Market Talk

US stocks close the 1Q with with some gains, but a late selloff robs equities of much of their vigor, as the Dow puts in its worst first-quarter since 1939 (there’s those darn Great Depression comparisons again.)

DJIA rises 87 (1.2%) to 7609; for the month, the index gained about 7.7%, but for the quarter, it lost 13.3%, its worst 1Q in percentage terms since 1939. S&P 500 rises 10 (1.3%) to 798, Nasdaq Comp gains 27 (1.8%) to 1529. Late selling takes away some of the shine, as at one point the Dow was up nearly 200 points.

Despite the furious March rally, equities still had a horrible 1Q; financials are down nearly 30%, and the only sector to gain was tech.

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Lots of chatter over the purportedly double standard the government’s taking with the banks and auto makers. Much more government money’s been spent bailing out banks as oppposed to automakers, for one massively obvious example, but so far GM’s Rick Wagoner is the only chief who’s been forced out.

But concluding the Obama Administration is taking it easy on the banks may be a bit premature, James Surowiecki writes at The New Yorker’s Balance Sheet blog. For one thing, depending on the results of the stress tests, the government may change its stance on floundering financial institutions, he says.

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Newswires’ Stephen Wisnefski writes:

Who needs a job when you've got one of these puppies?

The incentives programs launched by Ford (F) and GM, which offer to cover payments if buyers loses their jobs, remove a key reason that consumers might defer a purchase, Edmunds.com says, noting that more-traditional incentives – such as rebates and cut-rate financing – have become ineffective.

Still, the auto makers will need to emphasize that their products are worth consideration in the first place, Edmunds says. The auto market research firm expects March US auto sales data that are set for release Wednesday to show a decline of 42% from a year ago.

We know times are tough, but if the auto makers can’t sell cars with this promotion, well, the only thing left is the government cheese route. And given who’s calling the shots in Detroit these days, that may not be far off.

Google (GOOG) announces on its corporate blog that it’ll enter the venture capital business and invest in a wide-range of industries, with roughly $100M committed to the fund throughout the next year, according to The Wall Street Journal.

But bloggers and venture capitalists question Google’s motives, which have been rumored since last July, saying it’s not a good idea for corporations to become venture capitalists.

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Newswires’ Matthias Rieker writes:

News that Colonial BancGroup (CNB) is close to a capital infusion apparently lifted the stock of BankUnited Financial (BKUNA) and Corus Bankshares (CORS).

Private equity investors have been waiting for a chance to gobble up a cheap stake in banks, but are wary of government intervention.

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Will Obama's tough stance on Detroit hold true?

The Obama administration came across as “appropriately stern and commanding” yesterday when discussing the fates of GM and Chrysler, certainly a contrast from its approach to fixing the banking sector, The Economist’s Free Exchange blog says.

But the true difference between the government’s plans for the automakers and banks may simply lie in the messenger, blog says. It’s simple – Treasury Secretary Tim Geithner hasn’t inspired confidence, while Obama “radiates it.”

“The administration’s approach here oozes competence and toughness, eve as the government prepares to extend billions in taxpayer dollars,” blog says. “That’s a pose it has yet to strike on the banking issue, where the appearance of a tough line is more crucial, even if Mr. Obama’s economic officials have determined that actual hardball would be counterproductive.”

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Traders are seizing on positive readings, er, reading, this morning, as US stocks regain their footing after two straight days of sharp selling. The DJIA’s up 112, S&P 500 is up 12, Nasdaq Comp’s up 26.

Every sector’s rising, with financials far outpacing the field; tech, utilities also sharply higher. On the Dow, IBM, JPMorgan, 3M lead gainers; Home Depot, GM, Boeing, J&J the only decliners.

GM’s down 9%, as the deathwatch is on, even as interim CEO Fritz Henderson says the company can meet a June 1 deadline to settle on a restructuring plan. Of course, back in December the auto maker was given three months to formulate a plan, and came up with zilch. But as Samuel Johnson said, nothing focuses the mind like a hanging.

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The chieftains of Citigroup, Bank of America and JP Morgan made a lot of noise a few weeks back about how their banks were profitable. In January and February. On an operating basis. It was enough to spark the current spate of buying throughout the market.

But what will really matter, Freidman Billings Ramsey says, isn’t whether they post a one-quarter profit; what matter’s is whether or not the trends are sustainable.

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Despite yesterday’s thrashing, US stocks still set to finish March in much better shape than where they began, and with a nice session today on Wall Street - as stock futures seem to be indicating – they could add to those gains.

As for the 1Q, ouch. Dow Industrials off 14% and S&P 500 down almost 13%. For DJIA, that’s the worst 1Q percentage-wise since 1939. But with this frenetic March, the index posted its best monthly gain since December 2003, and the best March since 2000. (March 2000? Still makes us shudder.)

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Wall Street regurgitates gains for a second straight session, after the Obama administration forces out GM’s CEO and the iconic auto maker edges closer to bankruptcy.

DJIA falls 254 (3.3%) to 7522; the index is now down 5.1% from the rally high it hit on Thursday. S&P 500 falls 28 (3.5%) to 788, crashing early through support at 790. Nasdaq Comp drops 43 (2.8%) to 1502. Late buying offers some balm.

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