Stock Market News for June 18, 2009

U.S. stocks declined for the third consecutive day after Standard & Poor’s cut its credit ratings and outlooks for 22 banks and bellwether FedEx Corp’s weak profit forecast reignited worries of a prolonged recession.  Nevertheless, consumer and technology stocks helped Nasdaq end the day higher with a 0.7% gain.

Pre-market futures suggest a flat opening as traders look for concrete signs of an economic recovery, amid fears of increased government interventions and a crushed economic rebound.

Commodities and financial shares led the decliners yesterday, but healthcare stocks rose after Democratic leaders began working on a healthcare overhaul that would make it mandatory for all Americans to have health insurance coverage.  Shares traded in a narrow range, swinging between gains and losses.  Among S&P industry groups, financials led the declining issues with a 2.2% fall.  Oil and basic materials both recorded a 1.6% fall.  Stocks of consumer services companies gained 1.1%, with drug retailers rising 2.3%.

Among financial sector issues, Bank of America (NYSE:BAC - Analyst Report) fell 3.4%, Citigroup (NYSE:C - Analyst Report) plunged 5.2% and Wells Fargo (NYSE:WFC - Analyst Report) recording a 5.4% decline.  JP Morgan (NYSE:JPM - Analyst Report), Goldman Sachs (NYSE:GS - Analyst Report), State Street (NYSE:STT - Snapshot Report) and Morgan Stanley (NYSE:MS - Snapshot Report) repaid funds borrowed under the government’s TARP program.  The Obama Administration’s proposed plan for a major financial system overhaul to counter the "cascade of mistakes and missed opportunities of the past decade," however, could not boost sentiments, even as $68 billion of TARP funds were repaid on Wednesday.  S&P, on its part, cited less favorable conditions industry-wide and greater volatility in financial markets for its decision to lower ratings on banks. Banks mentioned included Regions Financial (NYSE:RF - Analyst Report), Wells Fargo (NYSE:WFC - Analyst Report), Capitol One Financial (NYSE:COF - Analyst Report) and PNC (NYSE:PNC - Snapshot Report).

Technology stocks, nevertheless, showed some resistance, riding high on a number of analyst upgrades and a better-than-expected forecast from Adobe Systems (NASDAQ:ADBE - Analyst Report). Merrill/BoA upended its rating on Texas Instruments (NYSE:TXN - Analyst Report) from "underperform" to its US I Focus List with a $27 target, noting its expected margin expansion even as the firm faces only modest cyclical recovery prospects. Qualcomm (NASDAQ:QCOM - Analyst Report) rose after Goldman Sachs (NYSE:GS - Analyst Report) added the firm to its conviction buy list, citing a raised global handset forecast along with an undervalued royalty business.

Chevron (NYSE:CVX - Analyst Report) shares declined 1.5% after weekly crude stockpiles showed a larger-than-expected decline of 3.87 million barrels.

Among corporate releases slated for today are JM Smucker (NYSE:SJM - Snapshot Report) and Discover Financial Services (NYSE:DFS - Snapshot Report); Research in Motion (NASDAQ:RIMM - Analyst Report) is expected to report results after today's close. Treasury Secretary Geithner is scheduled to testify in a House committee hearing on financial regulation. Jefferies' Healthcare Conference continues for its third and final session.