GE's Triple-A Rating Gets Downgraded A Notch
The market is rallying nicely in early trading. GE finally had its credit rating downgraded a notch, but this action was widely anticipated in the market, so the shares of GE are actually rallying +10% today.
Advance retail sales declined by -0.1% for February, but this was less than the expected -0.5% forecast. Moreover, the prior month's reading was revised higher to a +1.8% increase. So it is possible that retail sales could be stabilizing.
Congress will hold its hearing this morning on the mark-to-market issue. The temporary suspension of this accounting rule would remove an overhang on many financial stocks, but it is a controversial issue. I think at the very least, some modifications to the rule are in order.
Last, the Madoff hearing is taking place today, and the testimony from his victims is heart-wrenching. There is no punishment sufficient for this man, which many are now calling a financial terrorist. For fear of offending any readers, I will not say what I think they should do with this guy.
Trading comment: The market continues to trade firm, and the fact that we have not given back any of Tuesday's outsized rally is a bit of a change in character from past one-day rallies. I still think the S&P 500 could run into a bit of resistance around the 740 level, but should continue higher after a pause around that area.
There are other parts of the market that have been really beaten down, and still look attractive. The first area I am looking to add exposure to is biotechs (XBI). Roche juse completed its offer to buy all of Genentech (DNA) for $95, Gilead (GILD) bought a company this morning, and action in the space is heating up.