AI
Wednesday, November 07, 2007 6:58:07 PM
Market Update 071106
http://biz.yahoo.com/mu/update.html
4:25 pm : It was one of those nerve-wracking days on Wall Street where just about everything got hit - and hit hard. The biggest blow was suffered by the financial sector, which plummeted 5.1% amid a batch of headlines that stoked concerns about the fallout from the housing market's severe downturn.
Washington Mutual (WM 20.04, -4.19) was at the epicenter of the concerns after being accused by the New York Attorney General of pressuring real estate appraisers to inflate the value of their appraisals. Both Fannie Mae (FNM 49.79, -5.60) and Freddie Mac (FRE 45.13, -4.26) were subpoenaed in this matter as the Attorney General is seeking information on the mortgages they bought from Washington Mutual and other banks.
The word "collusion" was used by the New York Attorney General, which rattled investors who didn't like the implication of widespread fraud.
In light of this development, and a Royal Bank of Scotland report suggesting losses related to the credit crisis could ultimately top $250 billion, financial stocks were dumped en masse.
The financial sector fallout wasn't event the half of it, so to speak, on Wednesday.
Stock holders were also rattled by General Motors (GM 33.95, -2.21) reporting a third quarter loss of $39 billion after writing down the value of future tax benefits. Excluding the accounting adjustment, GM lost $2.80 per share in the period as mortgage-related losses at GMAC, in which it holds a 49% stake, more than offset the small profit from its automotive operations. Analysts had been expecting a loss of $0.36.
The weakening dollar also occupied the market's attention all day, as it got knocked back on a report that China might pursue a plan to adjust its dollar holdings in favor of stronger currencies. The dollar index hit its lowest level since inception at 75.077 before rebounding a bit to finish the day down 0.8% at 75.412.
The dollar weakness was again seen as a buying catalyst for commodity traders who bid oil and gold futures as high as $98.62 and $855.00, respectively, at one point.
Oil prices eventually sold off and finished the day down 0.3% at $96.37. The reversal was attributed to profit-taking as the contract neared $100 and to a weekly inventory report that showed a lower than expected drawdown in stockpiles.
A report that third quarter productivity rose 4.9%, while unit labor costs declined 0.2%, was completely overlooked by the market despite being good news from an inflation standpoint.
The Treasury market took some notice, but it was driven primarily by a flight-to-quality trade that coincided with the stock market sell-off.
The 10-year note gained 12 ticks, bringing its yield down to 4.33%. The strongest buying action, though, was at the front of the Treasury curve as the yield on the 3-month Treasury bill dropped 30 basis points to 3.43% with traders registering concerns about the credit market mess and frontrunning the possibility of another Fed rate cut.
The market will get some important insight Thursday on Fed policy when Fed Chairman Bernanke testifies before the Joint Economic Committee on the economic outlook.DJ30 -360.92 DJTA -3.2% DJUA -2.4% NASDAQ -76.42 NQ100 -2.5% R2K -3.2% SOX -2.5% SP400 -2.3% SP500 -44.65 NASDAQ Dec/Adv/Vol 2444/587/2.53 bln NYSE Dec/Adv/Vol 2995/301/1.66 bln
3:30 pm : Heading into the final half-hour of trading, the major indices are holding near the bottom of their intraday ranges. All ten economic sectors spent the entirety of the session in negative territory.
Released at 15:00 ET, consumer credit for September came in at $3.7 billion versus a consensus estimate that called for a reading of $9.0 billion. This monthly measure of consumer debt is volatile and subject to massive revisions. It is also released well after every other consumer spending indicator, including weekly chain store sales, auto sales, consumer confidence, retail sales, and personal consumption. For these reasons, the market almost never reacts to the consumer credit report.
After the close, 59 companies are confirmed to report, including AIG (AIG 58.18, -3.87) and Cisco (CSCO 33.20, -0.88). Regarding AIG, the stock is down due to concerns the company might announce a write-down due to mortgage exposure.DJ30 -270.77 NASDAQ -66.15 SP500 -33.42 NASDAQ Dec/Adv/Vol 2360/654/1.96 bln NYSE Dec/Adv/Vol 2874/387/1.19 bln
3:00 pm : After slowly drifting upward for the past hour, the indices are back on the retreat. The small-cap Russell 2000 Index is again underperforming the broader market. At current levels, the index is showing a loss year-to-date.
Declines are broad-based this session, as indicated by the low 0.16 advancer to decliner ratio at the NYSE.
The DXY Index, which compares the dollar against major currencies, is off its lows, but still trading with a considerable 0.8% loss.DJ30 -253.62 NASDAQ -51.67 R2K -2.5% SP500 -31.00 NASDAQ Dec/Adv/Vol 2324/665/1.76 bln NYSE Dec/Adv/Vol 2814/440/1.11 bln
2:30 pm : Since the last update, the stock market has extended its recovery efforts, but has a long way to go to make it back to the unchanged mark.
All 30 Dow components are currently in the red. AIG (AIG 58.37, -3.68), American Express (AXP 55.67, -2.90) and Exxon Mobil (XOM 88.20, -2.18) are under the most pressure. Wal-Mart (44.27, -0.02) is outperforming on a relative basis.
In other news, Reuters reports that the Fed is moving its release of the Oct. 30-31 FOMC meeting minutes to Nov. 20 from Nov. 21.DJ30 -201.75 NASDAQ -39.35 SP500 -24.50 NASDAQ Dec/Adv/Vol 2348/618/1.62 bln NYSE Dec/Adv/Vol 2868/382/1.02 bln
2:00 pm : The major indices have recovered off their intraday lows, but continue to post substantial losses. Overall, the session has been ugly, considering the market has been stuck in the red throughout the trading day.
Bloomberg.com reports that U.S. banks and brokers face as much as $100 billion of write-downs because of Level 3 accounting rules, in addition to the losses caused by the subprime credit slump, according to Royal Bank of Scotland Group. Chief Credit Strategist Bob Janjuah in London wrote in a note today that the new rule is effective Nov. 15. He also stated, "this credit crisis, when all is out, will see $250 billion to $500 billion of losses.”
The financial sector is currently down 3.9%, which makes the sector down 18% year-to-date.DJ30 -238.17 NASDAQ -46.52 SP500 -28.39 NASDAQ Dec/Adv/Vol 2334/599/1.50 bln NYSE Dec/Adv/Vol 2852/374/920 mln
1:30 pm : As we previously alluded was likely given the negative tone this session, the S&P 500 tested the 1490 support level. The S&P then penetrated the weekly and month support of 1490, which spurred some additional selling pressure.
St. Louis Fed President Bill Poole said more rate cuts might still be needed if housing downdraft spreads, but excessive rate cuts would run the risk of increasing inflation. Also putting pressure on stocks was a CNBC commentator's remark that Lehman Brothers (LEH 56.00, -3.37) may potentially have a $3.9 billion write-down. DJ30 -256.30 NASDAQ -53.85 SP500 -32.28 NASDAQ Dec/Adv/Vol 2300/609/1.32 bln NYSE Dec/Adv/Vol 2793/412/805
1:00 pm : Crude oil is now down 1.1% to $95.64. Oil has been highly volatile this session, as it surpassed $98 on two occasions. The decline in oil prices has helped the Amex Airline Index and Dow Jones Transportation average pare some of their losses. The same cannot be said, however, for the broader market, which is trading at its worst levels of the session.
The highly influential financial sector (-3.6%) continues to be the main drag, but there is also weakness in materials (-2.1%). The stock market typically has a hard time making advances without the support of financials, due to its heavy 20% weighting. DJ30 -189.91 DJTA -2.5% NASDAQ -41.91 SP500 -23.84 NASDAQ Dec/Adv/Vol 2228/659/1.16 mln NYSE Dec/Adv/Vol 2727/455/703 mln
12:30 pm : The S&P 500 is roughly 9 points above the 1490 level, which is viewed by technical traders as a key area of support. Note that the market managed a healthy rebound from large losses on Monday when that area was retested and held. Given the negative tone of today's trading, it stands to reason that we may see another retest of the 1490 area, which will invite some interesting trading action.
Crude prices have eased off their intraday highs, but are still trading near record levels. The high crude prices are reflected in the underperformance of the Amex Airline Index (-3.0%) and the Dow Jones Transportation average (-2.4%). Including this session's decline, the Amex Airline Index is down 29.8% year-to-date.DJ30 -174.60 NASDAQ -38.93 SP500 -21.02 NASDAQ Dec/Adv/Vol 2178/675/1.03 bln NYSE Dec/Adv/Vol 2650/517/610 mln
12:00 pm : The stock market opened on a sharply lower note following negative news regarding Dow component General Motors (GM 34.53, -1.63) and renewed credit market concerns. The major indices are currently trading slightly above their session lows, with substantial losses.
General Motors checked in with lousy third quarter results that were marred by a near $38 billion non-cash charge for a valuation allowance against its deferred tax assets. Reuters Estimates told Briefing.com that GM's loss of $2.88 per share, adjusted for one-time items, is comparable to their consensus estimate that called for a loss of $0.36. While this charge impacts the book value of GM, it really has nothing to do with their business prospects.
The credit market continues to concern investors, as indicated by the flagging financial sector (-2.6%). A Wall Street Journal article states that Morgan Stanley (MS 51.83, -2.68) may take a $3 billion to $6 billion write-down in the fourth quarter. Meanwhile, Deutsche Bank analyst Mike Mayo said on CNBC that he is now projecting over $50 billion of write-downs in banks/brokers in the second half of the year.
Washington Mutual's (WM 21.53, -2.70) stock is getting hammered. A Reuters report states the company's CEO said it is "hard to speculate" on the market environment in January, when the board meets to discuss its dividend policy. Market participants have already been speculating that the company will cut its dividend due to the credit market turmoil.
Defensive sectors are currently in favor. The consumer staples (-0.4%), healthcare (-0.6%), utilities (-0.7%) and telecom (-0.8%) sectors are outperforming on a relative basis.
Separately, the dollar has weakened following reports that Cheng Siwei, the Vice Chairman of China's National People's Congress, signaled China might adjust its foreign currency reserves. In keeping with the recent trend, the weakening dollar has underpinned the buying interest in oil and gold futures.
Crude oil traded in a volatile manner leading up to and following the weekly energy report that showed a smaller draw than expected. Crude surpassed $98 a barrel, but has eased a bit to $97.23.
The standard excuses of higher oil prices and a weak dollar are also making it easier for journalists to write their articles this morning. Apparently the move from $97 to $98 from yesterday to today is negative for the stock market while the move from $94 to $96.70 yesterday was not. DJ30 -152.17 NASDAQ -32.18 SP500 -18.72 NASDAQ Dec/Adv/Vol 2124/712/892 mln NYSE Dec/Adv/Vol 2615/526/534 mln
11:30 am : The stock market continues to trade near its intraday low. Action has been somewhat choppy this morning, but the stock market's range has been limited.
CNBC reports that Visa will pay $2.25 billion to American Express (AXP 57.02, -1.55) to settle their antitrust case. CNBC said it is the "largest such settlement in antitrust history." Visa will pay half now, and the rest over 4 years. CNBC also states that the settlement has been approved by the general counsel, and it is just a matter of time before members approve it.DJ30 -136.32 NASDAQ -29.21 SP500 -16.62 NASDAQ Dec/Adv/Vol 2095/707/764 mln NYSE Dec/Adv/Vol 2617/481/437 mln
11:00 am : Since the last update, the indices slipped to new intraday lows due to further declines in the financial sector (-2.5%).
All industry groups within the sector are in the red, with thrifts and mortgages (-5.2%) showing the most weakness. Reuters reports that when asked about Washington Mutual's (WM 22.26, -1.96) ability to maintain its dividend, the company's CEO said it is "hard to speculate" about the market environment in January.
Crude oil for December delivery has traded in a highly volatile manner leading up to and following the weekly EIA report. Crude rallied past $98 following the data, despite the draw being smaller than expected. Prices have since retreated to $96.80.DJ30 -160.70 NASDAQ -32.47 SP500 -19.02 NASDAQ Dec/Adv/Vol 2109/649/594 mln NYSE Dec/Adv/Vol 2550/488/337 mln
10:30 am : The stock market is trading slightly above its opening lows, but remains negative along with the ten economic sectors.
Just reported, the Energy Information Administration stated that for the week ended November 2, crude oil had a draw of 821,000 barrels. A draw of 1.5 million was expected. This is the fourth time in five weeks that crude has had a draw. Just prior to the release, crude was trading down 0.3% to $96.50.
At 10:00 ET, wholesale inventories for September came in at 0.8%, compared to the expected reading of 0.1%. The market's reaction was limited immediately following the release. DJ30 -113.64 NASDAQ -21.31 SP500 -13.10 NASDAQ Dec/Adv/Vol 1880/724/368 mln NYSE Dec/Adv/Vol 2394/557/210 mln
10:00 am : The major indices are trading close to their opening lows as investors continue to be cautious.
All ten economic sectors are in the red. The financial sector (-1.7%) is the main laggard due to investor uncertainty regarding the state of the credit markets. A Wall Street Journal article states that Morgan Stanley (MS 52.05, -2.46) may take a $3 billion to $6 billion write-down in the fourth quarter.
The energy sector (-0.2%) is outperforming on a relative basis, as it typically benefits from rising crude oil prices. DJ30 -126.02 NASDAQ -24.79 SP500 -14.40
09:45 am : The stock market opened significantly lower. Dow Jones component General Motors (GM) is largely to blame for the selling pressure in the early-going. GM announced last night that it is taking a $39 billion non-cash charge for a valuation allowance against its deferred tax assets. Additionally, GM reported a much larger than expected operating loss (excluding the impact of the charge).
The dollar has weakened following reports that Cheng Siwei, the Vice Chairman of China's National People's Congress, signaled China might adjust its foreign currency reserves. The decline in the dollar has contributed to the rally of commodities. Crude oil, up 1.0% to $97.77, is trading in record territory ahead of the weekly energy report at 10:30 ET. DJ30 -122.90 NASDAQ -26.29 SP500 -14.11
09:17 am : S&P futures vs fair value: -16.9. Nasdaq futures vs fair value: -18.5.
09:00 am : S&P futures vs fair value: -16.5. Nasdaq futures vs fair value: -18.8. Futures get a modest boost following a better than expected productivity report at 8:30 ET. Third quarter productivity rose at a much larger than expected 4.9% annual rate. This was due in part to a decline in hours worked. The large productivity gain helped lower the change in unit labor costs to -0.2%.
08:30 am : S&P futures vs fair value: -18.4. Nasdaq futures vs fair value: -24.5. Banks are under pressure this morning. A Wall Street Journal article that indicated Morgan Stanley (MS) may take a $3 billion to $6 billion write down in the fourth quarter has helped reignite credit concerns.
08:01 am : S&P futures vs fair value: -21.3. Nasdaq futures vs fair value: -26.5. Futures point to a sharply lower open due to a number of selling catalysts. The dollar is down after the Vice Chairman of China's National People's Congress signaled China might adjust its foreign currency reserves. Following the recent trend, the weakening dollar has caused oil and gold to rally. Finally, General Motors (GM) reported dismal third quarter earnings following a roughly $38 billion non-cash charge for a valuation allowance against its deferred tax assets.
06:23 am : S&P futures vs fair value: -16.6. Nasdaq futures vs fair value: -21.8.
06:23 am : FTSE...6431.60...-43.30...-0.7%. DAX...7792.07...-35.12...-0.4%.
http://biz.yahoo.com/mu/update.html
4:25 pm : It was one of those nerve-wracking days on Wall Street where just about everything got hit - and hit hard. The biggest blow was suffered by the financial sector, which plummeted 5.1% amid a batch of headlines that stoked concerns about the fallout from the housing market's severe downturn.
Washington Mutual (WM 20.04, -4.19) was at the epicenter of the concerns after being accused by the New York Attorney General of pressuring real estate appraisers to inflate the value of their appraisals. Both Fannie Mae (FNM 49.79, -5.60) and Freddie Mac (FRE 45.13, -4.26) were subpoenaed in this matter as the Attorney General is seeking information on the mortgages they bought from Washington Mutual and other banks.
The word "collusion" was used by the New York Attorney General, which rattled investors who didn't like the implication of widespread fraud.
In light of this development, and a Royal Bank of Scotland report suggesting losses related to the credit crisis could ultimately top $250 billion, financial stocks were dumped en masse.
The financial sector fallout wasn't event the half of it, so to speak, on Wednesday.
Stock holders were also rattled by General Motors (GM 33.95, -2.21) reporting a third quarter loss of $39 billion after writing down the value of future tax benefits. Excluding the accounting adjustment, GM lost $2.80 per share in the period as mortgage-related losses at GMAC, in which it holds a 49% stake, more than offset the small profit from its automotive operations. Analysts had been expecting a loss of $0.36.
The weakening dollar also occupied the market's attention all day, as it got knocked back on a report that China might pursue a plan to adjust its dollar holdings in favor of stronger currencies. The dollar index hit its lowest level since inception at 75.077 before rebounding a bit to finish the day down 0.8% at 75.412.
The dollar weakness was again seen as a buying catalyst for commodity traders who bid oil and gold futures as high as $98.62 and $855.00, respectively, at one point.
Oil prices eventually sold off and finished the day down 0.3% at $96.37. The reversal was attributed to profit-taking as the contract neared $100 and to a weekly inventory report that showed a lower than expected drawdown in stockpiles.
A report that third quarter productivity rose 4.9%, while unit labor costs declined 0.2%, was completely overlooked by the market despite being good news from an inflation standpoint.
The Treasury market took some notice, but it was driven primarily by a flight-to-quality trade that coincided with the stock market sell-off.
The 10-year note gained 12 ticks, bringing its yield down to 4.33%. The strongest buying action, though, was at the front of the Treasury curve as the yield on the 3-month Treasury bill dropped 30 basis points to 3.43% with traders registering concerns about the credit market mess and frontrunning the possibility of another Fed rate cut.
The market will get some important insight Thursday on Fed policy when Fed Chairman Bernanke testifies before the Joint Economic Committee on the economic outlook.DJ30 -360.92 DJTA -3.2% DJUA -2.4% NASDAQ -76.42 NQ100 -2.5% R2K -3.2% SOX -2.5% SP400 -2.3% SP500 -44.65 NASDAQ Dec/Adv/Vol 2444/587/2.53 bln NYSE Dec/Adv/Vol 2995/301/1.66 bln
3:30 pm : Heading into the final half-hour of trading, the major indices are holding near the bottom of their intraday ranges. All ten economic sectors spent the entirety of the session in negative territory.
Released at 15:00 ET, consumer credit for September came in at $3.7 billion versus a consensus estimate that called for a reading of $9.0 billion. This monthly measure of consumer debt is volatile and subject to massive revisions. It is also released well after every other consumer spending indicator, including weekly chain store sales, auto sales, consumer confidence, retail sales, and personal consumption. For these reasons, the market almost never reacts to the consumer credit report.
After the close, 59 companies are confirmed to report, including AIG (AIG 58.18, -3.87) and Cisco (CSCO 33.20, -0.88). Regarding AIG, the stock is down due to concerns the company might announce a write-down due to mortgage exposure.DJ30 -270.77 NASDAQ -66.15 SP500 -33.42 NASDAQ Dec/Adv/Vol 2360/654/1.96 bln NYSE Dec/Adv/Vol 2874/387/1.19 bln
3:00 pm : After slowly drifting upward for the past hour, the indices are back on the retreat. The small-cap Russell 2000 Index is again underperforming the broader market. At current levels, the index is showing a loss year-to-date.
Declines are broad-based this session, as indicated by the low 0.16 advancer to decliner ratio at the NYSE.
The DXY Index, which compares the dollar against major currencies, is off its lows, but still trading with a considerable 0.8% loss.DJ30 -253.62 NASDAQ -51.67 R2K -2.5% SP500 -31.00 NASDAQ Dec/Adv/Vol 2324/665/1.76 bln NYSE Dec/Adv/Vol 2814/440/1.11 bln
2:30 pm : Since the last update, the stock market has extended its recovery efforts, but has a long way to go to make it back to the unchanged mark.
All 30 Dow components are currently in the red. AIG (AIG 58.37, -3.68), American Express (AXP 55.67, -2.90) and Exxon Mobil (XOM 88.20, -2.18) are under the most pressure. Wal-Mart (44.27, -0.02) is outperforming on a relative basis.
In other news, Reuters reports that the Fed is moving its release of the Oct. 30-31 FOMC meeting minutes to Nov. 20 from Nov. 21.DJ30 -201.75 NASDAQ -39.35 SP500 -24.50 NASDAQ Dec/Adv/Vol 2348/618/1.62 bln NYSE Dec/Adv/Vol 2868/382/1.02 bln
2:00 pm : The major indices have recovered off their intraday lows, but continue to post substantial losses. Overall, the session has been ugly, considering the market has been stuck in the red throughout the trading day.
Bloomberg.com reports that U.S. banks and brokers face as much as $100 billion of write-downs because of Level 3 accounting rules, in addition to the losses caused by the subprime credit slump, according to Royal Bank of Scotland Group. Chief Credit Strategist Bob Janjuah in London wrote in a note today that the new rule is effective Nov. 15. He also stated, "this credit crisis, when all is out, will see $250 billion to $500 billion of losses.”
The financial sector is currently down 3.9%, which makes the sector down 18% year-to-date.DJ30 -238.17 NASDAQ -46.52 SP500 -28.39 NASDAQ Dec/Adv/Vol 2334/599/1.50 bln NYSE Dec/Adv/Vol 2852/374/920 mln
1:30 pm : As we previously alluded was likely given the negative tone this session, the S&P 500 tested the 1490 support level. The S&P then penetrated the weekly and month support of 1490, which spurred some additional selling pressure.
St. Louis Fed President Bill Poole said more rate cuts might still be needed if housing downdraft spreads, but excessive rate cuts would run the risk of increasing inflation. Also putting pressure on stocks was a CNBC commentator's remark that Lehman Brothers (LEH 56.00, -3.37) may potentially have a $3.9 billion write-down. DJ30 -256.30 NASDAQ -53.85 SP500 -32.28 NASDAQ Dec/Adv/Vol 2300/609/1.32 bln NYSE Dec/Adv/Vol 2793/412/805
1:00 pm : Crude oil is now down 1.1% to $95.64. Oil has been highly volatile this session, as it surpassed $98 on two occasions. The decline in oil prices has helped the Amex Airline Index and Dow Jones Transportation average pare some of their losses. The same cannot be said, however, for the broader market, which is trading at its worst levels of the session.
The highly influential financial sector (-3.6%) continues to be the main drag, but there is also weakness in materials (-2.1%). The stock market typically has a hard time making advances without the support of financials, due to its heavy 20% weighting. DJ30 -189.91 DJTA -2.5% NASDAQ -41.91 SP500 -23.84 NASDAQ Dec/Adv/Vol 2228/659/1.16 mln NYSE Dec/Adv/Vol 2727/455/703 mln
12:30 pm : The S&P 500 is roughly 9 points above the 1490 level, which is viewed by technical traders as a key area of support. Note that the market managed a healthy rebound from large losses on Monday when that area was retested and held. Given the negative tone of today's trading, it stands to reason that we may see another retest of the 1490 area, which will invite some interesting trading action.
Crude prices have eased off their intraday highs, but are still trading near record levels. The high crude prices are reflected in the underperformance of the Amex Airline Index (-3.0%) and the Dow Jones Transportation average (-2.4%). Including this session's decline, the Amex Airline Index is down 29.8% year-to-date.DJ30 -174.60 NASDAQ -38.93 SP500 -21.02 NASDAQ Dec/Adv/Vol 2178/675/1.03 bln NYSE Dec/Adv/Vol 2650/517/610 mln
12:00 pm : The stock market opened on a sharply lower note following negative news regarding Dow component General Motors (GM 34.53, -1.63) and renewed credit market concerns. The major indices are currently trading slightly above their session lows, with substantial losses.
General Motors checked in with lousy third quarter results that were marred by a near $38 billion non-cash charge for a valuation allowance against its deferred tax assets. Reuters Estimates told Briefing.com that GM's loss of $2.88 per share, adjusted for one-time items, is comparable to their consensus estimate that called for a loss of $0.36. While this charge impacts the book value of GM, it really has nothing to do with their business prospects.
The credit market continues to concern investors, as indicated by the flagging financial sector (-2.6%). A Wall Street Journal article states that Morgan Stanley (MS 51.83, -2.68) may take a $3 billion to $6 billion write-down in the fourth quarter. Meanwhile, Deutsche Bank analyst Mike Mayo said on CNBC that he is now projecting over $50 billion of write-downs in banks/brokers in the second half of the year.
Washington Mutual's (WM 21.53, -2.70) stock is getting hammered. A Reuters report states the company's CEO said it is "hard to speculate" on the market environment in January, when the board meets to discuss its dividend policy. Market participants have already been speculating that the company will cut its dividend due to the credit market turmoil.
Defensive sectors are currently in favor. The consumer staples (-0.4%), healthcare (-0.6%), utilities (-0.7%) and telecom (-0.8%) sectors are outperforming on a relative basis.
Separately, the dollar has weakened following reports that Cheng Siwei, the Vice Chairman of China's National People's Congress, signaled China might adjust its foreign currency reserves. In keeping with the recent trend, the weakening dollar has underpinned the buying interest in oil and gold futures.
Crude oil traded in a volatile manner leading up to and following the weekly energy report that showed a smaller draw than expected. Crude surpassed $98 a barrel, but has eased a bit to $97.23.
The standard excuses of higher oil prices and a weak dollar are also making it easier for journalists to write their articles this morning. Apparently the move from $97 to $98 from yesterday to today is negative for the stock market while the move from $94 to $96.70 yesterday was not. DJ30 -152.17 NASDAQ -32.18 SP500 -18.72 NASDAQ Dec/Adv/Vol 2124/712/892 mln NYSE Dec/Adv/Vol 2615/526/534 mln
11:30 am : The stock market continues to trade near its intraday low. Action has been somewhat choppy this morning, but the stock market's range has been limited.
CNBC reports that Visa will pay $2.25 billion to American Express (AXP 57.02, -1.55) to settle their antitrust case. CNBC said it is the "largest such settlement in antitrust history." Visa will pay half now, and the rest over 4 years. CNBC also states that the settlement has been approved by the general counsel, and it is just a matter of time before members approve it.DJ30 -136.32 NASDAQ -29.21 SP500 -16.62 NASDAQ Dec/Adv/Vol 2095/707/764 mln NYSE Dec/Adv/Vol 2617/481/437 mln
11:00 am : Since the last update, the indices slipped to new intraday lows due to further declines in the financial sector (-2.5%).
All industry groups within the sector are in the red, with thrifts and mortgages (-5.2%) showing the most weakness. Reuters reports that when asked about Washington Mutual's (WM 22.26, -1.96) ability to maintain its dividend, the company's CEO said it is "hard to speculate" about the market environment in January.
Crude oil for December delivery has traded in a highly volatile manner leading up to and following the weekly EIA report. Crude rallied past $98 following the data, despite the draw being smaller than expected. Prices have since retreated to $96.80.DJ30 -160.70 NASDAQ -32.47 SP500 -19.02 NASDAQ Dec/Adv/Vol 2109/649/594 mln NYSE Dec/Adv/Vol 2550/488/337 mln
10:30 am : The stock market is trading slightly above its opening lows, but remains negative along with the ten economic sectors.
Just reported, the Energy Information Administration stated that for the week ended November 2, crude oil had a draw of 821,000 barrels. A draw of 1.5 million was expected. This is the fourth time in five weeks that crude has had a draw. Just prior to the release, crude was trading down 0.3% to $96.50.
At 10:00 ET, wholesale inventories for September came in at 0.8%, compared to the expected reading of 0.1%. The market's reaction was limited immediately following the release. DJ30 -113.64 NASDAQ -21.31 SP500 -13.10 NASDAQ Dec/Adv/Vol 1880/724/368 mln NYSE Dec/Adv/Vol 2394/557/210 mln
10:00 am : The major indices are trading close to their opening lows as investors continue to be cautious.
All ten economic sectors are in the red. The financial sector (-1.7%) is the main laggard due to investor uncertainty regarding the state of the credit markets. A Wall Street Journal article states that Morgan Stanley (MS 52.05, -2.46) may take a $3 billion to $6 billion write-down in the fourth quarter.
The energy sector (-0.2%) is outperforming on a relative basis, as it typically benefits from rising crude oil prices. DJ30 -126.02 NASDAQ -24.79 SP500 -14.40
09:45 am : The stock market opened significantly lower. Dow Jones component General Motors (GM) is largely to blame for the selling pressure in the early-going. GM announced last night that it is taking a $39 billion non-cash charge for a valuation allowance against its deferred tax assets. Additionally, GM reported a much larger than expected operating loss (excluding the impact of the charge).
The dollar has weakened following reports that Cheng Siwei, the Vice Chairman of China's National People's Congress, signaled China might adjust its foreign currency reserves. The decline in the dollar has contributed to the rally of commodities. Crude oil, up 1.0% to $97.77, is trading in record territory ahead of the weekly energy report at 10:30 ET. DJ30 -122.90 NASDAQ -26.29 SP500 -14.11
09:17 am : S&P futures vs fair value: -16.9. Nasdaq futures vs fair value: -18.5.
09:00 am : S&P futures vs fair value: -16.5. Nasdaq futures vs fair value: -18.8. Futures get a modest boost following a better than expected productivity report at 8:30 ET. Third quarter productivity rose at a much larger than expected 4.9% annual rate. This was due in part to a decline in hours worked. The large productivity gain helped lower the change in unit labor costs to -0.2%.
08:30 am : S&P futures vs fair value: -18.4. Nasdaq futures vs fair value: -24.5. Banks are under pressure this morning. A Wall Street Journal article that indicated Morgan Stanley (MS) may take a $3 billion to $6 billion write down in the fourth quarter has helped reignite credit concerns.
08:01 am : S&P futures vs fair value: -21.3. Nasdaq futures vs fair value: -26.5. Futures point to a sharply lower open due to a number of selling catalysts. The dollar is down after the Vice Chairman of China's National People's Congress signaled China might adjust its foreign currency reserves. Following the recent trend, the weakening dollar has caused oil and gold to rally. Finally, General Motors (GM) reported dismal third quarter earnings following a roughly $38 billion non-cash charge for a valuation allowance against its deferred tax assets.
06:23 am : S&P futures vs fair value: -16.6. Nasdaq futures vs fair value: -21.8.
06:23 am : FTSE...6431.60...-43.30...-0.7%. DAX...7792.07...-35.12...-0.4%.
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