Market Talk

These straight-up bursts into the closing bell are getting a little too predictable. Lazy, modest gains during most of the session for stocks, and then bam — the Dow Industrials sprint into the close, as if they’re in a hurry to get somewhere.

Not much in the news ahead of a holiday weekend to motivate buyers or sellers today, so markets stick to their months-long upward bias. Stronger euro serves as positive influence. Energy, consumer discretionary stocks lead sector advancers — that’s always amusing, those two moving up in tandem, since what’s usually good for energy (high oil prices), is bad for consumers’ discretionary spending.

Tech and materials pull back, with materials separating from its usual correlation to energy.

Three stocks — Chevron, CAT and Travelers — drive more than half the Dow’s advance. How many times have we seen that before? CAT and its relatively miniscule float is almost always among the names pushing the Dow around during days like this. If it’s not Chevron or Travelers joining in, it’s typically IBM and Boeing.

DJIA rises 73.11 to 12391.25 (0.6%), while Nasdaq Comp adds a more modest 2.37 (less than 0.1%) to 2833.95, and S&P 500 ends 2.58 (0.2%) higher at 1343.01.

Best three-week performance for the DJIA since just before the swoon last August; S&P 500 makes it 17 winners out of 21 sessions.

Apple and IBM’s earnings (blow out earning, in the case of the former) can’t overcome the market’s general malaise today, as Goldman’s earnings and the housing-starts report were two notable disappointments.

US stocks looking weak, even though the Wall Street spin on Friday’s jobs report — that it would spark a deal on the Bush tax cuts — seems to be playing out quickly.

Word out of DC is a deal is close that would extend the cuts for everybody, and also extend jobless bennies for an unspecified amount of time. Meanwhile, Bernanke suggested on “60 Minutes” last night that he could expand QE2, “if needed,” and Europe’s leaders are getting together to discuss expanding their bailout fund.

Is there any “austerity” in there, anywhere? Bueller? Bueller? Are the only people sharing the sacrifices the common schlubs in Greece and Ireland?

S&P futures down 3.80, DJ futures down 18. Ten-year yield down to 2.97%. Euro down sharply, lately at $1.3269.

- Deal-making has been coming back, with another spate of deals and potential deals announced yesterday, but with one notable difference, John Curran writes at Time’s Curious Capitalist blog. “The big difference is, this merger-fest probably won’t result in higher stock prices.”

- “The Fed may need to do something to shock markets into believing that it is serious about reversing the decline in (inflation) expectations,” Ryan Avent notes at The Economist’s Free Exchange blog. “Without a firm commitment to an eye-popping number, markets may simply believe that the Fed will pull the plug on the purchases before the job is done — a belief that will undermine the impact of the purchases.”

- “What’s the bear case on QE2?” ponders Minyanville’s Todd Harrison. “Think Rocky Balboa at the end of the first movie; there ain’t gonna be no rematch, and there ain’t gonna be no QE3,” Harrison notes. “That’s the risk for policymakers. It’s the next to last bullet (and you know where the last one is pointed).”

- Hewlett-Packard (HPQ) maintains “emulating Apple is not part of our strategy,” but it wouldn’t hurt H-P to focus on excellence in user experience, Digital Daily blogger John Paczkowski says. “Because if it nails that and then ‘doubles down’ on webOS as promised, we could see some very interesting things coming out of H-P in the months ahead.”

- Apple shares dropped as much as 5.6% Tuesday before closing down 1.5%. Rumors swirled in the morning that Apple COO Tim Cook could become the new Hewlett-Packard chief. But that rumor was quickly dismissed.

- CNet’s Software Interrupted blog points out that Google (GOOG) has acquired 23 companies so far this year, compared with none for Microsoft (MSFT). That means MSFT, already fighting what many consider a losing battle in search, is also losing out in top start-up technologies like mobile and social networking, as well as foregoing some of the best talent available.

- To the delight of nerds across the country, it turns out that Apple’s (AAPL) new Apple TV can be hacked just like an iPhone, iPad and iPod Touch, a popular group of hackers announced last night on their blog. The group, known as the “Dev-Team,” have for the past few years been finding ways to run unauthorized software on AAPL’s popular mobile devices.

- The churn among Yahoo’s (YHOO) executive ranks continues, as Jimmy Pitaro, VP of Media, is expected to leave the company soon, reports All Things D blogger Kara Swisher. “Adding Pitaro to the pile will only increase pressure on [CEO Carol] Bartz…to show investors that Yahoo has a clear plan amidst the executive turmoil.”

- AOL goes on a spending spree, scooping up TechCrunch, one of the most influential blogs in Silicon Valley, as well as Web video-syndication company 5min Media.

- Two wins later, Jason Gay says its time for NY Jets QB Mark Sanchez to give up his blanky.

- With earnings season only a few weeks away, Josh Brown notes a pattern that’s developed in last six quarters. “A run up in stocks at the beginning of earnings season’s opening month followed by the almost inevitable denouement as hearts are broken and focus is diverted elsewhere,” he says. “The Ghosts of Earnings Past are haunting the nascent rally even as you read this.”

- Now that the recession is technically over, Yves Smith wonders if this is what a recovery really feels like. “The ugly fact is that serious financial crises take a very long time to resolve and result in a permanent fall in the standard of living,” she writes. “The best we can hope for, absent aggressive government action, is an economy that bumps along at a low level of what is technically growth, but is very far from what most businessmen and consumers would consider healthy.”

- Larry Summers’ decision to step down as one of Obama’s top economic advisers is a long-time coming, FusionIQ CEO Barry Ritholtz says. “Summers was a defender of the status quo…The change people voted for never appeared, and the Summers-led economic team gave us two more years of Bush bailout policies. For that humongous error, his departure is a welcome change.”

- Mark Thoma questions why the Fed’s taking a “wait and see” approach on whether more QE or other stimulative measures are needed for the economy. “The Fed should have learned that it needs to act preemptively from its mistake in dealing with the housing bubble,” Thoma says. “Cleaning up after the fact, which is what ‘wait and see’ amounts to, is inferior to preventing problems before they appear.”

- Google’s M&A department has thrown lots of money at many different ideas, but it’s hard to argue with some of its successful wagers throughout the years, including Android and YouTube, Digital Daily blogger John Paczkowski says. “Of course that’s just two acquisitions out of the 80 or so that Google’s made since 2001,” he notes. “But obviously the threat of a clunker investment or two isn’t going to temper Google’s aggressive acquisition strategy.”

- Bullish sentiment among advisors hit 41.4%, according to the Investors Intelligence weekly sentiment survey, which marks its highest level since early August. But, as Bespoke points out, bullish sentiment has hit that level a few times in recent months, with stocks not experiencing much success in the aftermath. “Will the third time be the charm or are we in for more of the same?”

- Keep an eye on the “quiet expansion” of Treasury Secretary Tim Geithner’s duties, especially in the aftermath of Larry Summers’ resignation, Yves Smith notes at naked capitalism. “The speculation has long been that he would not stay much beyond the mid-terms, but that looks like a far less sure bet than it did a few months ago.”

- Housing prices continue falling in wake of government’s home-buyer tax credit, dropping to lowest level in nearly six years, according to FHFA home price index. “With the two-year tax credit experience in the rearview mirror, officials probably need to be thinking about going back to the policy drawing board,” Ryan Avent writes.

- The recession’s officially over, but Tyler Cowen says it’s premature to believe the economy’s bottoming-out process is over. “It looks like a recovery only because things were, for a while, so extremely bad. I don’t yet think of us as being in a true recovery mode at all.”

- Runners are abandoning races with quirky distances in favor of the standard marathon or half marathon.

- “We have the specter of Greece’s finance minister insisting really, no really, it will never ever default, or default via restructuring,” Yves Smith quips at naked capitalism. “Now given the unfortunate accident of timing, these protests sound awfully Dick Fuld like, although the better parallel is probably Mexico, which kept insisting in 1994, no way, no how would it need to restructure, despite having a lot of dollar denominated obligations and an untenable currency peg,” she adds. “And it was OK, until it wasn’t.”

- As chatter ramps up about new stimulus plans, FusionIQ CEO Barry Ritholtz has his own ideas for what he would do if given $1T to stimulate the economy. “Some folks believe the government should do nothing, spend no money, focus on balancing the budget,” Ritholtz says. “But is the ideal time to begin a new diet and exercise regime when you have pneumonia? The time to reduce the government’s economic deficit and footprint is during a robust expansion, not during (or just after) a contraction.”

- S&P 500 still hasn’t eclipsed its August highs, but market breadth has indicated underlying strength in the September rally, Bespoke Investment Group says. About 80% of S&P 500 stocks are trading above their 50-day moving averages, which is higher than last month. “This isn’t quite to the highest levels seen over the last year, but it’s getting close.”

- “It takes jobs to create households, and usually housing is the key driver for employment growth in the early stages of a recovery,” Calculated Risk says. “So this is a trap: the excess supply means weak employment growth, leading to few new households, so the excess supply is absorbed slowly — putting off more robust employment growth.”

- JPMorgan Chase (JPM) finally issues a formal apology for the web problems that plagued its online banking service earlier this week. “We are sorry for the difficulties that recently affected Chase.com, and we apologize for not communicating better with you during this issue,” JPM says on its website. The apology is notable as many bloggers and folks on Twitter had criticized JPM for its failure to properly communicate this issue with its customers.

- Google Voice cofounder Craig Walker is leaving his role as a manager of real-time communications at Google (GOOG) and returning to his entrepreneurial roots. Walker, who was previously chief executive of Grand Central and renamed Google Voice after its acquisition by GOOG in 2007, will become Google Venture’s first resident entrepreneur, TechCrunch reports.

- “With two strong divergent opinions on gold and low implied volatility levels, this could be an excellent time to buy options in order to establish speculative long or short positions in the metal,” Bill Luby writes.

- All Things D blogger Kara Swisher doesn’t sugarcoat her thoughts on Yahoo (YHOO) CEO Carol Bartz. “Her actions in regards to the Internet giant’s Asian relationships are about as bad as it gets these days.”

- Poverty rate climbed to 14.3% last year, while those lacking health insurance rose to 50.7 million from 46.3 million. Incomes fell slightly as households relied on government and family aid to weather the recession.

- For the city that never sleeps, take a look at some of Central Park’s midnight runners.

- The Dow has posted four-straight days of gains and sits at a 10-week high, all while Treasurys fall on supply; 2-year auction hits record low yield. “Suddenly, investors live in a perfect world: There’s enough money out there to push the stock market higher and keep bond yields down,” Tom Petruno writes at LA Times’ Money & Co blog. “Enjoy it while it lasts.”

- “I really don’t think people appreciate the huge dangers posed by a weak response to 9.5% unemployment, and the highest rate of long-term unemployment ever recorded,” Paul Krugman says. “The point is that while policy makers may think they’re being prudent and appropriately cautious in their responses to unemployment, there’s a good chance that they’re prudenting and cautiousing us into a long-term jobs catastrophe.”

-After a couple of failed attempts, the S&P 500 has finally broken through its downtrend from the April highs, Bespoke Investment Group points out. “The next level of potential resistance now lies just below the 1130 level, which is where the June rally fizzled as well as the flash crash closing low on May 6.”

- BP’s plans to sell about $30B in assets. “The sales could be the best response possible to the spill’s legacy — as could the company’s debt reduction and increased cashflow,” FT’s Alphaville says. “Well, great — BP is turning into a well-functioning litigation-offset machine. That comes at the expense, though, of knowing how it’s actually going to function in the future as a successful — and safe — oil company.”

- Average age of completed but unsold new homes was 12.4 months at end of June, historically high but well off peak levels hit earlier this year. “Like so much else about this recovery, this is an area where the data says things are improving, but remain at bad levels,” NYT’s Floyd Norris notes.

- The second-half slowdown is here, Calculated Risk writes. “I still think we will avoid a technical double dip recession, but that won’t matter to the people impacted by the slowdown.”

- “Q2 earnings for American companies have been remarkable for how disconnected they seem from from the actual economy,” Joe Weisenthal says at Money Game. “Now it could be that these good earnings will soon translate to hiring, and everything will be great. But watch out if the divergence occurs, because that will mean fresh anger and scorn from politicians, and everyone else.”

- Michael Schuman asks if the euro crisis is really over. “Europe may be able to patch up investor confidence by acting like problems are getting solved without actually solving them,” he says. “But that will only get Europe so far.”

- MarketBeat wonders if gold bugs are in retreat?

- “The Boston Red Sox may have beaten the New York Yankees to the punch to become the first billion-dollar baseball club in history,” Brett Arends writes at MarketWatch.

- SEC reaches a $550 million settlement with Goldman Sachs. “The regulators get to claim victory while the Eloi get to continue their frolic atop the fluffy clouds of privilege and untouchability,” Josh Brown writes at The Reformed Broker. “Nobody admits wrongdoing, rightdoing or frankly, admits anything at all for that matter.”

- “This is surely a massive win for Goldman, whose entire business was at stake if it was found guilty of serious wrongdoing,” Reuters blogger Felix Salmon says. “The risk, of course, is that Goldman’s victory here will only serve to exacerbate its arrogance. Could the Squids of West Street become even more insufferable, now?”

- Business Insider has a list of winners and losers in the Goldman fraud settlement case.

- Lots of data to digest this morning, and most of it isn’t promising. Producer prices fall for third straight month and manufacturing data was weak. Headline jobless claims number looks good, but seasonal adjustments played a large role in the better-than-expected figure. “Due to the seasonal issues around the adjustments with GM doing the opposite of what they’ve historically done has made initial claims more difficult to analyze for a few weeks,” says Miller Tabak’s Peter Boockvar. “One thing though is for sure, up to 3 million workers will be falling off the extended claims rolls as benefits run out.”

- Naked Capitalism blogger Yves Smith relays an interesting nugget from HousingWire: for every one home currently on the market, two are waiting to be sold. “The scary part here is this estimate of market overhang refers only to foreclosed and distressed property,” she says. “There is another category of hidden inventory, people who would like to sell but aren’t even listing their houses.”

- Oil has finally stopped gushing into the Gulf. For now, as BP tests a new containment cap.

- Apple’s (AAPL) acquisition of mapping company Poly9 marks the second maps-focused company AAPL has bought in the last year. “In the short term, and with Poly9 specifically, Apple is buying its Google Earth,” Business Insider’s Dan Frommer says. “But more broadly, Apple is preparing for life after Google.”

- H-P’s (HPQ) Android tablet, which was supposed to hit the market in 4Q, has been delayed and won’t ship before the end of the year, Digital Daily blogger John Paczkowski reports, citing anonymous sources. Reason for the delay aren’t clear. “Perhaps, H-P has decided to focus its resources on the future webOS slate PC that its new Palm unit is developing,” he says. “Or perhaps the company is reconsidering its multi-OS tablet strategy in light of the Palm acquisition. After all, H-P has said repeatedly it is ‘doubling down’ on webOS.”

- “Even as lenders struggle to pull themselves out of the credit crisis, signs of a new and potentially dangerous infatuation with risky borrowers are emerging,” WSJ reports.

- Pretty pumped to see Carlos Beltran patrolling center field once again for the Mets.

- BofA, Citi, JPMorgan and Goldman Sachs all racked up perfect trading quarters in 1Q, but the Kid Dynamite blogger is less than impressed with the ensuing analysis. “See, the probability of winning when your cost of funds is near zero and you can invest at positive interest rates at assets which are already being supported by the Government is probably closer to 100% than 50%.”

- “It’s no wonder that Goldman Sachs–perhaps the largest market maker in the world–consecutively avoids trading losses quarter after quarter,” FT’s Alphaville blog says. “That’s because when you’re making markets with no obligation to do so, you are in complete control. You dictate the terms. It’s very hard to lose.”

- EU’s nearly $1T bailout package stabilized Europe’s stock and bond markets this week, but hasn’t done much for the sliding euro.

- The online advertising business is improving from its dismal
performance a year ago, but how much of an improvement is tough to quantify.

- Paul Volcker’s candidness is undermining Obama. “It’s one thing for people in the private sector to express negative views about the future on the Eurozone, quite another for someone of Volcker’s stature who is playing a policy role for the Administration to undermine an initiative deemed so important that the President has thrown its weight behind it,” Yves Smith says.

- The number of people considered long-term unemployed sits at its highest level on record even as the economy has experienced four-straight months of net payroll growth. “Think about what that means: The new jobs that have been created so far seem to be going disproportionately to people out of work for only a short period,” Catherine Rampell writes.

- NBC canceling Law and Order could mean 8,000 people will join the unemployed ranks.

- Bespoke compiles a list of companies whose stocks have performed well on their earnings release days, but then declined the most since then. Topping the list, First Solar (FSLR) which rose 18% after posting earnings April 28, but since has dropped 20%.

- Well, that experiment didn’t last long. Google plans to stop selling its Nexus One on the Web.

- The summer of LeBron officially starts now. Mayor Bloomberg says he’ll give LeBron a “big sales pitch” to come to NY, but President Obama hopes the King goes to Chicago. LeBron, you can guest post here at Market Talk anytime you’d like if you become a Knickerbocker.

As huge NY fans, we were ecstatic to hear our colleague Veronica Dagher had the opportunity to interview Super Bowl XLII MVP Eli Manning and the NY Jets’ newest running back, LaDainian Tomlinson.

At Gatorade’s G Series Pro launch event in NYC, Manning and Little LT (sorry, guy, you’re in New York now, there’s only one true LT in this town) discuss the season ahead, the business of the NFL and who to trust with your money. Check out Veronica’s interviews here.