AI
Friday, January 26, 2007 8:05:04 PM
Market Update 070126
http://biz.yahoo.com/mu/update.html
4:20 pm : The indices finished in split fashion and were relatively flat Friday as investors juggled mixed corporate news, surging oil prices and the growing likelihood the Fed might not cut rates at all this year.
Before the market opened, the belief that Thursday's sell-off may have been an overreaction, especially on the heels of Microsoft's (MSFT 30.60 +0.15) solid quarter and fellow Dow component Caterpillar (CAT 61.04 +1.41) issuing upside 2007 sales guidance, helped to improve the underlying tone.
Microsoft's solid quarter helped renew confidence in Technology's growth prospects, as bargain hunters jumped back into beaten-down chip stocks. Nonetheless, tech only recovering a fraction of the 1.0% it endured a day earlier was only enough to help the Nasdaq limp into the close with a paltry gain.
Aside from the inability to take a more convincing tech recovery into the weekend, growing uncertainty as to which way (and when) policy makers will fine-tune monetary policy also weighed on investors' minds.
At 8:30 ET, the market digested a report that showed underlying business investment trends are picking up after a few soft months. Durable goods orders jumped 3.1% in December, ex-transportation orders posted their first increase since September and non-defense orders (ex-trans) rebounded after a few months of decline.
Just a day removed from getting more evidence of stabilization in the economy's weakest sector - housing - the Commerce Dept. showed that new home sales rose a healthy 4.8% in December to a 1.12 mln annual rate, the highest level since April. The report also showed a decline in monthly inventories, a drop in median home prices and an upward revision to November's numbers. However, such strong data also left some investors fearing the worst - that the Fed's next move may actually be to tighten.
The funds futures market continues to reduce the favored odds for a Fed policy ease over 2007 as the current pricing holds off a rate cut until December.
At the end of the day, though, the market simply looked tired following a week of choppy trading. In fact, had reports of a possible alliance between Countrywide Financial (CFC 42.94 +2.65) and Bank of America (BAC 52.05 -0.35) not surfaced late in the day to turnaround the influential Financials sector, the Dow and S&P 500 would have lost even more ground.
On a positive note, the market remained fairly resilient in the face of a 2.2% surge in oil prices.BTK -0.2% DJ30 -15.54 DJTA -0.9% DJUA +0.2% DOT +0.2% NASDAQ +1.25 NQ100 -0.3% R2K +0.5% SOX 1.6% SP400 +0.3% SP500 -1.71 XOI +0.5% NASDAQ Dec/Adv/Vol 1239/1763/1.94 bln NYSE Dec/Adv/Vol 1361/1896/1.37 bln
3:30 pm : Going into the close of trading for the week, there still isn't a strong sense of conviction on either the bullish or bearish side of the aisle. However, a recent turnaround in the influential Financials sector, sparked by some encouraging news in the mortgage-lending space, is helping the blue-chip indices inch closer to the unchanged mark.
Thrifts & Mortgage (+1.5%) is now among today's best performers following recent reports that Countrywide Financial (CFC 44.66 +4.37) is holding discussions about an alliance with Bank of America (BAC 52.00 -0.40). Countrywide is surging nearly 11% to a new all-time high, but since B of A is losing ground on the news and is a much more heavily-weighted constituent on the S&P 500, the broader market is struggling to turn positive. DJ30 -7.33 NASDAQ +4.84 SP500 -0.10 NASDAQ Dec/Adv/Vol 1404/1560/1.67 bln NYSE Dec/Adv/Vol 1645/1599/1.15 bln
11:00 am : As evidenced by the Nasdaq recently (albeit briefly) inching into positive territory and a narrower spread between decliners and advancers, sentiment has improved since the last update. Aside from strength in Systems Software (+1.0%), as Microsoft's (MSFT 30.80 +0.35) upbeat Q2 report renews optimism about tech's growth prospects, a sense that other areas in tech are oversold is also giving the influential sector a boost. Semiconductor Equipment, one of this year's worst performing S&P industry groups (-3.9%) as of yesterday's close, ranks as today's second best performer (+1.8%). DJ30 -30.77 NASDAQ -1.07 SOX +1.8% SP500 -2.60 NASDAQ Dec/Adv/Vol 1505/1202/624 mln NYSE Dec/Adv/Vol 1664/1315/360 mln
10:30 am : Just as the market was anticipating, a stronger than expected housing report has taken an added toll on the market. All three indices have extended their reach to the downside after the Commerce Dept. showed new home sales rose a healthy 4.8% in December to 1.12 mln, the highest level since April, leaving some investors fearing the worst -- that the Fed's next move may actually be to tighten.
However, further analysis of the report, which also showed a decline in monthly inventories, a drop in median home prices and an upward revision to November's numbers, also serves as a reminder that the worst may be over for housing, which has been reflected in a modest bounce from morning lows. The housing report is a net positive for stocks, it just depends on whether investors will decide to return their focus to "good" news instead of questionably "bad" news. DJ30 -28.84 NASDAQ -6.38 SP500 -2.90 NASDAQ Dec/Adv/Vol 1749/922/456 mln NYSE Dec/Adv/Vol 1807/1116/252 mln
10:00 am : Early recovery efforts are short lived as added nervousness sets in ahead of another update on housing, especially in the wake of yesterday's existing home sales report. As a reminder, existing homes sales may account for the majority of (about 85%) the U.S. housing market, but new home sales, which will be out momentarily, are recorded when a contract is actually signed and are considered a timelier gauge of the housing market.
More evidence of stabilization in housing is an overall positive for the economy and further sidelines the worst of recession fears; but too strong a number will also further diminish hopes of a Fed rate cut anytime soon and likely weaken an already clearly shaky sentiment about owning equities at current levels.DJ30 -8.09 NASDAQ -9.91 SP500 -1.56 NASDAQ Dec/Adv/Vol 1232/1209/168 mln NYSE Dec/Adv/Vol 1118/1497/72 mln
09:40 am : Not surprising, the on-again, off-again trading pattern that has driven the stock market of late has stocks bouncing back following yesterday's sell-off. Providing a boost to all three major averages is Microsoft (MSFT 31.20 +0.75), which is up 2.5% after topping Wall Street expectations on strong sales last night. Fellow Dow component Caterpillar (CAT 61.02 +1.39) is surging 2.3% after issuing upside sales guidance for 2007 and following data that showed manufacturing activity gained some steam heading into the end of 2006.
Earlier, the Commerce Dept. showed that durable goods orders jumped 3.1% in December. Excluding transportation, orders rose 2.3% -- the first rise since September and the best increase since March, while non-defense orders (ex-trans) rose 2.4% after a few months of decline. The rebound reflects a solid underlying trend in orders that will add to the steady growth in consumer spending to help the economy get back on track.DJ30 +15.78 NASDAQ +5.61 SP500 +2.28 NASDAQ Vol 92 mln NYSE Vol 48 mln
09:15 am : S&P futures vs fair value: +3.0. Nasdaq futures vs fair value: +6.0.
http://biz.yahoo.com/mu/update.html
4:20 pm : The indices finished in split fashion and were relatively flat Friday as investors juggled mixed corporate news, surging oil prices and the growing likelihood the Fed might not cut rates at all this year.
Before the market opened, the belief that Thursday's sell-off may have been an overreaction, especially on the heels of Microsoft's (MSFT 30.60 +0.15) solid quarter and fellow Dow component Caterpillar (CAT 61.04 +1.41) issuing upside 2007 sales guidance, helped to improve the underlying tone.
Microsoft's solid quarter helped renew confidence in Technology's growth prospects, as bargain hunters jumped back into beaten-down chip stocks. Nonetheless, tech only recovering a fraction of the 1.0% it endured a day earlier was only enough to help the Nasdaq limp into the close with a paltry gain.
Aside from the inability to take a more convincing tech recovery into the weekend, growing uncertainty as to which way (and when) policy makers will fine-tune monetary policy also weighed on investors' minds.
At 8:30 ET, the market digested a report that showed underlying business investment trends are picking up after a few soft months. Durable goods orders jumped 3.1% in December, ex-transportation orders posted their first increase since September and non-defense orders (ex-trans) rebounded after a few months of decline.
Just a day removed from getting more evidence of stabilization in the economy's weakest sector - housing - the Commerce Dept. showed that new home sales rose a healthy 4.8% in December to a 1.12 mln annual rate, the highest level since April. The report also showed a decline in monthly inventories, a drop in median home prices and an upward revision to November's numbers. However, such strong data also left some investors fearing the worst - that the Fed's next move may actually be to tighten.
The funds futures market continues to reduce the favored odds for a Fed policy ease over 2007 as the current pricing holds off a rate cut until December.
At the end of the day, though, the market simply looked tired following a week of choppy trading. In fact, had reports of a possible alliance between Countrywide Financial (CFC 42.94 +2.65) and Bank of America (BAC 52.05 -0.35) not surfaced late in the day to turnaround the influential Financials sector, the Dow and S&P 500 would have lost even more ground.
On a positive note, the market remained fairly resilient in the face of a 2.2% surge in oil prices.BTK -0.2% DJ30 -15.54 DJTA -0.9% DJUA +0.2% DOT +0.2% NASDAQ +1.25 NQ100 -0.3% R2K +0.5% SOX 1.6% SP400 +0.3% SP500 -1.71 XOI +0.5% NASDAQ Dec/Adv/Vol 1239/1763/1.94 bln NYSE Dec/Adv/Vol 1361/1896/1.37 bln
3:30 pm : Going into the close of trading for the week, there still isn't a strong sense of conviction on either the bullish or bearish side of the aisle. However, a recent turnaround in the influential Financials sector, sparked by some encouraging news in the mortgage-lending space, is helping the blue-chip indices inch closer to the unchanged mark.
Thrifts & Mortgage (+1.5%) is now among today's best performers following recent reports that Countrywide Financial (CFC 44.66 +4.37) is holding discussions about an alliance with Bank of America (BAC 52.00 -0.40). Countrywide is surging nearly 11% to a new all-time high, but since B of A is losing ground on the news and is a much more heavily-weighted constituent on the S&P 500, the broader market is struggling to turn positive. DJ30 -7.33 NASDAQ +4.84 SP500 -0.10 NASDAQ Dec/Adv/Vol 1404/1560/1.67 bln NYSE Dec/Adv/Vol 1645/1599/1.15 bln
11:00 am : As evidenced by the Nasdaq recently (albeit briefly) inching into positive territory and a narrower spread between decliners and advancers, sentiment has improved since the last update. Aside from strength in Systems Software (+1.0%), as Microsoft's (MSFT 30.80 +0.35) upbeat Q2 report renews optimism about tech's growth prospects, a sense that other areas in tech are oversold is also giving the influential sector a boost. Semiconductor Equipment, one of this year's worst performing S&P industry groups (-3.9%) as of yesterday's close, ranks as today's second best performer (+1.8%). DJ30 -30.77 NASDAQ -1.07 SOX +1.8% SP500 -2.60 NASDAQ Dec/Adv/Vol 1505/1202/624 mln NYSE Dec/Adv/Vol 1664/1315/360 mln
10:30 am : Just as the market was anticipating, a stronger than expected housing report has taken an added toll on the market. All three indices have extended their reach to the downside after the Commerce Dept. showed new home sales rose a healthy 4.8% in December to 1.12 mln, the highest level since April, leaving some investors fearing the worst -- that the Fed's next move may actually be to tighten.
However, further analysis of the report, which also showed a decline in monthly inventories, a drop in median home prices and an upward revision to November's numbers, also serves as a reminder that the worst may be over for housing, which has been reflected in a modest bounce from morning lows. The housing report is a net positive for stocks, it just depends on whether investors will decide to return their focus to "good" news instead of questionably "bad" news. DJ30 -28.84 NASDAQ -6.38 SP500 -2.90 NASDAQ Dec/Adv/Vol 1749/922/456 mln NYSE Dec/Adv/Vol 1807/1116/252 mln
10:00 am : Early recovery efforts are short lived as added nervousness sets in ahead of another update on housing, especially in the wake of yesterday's existing home sales report. As a reminder, existing homes sales may account for the majority of (about 85%) the U.S. housing market, but new home sales, which will be out momentarily, are recorded when a contract is actually signed and are considered a timelier gauge of the housing market.
More evidence of stabilization in housing is an overall positive for the economy and further sidelines the worst of recession fears; but too strong a number will also further diminish hopes of a Fed rate cut anytime soon and likely weaken an already clearly shaky sentiment about owning equities at current levels.DJ30 -8.09 NASDAQ -9.91 SP500 -1.56 NASDAQ Dec/Adv/Vol 1232/1209/168 mln NYSE Dec/Adv/Vol 1118/1497/72 mln
09:40 am : Not surprising, the on-again, off-again trading pattern that has driven the stock market of late has stocks bouncing back following yesterday's sell-off. Providing a boost to all three major averages is Microsoft (MSFT 31.20 +0.75), which is up 2.5% after topping Wall Street expectations on strong sales last night. Fellow Dow component Caterpillar (CAT 61.02 +1.39) is surging 2.3% after issuing upside sales guidance for 2007 and following data that showed manufacturing activity gained some steam heading into the end of 2006.
Earlier, the Commerce Dept. showed that durable goods orders jumped 3.1% in December. Excluding transportation, orders rose 2.3% -- the first rise since September and the best increase since March, while non-defense orders (ex-trans) rose 2.4% after a few months of decline. The rebound reflects a solid underlying trend in orders that will add to the steady growth in consumer spending to help the economy get back on track.DJ30 +15.78 NASDAQ +5.61 SP500 +2.28 NASDAQ Vol 92 mln NYSE Vol 48 mln
09:15 am : S&P futures vs fair value: +3.0. Nasdaq futures vs fair value: +6.0.
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