AI
Wednesday, January 31, 2007 8:45:20 PM
Market Update 070131
http://biz.yahoo.com/mu/update.html
4:20 pm : Stocks rallied Wednesday as investors embraced further evidence that the Fed is doing a remarkably good job of managing a soft landing for the economy... so far. The Dow finished within a point of record levels, the S&P 500 closed out its eighth straight month of gains while the Russell 2000 and S&P 400 MidCap closed at historic highs.
Per usual, all eyes were fixed on today's FOMC meeting. As expected, policy makers left rates unchanged at 5.25% for a fifth straight time; but the policy statement carried some added risk. The market has been pricing in an increasingly hawkish stance for a few weeks ago now, and a stronger than expected advance read on Q4 GDP did little to change things.
While a rebound to 3.5% growth from 2.0% in Q3 dispels the worst of recession fears, suggesting the economy is back on trend, the GDP report further diminished the chance of the Fed easing anytime soon. Today's Fed statement further echoed such improbability, as the directive reflected a continued leaning toward a rate hike rather than lowering rates.
Oil prices tacking a 2.1% gain onto yesterday's 5.5% surge, marking the biggest two-day gain since December 2004, as well as the Energy sector's inability to take full advantage with a paltry 0.2% advance, also lent less conviction behind today's reaction to the Fed.
Be that as it may, a market hungry for some upbeat news since earnings season so far has been uninspiring, market participants rallied around proof that the economy is firming, not slowing. The removal of "substantial" to describe the slowdown in housing and addition of "stabilization" was also greeted with enthusiasm, as was the phrase, "Readings on core inflation have improved modestly in recent months," which excluded the word "elevated" from the last meeting.
Of the 10 sectors that closed higher, Industrials provided the bulk of upside leadership. While signs of a "goldilocks" economy certainly gave the group an added boost in afternoon trading, the economically-sensitive sector was already applauding a blowout quarter from Dow component Boeing (BA 89.56 +3.56).
With the percentage of companies reporting profits 10% or more above expectations has dropped sharply, Boeing more than doubling Q4 profits and raising its FY07 guidance was also welcoming news for a market struggling to keep buying efforts on track after such a huge run-up in the second half of 2006. BTK -0.1% DJ30 +98.38 DJTA +2.7% DJUA +0.2% DOT +1.0% NASDAQ +15.29 NQ100 +0.8% R2K +0.3% SOX -0.4% SP400 0.7% SP500 +9.42 XOI 0.5% NASDAQ Dec/Adv/Vol 1331/1718/2.21 bln NYSE Dec/Adv/Vol 1068/2213/1.58 bln
2:30 pm : The indices are holding relatively steady near their best levels of the day as investors continue to rally around encouraging news out of the Fed and a decision that was unanimous for the first time five meetings. The actual text of the statement reads: "Recent indicators have suggested somewhat firmer economic growth, and some tentative signs of stabilization have appeared in the housing market. Overall, the economy seems likely to expand at a moderate pace over coming quarters.
Readings on core inflation have improved modestly in recent months, and inflation pressures seem likely to moderate over time. However, the high level of resource utilization has the potential to sustain inflation pressures.
The Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information." DJ30 +70.25 NASDAQ +4.98 SP500 +4.79 NASDAQ Dec/Adv/Vol 1547/1425/1.36 bln NYSE Dec/Adv/Vol 1602/1592/999 mln
2:15 pm : As expected, the Federal Reserve left the fed funds rate unchanged at 5.25% again. With respect to the accompanying policy directive, the Fed has asserted that economic growth is firming. The word "substantial," as it pertains to the slowdown in housing was removed, with the Fed citing "tentative signs of stabilization." The word "elevated," with regard to core inflation was also removed, with the statement saying readings have "improved modestly in recent months." Initial responses in both the stock and bond markets have been positive, but market action is expected to be volatile throughout the rest of the session.DJ30 +62.41 NASDAQ +4.31 SP500 +4.10 NASDAQ Dec/Adv/Vol 1696/1271/1.27 bln NYSE Dec/Adv/Vol 1610/1590/952 mln
2:00 pm : In the 15 minutes ahead of the FOMC announcement, equities continue to settle into their typical holding pattern ahead of today's Fed announcement. Treasuries, however, are inching a bit higher ahead of the directive; but thin volume offers little conviction behind the move, especially since the policy statement is likely to emphasize inflation risks and continued strength in the economy -- bad news for bonds. The 10-year note is up 5 ticks to yield 4.84%. DJ30 +26.04 NASDAQ -2.89 SP500 +0.11 NASDAQ Dec/Adv/Vol 1672/1282/1.21 bln NYSE Dec/Adv/Vol 1598/1564/908 mln
12:00 pm : The major averages are trading in positive territory, as investors weigh a blowout report from Boeing (BA 89.84 +3.84) against uncertainty about the wording in today's Fed policy statement. Be that as it may, market gains are modest at best as the lack of conviction on the part of buyers, as reflected in another day of below-average volume, further underscores a sense of caution.
Since the percentage of companies reporting profits 10% or more above expectations has dropped sharply, investors are applauding news that Boeing more than doubled Q4 profits on record revenues and raised its guidance for fiscal 2007. It is also worth noting, though, that without the 4.5% surge in Boeing shares, the Dow would actually be flat since the rise in Boeing shares currently accounts for the entire 30-point move to the upside on the price-weighted index.
Meanwhile, the biggest focus today continues to surround the culmination of a two-day FOMC meeting (2:15 ET). Since the market remains totally convinced that policy makers will leave the overnight lending rate unchanged at 5.25% for a fifth straight time, the accompanying policy statement carries some risk since the Fed is likely to convey more of a hawkish stance than anticipated just a few weeks ago.
Underpinning the overall sense of uncertainty has been a stronger than expected advance read on Q4 GDP. While a rebound to 3.5% growth from 2.0% in Q3 dispels the worst of recession fears, suggesting the economy is back on trend, the report further diminishes the chance of the Fed easing anytime soon. It is Briefing.com's belief that the market will learn that the Fed has a stronger bias for raising interest rates than lowering them, as the bulk of surprisingly strong economic data of late continues to put the brakes on a seven-month rally in stocks. DJ30 +30.80 NASDAQ +0.43 SP500 +0.97 NASDAQ Dec/Adv/Vol 1640/1171/820 mln NYSE Dec/Adv/Vol 1603/1471/604 mln
11:30 am : Recent recovery efforts are short lived as a turnaround in oil prices removes some of the enthusiasm of owning equities, especially ahead of this afternoon's Fed policy directive. Crude was down as much as 2.1% following the EIA's weekly inventories report. However, the commodity now up nearly 1.0% and back above $57/bbl has only been beneficial to Energy (+0.2%).
The sector has subsequently turned positive but it is not providing the type of leadership seen yesterday (+2.1%) to act as an offset to the inflation potential of higher energy prices. Dow component Exxon Mobil (XOM 74.48 +0.09) has turned the corner, but the broader market's most heavily-weighted name is up only 0.1%.DJ30 +24.19 NASDAQ -2.79 SP500 -0.42 XOI +0.1% NASDAQ Dec/Adv/Vol 1637/1134/706 mln NYSE Dec/Adv/Vol 1629/1418/502 mln
09:40 am : As expected, the typical nervousness heading into a Fed decision and policy statement (2:15 ET) sidelines buyers at the onset of trading. The Dow, though, is holding onto a small gain early on; but that's entirely due to a 4.3% surge in shares of Boeing (BA 89.66 +3.60), which more than doubled Q4 profits. Boeing currently accounts for a 29-point move on the price-weighted index and without its advance the Dow would be lower.
Underpinning the overall sense of caution has been a stronger than expected advance read on Q4 GDP. While a rebound to 3.5% growth from 2.0% in Q3 dispels the worst of recession fears, suggesting the economy is back on trend, the report also renews concerns that policy makers will now show a bias towards higher rates rather than lower rates since the bulk of strong data recently continues to put the brakes on a seven-month rally in stocks. DJ30 +10.81 NASDAQ -12.13 SP500 -2.62 NASDAQ Vol 92 mln NYSE Vol 48 mln
09:15 am : S&P futures vs fair value: -2.5. Nasdaq futures vs fair value: -4.5.
http://biz.yahoo.com/mu/update.html
4:20 pm : Stocks rallied Wednesday as investors embraced further evidence that the Fed is doing a remarkably good job of managing a soft landing for the economy... so far. The Dow finished within a point of record levels, the S&P 500 closed out its eighth straight month of gains while the Russell 2000 and S&P 400 MidCap closed at historic highs.
Per usual, all eyes were fixed on today's FOMC meeting. As expected, policy makers left rates unchanged at 5.25% for a fifth straight time; but the policy statement carried some added risk. The market has been pricing in an increasingly hawkish stance for a few weeks ago now, and a stronger than expected advance read on Q4 GDP did little to change things.
While a rebound to 3.5% growth from 2.0% in Q3 dispels the worst of recession fears, suggesting the economy is back on trend, the GDP report further diminished the chance of the Fed easing anytime soon. Today's Fed statement further echoed such improbability, as the directive reflected a continued leaning toward a rate hike rather than lowering rates.
Oil prices tacking a 2.1% gain onto yesterday's 5.5% surge, marking the biggest two-day gain since December 2004, as well as the Energy sector's inability to take full advantage with a paltry 0.2% advance, also lent less conviction behind today's reaction to the Fed.
Be that as it may, a market hungry for some upbeat news since earnings season so far has been uninspiring, market participants rallied around proof that the economy is firming, not slowing. The removal of "substantial" to describe the slowdown in housing and addition of "stabilization" was also greeted with enthusiasm, as was the phrase, "Readings on core inflation have improved modestly in recent months," which excluded the word "elevated" from the last meeting.
Of the 10 sectors that closed higher, Industrials provided the bulk of upside leadership. While signs of a "goldilocks" economy certainly gave the group an added boost in afternoon trading, the economically-sensitive sector was already applauding a blowout quarter from Dow component Boeing (BA 89.56 +3.56).
With the percentage of companies reporting profits 10% or more above expectations has dropped sharply, Boeing more than doubling Q4 profits and raising its FY07 guidance was also welcoming news for a market struggling to keep buying efforts on track after such a huge run-up in the second half of 2006. BTK -0.1% DJ30 +98.38 DJTA +2.7% DJUA +0.2% DOT +1.0% NASDAQ +15.29 NQ100 +0.8% R2K +0.3% SOX -0.4% SP400 0.7% SP500 +9.42 XOI 0.5% NASDAQ Dec/Adv/Vol 1331/1718/2.21 bln NYSE Dec/Adv/Vol 1068/2213/1.58 bln
2:30 pm : The indices are holding relatively steady near their best levels of the day as investors continue to rally around encouraging news out of the Fed and a decision that was unanimous for the first time five meetings. The actual text of the statement reads: "Recent indicators have suggested somewhat firmer economic growth, and some tentative signs of stabilization have appeared in the housing market. Overall, the economy seems likely to expand at a moderate pace over coming quarters.
Readings on core inflation have improved modestly in recent months, and inflation pressures seem likely to moderate over time. However, the high level of resource utilization has the potential to sustain inflation pressures.
The Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information." DJ30 +70.25 NASDAQ +4.98 SP500 +4.79 NASDAQ Dec/Adv/Vol 1547/1425/1.36 bln NYSE Dec/Adv/Vol 1602/1592/999 mln
2:15 pm : As expected, the Federal Reserve left the fed funds rate unchanged at 5.25% again. With respect to the accompanying policy directive, the Fed has asserted that economic growth is firming. The word "substantial," as it pertains to the slowdown in housing was removed, with the Fed citing "tentative signs of stabilization." The word "elevated," with regard to core inflation was also removed, with the statement saying readings have "improved modestly in recent months." Initial responses in both the stock and bond markets have been positive, but market action is expected to be volatile throughout the rest of the session.DJ30 +62.41 NASDAQ +4.31 SP500 +4.10 NASDAQ Dec/Adv/Vol 1696/1271/1.27 bln NYSE Dec/Adv/Vol 1610/1590/952 mln
2:00 pm : In the 15 minutes ahead of the FOMC announcement, equities continue to settle into their typical holding pattern ahead of today's Fed announcement. Treasuries, however, are inching a bit higher ahead of the directive; but thin volume offers little conviction behind the move, especially since the policy statement is likely to emphasize inflation risks and continued strength in the economy -- bad news for bonds. The 10-year note is up 5 ticks to yield 4.84%. DJ30 +26.04 NASDAQ -2.89 SP500 +0.11 NASDAQ Dec/Adv/Vol 1672/1282/1.21 bln NYSE Dec/Adv/Vol 1598/1564/908 mln
12:00 pm : The major averages are trading in positive territory, as investors weigh a blowout report from Boeing (BA 89.84 +3.84) against uncertainty about the wording in today's Fed policy statement. Be that as it may, market gains are modest at best as the lack of conviction on the part of buyers, as reflected in another day of below-average volume, further underscores a sense of caution.
Since the percentage of companies reporting profits 10% or more above expectations has dropped sharply, investors are applauding news that Boeing more than doubled Q4 profits on record revenues and raised its guidance for fiscal 2007. It is also worth noting, though, that without the 4.5% surge in Boeing shares, the Dow would actually be flat since the rise in Boeing shares currently accounts for the entire 30-point move to the upside on the price-weighted index.
Meanwhile, the biggest focus today continues to surround the culmination of a two-day FOMC meeting (2:15 ET). Since the market remains totally convinced that policy makers will leave the overnight lending rate unchanged at 5.25% for a fifth straight time, the accompanying policy statement carries some risk since the Fed is likely to convey more of a hawkish stance than anticipated just a few weeks ago.
Underpinning the overall sense of uncertainty has been a stronger than expected advance read on Q4 GDP. While a rebound to 3.5% growth from 2.0% in Q3 dispels the worst of recession fears, suggesting the economy is back on trend, the report further diminishes the chance of the Fed easing anytime soon. It is Briefing.com's belief that the market will learn that the Fed has a stronger bias for raising interest rates than lowering them, as the bulk of surprisingly strong economic data of late continues to put the brakes on a seven-month rally in stocks. DJ30 +30.80 NASDAQ +0.43 SP500 +0.97 NASDAQ Dec/Adv/Vol 1640/1171/820 mln NYSE Dec/Adv/Vol 1603/1471/604 mln
11:30 am : Recent recovery efforts are short lived as a turnaround in oil prices removes some of the enthusiasm of owning equities, especially ahead of this afternoon's Fed policy directive. Crude was down as much as 2.1% following the EIA's weekly inventories report. However, the commodity now up nearly 1.0% and back above $57/bbl has only been beneficial to Energy (+0.2%).
The sector has subsequently turned positive but it is not providing the type of leadership seen yesterday (+2.1%) to act as an offset to the inflation potential of higher energy prices. Dow component Exxon Mobil (XOM 74.48 +0.09) has turned the corner, but the broader market's most heavily-weighted name is up only 0.1%.DJ30 +24.19 NASDAQ -2.79 SP500 -0.42 XOI +0.1% NASDAQ Dec/Adv/Vol 1637/1134/706 mln NYSE Dec/Adv/Vol 1629/1418/502 mln
09:40 am : As expected, the typical nervousness heading into a Fed decision and policy statement (2:15 ET) sidelines buyers at the onset of trading. The Dow, though, is holding onto a small gain early on; but that's entirely due to a 4.3% surge in shares of Boeing (BA 89.66 +3.60), which more than doubled Q4 profits. Boeing currently accounts for a 29-point move on the price-weighted index and without its advance the Dow would be lower.
Underpinning the overall sense of caution has been a stronger than expected advance read on Q4 GDP. While a rebound to 3.5% growth from 2.0% in Q3 dispels the worst of recession fears, suggesting the economy is back on trend, the report also renews concerns that policy makers will now show a bias towards higher rates rather than lower rates since the bulk of strong data recently continues to put the brakes on a seven-month rally in stocks. DJ30 +10.81 NASDAQ -12.13 SP500 -2.62 NASDAQ Vol 92 mln NYSE Vol 48 mln
09:15 am : S&P futures vs fair value: -2.5. Nasdaq futures vs fair value: -4.5.
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