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Market Update 070326
http://biz.yahoo.com/mu/update.html

3:30 pm : After posting gains over the last five sessions, it appears the Dow's latest streak will be snapped today. Even though the blue-chip index is well off its nearly 114-point low, 22 of 30 components are still in negative territory with only 30 minutes left in the trading day.

The Nasdaq and the S&P 500, though, are gaining some momentum going into the close and may actually turn positive before the day is done; but the below average volume behind today's action also offers very little conviction on the part of buyers and the uphill battle they've faced throughout the session. DJ30 -35.66 NASDAQ -1.13 SP500 -1.83 NASDAQ Dec/Adv/Vol 1800/1242/1.39 bln NYSE Dec/Adv/Vol 1933/1295/1.13 bln

3:00 pm : Since oil relinquishing much of its intraday advance also contributed to the market's improvement 30 minutes ago, the commodity almost as quickly regaining momentum into the close of trading on the NYMEX has currently stalled what little enthusiasm buyers have been trying to muster.

Crude for May delivery closed up 1.1% near $63/bbl on Iran worries and may soon become a more convincingly bearish factor for the stock market should the uptrend continue. Aside from oil's potential inflationary characteristics posing a problem, the Energy sector's inability to take full advantage of crude's climb is a concern from a leadership standpoint. DJ30 -50.75 NASDAQ -4.25 SP500 -3.92 XOI +0.5% NASDAQ Dec/Adv/Vol 1846/1193/1.32 bln NYSE Dec/Adv/Vol 1968/1247/1.06 bln

2:30 pm : Equities are still on the defensive, but a recent turnaround in the influential Tech sector leaves the indices slowly inching their way toward breakeven. Internet Software & Services (+0.9%) is now among today's top ten performers as eBay (EBAY 32.58 +0.75) gets a boost after Goldman Sachs raised their Q1 revenue and earnings estimates.

Computer Hardware is also getting a lift from some upbeat analyst commentary. Dell (DELL 23.50 +0.67) is surging nearly 3% after Goldman upgraded the stock to a Buy. DJ30 -48.89 NASDAQ -3.43 SP500 -3.30 NASDAQ Dec/Adv/Vol 1815/1199/1.22 bln NYSE Dec/Adv/Vol 1945/1257/978 mln

2:00 pm : More of the same for stocks as market internals still hold a decidedly negative slant. As reflected in the A/D line, decliners on the NYSE hold a nearly 2-to-1 advantage over decliners while those on the Nasdaq hold an 18-to-11 edge.

Further underscoring the widespread bearish tone has been a 7% gain on the VIX (CBOE Volatility Index). That suggests investors are actively buying put protection amid concerns that today's disappointing housing data may be a sign of worse things to come. The "investor fear gauge" was up nearly 14% earlier as some on Wall Street are beginning to believe that valuations simply aren't sustainable at current levels, especially with the potential of profit warnings over the next couple of weeks. DJ30 -66.73 NASDAQ -9.94 SP500 -5.81 NASDAQ Dec/Adv/Vol 1853/1137/1.11 bln NYSE Dec/Adv/Vol 2024/1159/890 mln

1:30 pm : Not much has changed since the last update as the major averages continue to vacillate in roughly the same ranges. On the Dow, 27 of 30 components are trading lower, paced by a 1.8% decline in Verizon Communications (VZ 37.43 -0.69).

Other notable blue chips down at least 1.0% and setting the stage for the Dow to snap a five-day winning streak include HD, HON, MMM, MRK, MSFT, UTX, and WMT. AT&T (T 39.11 +0.23), benefiting after Lehman raised its price target to $47, is the only component turning in a respectable performance. DJ30 -72.10 NASDAQ -11.02 SP500 -6.36 NASDAQ Dec/Adv/Vol 1897/1067/1.04 bln NYSE Dec/Adv/Vol 2057/1102/828 mln

1:00 pm : The market's latest efforts to pare losses have hit a headwind as broad-based selling pressure continues to weigh on the proceedings. The Materials sector's stint in positive territory was short lived, but its reversal has been matched by a turnaround in Utilities. However, since both sectors rank as two of the three least influential on the S&P 500, rarely do even huge swings in either one have much of an impact on the broader market.

The Dow Jones Utilities Index closed at an all-time high on Friday and is now building on those gains as dividend-paying stocks become more attractive as bond yields fall and a more risk averse market looks for safe havens. DJ30 -74.58 NASDAQ -11.21 SP500 -6.73 NASDAQ Dec/Adv/Vol 1815/1132/950 mln NYSE Dec/Adv/Vol 1979/1166/750 mln

12:30 pm : Stocks kick off the afternoon session at improved levels, but the rebound is not nearly enough to make a significant change in the standings. While further appreciation in Energy and a turnaround in Materials are the more noticeable contributors to the market's attempts to pare losses, the Financials sector nearly halving its midday decline within the last 30 minutes is the more legitimate reason behind the broader market's uptick.

The AMEX Securities Broker/Dealer Index was down as much as 1.5% earlier but is now down only 0.6%. DJ30 -58.82 NASDAQ -9.55 SP500 -5.08 NASDAQ Dec/Adv/Vol 1901/1024/864 mln NYSE Dec/Adv/Vol 2141/982/678 mln

12:00 pm : As expected, today's housing data did set the tone for trading. To the dismay of the bulls, however, a surprise 3.9% drop in new home sales rocked a market that had been pricing in more signs of stabilization within the troubled housing market. The Dow, S&P 500 and Nasdaq are off their worst levels midday but still sport broad-based declines; nine out of 10 sectors are trading lower.

At 10:00 ET, the Commerce Dept. showed that new home sales unexpectedly fell last month to the lowest level in nearly seven years. More troubling was the fact that the supply of unsold homes at the current sales pace rose to the highest level since 1991. Even though the data do not mean that the housing market is crashing and will pull the overall economy into recession, the broader perspective shows that housing is still in a correction and will remain a moderate drag on real GDP for several more quarters.

Not surprising, Homebuilders (-2.1%) rank among the day's worst performing S&P industry groups and remain this year's biggest laggard (-17%). That, combined with oil prices eclipsing $63/bbl for the first time this year prompting consolidation among retailers, leaves Consumer Discretionary (-0.7%) as one of today's biggest disappointments. Rising oil prices are also having an adverse effect on transportation stocks, especially Railroads (-2.0%), which leaves Industrials (-1.1%) as the day's worst performing sector.

A 1.0% decline in Financials, the most heavily weighted sector on the S&P 500, remains the biggest obstacle stalling follow-through momentum on the heels of last week's impressive market rally. Already showing signs of fatigue early on after the S&P 500 logged its best weekly performance (+3.5%) in four years, mortgage lenders tumbling on the housing news have left some wondering if Financials is likely to see some downward earnings revisions over the next couple of weeks heading into earnings season. BTK -0.7% DJ30 -86.52 DJTA -1.5% DJUA -0.2% DOT -0.5% NASDAQ -13.47 NQ100 -0.5% R2K -0.6% SOX -0.7% SP400 -0.6% SP500 -8.41 XOI +0.1% NASDAQ Dec/Adv/Vol 1847/1041/770 mln NYSE Dec/Adv/Vol 2151/940/594 mln

11:30 am : It appears recent efforts to find a bottom have been somewhat successful, but that by no means suggests buyers are racing to jump back in to pick up bargains. Aside from the unexpected drop in new home sales and oil prices hitting 2007 highs weighing on sentiment, some trepidation typically associated with the profit warning season is also underpinning some nervousness.

As a reminder, Q1 earnings estimates have fallen from 8% two months ago to 5% or less today, with estimates for nine out of 10 S&P sectors being revised downward. Financials has been the only sector where growth forecasts have been upwardly revised; but the likelihood of that changing over the coming weeks adds to the apprehension of extending the sector's recent recovery attempts. DJ30 -86.12 NASDAQ -14.24 SP500 -9.00 NASDAQ Dec/Adv/Vol 1919/937/668 mln NYSE Dec/Adv/Vol 2230/835/514 mln

11:00 am : The indices have bounced off their worst levels but sellers remain in complete control of the action. All 10 sectors are now negative territory, paced by a 1.1% decline in Industrials; but a 0.9% pullback in Financials remains the biggest thorn in the market's side.

Even though bond yields have dropped roughly 5 basis points across the curve following the disappointing housing data, and lower borrowing costs typically bode well for rate-sensitive areas, mortgage lenders have tumbled and are weighing heavily on a sector that has been pricing in some signs of stabilization in housing that had eased the worst of recession fears and concerns tied especially to subprime mortgage misfortunes. Of the 147 S&P industry groups, 140 are trading lower. DJ30 -86.28 NASDAQ -14.79 SP500 -9.25 NASDAQ Dec/Adv/Vol 1820/1010/528 mln NYSE Dec/Adv/Vol 2146/859/398 mln

10:30 am : Stocks spike lower within the last 30 minutes following further evidence that serious problems continue in the market for new homes. At the top of the hour, the Commerce Dept. showed that new home sales unexpectedly fell 3.2% in February to a seasonally adjusted annual rate of 848,000 (consensus 995,000). That is the lowest since June 2000 and runs counter to last week's surprise 3.9% jump in existing home sales.

More troubling was the fact that the inventory of unsold homes rose to an 8.1 months supply from 7.3 in January. Even though the data do not mean that the housing market is crashing and will pull the overall economy into recession, the broader perspective shows that housing is still in a correction and will remain a moderate drag on real GDP for several more quarters. DJ30 -96.02 NASDAQ -15.67 SP500 -10.86 NASDAQ Dec/Adv/Vol 1723/1026/370 mln NYSE Dec/Adv/Vol 1963/962/268 mln

10:00 am : The major averages are still trading in split fashion as participants wait for today's housing data, which will be out momentarily, to help set a more definitive tone. Of the 10 economic sectors, seven are trading lower. Industrials is today's biggest laggard (-0.4%) as many of its transportation components consolidate at the expense of rising oil prices. Consumer Staples and Financials are also giving back some of last week's gains.

Energy (+0.6%) is turning in the best performance as crude for May delivery hovers above $63/bbl while Technology holds onto a modest 0.2% advance. Dell (DELL 23.50 +0.67) is up nearly 3% after being upgraded to Buy from Neutral at Goldman Sachs.DJ30 -13.02 NASDAQ +4.14 SP500 -0.55 NASDAQ Dec/Adv/Vol 1135/1389/136 mln NYSE Dec/Adv/Vol 1290/1244/70 mln

09:40 am : With the S&P 500 logging its best weekly point and percentage gain in four years and the Dow fresh off its fifth straight advance and turning positive for the year with its best weekly percentage gain (+3.1%) since last July, it's not surprising to see the stock market take a bit of a breather.

The latest update on the state of the troubled housing market (i.e. new home sales at 10:00 ET), oil prices hitting $63/bbl for the first time this year amid renewed geopolitical concerns and the absence of any Monday-morning merger news of note are also contributing to the market's lackluster disposition. DJ30 -10.57 NASDAQ +1.27 SP500 -0.54 NASDAQ Vol 86 mln NYSE Vol 42 mln

09:15 am : S&P futures vs fair value: -1.0. Nasdaq futures vs fair value: +1.0.

09:00 am : S&P futures vs fair value: -1.2. Nasdaq futures vs fair value: +0.5. Still shaping up to be a relatively flat start for the cash market as futures vacillate around the unchanged mark. Investors continue to hold their cards close to their vests heading into today's new home sales report. Another noteworthy factor stalling last week's momentum is the fact that today is Monday yet there are no merger announcements to give the market a boost. As a reminder, a wave of M&A activity last Monday, led by confirmation that Barclays PLC (BCS) was in talks with ABN Amro (ABN) over a potential blockbuster merger, sparked a rally on Wall Street.

08:30 am : S&P futures vs fair value: -1.3. Nasdaq futures vs fair value: -0.8. Pre-market sentiment continues to deteriorate as Nasdaq 100 futures now trade below fair value as well. Oil prices surging 1.1% and flirting with $63/bbl amid potential supply disruptions after the U.N. tightened sanctions against Iran are acting as an overhang. With the first quarter winding down this week, and Q1 earnings estimates having fallen from 8% two months ago to 5% or less today, the specter of profit warnings over the next couple of weeks will also be at the forefront of investors' minds.

08:00 am : S&P futures vs fair value: -1.0. Nasdaq futures vs fair value: +1.2. Early indications are pointing to a sluggish start for stocks. That's not all that surprising, though, since the Dow, S&P 500 and Nasdaq averaging gains of 3.4% last week are likely to attract some profit-taking activity. Investors are also showing some reserve ahead of another update on the state of the housing market. New Home Sales hitting the wires at 10:00 ET should help set a more definitive tone to today's action.

06:21 am : S&P futures vs fair value: -1.5. Nasdaq futures vs fair value: -3.5.