We are an hour into the session and find that chatter about Bear Stearns (BSC) is roiling the market...

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Pre-open stock futures were indicating a higher open after the tame CPI data but that is now "old news" as the headlines are abuzz with word that Bear Stearns' "liquidity 'deteriorated significantly' during the past 24 hours" and the company is getting a bailout from the Fed and J.P. Morgan (JPM). Shares of BSC are down 45%. Here is the intraday chart...

Chart Courtesy of Thomson Financial

The drop in BSC helps to explain the weakness, especially in the Broker/Dealer Index (XBD), but what is particularly interesting about this whole thing is the blurb below that Briefing.com published on Monday...

"Bear Stearns confirms that it denies liquidity rumors (62.30 -7.78) -Update : The co announces it has denied market rumors regarding the firm's liquidity. The co stated that there is absolutely no truth to the rumors of liquidity problems that circulated today in the mkt. Alan Schwartz, President and CEO of the co, said, 'Bear Stearns' balance sheet, liquidity and capital remain strong.'"

The plunge also makes some recent put activity on Bear Stearns stand out. Earlier this week, Adam Warner talked about the action at the March 30 and March 35 puts. We also saw the stock appear on my daily option skews scan with puts active on the scan for Tuesday...and Wednesday...and Thursday...and today. I usually look at put accumulations with a contrarian spin but perhaps there is something to be said to considering it "smart money" when the action is this persistent on a stock that is this weak?

Here are a few of the analyst upgrades and downgrades that I thought were worth noting this morning...

Upgrades
• Eastman Kodak (EK)
• FLIR Systems (FLIR)
• Hecla Mining (HL)
• Mylan Labs (MYL)
• Omniture (OMTR)
• Union Drilling (UDRL)
• Exxon Mobil (XOM)
Downgrades
• RadNet (RDNT)
• Teva Pharm (TEVA)
• Technology Investmt Cap (TICC)
• UCBH Holdings (UCBH)