Career News 24/7: STOCKS MELT UP TO AN ALL-TIME HIGH: Here's What You Need To Know, May 14, 2013

Tuesday, May 14, 2013

STOCKS MELT UP TO AN ALL-TIME HIGH: Here's What You Need To Know, May 14, 2013

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Tuesday, May 14, 2013

Stocks started the day at an all-time high and only rocketed higher.

First the scoreboard:

Dow: 15,215, +123.5 pts, +0.8%
S&P 500: 1,650, +16.5 pts, +1.0%
NASDAQ: 3,462, +23.8 pts, +0.6%

And now the top stories:

U.S. stock market futures were telling us that stocks were supposed to trade lower today. However, things turned around a little before 8:00 AM ET. That was when influential hedge fund manager David Tepper appeared on CNBC and presented his uber-bullish case for stocks. To sum things up, he noted that the global economy was improving and global central banks were easing. In the U.S., Tepper noted that the economy would be doing even better if it could just find more people to work in its housing industry.
Tepper also held up a chart of the equity risk premium during his appearance. The equity risk premium can be defined simply as the expected return on a broad stock market index in excess of the long-term risk-free rate, which is often measured by a government bond yield. The higher the better. And it's at a historically high level. Experts like Aswath Damodaran, Jim O'Neill, Lazslo Birinyi, and Barry Ritholtz have all noted the bullish nature of this metric.
Interestingly, the VIX — a measure of fear and volatility — jumped 1.6% today. Typically, when stocks rally, the VIX falls or goes nowhere. From Stifel Nicolaus' Dave Lutz: "We are getting a lot of questions about the upside move in the VIX today, despite the spike higher in Equities. While there is certainly a valid argument that people are buying protection against this spike higher (Fade the “Tepper Rally”) – A lot of smart Volatility guys are telling me it’s actually due to fear of a “Melt Higher”. "
Shares of electric car maker Tesla surged at the open, but eventually ended down 5% on the day. In a bullish note to clients this morning, Morgan Stanley's Adam Jonas officially declared Tesla to be "America's 4th Automaker." Jonas raised his price target to $103 from $47. The stock closed at $83.
Apple shares tumbled late in the afternoon and closed down 2% for the day on no obvious news.
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