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Market Update 070913
http://biz.yahoo.com/mu/update.html
4:20 pm : There was a lot of green on stock monitors today thanks to the leadership of blue chip issues, which drafted off reassuring announcements from McDonald's (MCD 54.30, +3.10) and Countrywide (CFC 18.93, +2.31), and brokerage upgrades of General Motors (GM 33.29, +3.04) and Merck (MRK 49.86, +0.19).

The jump in stock prices came in the face of a new record close for oil prices, which were down modestly most of the day before getting an upside push late in the session to close at $80.09 (+$0.19) per barrel.

The transportation stocks weren't derailed by the move in oil prices; in fact, they were among today's best performers as evidenced by the 1.3% gain in the Dow Jones Transportation Average.

Today's session was mostly a blue chip affair as a weakening dollar sparked buying interest in multinational companies while an underlying sense of angst ahead of next week's FOMC meeting left participants favoring liquid, large-cap names.

McDonald's led the Dow's winning effort as investors charged into the stock after the company announced a 50% increase in its annual cash dividend to $1.50 per share. General Motors was close behind as it surged on a Citigroup upgrade to Buy and reports that the UAW is close to agreeing to a union-controlled health care trust fund that would create a good deal of expense relief for the auto makers.

Speaking of relief, Countrywide investors got some with the news that the mortgage lender was able to secure an additional $12 billion in borrowing capacity through new and existing credit facilities. That announcement gave Countrywide's stock a much needed lift and it helped spur a bargain hunting bid in the financial sector (+1.6%), which was today's best-performing area.

Quality sector leadership was a key reason why sellers didn't make many waves today. It was noteworthy, though, that the tech sector (+0.05%) trailed the action. A revenue warning from Alcatel-Lucent (ALU 9.16, -0.88) and an underperforming semiconductor group were largely to blame.

For the most part, the market was focused on all things positive today, including a better than expected initial claims report and word from Target (TGT 64.42, +1.70) that it is considering the sale of its credit card receivables.

The Treasury market for its part didn't have much to focus on that was positive. Selling was seen across the yield curve as the rally in stocks led to an unwinding of flight-to-quality trades and possibly some asset re-allocation. The 10-year note dropped 17 ticks, bringing its yield up to 4.48%.

Volume in the equity market was again on the light side, which has been the case throughout the week. The low volume today was attributed in part to the Rosh Hashanah holiday.

Looking to Friday there is nothing of note on the earnings calendar. Economic data, however, will be a focal point as the release of the retail sales and industrial production reports for August carry market-moving potential.DJ30 +133.23 NASDAQ +8.99 R2K +0.3% SOX -0.4% SP400 +0.3% SP500 +12.39 NASDAQ Dec/Adv/Vol 1459/1502/1.69 bln NYSE Dec/Adv/Vol 1363/1922/1.27 bln

3:30 pm : The indices are off their highs but continue to hold the bulk of today's gains as there hasn't been any real wavering by today's leadership groups.

Volume remains on the light side, which has been the case throughout the week. Next week should see a pickup in trading activity with the FOMC meeting, the earnings reports from investment banks, and the quadruple witching options expiration on Friday.

Looking to tomorrow the earnings calendar won't provide any excitement. The economic calndar, on the other hand, should be a focal point as the retail sales and industrial production reports for August will be released at 08:30 ET and 09:15 ET, respectively.DJ30 +137.78 NASDAQ +12.64 SP500 +13.28 NASDAQ Dec/Adv/Vol 1194/1726/1.33 bln NYSE Dec/Adv/Vol 1083/2185/912 mln

3:00 pm : After a minor afternoon slip (Dow dropped 40 points off high) the market indices found their footing near midday ranges and have been edging higher once again.

Sectors displaying relative strength vs. the S&P 500 during the recent upticks include: Finance (XLF +1.6%), Energy (XLE +1.1%, OIH +0.8%)-- crude finished the session higher by 13 cents to $80.04 pbl-- and Retail (RTH +1.9%).

Today's Treasury Budget was reported at -$117.0 bln vs. a consensus of -$85.0 bln but the equity impact was minimal.BTK -0.4% DJ30 +143 NASDAQ +11 NQ100 +0.5% R2K +0.8% SP400 +0.6% SP500 +14 NASDAQ Dec/Adv/Vol 1225/1687/1.219 bln NYSE Dec/Adv/Vol 1137/2117/834 mln

2:30 pm : A little further backtracking/profit taking for the market averages in recent action after the Dow/S&P 500 stalled near Sep intraday/closing highs. The best the lagging Nasdaq could accomplish today was reach Wednesday's peak.

Similar type action has also been noted for the 10-Yr yield after it ran back near resistance at its March closing lows. The relationship between 10-Yr Yields and stock prices has revolved around the move into safe haven bonds during the subprime crisis (yields fall as bond prices rise) and back out of bonds over the last week.

Networking -1.7%, Disk Drive -0.6% and Semi (SMH -0.2%) have contributed to the Nasdaq under performance. DJ30 +139 NASDAQ +12 SP500 +13 NASDAQ Dec/Adv/Vol 1191/1708/1.129 bln NYSE Dec/Adv/Vol 1061/2178/772 mln

2:05 pm : Quiet action over the last half hour has given way to a little more of a pullback but the stock indices have slipped only modestly off their afternoon/session highs.

This has been more of a large cap/blue chip led rally as the recent run in the Dow left it slightly under its Sep intraday recovery high at 13494 (S&P 500 tested Sep close high at 1489).

The lagging performance in the Nasdaq has not only been evident today (stalled at yesterday's high) but off of last week's low as well. As of today's peak it was still 1.3% below its Sep high. Volume continues to run at a below average pace despite the sizeable advance.DJ30 +156 NASDAQ +15 SP500 +15 NASDAQ Dec/Adv/Vol 1121/1763/1.039 bln NYSE Dec/Adv/Vol 1009/2208/702 mln

1:30 pm : Limited range trade over the last 90 minutes or so has given way to new session highs for all the market averages. The tech dominated Nasdaq Comp continues lag with it just recently edging above its opening session high.

Declines in Networking (NWX -1.3%) and minor gains in Semi (SMH +0.2%) have been limiting factors for Nasdaq.

Finance (XLF +1.7%), which is the largest component of the S&P 500, is enjoying a strong session as subprime worries slip to the back burner today -- Countrywide (CFC +8.4%) has been able to secure an additional $12 billion in borrowing capacity-- and some of the safe haven trade into Treasuries is being reversed. The Dow's climb leaves it within a short distance of the recovery high established on Sep 04 at 13494.DJ30 +168 DJTA +1.7% DJUA +0.8% NASDAQ +15.50 NQ100 +0.7% R2K +1% SP400 +0.9% SP500 +17.16 XOI +1.4% NASDAQ Dec/Adv/Vol 1228/1622/918 mln NYSE Dec/Adv/Vol 1120/2082/622 mln

12:55 pm : The indices are trading in narrow ranges and holding near their highs for the session.

With such an introduction it won't surprise you to hear that the leadership trends remain very much intact. That is, the financial sector continues to exhibit relative strength while the blue chip stocks continue to command most of the buying interest.

Losses in the Treasury market have been extended as the stock market has rallied. Mindful of this, it stands to reason that there could be some asset re-allocation that is helping to underpin equities. With volume as light as it is, though, and the FOMC meeting next week, we wouldn't get too fired up about that assertion.DJ30 +137.21 NASDAQ +11.02 SP500 +13.24 NASDAQ Dec/Adv/Vol 1312/1507/820 mln NYSE Dec/Adv/Vol 1149/2019/560 mln

12:30 pm : The Dow keeps on trucking, having hit a new session high in the past half hour. Its biggest laggard today is Altria Group (MO 67.09, -0.41) which seems only fitting given that stock's defensive orientation. Altria, though, isn't down to any great extent and there isn't a whole lot to be read into its weakness.

The transports, interestingly, comprise another strong area. Strength there goes to show that the market has a bullish bias about it today. While oil prices are down slightly today (-$0.13 at $79.78), they are still at levels that will crimp the transport sector's profitability.

The Dow Jones Transportation Average is up 1.2%.DJ30 +146.48 NASDAQ +12.57 SP500 +14.24 NASDAQ Dec/Adv/Vol 1352/1435/743 mln NYSE Dec/Adv/Vol 1179/1965/507 mln

12:00 pm : It was a solid start for the stock market today thanks to some constructive developments affecting a number of blue chip issues. That solid start set a good tone that has continued to ring true for the bulls, which are eyeing the major indices near their best levels of the day entering the New York lunch hour.

Speaking of lunch, how about some McDonald's (MCD 54.13, +2.93)? A Big Mac sounds good to your author, but what sounded even better to the market was the company's announcement that its Board of Directors approved a 50% increase in the annual cash dividend per share to $1.50.

The super-sized dividend hike at McDonald's has left the stock sitting atop the Dow today. Following close behind is General Motors (GM 32.54, +2.29), which has surged on the back of a Citigroup upgrade to Buy and reports that the UAW is willing to agree to a union-controlled health care trust fund that would create a good deal of expense relief for the auto makers.

By and large, the market's focus to this point has been on all things positive.

It has applauded Target's (TGT 64.21, +1.49) decision to explore a possible sale of its credit card receivables, it has been relieved to hear that Countrywide (CFC 18.02, +1.40) has been able to secure an additional $12 billion in borrowing capacity through new and existing credit facilities, and it has been encouraged by the report that weekly initial claims of 319K were better than the expected number of 325K.

Additionally, the market has taken a liking to the fact that the financial sector (+1.4%) is today's best-performing area. It has a lot of company, though, as all 10 economic sectors are in positive territory with consumer discretionary (+1.3%), materials (+1.3%) and telecom (+1.1%) all sporting a gain in excess of 1.0%.

The positive action in the equity market has sparked an unwinding of some of the flight-to-quality in the Treasury market, which has been on the defensive sine the stock market opened. The 10-year note is currently down 15 ticks bringing its yield up to 4.47%.

Today's stock market advance, though, is very much a blue chip show. While small-cap and mid-cap stocks are trading higher, they are trailing well behind their large-cap counterparts.

Trading volume is again on the light side with approximately 450 million shares changing hands at the NYSE. The Rosh Hashanah holiday is getting some attribution as a reason for the low volume.DJ30 +141.77 NASDAQ +10.47 R2K +0.2% SP400 +0.3% SP500 +13.30 NASDAQ Dec/Adv/Vol 1358/1388/652 mln NYSE Dec/Adv/Vol 1133/1973/439 mln

11:30 am : The market has maintained its bullish posture as it focuses today predominantly on all things positive. That would include the weekly initial claims report, which showed 319K claims for unemployment insurance were filed. While that was up slightly from the prior week's level of 315K (revised from 318K), it was better than the consensus estimate of 325K.

The indices are sitting at, or near, their best levels of the session, supported by quality leadership and broad-based participation from a sector standpoint.

The only S&P industry groups down more than 1.0% at this juncture are education services (-1.3%) and trading companies (-1.1%).DJ30 +145.99 NASDAQ +13.84 SP500 +14.80 NASDAQ Dec/Adv/Vol 1335/1360/534 mln NYSE Dec/Adv/Vol 1112/1940/353 mln

11:00 am : The market continues to press higher on the back of blue chip strength. Sellers are out there, but thus far, they haven't exerted any notable pressure on the broader market.

The financial sector, which is the most heavily-weighted sector in the S&P 500, is acting as today's pacesetter with a gain of 1.3%. Sponsorship from this key area is a reason why the market hasn't really hit any air pockets in the early-going.

Within the Dow, 27 of its 30 components are sporting a gain with McDonald's (MCD 54.53, +3.33) at the top of that list. DJ30 +130.22 NASDAQ +9.77 SP500 +12.95 NASDAQ Dec/Adv/Vol 1333/1319/419 mln NYSE Dec/Adv/Vol 1088/1896/271 mln

10:30 am : The blue chips have maintained their leadership post, and consequently, we're seeing nice gains today in the Dow Jones Industrial Average and the S&P 500 Index.

The Nasdaq is up today, but it is trailing the other major indices due to relative weakness in the influential semiconductor group.

Interestingly, semiconductors are underperforming in today's trade despite Lehman Bros. upgrading its view of the sector to Positive and UBS issuing bullish comments on Intel (INTC 25.34, -0.12) that included an increase in the firm's price target to $32 from $30.

As an aside, Intel is a suggested holding in Briefing.com's Active Portfolio. It is up 17% since we added it to the portfolio in January 2006.DJ30 +117.38 NASDAQ +4.24 SOX -0.4% SP500 +11.07 NASDAQ Dec/Adv/Vol 1486/1051/280 mln NYSE Dec/Adv/Vol 1281/1613/168 mln

10:00 am : There is a blue chip rally underway this morning, which is reflected in the outperformance of the Dow Jones Industrial Average.

Buying interest is broad-based across the 10 S&P economic sectors, but in reality, this can't be deemed a broad-based rally per se. The small-cap and mid-cap issues are not very involved as evidenced by the lack of movement in the S&P 600 Smallcap Index (-0.05%) and the S&P 400 Midcap Index (+0.01%).

Separately, oil prices are down this morning (-$0.19 to $79.72) but their proximity to $80 per barrel has the market keeping a watchful eye on the action in the energy pits. The energy sector, meanwhile, is among today's leadership with a gain of 0.8%.DJ30 +100.23 NASDAQ +5.76 SP500 +8.49 NASDAQ Dec/Adv/Vol 1032/1294/115 mln NYSE Dec/Adv/Vol 771/1689/56 mln

09:40 am : The major indices are off to a positive start which was presaged by the futures market and has been driven by blue chip leadership.

McDonald's (MCD 53.23, +2.03) is among the early standouts after raising its annual cash dividend by 50% to $1.50 per share. Similarly, fellow Dow components General Motors (GM 32.25, +2.00) and Merck (MRK 50.60, +0.93) are off to a good start after being upgraded to Buy at Citigroup and Banc of America, respectively.

Reflecting the broad-based buying interest, all 10 economic sectors are in positive territory.DJ30 +81.21 NASDAQ +9.11 SP500 +8.23

09:15 am : S&P futures vs fair value: +9.1. Nasdaq futures vs fair value: +15.5. Solid up open indicated.

09:00 am : S&P futures vs fair value: +8.8. Nasdaq futures vs fair value: +15.5. Futures push to highest level of the session on what could be a light trading volume day due to the Rosh Hashanah holiday. Oil holding steady at $79.91 a barrel apparently is not an impediment.

08:32 am : S&P futures vs fair value: +6.2. Nasdaq futures vs fair value: +10.5. New claims for unemployment for the week ended September 8 rose to 319,000 from 315,000 the week before, but that is still a very low level from a historical standpoint. That suggests the weak payroll trend is due to cautious hiring more than a high level of levels, and that businesses have not gone into retrenchment mode.

08:01 am : S&P futures vs fair value: +5.0. Nasdaq futures vs fair value: +8.5. Futures point to higher open, as corporate news helps set a better tone. McDonald's increases its dividend 50%, and Microsoft 10%. Alcatel-Lucent isn't helping, however. It warned that revenue this year will be less than expected. Oil is near flat at $79.83 a barrel.

06:18 am : S&P futures vs fair value: -1.6. Nasdaq futures vs fair value: +2.0.