Bernanke Boosts Dow Past European Jitters

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"After a sharp sell-off toward the end of the day yesterday, major markets rebounded quite nicely today," said Schaeffer's Senior Equity Analyst Joe Bell on a day that saw the Dow Jones Industrial Average bounce back into positive territory on another big swing. "The February consumer confidence figure was better than expected, which helped keep the markets afloat. Investors also took notice of Bernanke's testimony to Congress, but his remarks had a familiar tone to them with no major surprises."

Continue reading for more on today's market, including :

plus...
  • The markets make another swing back up, what Fed Chairman Bernanke told Congress about the "sequester" and QE3, and how Level 3 Communications ( LVLT ) drew a lot of call trading despite a recent technical slide.

Thanks in part to strong consumer confidence numbers, the Dow Jones Industrial Average overcame Monday's jitters over Europe and Italy early, shaking off Tuesday's poor results from overseas -- and then rallied further on the comments by Federal Reserve Chairman Ben Bernanke. The Dow gained 116 points, jumping 0.8% to finish at 13,900.13. Of the 30 companies on the Dow, 23 advanced, led by Home Depot ( HD ), which climbed 5.7% on a surprisingly positive earnings report. Microsoft ( MSFT ) was unchanged. The six decliners were led by UnitedHealth ( UNH ), which fell 0.5%.

The S&P 500 Index (SPX) also won the day, climbing 9 points, or 0.6%, to close at 1,496.94 -- but failed to crack the 1,500 barrier for the second straight day. That's the first time the SPX has finished below 1,500 for two straight days since this level was overcome on Jan. 25. The Nasdaq Composite (COMP) gained 13 points, or 0.4%, to finish at 3,129.65.

After the biggest one-day jump since August 2011 on Monday, the CBOE Volatility Index (VIX) calmed down a bit, dropping 2.1 points, or 11.2%, to close at 16.87.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"The best thing about today's session had to be the housing data," Bell said of today's market action, which was also impacted by an increase in the average home price, according to the monthly Case-Shiller index. "Homebuilders have been getting hit hard the last few days and this morning's better-than-expected data helped push the sector higher."

3 Things to Know About Today's Market :

  • Federal Reserve Chairman Ben Bernanke made it clear in his semi-annual address to Congress that the QE3 program of bond-buybacks being used to stimulate the economy would continue. He also urged Congress to avoid the impending "sequester," the $85 billion in automatic spending cuts set to begin March 1. (MarketWatch)
  • Megabank JPMorgan Chase & Co. (JPM) is planning to cut 4,000 jobs in 2013 and shrink operations over the next two years. CEO Jamie Dimon announced these cuts to those attending the company's investor day, reversing earlier calls for more growth. (Fortune/CNN)
  • The music industry reported its first increase in global sales in more than a decade, with record sales growing 0.3% in 2012. (The New York Times)

5 Stocks We Were Watching Today :

  1. Telecommunications firm Level 3 Communications ( LVLT ) is much lower after its Feb. 11 earnings report, but that didn't stop traders from buying up calls at a fast pace, perhaps to protect shorted positions.
  2. Bears continued their put buying today on Clearwire Corporation (CLWR), buying 35 times the normal amount on the wireless technology firm.
  3. Morgan Stanley (MS) also was targeted by the bearish crowd, which is counting on a slide lower for the banking stock.
  4. One straddle buyer made a big bet on a big move in either direction from Ford Motor Company (F).
  5. Caterpillar Inc. (CAT) found itself the center of a swarm of bearish traders looking for a short-term slide over the next couple of weeks.

EARNINGS

For a look at today's options movers and commodities activity, head to page 2.

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities :

Crude futures closed down Tuesday, primarily because of the uncertainty created by Italy's anticlimactic general elections. Oil for April delivery dropped 48 cents, or 0.5%, to end the day at $92.63 per barrel -- a new year-to-date low for the contract.

Gold advanced, however, capitalizing on a fresh safe-haven bid. April-dated gold advanced $28.90, or 1.8%, to close at $1,615.50 per ounce.

SCHAEFFER'S MARKET POSTURE

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: APPL , HD , LVLT , MSFT , UNH

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