Thursday's Market Summary....

U.S. Markets

Dow +35.50 (+0.29%)
Nasdaq +19.74 (+0.88%)
S&P 500 +6.71 (+0.51%)

News That Moved the Market

Market Gets a Boost From Standard & Poor's. Stocks began the session lower after a couple pieces of negative news, but were able to recover nicely following S&P's report that the bulk of the writedowns from subprime securities may be behind us. The ratings agency did increase its estimate for the total amount of the writedowns by $20 billion to $285 billion, but investors focused on the news that the end of this subprime mess could be in sight.

Another Fund Goes Under. Late Wednesday Carlyle Capital, a bond fund affiliated with the private-equity firm Carlyle Group, announced it had failed to find new financing or strike new a deal with its lenders, and would have to give up all its current assets. The collapse of the fund weighed on stocks in Europe and pushed U.S. futures into negative territory before the open. The fund, which had received more than $400 million in margin calls since March 5th, was severely crippled by the declines in demand and price of mortgage-backed securities.

Retail Sales Tumble. Retail sales unexpectedly decreased by 0.6% last month, raising fears of a recession. Economists were anticipating an increase of 0.1%. The figure is a key indicator of the strength for the U.S. consumer, and this report showed that perhaps a weaker economy combined with record high commodity prices are taking their tole. U.S. consumer spending makes up 70% of the GDP.

Quick Tics:

Time Warner (TWX, -1.7%) agreed to buy social networking site Bebo for $850 million…

Gold traded above $1,000 for the first time, but ended the session up $13.30 at $933.80/ounce...

Visa's $16 billion IPO, set for March 20th, is oversubscribed.

Tomorrow Notable Earnings

AnnTaylor Stores (ANN) Before Open
Liz Claiborne (LIZ) Before Open

Economic Events:

8:30 AM: CPI
10:00 AM: Michigan Sentiment-Prel.

Updating our Beats and Raises Portfolio...

Here is an updated list of companies that have Beat Earnings Expectations AND have Raised Guidance for 2008. These are the kind of stocks that should lead the market higher in a recovery:

Potash (POT)
Terex (TEX)
Intuitive Surgical (ISRG)
Hewlett-Packard (HPQ)
Medco Health (MHS)
Buffalo Wild Wings (BWLD)
Gamestop (GME)
Mosanto (MON)
JC Penney (JCP)
Zimmer Holdings (ZMH)
Sohu (SOHU)
Dolby Labs (DLB)
Research in Motion (RIMM)
Express Scripts (ESRX)
Boeing (BA)
Chattem (CHTT)
Corning (GLW)
IBM (IBM)
Netflix (NFLX)
EOG Resources (EOG)
Joy Global (JOYG)
Ciena (CIEN)
Steel Dynamics (STLD)
JA Solar (JASO)
Mastercard (MA)

Key Reversal.....

The market is now trading higher after gapping down lower this morning. At one point the Down was down over 250 points. Currently, the Dow is up 33 points.

This is key as the market is now shaking off bad news...something we haven't seen since before Christmas... Maybe a bottom is in.

Today's Upgrades...

Stocks that have been Upgraded this morning:

UnionBanCal (UB) by Punk, Ziegel & Co
JA Solar (JASO) by Needham & Co
Unisource Energy (UNS) by Soleil
Leap Wireless (LEAP) by Wachovia
Millennium Pharm (MLNM) by Piper Jaffray
Humana (HUM) by UBS
JA Solar (JASO) by Lehman Brothers
NIDEC (NJ) by JP Morgan
GSI Commerce (GSIC) by Jefferies & Co
Wimm-Bill-Dann Foods (WBD) by Credit Suisse
Monsanto (MON) by Banc of America Sec
AstraZeneca (AZN) by UBS

Carlisle Capital on Verge of Collapse...

Carlyle Capital, managed by private-equity firm Carlyle Group LLC, says it expects its lenders will soon seize "substantially all" of its remaining assets after banks including Deutsche Bank (DB) and J.P. Morgan (JPM) refused to extend it new financing terms.

The firm's leveraged $22B portfolio consists entirely of securities issued by government-sponsored lenders Fannie Mae (FNM) and Freddie Mac (FRE), the value of which has plummeted in recent weeks.

Southwest Airlines Grounded...

Southwest Airlines (LUV) grounded 38 of its older planes amid government and internal probes over "ambiguity" in its inspection protocols. The groundings reduce its scheduled flights by 4%; the company said the aircraft would be reinspected Wednesday and return to service by this morning.

Last week the FAA confronted Southwest with a $10.2M fine for missing deadlines to inspect planes for fuselage cracks and continuing to fly them after acknowledging the oversight.

Paulson to Address Credit Crunch...

The Working Group on Financial Markets, led by Treasury Secretary Henry Paulson, will today release its recommendations to avoid a repetition of the liquidity freeze now threatening the U.S. economy. Highlights include "strong nationwide licensing standards" for mortgage brokers; a clearer differentiation in credit ratings between bonds and complex, riskier structures coupled with greater disclosure by rating agencies; and increased regulation of the dealings of issuers of mortgage-backed securities.

US Dollar Dives...

The dollar fell to 12-year lows against the yen, dropping to less than 100 yen, and hit record lows against the euro, as Asian/European markets and U.S. equity futures dived in overnight trading [see below], raising concerns of more turmoil in the financial markets. "Investors are getting out of dollar assets and this is going to lead to a dollar crash," a Tokyo currency manager said.

On four previous occasions since 1995, Japanese authorities have sold the yen when it approached the 100 mark to support its country's exports.

Earnings Due Today....

COMPANIES REPORTING EARNINGS

• Aeropostale Inc. (ARO). Expected to report Q4 earnings of $0.88 a share, according to analysts polled by Thomson Financial.

• Flanders Corp. (FLDR). Expected to post Q4 profit of $0.15 per share.

• TICC Capital Corp. (TICC). Expected to report Q4 profit of $0.34 per share, which is a decrease of 12.82% from the same quarter last year when the company earned $0.39 a share.

Today's Top Stories....

• Dollar tumbles below 100 yen for first time in 12 years

• Treasury secretary Henry Paulson to propose revamp of credit rules - report

• Treasury deputy secretary Robert Kimmitt says U.S. economy should pick up in Q2

• Home foreclosure filings rise 60% in Feb.

• Abbott's diabetes treatment gets FDA nod

• Electronic Arts makes $26-a-share hostile bid for Take-Two Interactive

• Monsanto upgraded to 'buy' at Banc of America

• AIG cut to equal-weight from overweight at Morgan Stanley; target cut to $50

• Tyco Electronics to buy back additional $500 million of stock

Wednesday's Summary....

U.S. Markets

Dow -46.57 (-0.38%)
Nasdaq -11.89 (-0.53%)
S&P 500 -11.88 (-0.90%)

News That Moved the Market

Stocks Fizzle Out. A late sell-off ensured the market would finish lower; one day after the Dow was up more than 4%. Stocks did trade higher for a large part of the session, but could not gain any momentum and looked overextended after huge gains yesterday. Oil topped $110/barrel for the first time, despite a greater than expected build in inventories. Instead of trading lower, investors seemed to have a "buy on the dip" mentality, pushing oil up another $1.17 to finish at $109.92. Government data showed speculators and fund managers are making bets for higher oil, with net long positions tripling in the last month. The rally should end when hedge funds and speculators decide to start taking profits, and will depend less on economic data, as exhibited today.

Target In Talks To Sell Half of Credit Card Division. Mega-retailer Target (TGT, -0.95% day; +1.45% A.H.) announced after the close it is in negotiations to sell about half of its credit-card loans for $4 billion. The potential acquirer was not named. The money could be used for stock buybacks, increasing shareholder value, and would create more stability on Target's balance sheet.

Quick Tics:

Caterpillar (CAT, +3.6%) and G.E. (GE, +1.7%) were both up after each company released positive outlooks…

Eliot Spitzer resigned as New York Governor after news surfaced yesterday of his connection to a prostitution ring…

Humana (HUM, -13.7%) dropped after cutting its earnings outlook.

Tomorrow Notable Earnings

Aeropostale, Inc. (ARO) Time Not Supplied

Economic Events:

8:30 AM: Retail Sales
8:30 AM: Jobless Claims
8:30 AM: Import and Export Prices
10:00 AM: Business Inventories

Finally the Fed Gets it Right...

The Fed said it will inject another $200B into the economy, lending money against mortgage-backed debt for 28 days, vs. the current overnight. The move sparked a 3.6% gain in the Dow, its biggest rally in five years. The Fed hopes the additional liquidity will help Wall Street bankers cushion their books against loan defaults and depressed debt securities.

The odds of a 75 BP cut to the Fed's current 3% target on March 18 fell to 64%; it had previously been fully priced-in.

Most importantly, the Market is actually showing respect for this latest move by the Fed. A huge rally yesterday and what is shaping up to be a follow-up rally today...

Technical Watch: Zimmer Holdings...

Check out the Daily chart on Zimmer Holdings (ZMH). The stock has formed a near perfect "cup and handle" formation.

The point to BUY would be if the stock breaks clearly above the $79-80 area.

The stock is up 1.05 to $76.15 this morning....and ticking higher.

Steel Dynamics Raises Guidance...

Steel Dynamics Inc. (STLD). the Fort Wayne, Ind.-based steel company late Tuesday said it now expects first-quarter earnings of $1.25 to $1.30 a share, up from its previous outlook of $1.10 to $1.20 a share, based on higher-than-anticipated flat-rolled steel pricing and improved scrap-processing results.

The current mean estimate of analysts polled by Thomson Financial is for a per-share profit of $1.18 for the quarter. Additionally, the company said it now expects full-year 2008 earnings of $5.25 to $5.75 a share, up from its prior forecast of $5 to $5.50 a share. Analysts are looking for earnings of $5.40 a share for the year.

JA Solar Earnings In-Line, Raises Guidance...

JA Solar Holdings Co.'s (JASO) fourth-quarter net income rose 34% on a boon in shipments and despite losses from currency fluctuations, which the company said it is addressing going forward.
The company also projected 2008 revenue well above analysts' expectations and boosted its production target for the year. Shares rose to $15.90 during recent premarket trading after closing at $14.58 on Tuesday.

JA Solar's stock had been down more than 40% the past two months. JA Solar, a Chinese manufacturer of high-performance solar cells, posted net income of $13.5 million, or 9 cents a share, compared with $10.1 million, or 11 cents a share, a year earlier. Shares outstanding were 36% higher in the recently ended quarter. Revenue more than tripled to $144.2 million.

The mean estimates of analysts surveyed by Thomson Financial were for earnings of 9 cents a share on revenue of $118 million.

Take Two Raises Guidance...

By raising its annual guidance Tue, video game maker Take-Two Software (TTWO) could force Electronic Arts (ERTS) to hike its $2B bid for the company, argues research firm Wall Street Strategies. Citing a better than expected 1Q and surprisingly strong preorders for a game to be released in a few weeks, Take-Two said it now expects fiscal 2008 earnings of $1.35 to $1.55 a share on revenue of $1.25B to $1.4B.

The company had expected per-share earnings of $1.30 to $1.50. Analysts expected per-share earnings of $1.35 on revenue of $1.36 billion. "Without a doubt the saga surrounding ERTS' bid is about to get a bit more complex," wrote the Wall Street Strategies research firm.

Humana Warns...

Humana (HUM) stock gets crushed again in premarket trading Wed, dragging down the entire managed care sector, after the company cuts its 1Q and 2008 earnings guidance. HUM recently down 26% at $35. The stock fell 24% Tue, after peer WellPoint's (WLP) earnings warning raised fears that unexpectedly high medical costs could mean weakening profits across the health insurance sector.

Aetna falls 6.2% to $40, WellPoint edges down an additional 1.6% to $46.49, UnitedHealth Group (UNH) loses another 10% to $34.51.

Also in premarket, Cigna (CI) falls 12%, Coventry Health Care (CVH) down 7.4%. (MRL).

Caterpillar Reaffirms Forecast...

Caterpillar Sees $60B In Revenue In 2010
Heavy-equipment maker reaffirms its 2008 per-share earnings and revenue forecast, and says it also expects revenues approaching $60 billion by 2010 and per-share earnings growth of 15% to 20% from 2005 through 2012. Shares rise 2% pre-market.

Cleveland Cliffs to Split Stock....

Cleveland-Cliffs Inc. (CLF). The Cleveland, OH-based mining company late Tuesday declared a two-for-one stock split, payable May 15 to shareholders of record as of May 1.

Earnings Due Today....

COMPANIES REPORTING EARNINGS

• American Eagle Outfitters Inc. (AEO). Expected to report Q4 earnings of $0.66 a share, according to analysts polled by Thomson Financial.

• Gymboree Corp. (GYMB). Expected to post Q4 profit of $0.95 a share, up 13.10% from the same quarter last year when the company earned $0.84.

• Men's Wearhouse Inc. (MW). Expected to report Q4 earnings of $0.17 a share.