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Daily Blog -02/26/09- 1:00 P.M.

Another Big Bounce in the Banks

The banking indices were market leaders this morning but the major averages were struggling to keep up with the rebound in financial stocks. Overseas markets were mixed. The Japanese NIKKEI was virtually flat. The Hong Kong Hang Seng lost 0.8%. Meanwhile the Chinese Shanghai index fell 3.8%. The situation looked more promising in Europe. The French CAC 40 rose 1.7%. The German DAX rallied 2.5%. London's FTSE surged 1.7%.

The move in Europe was sparked by a big bounce in financials. The Royal Bank of Scotland (RBS) reported earnings with a loss of $34.2 billion. This was the biggest loss in English history and yet the stock rallied as investors had feared an even larger loss. RBS also announced major news that the British government had agreed to insure some $462 billion in assets in exchange for more preferred stock in RBS, which potentially raises the government's stake in RBS to almost 95% of the company.

This strength in European bank stocks helped lift the U.S. financial sector. The BIX banking index is up 9.2% and the BKX banking index is up 7%. Citigroup shares are not participating with the stock up 0.7% to $2.53. BAC is having a good day with an 8.7% gain near $5.60 a share. JPM is also a leader in today's rally with an 8.4% gain to $23.50.

Another sector showing strength today is energy. The OIX oil index is up 1.9% and the more volatile OSX oil services index is up 4%. The move is being fueled by a big rally in crude oil. Oil is up another 6% or $2.60 and trading above $45.00 a barrel. This gain follows yesterday's 6% rally. The USO oil ETF is up 3.8% and the DXO is up 6.8% to $2.34.

Another commodity making news is gold. Gold continues to see profit taking. The shiny metal is down four days in a row. Gold futures were off 3% today while the GLD gold ETF is only down 0.7%. Gold futures have fallen from $1,000 an ounce to less than $940 an ounce in just four days.

You can see from these charts that the major U.S. indices aren't moving much today.

Chart of the S&P 500:

Chart of the NASDAQ:

Chart of the Dow Industrials:

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