Stocks Continue Rally on Retail Data

Those moves came a day after Merrill Lynch upgraded Lehman to a positive ranking, and all three analysts have said that Lehman won't fall apart in the same manner that Bear Stearns, now part of JPMorgan Chase (JPM Quote), did three months ago.

Lehman's cash problems led to speculation of a collapse almost immediately following the Bear debacle in March, and earlier this week the stock took a beating on rumors that the brokerage continues to struggle mightily. Recently, however, shares were bouncing 5.5% at $33.12.

In other positive analyst research, United Airlines operator UAL (UAUA Quote) was upgraded by both Lehman and Soleil a day after announcing it will cut down its fleet and lay off about 1,000 more workers by year-end than it had originally planned on doing. Big early gains were tapering off recently, but the stock was still up 6.5%.

Spiking fuel costs and a generally difficult macroeconomic environment have forced several airlines to make similar moves, among them Continental Airlines (CAL Quote), which today said it will cut domestic mainline departures by 16% starting in the September and plans to lay off 3,000 employees. Further, CEO Larry Kellner and president Jeff Smisek said they would cut their salaries for the rest of the year and forego benefits from their 2008 incentive program.

Continental shares moved up 3%, and Northwest Airlines (NWA Quote) jumped 9.8% on a Lehman upgrade. Yesterday the carrier announced that its traffic had picked up by 4.3% in May.

Also helping keep the mood cheery was the Labor Department, which said that the number of people filing for unemployment benefits slid to 357,000 last week, down by 18,000 from the prior week's upwardly revised figure. Economists were expecting 372,000 claims, on average.