Market Talk

- Can we have new regulation cake, and eat it too? “After 30 years of deregulation, it’s time for the rebirth of regulation: Not heavy-handed and unnecessarily costly regulation, but regulation that’s up to the task of protecting the public from companies and executives that will do almost anything to make a buck,” former labor secretary Robert Reich says.

- It’s still not clear whether the aftermath of the Great Recession will result in new financial regulation that’s “more than window dressing designed to appease voters without actually curtailing financial sector activity,” University of Oregon economics professor Mark Thoma writes.

- Deals on Palm phones are there for the taking, with Amazon (AMZN) selling the Pre Plus only for a penny. “That’s right, the next generation version of the phone that former Palm Ceo Ed Colligan once described as a ‘significantly better product’ deserving of a higher price than Apple’s (AAPL) iPhone is selling for a penny at Amazon,” Digital Daily blogger John Paczkowski says.

- Recent weakness in China stock market doesn’t bode well, Peter Boockvar notes. Shanghai index currently sits at lowest level since last autumn, it’s down 11 of the past 13 sessions and off 14% year-to-date.

- The nature of contagion is that people act on the rumor and ignore everything else,” Ryan Avent writes at Economist’s Free Exchange blog. “Back in 2008, markets attacked financial firms indiscriminately, even as bank executives pleaded that their finances were sound. They were, in some cases, quite right. But liquidity crises, if left unchecked, become insolvency crises. The panic becomes self-fulfilling.”

- Pimco CEO Mohamed El-Erian says the Greek crisis is far from over.

- S&P 500 fast approaching its 50-day moving average. “While the 50-day is typically thought of as a key support level, the last time it came into play for the S&P 500 was back in January, and the index didn’t blink before breaking well below it back then,” Bespoke says.

- Microsoft’s (MSFT) Internet Explorer — the 300-pound gorilla of the Internet browser market — continues to lose weight.

- Peter Kafka live blogs News Corp’s earnings call with Rupert Murdoch.

- Michael Comeau at Minyanville explains why Apple (AAPL) can pretty much get away with whatever it wants.

Fresh off the Dow posting its second-worst drop of 2010, our WSJ colleague Matt Phillips decides to reminisce about the five worst trading sessions of the year. From MarketBeat:

1. Feb. 4 — The Dow fell 268.37 points, its worst one-day point slide since April 20, 2009, and briefly dipped below the psychologically important 10000 level for the first time since November. All in all it fell 2.6% for the day to end at 10002.18, a three-month low, thanks to fears about the global economy and sovereign credit.

2. Jan. 22 — The Dow fell 2.1% to 10172.98 on news out of Washington, where more Democratic senators came out against the nomination of Ben Bernanke to a second term as Federal Reserve chairman.

3. Jan. 21 — The Dow fell 213.27 points, or 2%, to 10389.88, amid President Obama’s announcement of plans to limit banks’ size and to move back toward the long-standing division between commercial banks, which cater to the broad public, and investment firms, which take bigger risks and trade for their own accounts.

4. April 27 –The Dow fell 213.04, or 1.9%, to 10991.99, on renewed concern about debt contagion in Europe. Standard & Poor’s sparked the selloff by cutting Greece’s debt rating to below investment grade, or “junk,” and cutting Portugal’s rating two notches. The move on Portugal inflamed investors’ fears that Greece’s woes are starting to spread.

5. April 30 — The Dow Jones Industrial Average tumbled 158.71 points, or 1.4%, to 11008.61, driven by declines in all 30 of its components. News that Goldman Sachs Group was the subject of a criminal probe prompted investors to sell financial shares.

US stocks tumble across the board, posting their worst declines in three months, as the Greek bailout is proving insufficient in quelling the roiling fears about sovereign debt across southern Europe.

DJIA, which posts its fourth straight triple-digit move, drops 225, or 2%, to 10927, its second-largest point decline of the year. S&P 500 falls 29 to 1174; all 10 sectors finish in the red. Materials and industrials each drop more than 3%. Nasdaq Comp plunges 75 to 2424, its biggest decline since January 2009.

How about all that optimism that swirled through the market just 24 hours ago? That didn’t last very long. Volatility surges — CBOE’s VIX rises 19%. Euro plunges to a fresh 12-month low against the dollar. Oil drops 4%.

Media giant News Corp (NWS NWSA) rises 2.5% in after-hours trading as F3Q revenue rose 19% on “Avatar” results and a rebounding advertising market. News Corp owns Dow Jones Newswires, publisher of this blog.

Intermune (ITMN) shares plunge in late trading after the FDA rejects its application for lung-disease drug pirfenidone and requests another clinical trial, something that is expensive and time consuming. ITMN off 78% to $9.94 in after-hours trading.

You know, at every step, from the first signs of strains in the subprime market right up until today, there have been these official pronouncements that all is well, the problems are contained, that it’s a small market, or there’s a bazooka on the table, or a loaded gun, or something that’s going to scare off the bond vigilantes and speculators from forcing the hand of whatever individual/corporation/industry/sovereignity has gotten itself into trouble.

And yet, the ramifications of the credit crisis keep rolling through markets and nations, despite all officials attempt to corral it. It’ll end when it ends, no matter how much money governments and central banks throw at it. Here’s a News Hub Extra where we break it down.

This is why they call it the risk trade.

US stocks are riding another volatile wave, opening sharply to the downside and erasing all of yesterday’s gains. Remember all the cheerleading yesterday about the Greek bailout adding clarity to Europe’s debt situation? That didn’t last long.

Traders are now pegging the declines to increasing worries over euro-zone debt, which goes to show that throwing money around may offer a temporary solution, very temporary in some cases, but doesn’t solve long-term problems.

As for Monday’s run-up, Art Cashin, director of floor operations at UBS, sheds some light on the market action in his morning note:

The talking heads claimed to find lots of contributors to Monday’s rally. They cited various bits of economic data. Most tried to attribute it to the Greek rescue package (even though Europe sold off on that news and the Euro weakened noticeably).

On the floor, the rally looked very much like a technical rebound in a thinly traded market.

More importantly, this market, which slowly and steadily churned out gains over the last few months, is quickly returning to its volatile ways. The Dow Jones Industrial Average has had four triple-digit moves in the last six sessions, not exactly a vote of confidence.

The index seems poised to extend that streak as it was recently off 223, or 2%, at 10930. S&P 500 was also off 26 at 1176. Materials, industrials and tech leading the declines as all are down more than 3%.

JPMorgan chartist Michael Krauss barely finished saying how he was impressed that S&P 500 has been able to trade sideways above 1175-1180 support amid sovereign credit fears and the like.

Well, that may be ending soon enough.

“We’d get bearish below 1170, which would entail a test of the key 1150 January high,” Krauss said in a note today.

And as stocks plunge, the stock market’s fear gauge has shot up more than 20% and moved to its highest intraday level since early February. After closing yesterday at 20.19, the CBOE’s VIX was recently up 23% to 24.87.

Let the roller coaster ride continue.

(John Shipman and Tennille Tracy contributed to this post.)

Looking at a list of the earnings numbers for the S&P 500 companies, what stands out the most are the almost astronomical profit-growth numbers some of these companies are reporting. The numbers are off the charts: 3,000%, 4,000%, 5,000%. Don’t bother asking if that’s sustainable; of course it isn’t. The numbers are more the result of the first half of the equation — the year-ago period — than the second half, these past three months. Still, the numbers are the numbers.

But it hasn’t been a stellar quarter for every publicly traded company. Some, actually, are still struggling, whether it’s competition of industry issues. From today’s Upshot:

While some first-quarter earnings have been downright astronomical—Reynolds American Inc.’s earnings tripled, Dow Chemical Co.’s quadrupled and Texas Instruments Inc.’s quintupled, there are some big companies laboring their way back.

Companies in the S&P 500-Stock Index are on track to post a year-over-year 84% profit gain, the best on record, according to ratings agency Standard & Poor’s. And the vast majority are posting numbers well above last year’s woeful quarter.

Still, some of the results are pretty awful. Valero Energy Corp. swung to a loss amid tight refining margins. Stanley Black & Decker suffered a loss on merger-related charges. Regions Financial Corp. swung to a $255 million quarterly loss as the regional bank sharply increased provisions for loan losses.

Yesterday’s relief over the big fat Greek bailout seems to have waned substantially, with European stock markets selling off and the euro not looking too sturdy.

Sentiment is Asia overnight wasn’t too hot either. China’s Shanghai Composite was off 1.2% and down 11 of last 13 sessions to close at lowest level since October. US dollar adding to yesterday’s gains, dollar index recently at 82.75.

Merck and Pfizer 1Q results already out; Merck outlook seems cautious, Pfizer maintains outlook, shares up 1.1% premarket. March factory orders and pending home sales both due at 10:00 a.m. Amid stronger dollar, oil slides back below $85/bbl. S&P futures off 8.40, DJ futures down 65. Ten-year higher, yield at 3.67%.