STOCKS NEWS US-Fear gauge ends lower with S&P below 700

Stocks on the move [HOT-RTRS] Real-Time Equity news [U E]

U.S. stock market report [.N]
1730 ET-03March2009 VIX closes lower as S&P 500 falls below 700
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The CBOE Volatility Index, or VIX .VIX, the implied volatility measure of
the S&P 500 .SPX closed at 50.93, down 3.27 percent even as the S&P benchmark
fell below 700 for the first time since 1996. The move was unusual, given the
two indexes typically trade inversely. In VIX futures, the near-term contracts
have continued to distance themselves from the intermediate-term futures by
rallying at a faster rate. This backwardation in volatility pricing is bearish
as long as it continues to intensify, said Larry McMillan of McMillan Analysis
Corp, in a note. "The fact that the VIX remains well below the panic-driven
peaks of last fall illustrates that the market is functioning efficiently with
buyers able to secure options-related protection at a lower cost than last
year," said Interactive Brokers Group analyst Andrew Wilkinson. Intraday swings
are less expansive and premium sellers can feel a little more comfortable
despite a market grinding lower, he added.
Reuters Messaging: doris.frankel.reuters.com@reuters.net

1709 ET-03March2009 American Express bulls use calendar spread
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Option traders established bullish positions on American Express (AXP.N) as
its shares rose 6.9 percent to $11.82 after the U.S. government unveiled
details of a program to stabilize the financial system that could ease the
credit card company's financial costs. One sign of bullishness was the rash of
put selling in the March contract where the $10 and $12.50 strikes were heavily
sold, said Andrew Wilkinson, analyst at Interactive Brokers Group. Using a
calendar call spread, one investor reserved the bullishness for January 2011 by
selling 10,000 call options at the $20 strike for 95 cents in the January 2010
contract and buying the same amount of calls exactly a year later for $1.95
apiece. "In this case, he is looking through the financial chaos and taking a
longer-term view on American Express," he said. For this play to come good,
shares would need to nearly double from the current level.

Reuters Messaging: doris.frankel.reuters.com@reuters.net

1609 ET-03March2009 VIX falls even as S&P falls below 700
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The CBOE Volatility Index .VIX, the implied volatility measure of the
S&P 500 index .SPX, fell despite the drop in the S&P benchmark to new lows.
The two indexes typically trade inversely. The VIX slid 4.33 percent to 50.50
as the SPX fell to 696.33. "Option premiums have been easing as the market
traded in a narrow range, with SPX crossing the unchanged line several times
during the session," said Scott Fullman, director of derivative investment
strategy at WJB Capital Group. "Tuesday's activity followed a sharp sell-off
Monday that had lifted VIX to its highest level since Jan. 20, while also
ending above the upper Bollinger Band line. He said traders have been looking
for stocks to find support since the latest decline broke support on Feb. 17.
The VIX, while elevated vs. historic levels, has refused to deliver a classic
capitulation spike higher, said Larry McMillan of McMillan Analysis Corp. in a
note. "We continue to believe that a more sustained rally will likely occur
following a spike in the VIX (above 60)."

Reuters Messaging: doris.frankel.reuters.com@reuters.net
1510 ET 03March2009-GE's biggest misperceptions -- Sterne Agee
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- GE will never have to formally convert to a bank; failure to dramatically
shrink GE Capital by early 2010 or a sharp further fundamental deterioration in
GE Capital's earnings could force GE to consider raising additional funds or
evaluate converting to a bank to secure additional funds, significantly
reducing its long-term valuation prospects.

Source: Sterne Agee Research Note.

Reuters Messaging: ellis.mnyandu.reuters.com@reuters.net
1429 ET 03March2009-GE (GE.N) investment case - Sterne Agee analysis
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Increasingly less solid and more fundamentally handicapped company with
strong exposure to global industrial infrastructure megacycle, challenged by
need to rapidly accelerate portfolio adjustments in a period of increasingly
diminishing liquidity to sharply shrink financial services business.

Source: Sterne Agee Research Note

Reuters Messaging: ellis.mnyandu.reuters.com@reuters.net
1429 ET 03March2009-GM sales drop 52.9 pct in February
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General Motors GM.N on Tuesday said that February vehicle sales fell 52.9
percent, with fleet sales tumbling 75 percent from the prior year as the
economy pressured consumer spending.

Car sales were down 50 percent while truck sales were down 55 percent, the
company said. [ID:nWEN5432]

Shares of GM, a Dow component, rose 3 percent to $2.07 on Tuesday while
peer company Ford Motor Co (F.N) dropped 3.2 percent to $1.82 and the Dow Jones
U.S. Automobile Index .DJUSAU dropped 0.5 percent to 27.90.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net
1336 ET 03March2009-U.S. had no choice but to rescue AIG: Bernanke
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U.S. Federal Reserve Chairman Ben Bernanke on Tuesday defended the
government's latest bailout of American International Group (AIG.N), saying
that the failure to act could have resulted in an economic diaster.

The insurance company received a third bailout from the government on
Monday, after it posted the largest quarterly loss in U.S. corporate history.
[ID:nN03352803]

"We know that failure of major financial firms in a financial crisis can be
disastrous for the economy," Bernanke said in testimony to the Senate Budget
Committee. "We really had no choice."

Shares of AIG advanced 9.5 percent to 46 cents on Tuesday.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net
1313 ET 03March2009-Crude oil up as OPEC cuts offset economic fears
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April crude futures rose modestly on Tuesday as investors expected OPEC
would cut production again, offsetting continued fears about the recession and
how it might impact demand. [ID:nSP479558]

The contract rose 0.5 percent to $40.41 while the S&P Energy index .GSPE
was up 1 percent at 309.48.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net
1305 ET 03March2009-Ford sales plummet 48 pct in February
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Shares of Ford Motor Co (F.N) fell on Tuesday, after the company reported
that its February sales tumbled 48 percent from the prior year. It also
outlined sharply lower production targets for its second quarter.

Sales dropped to 99,400 vehicles in February from 192,799 in February 2008.
Sales in the company's Volvo line, which it is reviewing for a possible sale,
were down 55 percent. [ID:nN03480093]

Shares of Ford dropped 2.7 percent to $1.83 while peer company General
Motors GM.N was flat at $2.01 and the Dow Jones U.S. Automobile Index
.DJUSAU dropped 0.6 percent to 27.87.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net