Market Snapshot April 29, 2009, 4:30PM EST

Stocks Finish Higher after Fed Decision

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Bloomberg News reports at least six of the 19 largest U.S. banks require additional capital, according to preliminary results of government stress tests, people briefed on the matter said. While some of the lenders may need extra cash injections from the government, most of the capital is likely to come from converting preferred shares to common equity, the people said. The Federal Reserve is now hearing appeals from banks, including Citigroup (C) and Bank of America (BAC), that regulators have determined need more of a cushion against losses, they added. By pushing conversions, rather than federal assistance, the government would allow banks to shore themselves up without the political taint that has soured both Wall Street and Congress on the bailouts.

Citigroup, soon to be one-third owned by the U.S. government, is asking the Treasury for permission to pay special bonuses to many key employees, according to people familiar with the matter. The WSJ said the request comes as Citigroup is grappling with broad government pay restrictions that could break apart its legendary energy-trading unit.

After BofA's annual meeting Wednesday, company chairman Kenneth Lewis's iron grip could be more tenuous than ever. According to people familiar with the preliminary results of shareholder votes set to be announced at the meeting in Charlotte, N.C., the 62-year-old Lewis is likely to win re-election to Bank of America's board by a wide margin. But a separate shareholder proposal that would force him to give up his seat as chairman was too close to call and could go against Lewis, these people said.

Investors also weighed news that automaker Chrysler had reached a tentative deal with bondholders, dampening the risk of bankruptcy.

Wall Street was still buzzing about the puzzling activity in Dendreon (DNDN) shares Tuesday. Trading in Dendreon was halted just before 1:30 p.m. Tuesday as the shares, which were trading higher, suddenly turned sharply lower ahead of the release of what turned out to be positive results of the company's IMPACT study of Provenge in men with advanced prostate cancer. Following an investigation, the Nasdaq Stock Market said Tuesday that all Dendreon trades will stand.

The shares soared when trading resumed Wednesday, up 12.33 to 24.14 at around 2:00 p.m. ET. An analyst at Needham upgraded Dendreon stock, and a handful of other Wall Street firms also boosted their view on the shares.

In earnings news Wednesday, General Dynamics (GD) posted $1.54 vs. $1.42 first-quarter EPS from continuing operations on 18% higher revenue.

VF Corp. (VFC) posts $0.91 vs. $1.33 first-quarter EPS on a 7% revenue decline (as reported). VF said changes in several key markets have led it to reduce its top and bottom line assumptions for the balance of the year.

Time Warner Inc.) posted $0.46 vs. $0.46 first-quarter EPS (excluding earnings from discontinued operations related to cable television) on 7% lower revenue. EPS results reflect a 1-for-3 reverse stock split, which became effective on March 27, 2009. Wall Street was looking for post-reverse split EPS of $0.38.

Aetna Inc. (AET) posted $0.96 vs. $0.92 first-quarter operating EPS on 11% higher revenue. However, Aetna noted that it incurred higher-than-projected medical costs in its commercial products. Looking ahead, the company continues to forecast 2009 operating EPS of $3.85-$3.95.

In other economic news Wednesday, the Mortgage Bankers Association said its Mortgage Applications index fell 18.1% for the week ended April 24 compared with the prior week even though the 30-year fixed-rate mortgage fell to an average 4.62% from 4.73% the week before. Fifteen-year fixed rate mortgages carried an average 4.45% rate, off slightly from the prior week's 4.46%. One-year adjustable-rate mortgages averaged 6.23%, up from 6.19%. Refinancings fell 21.9% on a week-to-week basis. Filings for mortgages to purchase homes were off a seasonally adjusted 0.6%.

Reuters reports a monthly survey by the European Commission showed economic sentiment in the 16 countries using the euro improved to 67.2 points in April from 64.7 in March, against market expectations of a rise to 65.2 points. This is the first rise in euro zone economic sentiment after 10 straight months of falls. But with sentiment still only just above record lows and consumer inflation expectations hitting new lows, the pressure was still on for the European Central Bank to cut interest rates and ease policy in others ways in May, economists said.