Wall Street brushed aside gloomy jobless figures Friday and rallied on the hopes of the economics stimulus package and next week's bank rescue plan.
The Dow Jones Industrial Average soared 217.52, or 2.7%, 8,280.50, while the S&P 500 rose 22.50, or 2.69%, to 868.60. The tech-heavy Nasdaq jumped 45.47, or 2.94%, to 1,591.71. Guy Adami said on CNBC's "Fast Money" TV show that the market ignored the jobless data because it's a lagging indicator. He said he liked the market today because it shrugged off a lot of bad news and continues to accelerate. He expects the market to continue moving up next week. Tim Seymour said the feeling that there's "light at the end of the tunnel" is noticeable in a number of indexes, including those that track shipping and transportation. Pete Najarian said that's true in the commodities market where copper, steel and other metals are moving forward. He also said the S&P finally broke through the 850-level. Melissa Lee, the moderator of the show, asked CNBC senior economics reporter Steve Liesman for a report on what he's hearing from sources about the Treasury's bank rescue plan, which is scheduled to be announced on Monday. Liesman said the so-called government aggregator bank is expected to purchase up to $500 billion in assets and provide additional capital as needed to banks. He also said Treasury Secretary Timothy Geithner will announce an overhaul of the transparency and governance portions of the rescue plan. And he is expected to come up with a plan to deal with foreclosures a few days after his speech on Monday.
Adami said investors should treat the news on Monday differently than in the past when they sold off on rallies. He said that playbook is wrong for this rally, which he said could last a while. Najarian noted that the volatility index closed higher at 43 instead of going down. The reason: People are optimistic about next week's news and are picking up S&P puts to protect themselves from any downside selling, he said. Lee asked the panel for their comments by Ken Lewis, the CEO of Bank of America ( BAC - Get Report) in a CNBC interview earlier in the day when he said his bank wouldn't need any more TARP money and planned to pay back what it owed the government in three years. BofA shares were up 27% today. Adami, a buyer of the stock, believes it will go higher. Najarian noted two stocks in the financials that continue to look impressive: Morgan Stanley ( MS - Get Report), which is up 44% year to date and Goldman Sachs ( GS - Get Report), up 15.3% year to date. He also liked the action of the regional banks, especially Fifth Third Bancorp ( FITB), which up 61.5% today. Lee asked Zachary Karabell to comment on the technology stocks, which were up 9% this week. He said the technology companies have done well because most of them have been run by CFOs since the dot-com bubble that burst in 2000. As a result, he explained, the companies have been run with "immense capital discipline" that have left them with a lot of cash and manageable levels of inventory to weather this economic downturn.
Lee moved on to another hot sector, the commodities markets. Seymour noted that nitrogen-based fertilizer stocks such as Potash ( POT) are coming back again. Adami said it's part of the reinflation trade that is especially noticeable in China. He also said investors are probably pulling out of low-yielding Treasurys and putting their money in commodities. Najarian said he noticed the commodities market started rising today after comments from Marius Kloppers, CEO of Billiton BHP ( BHP) that steel demand is returning in China. Najarian said that rail stocks have also moved up dramatically, adding Warren Buffett pocketed $10 in the past two weeks with his shares in Burlington Northern ( BNI). "It's China, China, China," added Karabell, who observed that the effect of China's stimulus can be seen in the growing demand for base metals. Lee moved on to the the health care sector, which was up 4% for the week. Najarian said the sector is showing more growth and consolidation. He noted that Carl Icahn has taken a bigger stake in Biogen ( AMGN). However, Karabell said investors should be careful about going long term in the sector because big-cap pharma and HMOs are facing a lot of headwinds. Lee brought on Jon Najarian to comment on a positive side-effect from President Obama's speech calling for pay caps on executives of financial firms that rely heavily on TARP. Najarian said these stringent measures will result in an exodus of talent who might use their skills to start up hundreds of new companies in the financial sector.
In perusing today's horrible jobless data, Karabell noted that those still working are at the higher end of the income level and have seen their wages go up in the past year. Seymour expressed doubts about the assertion, saying the falloff in employment across all sectors have left employers in the position of paying whatever they want to pay. Lee invited Jim Flaws, CFO of Corning ( GLW) to discuss his company's optimistic projections of flat-panel TV sales. Flaws said flat-panel TV sales were up 37% in the U.S. in December, following a similar pattern overseas. He said the retail demand for TVs and notebooks is strong and that the supply chain contraction has ended. He said his company expects a rebound in LCD sales in the second quarter. In the final trades, Karabell was for SPDR S&P Metals and Mining ( XME - Get Report). Adami liked Gap ( GPS - Get Report). Seymour liked Turkcell ( TKC - Get Report). And Najarian is a buyer of Harley Davison ( HOG - Get Report). "Check out
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