Gains continue for stocks, though moves are small and volumes light. The Dow (DJI) closed the session with a gain of 2.95 points to 10,567.33. The S&P 500 (SPX) added 5.16 points to 1,145.61. The Nasdaq (COMP) tacked on 18.27 points to 2,358.95. Volume came in at 1.14 billion shares on the NYSE and 2.51 billion shares on the Naz. Market breadth was positive by a 21-to-10 and 18-to-10 margin on the Big Board and Naz respectively.

Financials led the gains Wednesday on positive analyst comments and merger rumors. Citigroup (C) shares gained 3.66 percent to $3.96 on positive comments from Rochdale analyst Dick Bove. Mr. Bove expects bank stocks to gain popularity as dividends increase. Citi also priced its preferred offering of 80 million shares at $25 with an 8.5 percent yield.

Rumors that Barclays (BCS) is looking to buy a U.S. bank also provided gains for several stocks. Shares of Fifth Third (FITB), PNC (PNC) and Suntrust (STI) all gained more than 2 percent. BCS shares were down nearly half a percent, but the Financial Select Sector SPDRs (XLF) tacked on 1.11 percent to 15.47.

Yesterday was the one year anniversary of the bear market bottom. Today was a different anniversary, marking the 10 year anniversary of the dot-com bubble. Nonetheless, tech stocks outperformed the broader market Wednesday led by gains in Google (GOOG), up 3.02 percent; and Broadcom (BRCM), rising 3.79 percent.

Biotech stocks have gotten a lot of attention of late and this continued today. Shares of Intermune (ITMN) soared 64.72 percent to a price of $38.38 on news its lung scarring drug had received backing from the FDA. Less than a week ago, the stock was trading below $15 a share.

Retailers have been in the news this past week with chain store sales stronger than expected as reported last week and retail sales data for February due out Friday. American Eagle Outfitters (AEO) announced earnings for the quarter that were in line with expectations, though revenues came in a bit higher. The clothing retailer also provided in line guidance for the current quarter, although same-store sales rose 5.0 percent, well ahead of the consensus for a 2.7 percent gain. AEO shares gained 6.12 percent to close at $18.20.

Thursday will see the release of data on international trade and the closely watched jobless claims data. Estimates are for the trade deficit to increase slightly to $-41.0 billion in January from $-40.2 billion in December. Jobless claims are expected to fall by 9,000 to a level of 460,000. As stocks have risen the past few sessions, albeit at a slow pace, the CBOE Market Volatility Index (VIX) has also moved slightly higher. This is a positive for the bulls as it shows some concern which is necessary to keep stocks moving higher. Nonetheless, the VIX remains near support and bad news could result in a mild correction.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site

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