AI
Wednesday, March 21, 2007 4:02:03 PM
Market Update 070321
http://biz.yahoo.com/mu/update.html
3:30 pm : The major averages are off their best levels but buyers remain in complete control of the action going into the close. Gains of 1.5% on the S&P 500 and Nasdaq have lifted both indices back into positive territory for the year. The Dow, led by gains in 29 of its 30 components, is also benefiting from the Fed-induced relief rally but is currently still languishing in the red for 2007.
Further underscoring the overwhelming bullish sentiment has been a decline of 13% on the VIX (CBOE Volatility Index), which suggests investors are aggressively buying call options in anticipation of further upside. DJ30 +140.44 NASDAQ +36.07 SP500 +20.68 NASDAQ Dec/Adv/Vol 801/2207/1.71 bln NYSE Dec/Adv/Vol 568/2695/1.19 bln
3:00 pm : The indices are extending their reach to the upside as evidence of the Fed possibly easing sooner than initially anticipated continues to light a fire under equities, especially the S&P 500's most heavily weighted sector -- Financials.
Aside from getting a lift from a relief rally in Treasuries, the rate-sensitive sector is now up 2.4% as investors race to pick up beaten-down brokers and banks. In fact, gains of 3.4% and 2.2% on the AMEX Securities Broker/Dealer Index and KBW Bank Index, respectively, have almost completely erased their year-to-date declines. Investment Banks (+4.5%) now ranks as today's best performing S&P industry group; Thrifts & Mortgages (+3.8%), Asset Managers (+3.5%), and Other Diversified Financial Services (+3.1%) have also broken into today's Top Ten. Of the 147 S&P industry groups, 143 are now trading higher. DJ30 +144.02 NASDAQ +38.41 SP500 +21.71 NASDAQ Dec/Adv/Vol 867/2112/1.44 bln NYSE Dec/Adv/Vol 709/2527/980 mln
2:30 pm : Onward and upward is now the market's new mantra as investors rally around the unexpected removal of the Fed's tilt toward more tightening. Fed funds futures now price in a nearly 50% chance of the Fed cutting rates at the June meeting, up from a roughly 25% likelihood before the report. The actual text of the statement reads: "Recent indicators have been mixed and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters.
Recent readings on core inflation have been somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.
In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information." DJ30 +89.59 NASDAQ +23.69 SP500 +14.28 NASDAQ Dec/Adv/Vol 1360/1576/1.18 bln NYSE Dec/Adv/Vol 1291/1900/796 mln
2:15 pm : As expected, the Federal Reserve left the fed funds rate unchanged at 5.25% for a sixth straight time. With respect to the accompanying policy directive, the Fed has asserted that "recent indicators have been mixed and the adjustment in the housing sector is ongoing." The Fed also noted that there's a risk that "inflation will fail to moderate as expected;" but investors appear to be focusing more on the fact that "additional firming" is no longer part of their language.
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. The 10-year note, which was down 11 ticks to yield 4.59%; it's now up 2 ticks to yield 4.54%.DJ30 +44.32 NASDAQ +9.15 SP500 +6.85 NASDAQ Dec/Adv/Vol 1317/1602/1.13 bln NYSE Dec/Adv/Vol 1263/1921/764 mln
2:00 pm : In the 15 minutes ahead of the FOMC announcement, the market is trying to regain some upward momentum. Be that as it may, the lack of conviction on the part of buyers continues to underscore a sense of caution should policy makers not soften their bias against inflation.
We believe the statement is not likely to show any major changes since recent data provide no reason for such an adjustment, which will likely sideline expectations of a potential easing that the stock market has been pricing in over the last several sessions. DJ30 +3.44 NASDAQ +6.24 SP500 +3.39 NASDAQ Dec/Adv/Vol 1316/1609/1.06 bln NYSE Dec/Adv/Vol 1312/1869/720 mln
1:30 pm : The indices continue to improve ever so slightly, but only enough to briefly lift the Dow into the green. Treasury Secretary Henry Paulson within the last 30 minutes saying he believes the U.S. economy is still healthy has given stocks a modest boost.
It hasn't been overly surprising, though, to see the recent bounce almost as quickly run out of steam since the Fed remains the day's focal point, not a meeting between Paulson and Peruvian President Garcia in Lima. DJ30 -4.41 NASDAQ +5.23 SP500 +2.66 NASDAQ Dec/Adv/Vol 1359/1542/984 mln NYSE Dec/Adv/Vol 1354/1810/660 mln
1:00 pm : Not much has changed as traders continue to make their way through the New York lunch hour waiting, and waiting, to see if the Fed changes any of the wording to its latest policy directive. To further underscore the limited participation heading into the 2:15 ET release, the NYSE and Nasdaq have only seen about 60 mln shares trade hands over the last 30 minutes.
As an aside, the Industrials, Consumer Staples, and Consumer Discretionary sectors have inched into positive territory; however, their paltry gains have not been enough to move the broader market. DJ30 -5.21 NASDAQ +2.89 SP500 +1.67 NASDAQ Dec/Adv/Vol 1401/1483/890 mln NYSE Dec/Adv/Vol 1377/1761/594 mln
12:30 pm : The indices kick off the afternoon session exactly where they traded throughout most of the morning, roughly flat. As evidenced by Johnson & Johnson (JNJ 60.51 -0.56) and Pfizer (PFE 25.30 -0.24) ranking among the Dow's worst performers, it's not surprising to see Health Care (-0.4%) also turning in the poorest performance among the six sectors losing ground.
Alcoa (AA 33.57 -0.50), the Dow's biggest laggard (-1.5%), is removing notable leadership from Materials, today's second worst performing sector (-0.2%). Alcoa ranks third among the Materials sector's 28 components with a 7.6% weighting. DuPont (DD 50.94 -0.20) and Dow Chemical (DOW 45.87 +0.27) are the sector's most influential names, combining to account for nearly 25% of a sector that ranks as the least influential of the 10 S&P 500 sectors. We currently have an Underweight rating on Materials but maintain an Overweight rating on Health Care given its double-digit growth rates and defensive characteristics.
DJ30 -14.42 NASDAQ +1.14 SP500 +0.67 NASDAQ Dec/Adv/Vol 1377/1478/820 mln NYSE Dec/Adv/Vol 1406/1736/534 mln
12:00 pm : Not surprising, uncertainty heading into the culmination of a two-day FOMC meeting is underpinning a cautious tone to this morning's action. The major averages are mixed midday and continue to hover around the unchanged mark with neither buyers nor sellers willing to make any bets ahead of the Fed.
Even though it is a foregone conclusion that policy makers at 2:15 ET today will leave the overnight lending rate unchanged at 5.25% for a sixth straight meeting, investors remain anxious to see if the Fed's directive implies there is a balanced risk between economic weakness and inflation.
It is worth noting, though, uncertainty as to what the policy directive will imply about future rate decisions has not left every investor erring on the side of caution as the Technology and Financials sector enjoy a batch of solid earnings reports.
Oracle Corp (ORCL 18.02 +0.47) is well off its opening highs (+4.8%) but is still trading sharply higher after posting a better-than-expected 35% jump in Q1 profits and saying it "exceeded guidance on every metric with strong revenue growth across all product lines." Adobe Systems (ADBE 42.59 +1.85) posting a 37% rise in Q3 earnings and raising its profit outlook has also restored some confidence about the tech sector's growth prospects.
Meanwhile, Morgan Stanley (MS 79.46 +3.35) handily topped expectations with record Q1 results, giving the brokerage group another boost of optimism. However, FedEx (FDX 109.98 -2.31), which is regarded as an economic proxy, posted its first profit decline in three years and tempered its Q4 guidance. Management saying Q3 earnings were negatively impacted by a slowing economic environment merely adds to the sense of nervousness ahead of a Fed statement we believe is not likely to show any major changes since recent data provide no reason for such an adjustment. BTK +0.6% DJ30 -11.46 DJTA -0.2% DJUA -0.2% DOT +0.1% NASDAQ +0.67 NQ100 -0.1% R2K +0.1% SOX +0.1% SP400 +0.1% SP500 +0.80 XOI +0.2% NASDAQ Dec/Adv/Vol 1348/1470/736 mln NYSE Dec/Adv/Vol 1373/1717/466 mln
11:30 am : More of the same for stocks as the major averages continue to fluctuate around the flat line looking fatigued. Sure, consternation ahead of the Fed's decision is forcing investors to keep their cards close to their vest; but it is also worth noting that stocks would likely being sluggish anyway given a respectable two-day winning streak.
In fact, the Dow, S&P 500 and Nasdaq have finished with gains in four out of the last five sessions and are now trading higher than they were after the global sell-off on February 27 exacerbated concerns about a market correction.DJ30 -13.42 NASDAQ +2.03 SP500 +0.79 NASDAQ Dec/Adv/Vol 1342/1414/620 mln NYSE Dec/Adv/Vol 1361/1650/388 mln
11:00 am : As is typically the case before the culmination of an FOMC meeting, stocks are still trading in a relatively narrow range. The lack of any intraday catalysts is also contributing to investors' apprehension to move the indices more aggressively in either direction.
Meanwhile, oil prices recently ticked as high as $59.88/bbl (+1.1%), following a larger than expected drawdown in weekly gasoline inventories. However, the commodity's uptick did not prompt enough of a knee-jerk reaction in stocks to make a significant change in the standings, leaving all eyes on the Fed to set a more definitive tone. DJ30 -11.83 NASDAQ +1.73 SP500 +0.96 NASDAQ Dec/Adv/Vol 1382/1316/494 mln NYSE Dec/Adv/Vol 1370/1591/302 mln
10:30 am : Equities are still struggling to find their footing as the indices continue to vacillate around the unchanged mark. The market's holding pattern has been further evidenced in the A/D line, as advancers on the NYSE hold a slim 15-to-13 advantage over decliners while both advancing and declining issues on the Nasdaq remain evenly matched.
Energy and Utilities as the only sectors making noticeable moves, with the remaining eight sectors not posting a gain or decline of more than 0.2%, further underscores the lack of conviction on either the bullish or bearish side of the aisle. DJ30 -13.58 NASDAQ +0.88 SP500 +0.49 NASDAQ Dec/Adv/Vol 1301/1305/350 mln NYSE Dec/Adv/Vol 1343/1541/192 mln
10:00 am : After briefly inching into positive territory for the year, the Nasdaq has run into some early selling pressure and now clings to the smallest of gains. The Dow has turned negative, leaving the major averages mixed and split industry leadership setting the tone for what is likely to be a lackluster session altogether until the Fed policy statement hits the wires this afternoon.
Of the five sectors trading higher, Energy paces the way as oil prices flirt with $60/bbl ahead of the upcoming inventories report (10:30 ET) and its gain of 0.5% dwarfs paltry gains from the likes of Financials and Technology. DJ30 -12.58 NASDAQ +0.16 SP500 +0.22 NASDAQ Dec/Adv/Vol 1163/1233/180 mln NYSE Dec/Adv/Vol 1188/1444/64 mln
09:40 am : There is no question that interest rates will be on the minds of investors all day, as policy makers wrap up a two-day FOMC meeting at 2:15 ET. The Fed is widely expected to leave the fed funds rate unchanged at 5.25% again and we believe the accompanying statement is not likely to change much either.
However, uncertainty as to what the policy directive will imply about future rate decisions hasn't left all investors erring on the side of caution as a batch of solid earnings reports have restored some confidence about the growth prospects of the influential Tech sector. Oracle Corp (ORCL 18.32 +0.77) is surging 4.4% after posting a better-than-expected 35% jump in Q1 profits and saying it "exceeded guidance on every metric with strong revenue growth across all product lines." Adobe Systems (ADBE 42.77 +2.03) is up 5.0% after reporting a 37% rise in Q3 earnings.
DJ30 +4.06 NASDAQ +6.56 SP500 +1.91 NASDAQ Vol 76 mln NYSE Vol 44 mln
09:15 am : S&P futures vs fair value: +0.9. Nasdaq futures vs fair value: +7.5.
09:00 am : S&P futures vs fair value: +0.7. Nasdaq futures vs fair value: +7.0. Early indications still suggest some carry-over momentum following an impressive two-day gain for the major averages may lift stocks at the open. With concerns about the subprime mortgage debacle spilling over into the broader economy acting as a thorn in the market's side of late, investors may be pricing in the chance that the Fed citing such an issue today will provide a reason for policy makers to eventually ease. While we think that would be a wrong interpretation, there's no denying that Fremont General (FMT) announcing agreements to sell $4 bln of its subprime residential loans earlier is providing another dose of relief.
08:30 am : S&P futures vs fair value: +0.2. Nasdaq futures vs fair value: +7.2. Not much has changed since the last update as the bulk of early buying interest seems to be fixated almost solely on the Nasdaq, with tech stocks expected to take the lead this morning. While strong earnings, and clearly whether this afternoon's Fed statement will reveal any clues pertaining to the timing of an eventual interest rate cut remain the focal points, oil prices can't be ruled out as a catalyst to today's action. Crude for May delivery is up nearly 1.0% and flirting with $60/bbl again ahead of the Energy Dept.'s weekly inventories data at 10:30 ET.
08:00 am : S&P futures vs fair value: +0.1. Nasdaq futures vs fair value: +7.2. Nasdaq 100 futures are trading well above fair value, fueled largely by a couple of strong earnings reports. A blowout third quarter from Oracle Corp (ORCL) and a 37% rise in Q1 profits from Adobe Systems (ADBE) last night have helped renew confidence in the tech sector's growth prospects.
Morgan Stanley (MS) handily topped expectations with record Q1 results, but FedEx (FDX) said Q3 earnings were negatively impacted by a slowing economic environment. Thus, the broader market looks to open on more of a flat note as investors also exhibit a sense of caution ahead of this afternoon's FOMC meeting. Even though it is a foregone conclusion that policy makers at 2:15 ET today will leave the overnight lending rate unchanged at 5.25% again, investors remain anxious to see if the Fed's directive implies there is a balanced risk between economic weakness and inflation.
http://biz.yahoo.com/mu/update.html
3:30 pm : The major averages are off their best levels but buyers remain in complete control of the action going into the close. Gains of 1.5% on the S&P 500 and Nasdaq have lifted both indices back into positive territory for the year. The Dow, led by gains in 29 of its 30 components, is also benefiting from the Fed-induced relief rally but is currently still languishing in the red for 2007.
Further underscoring the overwhelming bullish sentiment has been a decline of 13% on the VIX (CBOE Volatility Index), which suggests investors are aggressively buying call options in anticipation of further upside. DJ30 +140.44 NASDAQ +36.07 SP500 +20.68 NASDAQ Dec/Adv/Vol 801/2207/1.71 bln NYSE Dec/Adv/Vol 568/2695/1.19 bln
3:00 pm : The indices are extending their reach to the upside as evidence of the Fed possibly easing sooner than initially anticipated continues to light a fire under equities, especially the S&P 500's most heavily weighted sector -- Financials.
Aside from getting a lift from a relief rally in Treasuries, the rate-sensitive sector is now up 2.4% as investors race to pick up beaten-down brokers and banks. In fact, gains of 3.4% and 2.2% on the AMEX Securities Broker/Dealer Index and KBW Bank Index, respectively, have almost completely erased their year-to-date declines. Investment Banks (+4.5%) now ranks as today's best performing S&P industry group; Thrifts & Mortgages (+3.8%), Asset Managers (+3.5%), and Other Diversified Financial Services (+3.1%) have also broken into today's Top Ten. Of the 147 S&P industry groups, 143 are now trading higher. DJ30 +144.02 NASDAQ +38.41 SP500 +21.71 NASDAQ Dec/Adv/Vol 867/2112/1.44 bln NYSE Dec/Adv/Vol 709/2527/980 mln
2:30 pm : Onward and upward is now the market's new mantra as investors rally around the unexpected removal of the Fed's tilt toward more tightening. Fed funds futures now price in a nearly 50% chance of the Fed cutting rates at the June meeting, up from a roughly 25% likelihood before the report. The actual text of the statement reads: "Recent indicators have been mixed and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters.
Recent readings on core inflation have been somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.
In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information." DJ30 +89.59 NASDAQ +23.69 SP500 +14.28 NASDAQ Dec/Adv/Vol 1360/1576/1.18 bln NYSE Dec/Adv/Vol 1291/1900/796 mln
2:15 pm : As expected, the Federal Reserve left the fed funds rate unchanged at 5.25% for a sixth straight time. With respect to the accompanying policy directive, the Fed has asserted that "recent indicators have been mixed and the adjustment in the housing sector is ongoing." The Fed also noted that there's a risk that "inflation will fail to moderate as expected;" but investors appear to be focusing more on the fact that "additional firming" is no longer part of their language.
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. The 10-year note, which was down 11 ticks to yield 4.59%; it's now up 2 ticks to yield 4.54%.DJ30 +44.32 NASDAQ +9.15 SP500 +6.85 NASDAQ Dec/Adv/Vol 1317/1602/1.13 bln NYSE Dec/Adv/Vol 1263/1921/764 mln
2:00 pm : In the 15 minutes ahead of the FOMC announcement, the market is trying to regain some upward momentum. Be that as it may, the lack of conviction on the part of buyers continues to underscore a sense of caution should policy makers not soften their bias against inflation.
We believe the statement is not likely to show any major changes since recent data provide no reason for such an adjustment, which will likely sideline expectations of a potential easing that the stock market has been pricing in over the last several sessions. DJ30 +3.44 NASDAQ +6.24 SP500 +3.39 NASDAQ Dec/Adv/Vol 1316/1609/1.06 bln NYSE Dec/Adv/Vol 1312/1869/720 mln
1:30 pm : The indices continue to improve ever so slightly, but only enough to briefly lift the Dow into the green. Treasury Secretary Henry Paulson within the last 30 minutes saying he believes the U.S. economy is still healthy has given stocks a modest boost.
It hasn't been overly surprising, though, to see the recent bounce almost as quickly run out of steam since the Fed remains the day's focal point, not a meeting between Paulson and Peruvian President Garcia in Lima. DJ30 -4.41 NASDAQ +5.23 SP500 +2.66 NASDAQ Dec/Adv/Vol 1359/1542/984 mln NYSE Dec/Adv/Vol 1354/1810/660 mln
1:00 pm : Not much has changed as traders continue to make their way through the New York lunch hour waiting, and waiting, to see if the Fed changes any of the wording to its latest policy directive. To further underscore the limited participation heading into the 2:15 ET release, the NYSE and Nasdaq have only seen about 60 mln shares trade hands over the last 30 minutes.
As an aside, the Industrials, Consumer Staples, and Consumer Discretionary sectors have inched into positive territory; however, their paltry gains have not been enough to move the broader market. DJ30 -5.21 NASDAQ +2.89 SP500 +1.67 NASDAQ Dec/Adv/Vol 1401/1483/890 mln NYSE Dec/Adv/Vol 1377/1761/594 mln
12:30 pm : The indices kick off the afternoon session exactly where they traded throughout most of the morning, roughly flat. As evidenced by Johnson & Johnson (JNJ 60.51 -0.56) and Pfizer (PFE 25.30 -0.24) ranking among the Dow's worst performers, it's not surprising to see Health Care (-0.4%) also turning in the poorest performance among the six sectors losing ground.
Alcoa (AA 33.57 -0.50), the Dow's biggest laggard (-1.5%), is removing notable leadership from Materials, today's second worst performing sector (-0.2%). Alcoa ranks third among the Materials sector's 28 components with a 7.6% weighting. DuPont (DD 50.94 -0.20) and Dow Chemical (DOW 45.87 +0.27) are the sector's most influential names, combining to account for nearly 25% of a sector that ranks as the least influential of the 10 S&P 500 sectors. We currently have an Underweight rating on Materials but maintain an Overweight rating on Health Care given its double-digit growth rates and defensive characteristics.
DJ30 -14.42 NASDAQ +1.14 SP500 +0.67 NASDAQ Dec/Adv/Vol 1377/1478/820 mln NYSE Dec/Adv/Vol 1406/1736/534 mln
12:00 pm : Not surprising, uncertainty heading into the culmination of a two-day FOMC meeting is underpinning a cautious tone to this morning's action. The major averages are mixed midday and continue to hover around the unchanged mark with neither buyers nor sellers willing to make any bets ahead of the Fed.
Even though it is a foregone conclusion that policy makers at 2:15 ET today will leave the overnight lending rate unchanged at 5.25% for a sixth straight meeting, investors remain anxious to see if the Fed's directive implies there is a balanced risk between economic weakness and inflation.
It is worth noting, though, uncertainty as to what the policy directive will imply about future rate decisions has not left every investor erring on the side of caution as the Technology and Financials sector enjoy a batch of solid earnings reports.
Oracle Corp (ORCL 18.02 +0.47) is well off its opening highs (+4.8%) but is still trading sharply higher after posting a better-than-expected 35% jump in Q1 profits and saying it "exceeded guidance on every metric with strong revenue growth across all product lines." Adobe Systems (ADBE 42.59 +1.85) posting a 37% rise in Q3 earnings and raising its profit outlook has also restored some confidence about the tech sector's growth prospects.
Meanwhile, Morgan Stanley (MS 79.46 +3.35) handily topped expectations with record Q1 results, giving the brokerage group another boost of optimism. However, FedEx (FDX 109.98 -2.31), which is regarded as an economic proxy, posted its first profit decline in three years and tempered its Q4 guidance. Management saying Q3 earnings were negatively impacted by a slowing economic environment merely adds to the sense of nervousness ahead of a Fed statement we believe is not likely to show any major changes since recent data provide no reason for such an adjustment. BTK +0.6% DJ30 -11.46 DJTA -0.2% DJUA -0.2% DOT +0.1% NASDAQ +0.67 NQ100 -0.1% R2K +0.1% SOX +0.1% SP400 +0.1% SP500 +0.80 XOI +0.2% NASDAQ Dec/Adv/Vol 1348/1470/736 mln NYSE Dec/Adv/Vol 1373/1717/466 mln
11:30 am : More of the same for stocks as the major averages continue to fluctuate around the flat line looking fatigued. Sure, consternation ahead of the Fed's decision is forcing investors to keep their cards close to their vest; but it is also worth noting that stocks would likely being sluggish anyway given a respectable two-day winning streak.
In fact, the Dow, S&P 500 and Nasdaq have finished with gains in four out of the last five sessions and are now trading higher than they were after the global sell-off on February 27 exacerbated concerns about a market correction.DJ30 -13.42 NASDAQ +2.03 SP500 +0.79 NASDAQ Dec/Adv/Vol 1342/1414/620 mln NYSE Dec/Adv/Vol 1361/1650/388 mln
11:00 am : As is typically the case before the culmination of an FOMC meeting, stocks are still trading in a relatively narrow range. The lack of any intraday catalysts is also contributing to investors' apprehension to move the indices more aggressively in either direction.
Meanwhile, oil prices recently ticked as high as $59.88/bbl (+1.1%), following a larger than expected drawdown in weekly gasoline inventories. However, the commodity's uptick did not prompt enough of a knee-jerk reaction in stocks to make a significant change in the standings, leaving all eyes on the Fed to set a more definitive tone. DJ30 -11.83 NASDAQ +1.73 SP500 +0.96 NASDAQ Dec/Adv/Vol 1382/1316/494 mln NYSE Dec/Adv/Vol 1370/1591/302 mln
10:30 am : Equities are still struggling to find their footing as the indices continue to vacillate around the unchanged mark. The market's holding pattern has been further evidenced in the A/D line, as advancers on the NYSE hold a slim 15-to-13 advantage over decliners while both advancing and declining issues on the Nasdaq remain evenly matched.
Energy and Utilities as the only sectors making noticeable moves, with the remaining eight sectors not posting a gain or decline of more than 0.2%, further underscores the lack of conviction on either the bullish or bearish side of the aisle. DJ30 -13.58 NASDAQ +0.88 SP500 +0.49 NASDAQ Dec/Adv/Vol 1301/1305/350 mln NYSE Dec/Adv/Vol 1343/1541/192 mln
10:00 am : After briefly inching into positive territory for the year, the Nasdaq has run into some early selling pressure and now clings to the smallest of gains. The Dow has turned negative, leaving the major averages mixed and split industry leadership setting the tone for what is likely to be a lackluster session altogether until the Fed policy statement hits the wires this afternoon.
Of the five sectors trading higher, Energy paces the way as oil prices flirt with $60/bbl ahead of the upcoming inventories report (10:30 ET) and its gain of 0.5% dwarfs paltry gains from the likes of Financials and Technology. DJ30 -12.58 NASDAQ +0.16 SP500 +0.22 NASDAQ Dec/Adv/Vol 1163/1233/180 mln NYSE Dec/Adv/Vol 1188/1444/64 mln
09:40 am : There is no question that interest rates will be on the minds of investors all day, as policy makers wrap up a two-day FOMC meeting at 2:15 ET. The Fed is widely expected to leave the fed funds rate unchanged at 5.25% again and we believe the accompanying statement is not likely to change much either.
However, uncertainty as to what the policy directive will imply about future rate decisions hasn't left all investors erring on the side of caution as a batch of solid earnings reports have restored some confidence about the growth prospects of the influential Tech sector. Oracle Corp (ORCL 18.32 +0.77) is surging 4.4% after posting a better-than-expected 35% jump in Q1 profits and saying it "exceeded guidance on every metric with strong revenue growth across all product lines." Adobe Systems (ADBE 42.77 +2.03) is up 5.0% after reporting a 37% rise in Q3 earnings.
DJ30 +4.06 NASDAQ +6.56 SP500 +1.91 NASDAQ Vol 76 mln NYSE Vol 44 mln
09:15 am : S&P futures vs fair value: +0.9. Nasdaq futures vs fair value: +7.5.
09:00 am : S&P futures vs fair value: +0.7. Nasdaq futures vs fair value: +7.0. Early indications still suggest some carry-over momentum following an impressive two-day gain for the major averages may lift stocks at the open. With concerns about the subprime mortgage debacle spilling over into the broader economy acting as a thorn in the market's side of late, investors may be pricing in the chance that the Fed citing such an issue today will provide a reason for policy makers to eventually ease. While we think that would be a wrong interpretation, there's no denying that Fremont General (FMT) announcing agreements to sell $4 bln of its subprime residential loans earlier is providing another dose of relief.
08:30 am : S&P futures vs fair value: +0.2. Nasdaq futures vs fair value: +7.2. Not much has changed since the last update as the bulk of early buying interest seems to be fixated almost solely on the Nasdaq, with tech stocks expected to take the lead this morning. While strong earnings, and clearly whether this afternoon's Fed statement will reveal any clues pertaining to the timing of an eventual interest rate cut remain the focal points, oil prices can't be ruled out as a catalyst to today's action. Crude for May delivery is up nearly 1.0% and flirting with $60/bbl again ahead of the Energy Dept.'s weekly inventories data at 10:30 ET.
08:00 am : S&P futures vs fair value: +0.1. Nasdaq futures vs fair value: +7.2. Nasdaq 100 futures are trading well above fair value, fueled largely by a couple of strong earnings reports. A blowout third quarter from Oracle Corp (ORCL) and a 37% rise in Q1 profits from Adobe Systems (ADBE) last night have helped renew confidence in the tech sector's growth prospects.
Morgan Stanley (MS) handily topped expectations with record Q1 results, but FedEx (FDX) said Q3 earnings were negatively impacted by a slowing economic environment. Thus, the broader market looks to open on more of a flat note as investors also exhibit a sense of caution ahead of this afternoon's FOMC meeting. Even though it is a foregone conclusion that policy makers at 2:15 ET today will leave the overnight lending rate unchanged at 5.25% again, investors remain anxious to see if the Fed's directive implies there is a balanced risk between economic weakness and inflation.
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