Stocks after recovering from losses, end little changed

Dow was up 12, decliners over advancers 1¼ to 1 while NAZ pulled back 9. Volume continues quiet at 0.9B, just one of those summer days. Today oil made headline news. Oil surged over 5 to 121 on growing tensions between the US & Russia with the possible threat Russia (world's 2nd largest oil producer) could cut off oil supplies. Problems with Georgia continue plus Russia is worried about the defense system the US will install in Poland. The last 2 days are first in a month that headlines news impacted oil prices causing them to rise. Oil stocks rose nicely on this news helping the Dow. The Alerian MLP index went up 1½ to 268.32, getting a little further away from the 260s, its 52 week low area.

S&P 500 FINANCIALS INDEX pulled back 2.90 to 268.74 (near the important 267 monthly low) as worries about the financials drone on. After being down on more deary news, Lehman (LEH) rose 1 point ending at break even. An analyst recommended buying LEH on the hopes they could be the subject of a hostile takeover. Sure! Even if it happens, difficult to imagine a significant premium given all the confusion over what financials are really worth.

American Intl Group (AIG), a Dow stock & billed as the largest insurance company in the world, pulled back under 20 (down 1.02 to 19.78), lowest price since 1996. Merrill Lynch (MER), down pennies, will announce a deal with NY Attorney General about a settlement in auction-rate securities sales. It will not be pretty & cost them plenty, money & reputation. This is another case where big financial boys who are supposed to be professionals knowing what they were doing, really weren't. Now their shareholders & all shareholders, among others, are paying. Expect more enormous size problems for financials, even in this quiet late Aug period.