Market Recap: Stocks Bounce Back from Tuesday's Plunge, Muscle Modestly Higher

              

The Dow Jones Industrial Average closed Tuesday at its lowest price since its Nov. 20 nadir, and so it seemed logical to assume the market would enjoy a modest bounce today. As it turns out, "modest" is the key word -- stocks collected hesitant gains following yesterday's sell-off, but a great deal of uncertainty about the government's financial rescue plan effectively prevented an all-out rally. In fact, investors' nerves were so frayed that equities dipped briefly into negative territory in afternoon trading. However, news that the Senate and the House of Representatives reached a tentative compromise on a $789 billion stimulus package contributed to a late-session bounce.

The Dow Jones Industrial Average (DJIA – 7,939.53) finished 50.7 points higher, or 0.6%, though the blue-chip barometer couldn't find enough buyers to help it reclaim the psychologically critical 8,000 level. Twenty of the Dow's 30 components rallied, led by yesterday's laggards -- financial firms Citigroup (C), up 10.2%, and Bank of America (BAC), up 9.2%. Walt Disney (DIS) paced the 9 declining issues, while Intel (INTC) shares finished flat.

The S&P 500 Index (SPX – 833.74) tacked on 6.6 points, or 0.8%, maintaining its foothold atop short-term support at 820. Finally, the Nasdaq Composite (COMP – 1,530.50) collected the slimmest gain, thanks to weakness in tech-sector bellwether Research In Motion Limited (RIMM). The COMP rose 5.8 points, or 0.4%, by the close.

Turning to equities in focus, Yamana Gold (AUY) was the target of heavy put volume after a bullish "buy" initiation at UBS ... An analyst suggested that Goldman Sachs Group (GS) and Morgan Stanley (MS) could potentially ace Geithner's financial "stress test" ... Applied Materials (AMAT) confessed to a quarterly loss for the first time since 2003 ... NVIDIA Corp. (NVDA) was hit with a downgrade after reporting a wider-than-expected quarterly loss ... Calls are the option of choice on Arch Coal (ACI), despite looming technical resistance ... and today's Quote of the Day comes from the irrepressible Rep. Barney Frank, chairman of the House Financial Services Committee. Frank presided today over an interrogation of the heads of 8 major financial institutions, and their potentially nefarious misuse of TARP funds. The outspoken congressman didn't hold back on the topic of CEO bonuses:

"Why in the world are some of the most highly-paid, talented people... why do you need to be bribed to act in the interests of your company?... Why do you need bonuses? Why can't you just get a salary to do your job?"

But these weren't the only headlines hitting the Street today. Click on the links below for our Daily Market Blog coverage of:

• American International Group (AIG)
• Sirius XM Radio (SIRI)
• Google (GOOG)
• and Caterpillar (CAT)

And, in case you missed it, Joseph Hargett assessed the prospects for AutoZone (AZO) in this week's edition of The Casual Contrarian. Click here to watch.

For today's activity in crude oil, gold futures, options, and more, turn to page 2.

Crude oil futures extended their decline today, with the front-month contract closing at its lowest price since Jan. 15. Lingering economic concerns helped contribute to oil's slide, but the focus today was on yet another bearish inventory report. The Energy Information Administration (EIA) reported that crude supplies climbed last week to 350.8 million barrels, marking an 18-month peak. Meanwhile, inventories at the Cushing, Oklahoma delivery point for Nymex futures jumped to a record high 34.9 million barrels. Against this backdrop, crude oil for March delivery gave up $1.61, or 4.3%, to finish at $35.94 per barrel.

Conversely, gold futures touched their highest price in nearly 7 months, as uncertainty over the bailout plan sparked a fresh round of safe-haven buying. The most active April contract added $30.30, or 3.3%, to finish at $944.50 per ounce, while the front-month February contract gained $30.10 to settle at $943.80 per ounce. That finish marked the highest closing price for a front-month gold contract since July 2008.

Levels to Watch in Trading:

Dow Jones Industrial Average (DJIA – 7,939.53) - support at 7,500; resistance at 9,000

S&P 500 Index (SPX – 833.74) - support at 750; resistance at 1,000

Nasdaq Composite (COMP – 1,530.50) - support at 1,300; resistance at 1,750

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