Updated from 4:12 p.m. EDTStocks in New York managed to stay in slightly positive territory for a second consecutive day Wednesday, the first time in roughly a month, with tech and financials leading the way. The Dow Jones Industrial Average rose 3.91 points, or 0.06%, to 6930.40, and the S&P 500 to added 1.76 points, or 0.2%, to 721.36. The Nasdaq tacked on 13.36 points, or 1%, to 1371.64. Hewlett Packard ( HPQ) and Citigroup ( C) rose 6.2% and 5.8%, respectively, leading advances on the Dow. Banks were again outperforming with the KBW Bank Index up 3%. Late in the afternoon, JPMorgan ( JPM) CEO Jamie Dimon said in an interview with CNBC that the bank was profitable in January and February, reiterating a similar proclamation by Citi on Tuesday that helped to spark a rally. For the day, the bank added 4.6%. While Tuesday's movement was "a breath of fresh air," it's too early to say this is a bottom, said Peter Cardillo, chief market economist at Avalon Partners. Although it's nice, this is likely a short-term rally sparked by positive comments yesterday and there's a lot of short-covering, says Walter Gerasimowicz, chairman and CEO of Meditron Asset Management. "I believe we still remain in the throes of a very deep recession." But, says Brett D'Arcy, CIO of CBIZ Financial Solutions, "Enough good news is trickling into the market that people are getting comfortable enough to invest in stocks." The rally is long overdue, says D'Arcy. "Stocks have gotten so oversold, they're cheap right now, and there are some very good companies that have gotten taken down with the rest of the market. "Are we done? Absolutely not, this is not going to be a straight line forward," he says. "But there is value here, we're not going to zero on the stock market, it's a good starting point."
One cloud over Wall Street is the question of what's still hiding on bank balance sheets and how those financial institutions will fare under the tough-environment scenario of the Obama administration's "stress test." "If banks like Citi are profitable, have they already disclosed or are they even aware of all of the toxic assets that may be lurking somewhere on their balance sheets?" asks Walter Gerasimowicz. "And are we awaiting another bombshell or surprise?" In bank news Wednesday, UBS ( UBS) revised its loss for 2008, widening it to $17.9 billion because of costs to settle a U.S. tax investigation and writedowns. Nonetheless, shares gained 2.3% to $8.61. Meanwhile, Goldman Sachs analysts upgraded big banks Morgan Stanley ( MS) and US Bancorp ( USB), while cutting American Express ( AXP) to sell. Morgan Stanley and US Bancorp surged 8% and 9%, respectively. American Express shares fell 2% to $11.93. Outside the banking sector, companies continue to take steps to deal with economic hardships. On Wednesday, chipmaker National Semiconductor ( NSM) said it would cut 26% of its workforce , while oil and gas giant ConocoPhillips ( COP) said it will cut costs by about $1.4 billion this year. In light of the news, National Semiconductor fell 2.7%, while Conoco Phillips edged down 0.05%. Moody's Investment Services offered its take on who might not be able to weather the economic storm, publishing a list of speculative-grade companies with the greatest risk of defaulting -- The Bottom Rung -- earlier in the week. In addition to putting money toward stimulus and bailout packages, the government also has to allocate funds for itself. President Obama signed a $410 billion measure, originally meant to be completed last year, to fund government. The mega bill includes significant increases in food aid for the poor, energy research and other programs, and wraps together nine spending bills to fund foreign aid and the annual operating budgets of every Cabinet department except for Defense, Homeland Security and Veterans Affairs, according to an AP report.
Wall Street is still keeping an ear out for more details on the Obama Administration's next-step bank relief plan. Treasury Secretary Timothy Geithner said Tuesday that the plan to deal with toxic assets that have been plaguing banks' balance sheets will be fleshed out more in the next few weeks. On a bright note, the recession hasn't stopped innovation. Apple introduced its newest "iPod shuffle" early Wednesday. The device is half of the size of the previous model and has a feature to speak song titles, artists and playlist names. Apple shares added 4.6% to $92.68. In commodities, oil fell 3.38 to settle at $42.33 a barrel, while gold added $14.80 to $910.70 an ounce. Longer-dated Treasuries were rising. The 10-year note was adding 31.5/32 to yield 2.9%, and the 30-year was rising 1-14/32, yielding 3.6%. The dollar was recently weaker against the euro and pound, and slightly stronger vs. the yen. Stocks overseas were mixed. The FTSE in London was down 0.6%, while the DAX in Frankfurt added 0.7%, respectively. In Asia, Hong Kong's Hang Seng and Japan's Nikkei ended higher by 4.6% and 2%, respectively.