Daily Summary....

U.S. Markets

Dow +46.90 (+0.38%)
Nasdaq +14.28 (+0.63%)
S&P 500 +10.46 (+0.79%)

News That Moved the Market:

Stocks Finish Higher Despite Lousy Retail Sales. Markets were able to end the day with gains for the first time this week, but volatility was still prevalent in today's trading. Selling pressure was strong early in the session when chain stores released January's sales results. With a few exceptions, the results were grim. In all, sales grew 0.5% from last year, with notable weakness in luxury and department store sales. Wal-Mart (WMT, +2.1%) reported a 0.5% increase in sales, well below the 2.0% jump analysts had anticipated. Target (TGT, +6.1%) saw a 1.1% decrease in same-store sales, while Nordstrom (JWN, +3.7%) said sales fell 6.6% at stores open more than a year. Despite the negativity, traders bought retailers perhaps sensing a bottom or figuring that earnings will not be affected by the poor start to the year.

Senate Passes Stimulus Plan. The U.S. Senate passed a $151 billion economic stimulus plan similar to the one the House passed last week. The bill will likely now get to the President very quickly to sign.

Pending Home Sales Decline. Homebuilders finished higher, despite lower than expected pending home sales data. The National Association of Realtors announced December pending home sales fell 1.5%, more than the 1.0% decrease expected, but an improvement over November's figures.

Pepsi Jumps On 2008 Outlook. Pepsi (PEP, +5.5%) traded higher after the company put out a solid forecast for the year in the face of higher commodity prices and economic weakness. The company reported a 31% decrease in profits due to a large tax benefit from last year. Pepsi sees earnings increasing about 10% in 2008.

Tomorrow Notable Earnings:

Weyerhaeuser(WY) Before Open

Economic Events:

10:00 AM: Wholesale Inventories

Circuit City to Open Smaller Stores...

Circuit City's turnaround plans. Circuit City (CC) will open 50-60 smaller stores in 2008 called "City" with high-level staff that will mimic Apple Stores; says it doesn't think selling itself is in its best interest; and more than doubled its credit line to $1.3B.

Apple Cuts Component Orders....

A researcher says Apple (AAPL) has reduced supplier orders for its iPhones, iPods and MacBooks for the second time in two months, amid weak Q4 sell-through.

Suppliers Broadcom (BRCM) and Marvell (MRVL) could feel the effects.

Midday Update....

Dow + 12
S&P +5
Nasdaq +5

After selling off on the open the market has strengthened. There is a noticeable change in Market Breadth this Morning.

On the NYSE:

Advancing Issues 1733
Declining Issues 1283

Advancing Volume 444 Million shares
Declining Volume 305 Million shares

Today is setting up an important inflection point. We are severely oversold and need to hold up here. How we close is critical.

Yahoo Steps Up Talks With Google...

Sources say Yahoo's (YHOO) talks with Google (GOOG) have intensified as the company looks at alternatives to Microsoft's (MSFT) $44.6B offer.

Breakdown Alert: Chipotle (CMG)

Chipotle (CMG) down 4.87 to $103.73

Chipotle has clearly broken down thru support it had at $110. Pull up a daily chart and you'll see what I mean. Next support levels: $98 and then $88.

I just ate there yesterday...same long line as always...so I would say this is purely market-related tied to recession fears..

Notable Mover: Emcore Corp.

Emcore (EMKR) up 1.47 to $13.50

Emcore is an interesting looking stock. The stock has been steadily climbing since June of last year. Though volatility has certainly picked up, this looks like it may be a solid new name to keep an eye on....which we will do.

Emcore Corporation's (EMKR) principal activity is a leading provider of compound semiconductor-based components and subsystems for the broadband, fiber optic, satellite and terrestrial solar power markets.

Farm / Fertilizer Stocks Getting Crushed this Morning...

Monsanto (MON) down 6.34 to $100.00

Potash (POT) down 6.51 to $132.40

Terra Nitrogen (TNH) down 9.82 to $126.03

Terra Industries (TRA) down 3.33 to $39.35

Mosaic (MOS) down 3.87 to $89.65


Each of these stocks are guiding higher for earnings this year...very volatile...but could be nice trade once the market bottoms.

JC Penney Stock Jumps on Q4 Outlook...

J.C. Penney Co.'s (JCP) January comparable-store sales, or sales of stores open at least a year, fell 1.9%, compared with a year earlier increase of 3.6%. The Plano, Texas, retailer said January total department store sales rose 1.7%, while direct sales increased 3.6%.

J.C. Penney projects February comparable-store sales to be flat, with comparable-department store sales decreasing in the low single digits on a percentage basis. J.C. Penney will include Internet sales in its comparable-store sales results starting in the 2008 fiscal year ending Jan. 31. The company now projects fiscal fourth-quarter earnings at the high end of its original guidance range of $1.65 to $1.80.

The stock is up 3.28 to $47.00 this morning. It is down from a high of $87 hit last February.

Energy Conversion Devices Sees Profit by Q4...

Energy Conversion Devices Inc.'s (ENER) second-quarter loss widened to $5.43 million, or 14 cents a share, from $2.91 million, or 7 cents, a year earlier. Results for the latest period included restructuring charges and preproduction costs totaling 12 cents a share.

The Rochester Hills, Mich., manufacturer of solar thin-film laminate products said revenue for the quarter ended Dec. 31 rose to $56.4 million from $22.9 million a year earlier. Analysts polled by Thomson Financial, on average, projected a loss of 13 cents a share on revenue of $53 million.

The company confirmed its expectation that it will reach sustainable profitability in the fiscal fourth quarter.

The stock is up 1.20 to $25.11 this morning.

Thornburg continues breakout...

TMA up .60 to $13.35

Thornburg Mortgage (TMA) continues to move higher this morning. This stock held up very well in the $9-$10 area, now it is receiving upgrades from several analysts. The stock is clearly breaking out off a four month base.

Ex-CEO Says He May Buy Children's Place...

Children's Place Retail Stores Inc (PLCE) former Chief Executive Ezra Dabah said on Thursday he was confident he could make a bid to buy the company for $24 a share, sending its shares up 18 percent in pre-market trading.

The $24 price would represent a 35 percent premium to the closing price of Children's Place shares on Wednesday. Dabah said he had received interest from private equity firm Golden Gate Capital to be a participant in the deal.

Dabah, who said in a filing to the Securities and Exchange Commission that he owns 17.2 percent of the children's clothing retailer's shares, resigned as CEO last September after an internal probe found he did not comply with the company's securities-trading policies.

Something smells with this potential deal.....This stock has been in a free fall lately....this guy owns alot of stock....could he be just looking to prop the stock up so he can get out??? I'd short on the news.

Akamai Beats Estimates...

Akamai Technologies Inc. (AKAM). The Cambridge, Mass.-based service provider for accelerating content and applications online late Wednesday reported fourth-quarter net income of $35.9 million, or 20 cents a share, compared with $20.6 million, or 12 cents a share, in the same period a year earlier. Normalized net income for the fourth quarter was $75.9 million, or 41 cents a share. Revenue for the period ended Dec. 31 jumped 46% to $183.2 million from last year's $125.7 million.

AKAM is up 1.00 to $30.75 premarket.

Earnings Due Today....

• Activision Inc. (ATVI). Expected to post Q3 earnings of $0.80 a share, according to analysts polled by Thomson Financial.

• Aon Corp. (AOC). Expected to report Q4 earnings of $0.66 a share.

• Apache Corp. (APA). Expected to report Q4 earnings of $2.52 a share.

• AutoNation Inc. (AN). Expected to report Q4 earnings of $0.32 a share.

• Embarq Corp. (EQ). Expected to report Q4 earnings of $1.11 a share.

• Expedia Inc. (EXPE). Expected to post Q4 earnings of $0.31 a share.

• Genworth Financial Inc. (GNW). Expected to report Q4 earnings of $0.69 a share

• International Paper Co. (IP). Expected to report Q4 earnings of $0.65 a share.

• Level 3 Communications (LVLT). Expected to report Q4 loss of $0.11 a share.

• McAfee Inc. (MFE). Expected to report Q4 earnings of $0.45 a share.

• Moody's Corp. (MCO). Expected to post Q4 earnings of $0.47 a share.

• Pitney Bowes Inc. (PBI). Expected to post Q4 earnings of $0.69 a share.

• Timberland Co. (TBL). Expected to post Q4 earnings of $0.51 a share.

• Watson Wyatt Worldwide (WW). Expected to post Q2 earnings of $0.70 a share.

Citigroup says Coal Prices to Keep Rising...

Coal will continue to rise in price as bad weather and other factors cut production, a Citigroup analyst says. The bank raised its forecast for thermal coal, saying prices will double this year. While demand for coal keeps rising as the world's electricity use expands, blizzards in China, power outages in South Africa, and floods in Queensland have cut world output.

Ways to play Coal:

Arch Coal (ACI)

Consolidated Energy (CNX)

Burlington Northern (BNI) - transports coal

Bank of America informs cardholders of mystery rate hike...

Bank of America has taken an aggressive stance toward its credit-card holders, raising interest rates based on criteria it won't disclose. Many credit-card lenders have raised rates on cardholders who are current with balances but see a deterioration in their overall credit scores. Bank of America last month notified some of its 40 million cardholders that it would more than double their rates.

Buffett blames investment banks for subprime mess...

Warren Buffett says the giant investment banks are responsible for the subprime mortgage meltdown and ensuing losses. "It's sort of a little poetic justice, in that the people that brewed this toxic Kool-Aid found themselves drinking a lot of it in the end," the billionaire investor said, adding that money is still available and reduced interest rates make it "quite cheap."

US Senate Vote Leaves Stimulus Plan Fate Unclear...

The fate of an economic stimulus plan in the Senate was unclear last night after Democrats fell one senator short of forcing Republicans to allow a vote on a $205 billion version of the plan.

I'm sure we'll hear more on this today...

Delta / Northwest Talks Intensify...

As we said yesterday, merger discussions between Delta Air Lines\ and Northwest Airlines are picking up steam and a deal could come in next two weeks. And talks between UAL and Continental have grown more serious, The Wall Street Journal says.

Cisco Warns on 3rd Quarter...

Cisco Shares May Fall On Weak 3Q Growth Estimate
Cisco Systems reports net income of $2.1 billion, or 33¢ a share. On a non-GAAP basis, Cisco earns 38¢ a share. Revenue grows nearly 17% to $9.8 billion. Results are in line with Wall Street expectations, but CEO says it expects weaker revenue growth going forward.

This will put downward pressure on the Market this morning....