Gentle Ben To The Rescue

Morning News of Note:

• Gapping Up
  Gapping up on strong earnings/guidance: ILMN +20%, DTLK +8.7%, NITE +8% (up in sympathy: ET +3.1%), LUFK +6%, LUV +6%, JPM +2.9%, UNH +2.9%, ASML +2.1%, BAC +1.6%, IBM +1.3%... Other News: FCEL +6.9% (power outage disrupts LAX air traffic), ESLR +4.8% (announces large contract), ACSEF +4.6% (recovers after recent sell-off), ERICY +4% (selected to upgrade Bite's 3G network), LFB +3.9% (to explore stategic alternatives), NVAX +3.1%, FAL +2.4% (Xstrata raises bid), BBY +2% (Pru upgrade), XING +2%, STM +1.9% (positive court ruling - ThinkEquity), DXPE +1.6%, NOK +1.4% (Lehman upgrade).
• Gapping Down
  Gapping down on disappointing earnings/guidance: YHOO -17% (also downgrades from JP Morgan and Deutsche; down in sympathy: BIDU -1.8%, EBAY -1.8%, GOOG -1.7%), DTAS -23% (also Piper downgrade), ADCT -14% (merger partner ANDW -9.4% also down), PLXT -10%, JBHT -4.4% (also Baird and AG Edwards downgrades), CSX -2.9%, WIT -2.7%, FLIR -1.9%, CHKP -1.8%... Other news: RMBS -10% (to restate results), AFFX -5.6% (strong ILMN qtr seen as bad news for AFFX; also AFFX announced it would lower prices for its 500K genotyping set to $250), NTES -4.5% (Susquehanna downgrade), AAA -2.6%, TOT -1.8% (weak European mkt), WYNN -1.3% (CIBC downgrade), NVS -1.2%, EON -1.1%.
• GOOG Google upgraded to Buy from Hold at AmTech; tgt $500 (403.05 ) -Update-
  AmTech upgrades GOOG to a Buy from a Hold with a $500 tgt sayin that following the YHOO news that they would experience search delays, GOOG was trading down to around $390 in the aftermarket. Firm believes YHOO's delay is GOOG's gain, and would be buyers on the weakness. Firm believes GOOG will report solid upside to expectations on Thursday. Firm's EPS est of $2.37 is ahead of consensus at $2.21 and they see potential for upside to their forecast.
• AAPL Walt Mossberg profiles iPod/Nike fitness device - WSJ (52.90 )
  Walt Mossberg reports "While the kit's $29 price tag is slight, you also must factor in the price of Apple's iPod Nano and the special Nike+ (NKE) shoes. We found it worked well and enhanced our exercise experience. One weakness of the Nike + iPod system is that it can't record your heart rate, the key measurement used in cardiovascular workouts.
• UNH UnitedHealth reports; guides in-line (48.40 )
  Reports Q2 (Jun) GAAP earnings of $0.70 per share, may not compare to the Reuters Estimates consensus of $0.68; revenues rose 57.3% year/year to $17.92 bln vs the $17.88 bln consensus. Co also reports Part D normalized earnings of $0.73 per share. It is not clear which EPS figure is comparable to the Reuters consensus. Co issues in-line guidance for FY06, sees EPS of 2.91-2.95 vs. $2.92 consensus.
• DIS Disney to produce fewer movies, cut 650 jobs - Reuters (29.10 )
  Reuters reports Disney (DIS) said late on Tuesday its chief of film production would leave the co, part of a move to boost profits at its studio division that include cutting annual movie production and eliminating 650 jobs. The co said it will produce and distribute about 10 Disney live-action and animated films a year and two to three Touchstone films a year.

Market Comments: The markets are spiking higher in early trading, following the release of the prepared remarks by Bernanke. The Fed chief is acknowledging the slowdown in the economy, and also forecasting an easing of inflation pressures into 2007.

I had speculated that the Fed would likely take a more dovish tone relative to previous comments. The market is really taking this to heart, as it implies that the Fed will stop raising rates sooner rather than later.

On this last point, the evidenc is in the bond market. The yield on the 10-year note has plunged from 5.18% this morning to 5.09% currently. And the odds in the fed funds futures for more rate hikes is falling fast. An end to the fed rate hikes should remove a considerable headwing from both the stock and bond markets.

Strong earnings reports this morning from JPM, BAC, ABT, GD, and CDWC gave the market an initial boost. But Bernanke's comments acted like a turbo boost, pushing all of the major indexes above +1.0% on the day. And upside volume is swamping downside volume.

long AAPL, GOOG, UNH