy."
Bernanke reiterated his belief in the U.S. economy and its "ability to adapt and to respond to diverse challenges."
"I think they made the right decision," Sen. Chris Dodd, D-Conn., the committee chairman, told Bloomberg Television. "You could have had not only a national but a global meltdown" if Bear had collapsed.
The Fed was notified on March 13 that Bear Stearns was going to have to declare bankruptcy, Bernanke told the Joint Economic Committee on Wednesday.
JPMorgan offered $2 per share for Bear on March 16, and the Fed said it would help facilitate the deal by extending $30 billion in credit. JPMorgan later increased its bid to $10 per share and assumed the risk for $1 billion in potential Bear losses, lowering the Fed's commitment to $29 billion.
More from MSN Money
Research In Motion profit soars
The BlackBerry is still hot. Just look at Research In Motion's earnings, which came out late Wednesday. The company said it earned $412.5 million, or 72 cents per share, more than double the $187.4 million, or 33 cents per share, RIM earned in the same period a year ago.- Video: Reaction to RIMM
Sales soared 102% to $1.88 billion. Analysts had expected earnings of 70 cents per share on revenue of $1.86 billion.
RIMM said that it signed up 2.18 million new customers in the quarter. The company's original forecast called for the addition of 1.8 million, but that had been revised upward. The company now has about 14 million subscribers.
Stock Charts (Year)
Research In Motion
Cisco Systems
RIMM said it expects to earn 82 to 86 cents per share for the current quarter, above the consensus estimate of 76 cents per share. The company is targeting revenue of $2.23 billion to $2.3 billion for the quarter, also ahead of Wall Street's estimate of $2.02 billion.
Research In Motion's good news helped rival Apple (AAPL, news, msgs) move higher. Apple was up 2.8% to $151.61 today and has risen 31% since mid-February. It's trading above its 200-day and 50-day moving averages.
Cisco gets downgraded
Research In Motion's stellar earnings report was offset by Cisco Systems.- Video: Two good blue-chips
The networking company was downgraded to "neutral" from "buy" at UBS, which said that Cisco's orders are starting to slow outside the U.S.
UBS expects sequential growth of 4%, below the consensus estimate of 6% growth. Emerging markets' growth will be between 25% to 30%, below a previous expectation of 30% to 40% growth, UBS predicts.
Continued: Jobless claims rise more than expected
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