Stock Market News for June 26, 2009

U.S. stocks advanced the most in three weeks, helped by optimism about the retail sector and Fed Chairman Ben Bernanke's defense of the central bank's role in Bank of America/Merrill (NYSE:BAC - Analyst Report) deal.  Stocks got a boost from Bed Bath and Beyond's (NASDAQ:BBBY - Snapshot Report) improved quarterly earnings and a JC Penney (NYSE:JCP - Analyst Report) upgrade.  The S&P 500 index jumped 2.1% and went into positive territory for the year.  Tech-heavy Nasdaq jumped 37 points, or 2.1%, and the Dow Jones Industrial Average matched S&P and Nasdaq's advance.  Treasury prices went sharply higher after a successful $27 billion 7-year notes auction.  Volume on the NYSE remained light with only 1.2 billion shares exchanging hands and advancing shares outpaced declining issues by a five-to-one margin.  The Vix volatility index dropped to its lowest since September 11, easing 9.3% to 26.36.     

Today's premarket futures suggest a mixed opening on news that Australian airliner Quantas Airways has canceled orders for 15 Boeing 787s, citing tough economic conditions. 

Lennar's (NYSE:LEN - Snapshot Report) report on order improvements suggested the housing scenario is improving.  Gains were broad-based yesterday as basic material shares jumped 3.0%, healthcare and consumer services were up 2.7%, industrials rose 2.5%, and oil and gas advanced 2.3%.  Commodity-related shares also rose and healthcare issues advanced on news that Senate negotiators had restrained the price tag on Obama's proposed healthcare reform bill to a target of $1 trillion over ten years.  DJIA components Merck (NYSE:MRK - Analyst Report) rose 4.4% and Pfizer (NYSE:PFE - Analyst Report) advanced 4.1%.  Technology issues advanced 2% after Micron (NYSE:MU - Snapshot Report) reported better-than-expected earnings and Palm's (NASDAQ:PALM - Analyst Report) loss was smaller-than-expected.

As consumer spending is being increasingly considered as the cornerstone of an economic recovery, a 14% jump in Bed Bath and Beyond's (NASDAQ:BBBY - Snapshot Report) first quarter earnings and a JP Morgan (NYSE:JPM - Analyst Report) upgrade of JC Penney (NYSE:JCP - Analyst Report) to "overweight" with an increased price target of $33 from $28, provided a boost to retailers.  Shares of retailers advanced 3.8%, led by gains in Bed Bath and Beyond (NASDAQ:BBBY - Snapshot Report) of 9.5%, Saks (NYSE:SKS - Analyst Report) of 6.7%, and JC Penney (NYSE:JCP - Analyst Report) of 6.0%.

With the second-quarter scheduled to end early next week, most money managers have begun their window dressing by selling some equities on losses and buying this quarter's some of best stocks.  That is likely to increase volatility in the coming sessions.