Bulls remain in control Wednesday despite caution in the Fed Beige Book report. The Dow ($INDU) gained 49.88 points to a level of 9,547.22. The S&P 500 ($SPX) added 7.98 points to 1,033.37. The Nasdaq ($COMPQ) 22.62 points, or 1.11 percent, to 2,060.39. Volume was moderate on the session with the NYSE trading 1.33 billion shares and the Naz turning over 2.52 billion shares. Market breadth was positive on the session by a 22-to-8 and 19-to-8 margin on the Big Board and Naz respectively.

The major market indices were on the rise Wednesday until the release of the Beige Book report in the afternoon session. This report provides anecdotal economic news from the 12 district banks. However, the latest report didn't show the optimism many were expecting. Fed leaders are still very concerned about the level of unemployment and how it will impact consumer spending. Though cautious, the Beige Book did note that the economy is on track for recovery, but that weaknesses remain which leaves the door open for continued liquidity.

The Beige Book noted that the housing sector remains a concern with home prices down in most districts. However, mortgage applications for this past week rose 9.5 percent after falling 1.0 percent the prior week. Both the refinancing and purchasing components saw strength with the 30-year fixed mortgage rate down 13-basis points to 5.02 percent. Home builders mostly saw gains today with Hovnanian (HOV) up 2.23 percent and Lennar (LEN) rising 1.30 percent.

The big gainer on the session was Vivus (VVUS) with the stock up 70.77 percent. The company announced that its obesity drug Qnexa was successful in weight loss trials. In the recent trial, test patients lost an average of 14.7 percent of their body weight. The stock closed the session at $11.80, up from $6.91 at the close of trading on Tuesday.

Healthcare stocks remain a focus as President Obama pushes for healthcare reform. The President will speak Wednesday night in prime time about his plans for reform. This issue seems to be divided down party lines and many corporate leaders are afraid of what a nationalized healthcare plan would cost tax payers. We will have to see how the public views the President's speech tonight, but ahead of the speech, 52 percent of a recent survey disapproved with Obama's handling of health care, which is up 9 points since July. Health care stocks were higher on the session with Aetna (AET) rising 1.39 percent and Fidelity Select Health Care (FSPHX) up 1.29 percent.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site