AI
Tuesday, November 20, 2007 7:13:00 PM
Market Update 071120
http://biz.yahoo.com/mu/update.html
4:30 pm : Anyone who claimed the trading action leading up to the Thanksgiving Day holiday would be boring has had to quickly change their tune as it has been anything but boring. Tuesday's session made that point abundantly clear.
The major indices opened on an upbeat note thanks to a stellar fourth quarter earnings report and upbeat guidance from Dow component Hewlett-Packard (HPQ 49.56, +0.12), leadership from fellow Dow component ExxonMobil (XOM 87.82, +3.71), which was upgraded from Neutral to Buy at UBS and, believe it or not, a report that housing starts increased 3.0% in October to an annualized rate of 1.229 million units (consensus 1.175 million).
There were some tethers on the rally, though. Specifically, the good news on housing starts was offset by the indication that building permits declined 6.6% to an annualized rate of 1.178 million. Oil prices spiked in conjunction with a weakening dollar and, in the most striking development, Freddie Mac (FRE 26.74, -10.76) plummeted 29% in the wake of a horrendous third quarter earnings report that also dragged down Fannie Mae (FNM 28.25, -9.33).
The Freddie Mac situation ended up weighing heavily on the market as the mortgage company posted a net loss of $2.02 billion, or $3.29 per share, for the third quarter after writing-down the value of its assets and increasing its provision for loan losses. The added worry for the market was the company's indication that it is seriously considering cutting its fourth quarter dividend by 50% and that it has hired advisors to discuss near-term capital raising needs.
The concern that Freddie Mac won't be purchasing as many mortgages as it has in the past from other lenders sent Countrywide (CFC 10.28, -0.29) into a tailspin that saw its stock scrape below $9.00 per share. Countrywide was eventually compelled to come out and shoot down bankruptcy rumors as being absolutely false.
The release of the minutes from the Oct. 31 FOMC meeting at 2:00 pm ET didn't help matters much when they showed officials discussing the October rate cut as "a close call." In light of the stock market's behavior since then, participants were somewhat taken aback that the officials weren't more resolute in thinking a rate cut was necessary at that time.
This understanding, combined with the update from the Fed that it has lowered its 2008 GDP growth forecast to 1.8%-2.5% from 2.5%-2.75%, drove the market to new lows for the session about 30 minutes after the release. Around the same time, crude futures for January delivery moved to their best levels of the day before closing at $98.03.
The 3.6% gain in oil prices underpinned a 3.2% gain in the energy sector (+3.2%) which was already riding ExxonMobil's coattails.
The market looked headed for another woeful finish, but that fate was averted when the market managed to hold above the day's prior low, an encouraging happening that brought buyers back and forced a short-covering rally that produced a positive finish.
The financials partook in the late rally and ended the day down 1.3% after being down as much as 3.6%.
Everything was caught up in the late move as 9 out of the 10 economic sectors recorded a gain, including the consumer discretionary sector (+0.02%) which was down 1.4% with roughly 40 minutes to go in the day. A disappointing earnings report from Target (TGT 51.69, -2.21) contributed to the sector's early losses.
As stocks recovered the lost ground, the Treasury market gave back its gains. The 10-year note closed down 5 ticks, leaving its yield at 4.09%.
DJ30 +51.70 NASDAQ +3.43 SP500 +6.43 NASDAQ Dec/Adv/Vol 1764/1257/2.63 bln NYSE Dec/Adv/Vol 1674/1632/1.87 bln
3:35 pm : The major indices rebound following a surge in broad-based buying interest. The financial sector (-1.8%), in particular, has shaved a large portion of its losses. There is not a specific news item to account for the pop.
Friedman Billings has downgraded Freddie Mac (FRE 27.06, -10.44) to Underperform from Market Perform, and is reducing its price target to $20 from $55, after Freddie reported a third quarter loss of $3.29 per share.
DJ30 +21.38 NASDAQ -9.44 SP500 +1.67 NASDAQ Dec/Adv/Vol 2170/817/2.10 bln NYSE Dec/Adv/Vol 2187/1100/1.40 bln
3:00 pm : The major indices are off their lows, but remain near their worst levels of the session. The stock market has traded in choppy fashion following the release of the October 31 FOMC meeting minutes at 14:00 ET.
The Nasdaq composite has been hit especially hard by the recent selling pressure. Qualcomm (QCOM 40.41, -1.34), Cisco (CSCO 28.65, -0.78) and Echostar Communications (DISH 42.15, -5.34) are the main laggards. DISH rallied yesterday on speculation of an AT&T (T 38.00, +0.20) takeover.
Google (GOOG 642.71, +16.86) is bucking the negative trend, as it provides leadership to the Nasdaq. Credit Suisse raised its price target on shares of Google to $900 from $800. Credit Suisse cited long-term opportunities in areas like display, local, and mobile as reasons for the increase.
DJ30 -73.24 NASDAQ -28.23 SP500 -7.94 NASDAQ Dec/Adv/Vol 2128/840/1.88 bln NYSE Dec/Adv/Vol 2193/1093/1.25 bln
2:30 pm : The release of the minutes from the October 31 FOMC meeting prompted some mixed interpretations - as most Fed releases do - and has led to choppy trading action. The latest move is to the downside and has carried the indices to new session lows. Oil prices, meanwhile, have moved to a new session high above $98 per barrel.
By and large, the minutes haven't helped the mood today as they were accompanied by a downgrade of the Fed's GDP forecast for 2008 to 1.8%-2.5% from 2.5%-2.75%. On the bright side, the 2008 forecast for core-PCE was also dialed down to 1.7%-1.9% from 1.75%-2.0%. That is understandable as slower than expected GDP growth should help curtail inflation pressures.
The minutes noted that the risks to inflation balance the risks to the economy and discussed the possibility of leaving rates unchanged.DJ30 -95.67 NASDAQ -29.99 SP500 -10.91 NASDAQ Dec/Adv/Vol 1944/990/1.68 bln NYSE Dec/Adv/Vol 2008/1264/1.12 bln
1:55 pm : The major indices are off their lows, but remain in the red. The weakness in equities has spurred buying interest in the Treasury market, which is now flat after paring its intraday losses.
Meanwhile crude oil continues to rally, as it is currently up 2.8% to $97.30. Prices, however, remain lower than crude oil’s recently reached all-time high of $98.62.
The market awaits the Oct. 31 FOMC minutes release in five minutes. Briefing.com will provide an analysis of the minutes, as well as market reactions at the bottom of the hour.
DJ30 -30.97 NASDAQ -9.36 SP500 -3.29 NASDAQ Dec/Adv/Vol 1995/924/1.44 mln NYSE Dec/Adv/Vol 2090/1165/959 mln
1:30 pm : The major indices fall into negative territory for the first time this session. Disappointment in the weakness of the financial (-2.8%), and consumer discretionary (-0.9%) sectors has caused tech (-0.3%) and industrials (-0.3%) to fall into the red.
The Dow, Nasdaq and S&P 500 have dropped 217, 63 and 28 points, respectively, from their intraday highs to their recently reached session lows.
Meanwhile, shares of the embattled mortgage lender Countrywide (CFC 8.57, -2.00) are being pummeled, as they fall below the $10 mark for the first time since 2002. Countrywide was downgraded to In-Line from Outperform at Foxx-Pitt.DJ30 -46.90 NASDAQ -18.24 SP500 -6.03 NASDAQ Dec/Adv/Vol 1990/917/1.32 bln NYSE Dec/Adv/Vol 1909/1321/868 mln
1:00 pm : The major indices give up more of their intraday gains as the financial sector (-1.9%) and the S&P 500 Retailing Index (-0.6%) continue to show weakness. The weakness in retailers has pushed the consumer discretionary sector (-0.5%) into the red. Yesterday, financials and retailers plunged 3%.
In what has been a swift reversal, all of the industry groups within the financial sector are now in negative territory. The thrifts & mortgages group is down 17.6%. In regard to Freddie Mac (FRE 26.66, -10.84), The Wall Street Journal reports the company's CEO, Buddy Piszel, told the newspaper that the company is likely to raise capital by selling several billion dollars of preferred stock in the "very near term."DJ30 +18.62 NASDAQ +3.17 SP500 +2.25 NASDAQ Dec/Adv/Vol 1690/1173/1.14 bln NYSE Dec/Adv/Vol 1483/1730/726 mln
12:30 pm : The stock market has given up a large portion of its intraday gains, led by a swift reversal in the consumer discretionary sector (+0.1%), specifically the retailers (flat). The financial sector (-1.6%) is also acting as a major drag, as it extends its intraday losses.
For now, selling interest is fading, but buying interest is not all that decisive either.
DJ30 +39.35 NASDAQ +16.54 SP500 +7.28 NASDAQ Dec/Adv/Vol 1437/1389/972 mln NYSE Dec/Adv/Vol 1362/1843/655 mln
12:00 pm : The major indices are trading noticeably higher at the East Coast lunch hour, although off their intraday highs, following a morning with a number of positive and negative market-moving headlines.
Overnight, Hewlett-Packard (HPQ 49.81, +0.37) gave futures a noticeable boost and provided a breath of fresh air to a Tech sector besieged by concerns over the pace of consumer spending. On top of beating earnings expectations, the company raised guidance for the first quarter and issued a strong FY08 outlook. In addition, the company announced another buyback authorization of $8 billion.
Meanwhile, retailer Nordstrom (JWN 34.80, +4.28) reported earnings that topped expectations, and issued FY08 guidance above the current consensus estimate.
Negative news from mortgage-finance firm Freddie Mac (FRE 26.75, -10.75) is preventing the stock market from making further gains. The company reported a larger-than-expected third quarter loss of $3.29 per share. In addition, the company announced it has hired Goldman Sachs and Lehman Brothers as financial advisors to help it consider very near term capital raising alternatives, and said it is seriously considering reducing its fourth quarter common stock dividend by 50%. Shares of Fannie Mae (FNM 29.58, -8.00) are getting clipped in conjunction with Freddie Mac.
Both Freddie Mac and Fannie Mae were previously subpoenaed in regard to their involvement in artificially inflating appraisals that would produce larger mortgages for customers.
Target (TGT 52.88, -1.02) reported earnings that missed expectations, which took some wind out of Nordstrom's positive report. The company announced a $10 billion share repurchase program that helped mitigate some disappointment, but shares are currently trading noticeably lower.
Currently, a bullish bias persists despite the mixed headlines. Nine of the ten economic sectors are in the green. The energy sector (2.8%) is providing leadership after Exxon Mobil (XOM 87.49, +3.38) was upgraded to Buy from Neutral at UBS. The rise in crude oil prices (+1.9% to $96.45) is also aiding in the sector's outperformance.
The financial sector (-0.9%) stands alone in the red, as the Freddie Mac report is causing the thrifts & mortgages group (-16%) to get clipped.
On the economic front, October housing starts were slightly better-than-expected, while building permits were slightly worse-than-expected. It is too early to call a bottom in the housing market and it would be premature to place much value on this one month of data. The minutes from the October 31 FOMC meeting are set to be released at 14:00 ET.
In currency trading, the dollar hit an all-time low against euro and Swiss franc. The DXY Index is down 0.53%. The weakness in the dollar has spurred buying interest in commodities, as the CRB Index is up 1.02%. DJ30 +89.10 NASDAQ +27.75 SP500 +11.56 NASDAQ Dec/Adv/Vol 1089/1706/826 mln NYSE Dec/Adv/Vol 1093/2078/566 mln
11:30 am : The major indices are trading modestly below their best levels of the session as the financial sector (-0.7%) extends its losses. The energy (+3.1%) and tech (+1.6%) sectors continue to lend support.
Retailer GameStop Corp. (GME 51.98, -1.01) posted a higher third quarter profit, helped by strong sales of games such as Halo 3, Madden NFL '08, and Guitar Hero III, but the video game retailer forecast fourth quarter results below analysts' expectations. Its shares, which have gained more than 92% this year at yesterday's closing price, are trading roughly 2% lower on the outlook for the holiday quarter.DJ30 +118.61 NASDAQ +33.27 SP500 +15.23 NASDAQ Dec/Adv/Vol 1037/1703/683 mln NYSE Dec/Adv/Vol 955/2166/466 mln
11:00 am : The major indices hit fresh session highs following a broad-based pickup in buying interest. The financial sector (-0.1%) is still in the red, but is well off its intraday lows.
The Amex Airline Index (-1.8%) is a notable pocket of weakness. The rise in crude oil prices is weighing on airline stocks.
There is a lack of buying interest in the Treasury market as equities show strength. The 10-year note is down nine ticks to yield 4.11%
DJ30 +125.14 NASDAQ +34.74 SP500 +16.61 NASDAQ Dec/Adv/Vol 1090/1595/509 mln NYSE Dec/Adv/Vol 1047/2022/359 mln
10:30 am : The stock market slips off its recently reached highs as financials (-0.5%) reverse into the red. The stock market's gains are still significant, but the major indices have a way to go to make up yesterday's losses.
Exxon Mobil (XOM 86.88, +2.77) is pacing this session's advance after UBS upgraded shares of the company to Buy from Neutral and raised its price target to $96. Crude oil is up 1.7% to $96.26, which is providing additional buying interest in Exxon, and the energy sector (+2.5%).
The rise in crude oil prices follows the decline in the dollar, which hit record lows against the euro. The DXY Index is down 0.57% this session. DJ30 +95.76 NASDAQ +24.49 SP500 +12.61 NASDAQ Dec/Adv/Vol 940/1675/349 mln NYSE Dec/Adv/Vol 1072/1807/146 mln
10:00 am : The major indices have extended their opening gains, as the financial sector (+0.6%) rebounds into the green after being down more than 1%. All ten economic sectors are posting gains, with the energy sector (+2.4%) pacing the advance.
Within the financial sector, the thrifts & mortgages group (-13.0%) is getting hammered following Freddie Mac's (FRE 28.49, -9.01) poor earnings report. Freddie Mac recorded mark-to-market losses totaling $2.7 billion for the quarter. For the same period last year, Freddie Mac recorded mark-to-market losses of $1.5 billion. Fannie Mae (FNM 30.37, -7.19) is trading down in conjunction with Freddie.
Both Freddie Mac and Fannie Mae were previously subpoenaed in regard to their involvement in artificially inflating appraisals that would produce larger mortgages for customers. DJ30 +104.22 NASDAQ +29.77 SP500 +13.67
09:40 am : The stock market opens modestly higher following a number of mixed headlines.
On the upside, Dow component Hewlett-Packard (HPQ) topped earnings expectations, and provided first quarter and fiscal 2008 guidance that was above consensus estimates. HP also said its board approved an $8 billion buyback. Likewise, retailer Nordstrom (JWN) reported earnings that topped expectations, and issued FY08 guidance above the current consensus estimate.
On the downside, Freddie Mac (FRE) reported a larger-than-expected third quarter loss of $3.29 per share. In addition, the company announced it has hired Goldman Sachs and Lehman Brothers as financial advisors to help it consider very near term capital raising alternatives, and said it is seriously considering reducing its fourth quarter common stock dividend by 50%. Futures were pointing to a noticeably higher start but dropped following Freddie Mac's earnings report.
Retailer Target (TGT) missed its earnings estimate, but mitigated some disappointment after announcing its board has approved a new $10 billion share repurchase program.
On the economic front, October housing starts were slightly better-than-expected, while building permits were slightly worse-than-expected. It is too early to call a bottom in the housing market and it would be premature to place much value on this one month of data.DJ30 +69.75 NASDAQ +16.32 SP500 +6.42
09:14 am : S&P futures vs fair value: +5.0. Nasdaq futures vs fair value: +13.5. Crude oil futures are up 0.8% to $95.41 per barrel.
09:00 am : S&P futures vs fair value: +3.7. Nasdaq futures vs fair value: +11.3. Futures are well off their highs, but still point to a positive start. Target (TGT) missed its earnings estimate. Some of the disappointed has been mitigated, though, after the company announced its Board of Directors have authorized a new $10 billion share repurchase program, replacing the previous authorization.
08:32 am : S&P futures vs fair value: +6.9. Nasdaq futures vs fair value: +14.0. Futures reaction is limited to the housing starts data. Just reported, October housing starts rose to 1.229 million, compared to the prior reading of 1.193 million. Economists expected 1.17 million housing starts. Freddie Mac (FRE) is holding futures from making further gains after reporting a larger-than-expected third quarter loss of $3.29 per share. In addition, the company announced it has hired Goldman Sachs and Lehman Brothers as financial advisors to help it consider very near term capital raising alternatives, and said it is seriously considering reducing its fourth quarter common stock dividend by 50%.
08:01 am : S&P futures vs fair value: +6.9. Nasdaq futures vs fair value: +15.5. Early indications suggest an upbeat start to the trading day following a couple of better-than-expected earnings reports. After Monday's close, Dow component Hewlett-Packard (HPQ) reported fiscal fourth quarter earnings that topped expectations, and provided first quarter and fiscal 2008 guidance that was above consensus estimates. Meanwhile, retailer Nordstrom (JWM) also beat and issued FY08 guidance above current estimates. Good earnings news from Medtronic (MDT), a UBS upgrade of ExxonMobil (XOM) from Neutral to Buy, and Pfizer (PFE) winning a court victory in lawsuits regarding Celebrex are also factoring in to the positive tone.
06:21 am : S&P futures vs fair value: +9.4. Nasdaq futures vs fair value: +8.8.
06:21 am : FTSE...6149.90...+29.10...+0.5%. DAX...7562.41...+50.44...+0.7%.
06:21 am : Nikkei...15211.52...+168.96...+1.1%. Hang Seng...27771.21...+311.04...+1.1%.
http://biz.yahoo.com/mu/update.html
4:30 pm : Anyone who claimed the trading action leading up to the Thanksgiving Day holiday would be boring has had to quickly change their tune as it has been anything but boring. Tuesday's session made that point abundantly clear.
The major indices opened on an upbeat note thanks to a stellar fourth quarter earnings report and upbeat guidance from Dow component Hewlett-Packard (HPQ 49.56, +0.12), leadership from fellow Dow component ExxonMobil (XOM 87.82, +3.71), which was upgraded from Neutral to Buy at UBS and, believe it or not, a report that housing starts increased 3.0% in October to an annualized rate of 1.229 million units (consensus 1.175 million).
There were some tethers on the rally, though. Specifically, the good news on housing starts was offset by the indication that building permits declined 6.6% to an annualized rate of 1.178 million. Oil prices spiked in conjunction with a weakening dollar and, in the most striking development, Freddie Mac (FRE 26.74, -10.76) plummeted 29% in the wake of a horrendous third quarter earnings report that also dragged down Fannie Mae (FNM 28.25, -9.33).
The Freddie Mac situation ended up weighing heavily on the market as the mortgage company posted a net loss of $2.02 billion, or $3.29 per share, for the third quarter after writing-down the value of its assets and increasing its provision for loan losses. The added worry for the market was the company's indication that it is seriously considering cutting its fourth quarter dividend by 50% and that it has hired advisors to discuss near-term capital raising needs.
The concern that Freddie Mac won't be purchasing as many mortgages as it has in the past from other lenders sent Countrywide (CFC 10.28, -0.29) into a tailspin that saw its stock scrape below $9.00 per share. Countrywide was eventually compelled to come out and shoot down bankruptcy rumors as being absolutely false.
The release of the minutes from the Oct. 31 FOMC meeting at 2:00 pm ET didn't help matters much when they showed officials discussing the October rate cut as "a close call." In light of the stock market's behavior since then, participants were somewhat taken aback that the officials weren't more resolute in thinking a rate cut was necessary at that time.
This understanding, combined with the update from the Fed that it has lowered its 2008 GDP growth forecast to 1.8%-2.5% from 2.5%-2.75%, drove the market to new lows for the session about 30 minutes after the release. Around the same time, crude futures for January delivery moved to their best levels of the day before closing at $98.03.
The 3.6% gain in oil prices underpinned a 3.2% gain in the energy sector (+3.2%) which was already riding ExxonMobil's coattails.
The market looked headed for another woeful finish, but that fate was averted when the market managed to hold above the day's prior low, an encouraging happening that brought buyers back and forced a short-covering rally that produced a positive finish.
The financials partook in the late rally and ended the day down 1.3% after being down as much as 3.6%.
Everything was caught up in the late move as 9 out of the 10 economic sectors recorded a gain, including the consumer discretionary sector (+0.02%) which was down 1.4% with roughly 40 minutes to go in the day. A disappointing earnings report from Target (TGT 51.69, -2.21) contributed to the sector's early losses.
As stocks recovered the lost ground, the Treasury market gave back its gains. The 10-year note closed down 5 ticks, leaving its yield at 4.09%.
DJ30 +51.70 NASDAQ +3.43 SP500 +6.43 NASDAQ Dec/Adv/Vol 1764/1257/2.63 bln NYSE Dec/Adv/Vol 1674/1632/1.87 bln
3:35 pm : The major indices rebound following a surge in broad-based buying interest. The financial sector (-1.8%), in particular, has shaved a large portion of its losses. There is not a specific news item to account for the pop.
Friedman Billings has downgraded Freddie Mac (FRE 27.06, -10.44) to Underperform from Market Perform, and is reducing its price target to $20 from $55, after Freddie reported a third quarter loss of $3.29 per share.
DJ30 +21.38 NASDAQ -9.44 SP500 +1.67 NASDAQ Dec/Adv/Vol 2170/817/2.10 bln NYSE Dec/Adv/Vol 2187/1100/1.40 bln
3:00 pm : The major indices are off their lows, but remain near their worst levels of the session. The stock market has traded in choppy fashion following the release of the October 31 FOMC meeting minutes at 14:00 ET.
The Nasdaq composite has been hit especially hard by the recent selling pressure. Qualcomm (QCOM 40.41, -1.34), Cisco (CSCO 28.65, -0.78) and Echostar Communications (DISH 42.15, -5.34) are the main laggards. DISH rallied yesterday on speculation of an AT&T (T 38.00, +0.20) takeover.
Google (GOOG 642.71, +16.86) is bucking the negative trend, as it provides leadership to the Nasdaq. Credit Suisse raised its price target on shares of Google to $900 from $800. Credit Suisse cited long-term opportunities in areas like display, local, and mobile as reasons for the increase.
DJ30 -73.24 NASDAQ -28.23 SP500 -7.94 NASDAQ Dec/Adv/Vol 2128/840/1.88 bln NYSE Dec/Adv/Vol 2193/1093/1.25 bln
2:30 pm : The release of the minutes from the October 31 FOMC meeting prompted some mixed interpretations - as most Fed releases do - and has led to choppy trading action. The latest move is to the downside and has carried the indices to new session lows. Oil prices, meanwhile, have moved to a new session high above $98 per barrel.
By and large, the minutes haven't helped the mood today as they were accompanied by a downgrade of the Fed's GDP forecast for 2008 to 1.8%-2.5% from 2.5%-2.75%. On the bright side, the 2008 forecast for core-PCE was also dialed down to 1.7%-1.9% from 1.75%-2.0%. That is understandable as slower than expected GDP growth should help curtail inflation pressures.
The minutes noted that the risks to inflation balance the risks to the economy and discussed the possibility of leaving rates unchanged.DJ30 -95.67 NASDAQ -29.99 SP500 -10.91 NASDAQ Dec/Adv/Vol 1944/990/1.68 bln NYSE Dec/Adv/Vol 2008/1264/1.12 bln
1:55 pm : The major indices are off their lows, but remain in the red. The weakness in equities has spurred buying interest in the Treasury market, which is now flat after paring its intraday losses.
Meanwhile crude oil continues to rally, as it is currently up 2.8% to $97.30. Prices, however, remain lower than crude oil’s recently reached all-time high of $98.62.
The market awaits the Oct. 31 FOMC minutes release in five minutes. Briefing.com will provide an analysis of the minutes, as well as market reactions at the bottom of the hour.
DJ30 -30.97 NASDAQ -9.36 SP500 -3.29 NASDAQ Dec/Adv/Vol 1995/924/1.44 mln NYSE Dec/Adv/Vol 2090/1165/959 mln
1:30 pm : The major indices fall into negative territory for the first time this session. Disappointment in the weakness of the financial (-2.8%), and consumer discretionary (-0.9%) sectors has caused tech (-0.3%) and industrials (-0.3%) to fall into the red.
The Dow, Nasdaq and S&P 500 have dropped 217, 63 and 28 points, respectively, from their intraday highs to their recently reached session lows.
Meanwhile, shares of the embattled mortgage lender Countrywide (CFC 8.57, -2.00) are being pummeled, as they fall below the $10 mark for the first time since 2002. Countrywide was downgraded to In-Line from Outperform at Foxx-Pitt.DJ30 -46.90 NASDAQ -18.24 SP500 -6.03 NASDAQ Dec/Adv/Vol 1990/917/1.32 bln NYSE Dec/Adv/Vol 1909/1321/868 mln
1:00 pm : The major indices give up more of their intraday gains as the financial sector (-1.9%) and the S&P 500 Retailing Index (-0.6%) continue to show weakness. The weakness in retailers has pushed the consumer discretionary sector (-0.5%) into the red. Yesterday, financials and retailers plunged 3%.
In what has been a swift reversal, all of the industry groups within the financial sector are now in negative territory. The thrifts & mortgages group is down 17.6%. In regard to Freddie Mac (FRE 26.66, -10.84), The Wall Street Journal reports the company's CEO, Buddy Piszel, told the newspaper that the company is likely to raise capital by selling several billion dollars of preferred stock in the "very near term."DJ30 +18.62 NASDAQ +3.17 SP500 +2.25 NASDAQ Dec/Adv/Vol 1690/1173/1.14 bln NYSE Dec/Adv/Vol 1483/1730/726 mln
12:30 pm : The stock market has given up a large portion of its intraday gains, led by a swift reversal in the consumer discretionary sector (+0.1%), specifically the retailers (flat). The financial sector (-1.6%) is also acting as a major drag, as it extends its intraday losses.
For now, selling interest is fading, but buying interest is not all that decisive either.
DJ30 +39.35 NASDAQ +16.54 SP500 +7.28 NASDAQ Dec/Adv/Vol 1437/1389/972 mln NYSE Dec/Adv/Vol 1362/1843/655 mln
12:00 pm : The major indices are trading noticeably higher at the East Coast lunch hour, although off their intraday highs, following a morning with a number of positive and negative market-moving headlines.
Overnight, Hewlett-Packard (HPQ 49.81, +0.37) gave futures a noticeable boost and provided a breath of fresh air to a Tech sector besieged by concerns over the pace of consumer spending. On top of beating earnings expectations, the company raised guidance for the first quarter and issued a strong FY08 outlook. In addition, the company announced another buyback authorization of $8 billion.
Meanwhile, retailer Nordstrom (JWN 34.80, +4.28) reported earnings that topped expectations, and issued FY08 guidance above the current consensus estimate.
Negative news from mortgage-finance firm Freddie Mac (FRE 26.75, -10.75) is preventing the stock market from making further gains. The company reported a larger-than-expected third quarter loss of $3.29 per share. In addition, the company announced it has hired Goldman Sachs and Lehman Brothers as financial advisors to help it consider very near term capital raising alternatives, and said it is seriously considering reducing its fourth quarter common stock dividend by 50%. Shares of Fannie Mae (FNM 29.58, -8.00) are getting clipped in conjunction with Freddie Mac.
Both Freddie Mac and Fannie Mae were previously subpoenaed in regard to their involvement in artificially inflating appraisals that would produce larger mortgages for customers.
Target (TGT 52.88, -1.02) reported earnings that missed expectations, which took some wind out of Nordstrom's positive report. The company announced a $10 billion share repurchase program that helped mitigate some disappointment, but shares are currently trading noticeably lower.
Currently, a bullish bias persists despite the mixed headlines. Nine of the ten economic sectors are in the green. The energy sector (2.8%) is providing leadership after Exxon Mobil (XOM 87.49, +3.38) was upgraded to Buy from Neutral at UBS. The rise in crude oil prices (+1.9% to $96.45) is also aiding in the sector's outperformance.
The financial sector (-0.9%) stands alone in the red, as the Freddie Mac report is causing the thrifts & mortgages group (-16%) to get clipped.
On the economic front, October housing starts were slightly better-than-expected, while building permits were slightly worse-than-expected. It is too early to call a bottom in the housing market and it would be premature to place much value on this one month of data. The minutes from the October 31 FOMC meeting are set to be released at 14:00 ET.
In currency trading, the dollar hit an all-time low against euro and Swiss franc. The DXY Index is down 0.53%. The weakness in the dollar has spurred buying interest in commodities, as the CRB Index is up 1.02%. DJ30 +89.10 NASDAQ +27.75 SP500 +11.56 NASDAQ Dec/Adv/Vol 1089/1706/826 mln NYSE Dec/Adv/Vol 1093/2078/566 mln
11:30 am : The major indices are trading modestly below their best levels of the session as the financial sector (-0.7%) extends its losses. The energy (+3.1%) and tech (+1.6%) sectors continue to lend support.
Retailer GameStop Corp. (GME 51.98, -1.01) posted a higher third quarter profit, helped by strong sales of games such as Halo 3, Madden NFL '08, and Guitar Hero III, but the video game retailer forecast fourth quarter results below analysts' expectations. Its shares, which have gained more than 92% this year at yesterday's closing price, are trading roughly 2% lower on the outlook for the holiday quarter.DJ30 +118.61 NASDAQ +33.27 SP500 +15.23 NASDAQ Dec/Adv/Vol 1037/1703/683 mln NYSE Dec/Adv/Vol 955/2166/466 mln
11:00 am : The major indices hit fresh session highs following a broad-based pickup in buying interest. The financial sector (-0.1%) is still in the red, but is well off its intraday lows.
The Amex Airline Index (-1.8%) is a notable pocket of weakness. The rise in crude oil prices is weighing on airline stocks.
There is a lack of buying interest in the Treasury market as equities show strength. The 10-year note is down nine ticks to yield 4.11%
DJ30 +125.14 NASDAQ +34.74 SP500 +16.61 NASDAQ Dec/Adv/Vol 1090/1595/509 mln NYSE Dec/Adv/Vol 1047/2022/359 mln
10:30 am : The stock market slips off its recently reached highs as financials (-0.5%) reverse into the red. The stock market's gains are still significant, but the major indices have a way to go to make up yesterday's losses.
Exxon Mobil (XOM 86.88, +2.77) is pacing this session's advance after UBS upgraded shares of the company to Buy from Neutral and raised its price target to $96. Crude oil is up 1.7% to $96.26, which is providing additional buying interest in Exxon, and the energy sector (+2.5%).
The rise in crude oil prices follows the decline in the dollar, which hit record lows against the euro. The DXY Index is down 0.57% this session. DJ30 +95.76 NASDAQ +24.49 SP500 +12.61 NASDAQ Dec/Adv/Vol 940/1675/349 mln NYSE Dec/Adv/Vol 1072/1807/146 mln
10:00 am : The major indices have extended their opening gains, as the financial sector (+0.6%) rebounds into the green after being down more than 1%. All ten economic sectors are posting gains, with the energy sector (+2.4%) pacing the advance.
Within the financial sector, the thrifts & mortgages group (-13.0%) is getting hammered following Freddie Mac's (FRE 28.49, -9.01) poor earnings report. Freddie Mac recorded mark-to-market losses totaling $2.7 billion for the quarter. For the same period last year, Freddie Mac recorded mark-to-market losses of $1.5 billion. Fannie Mae (FNM 30.37, -7.19) is trading down in conjunction with Freddie.
Both Freddie Mac and Fannie Mae were previously subpoenaed in regard to their involvement in artificially inflating appraisals that would produce larger mortgages for customers. DJ30 +104.22 NASDAQ +29.77 SP500 +13.67
09:40 am : The stock market opens modestly higher following a number of mixed headlines.
On the upside, Dow component Hewlett-Packard (HPQ) topped earnings expectations, and provided first quarter and fiscal 2008 guidance that was above consensus estimates. HP also said its board approved an $8 billion buyback. Likewise, retailer Nordstrom (JWN) reported earnings that topped expectations, and issued FY08 guidance above the current consensus estimate.
On the downside, Freddie Mac (FRE) reported a larger-than-expected third quarter loss of $3.29 per share. In addition, the company announced it has hired Goldman Sachs and Lehman Brothers as financial advisors to help it consider very near term capital raising alternatives, and said it is seriously considering reducing its fourth quarter common stock dividend by 50%. Futures were pointing to a noticeably higher start but dropped following Freddie Mac's earnings report.
Retailer Target (TGT) missed its earnings estimate, but mitigated some disappointment after announcing its board has approved a new $10 billion share repurchase program.
On the economic front, October housing starts were slightly better-than-expected, while building permits were slightly worse-than-expected. It is too early to call a bottom in the housing market and it would be premature to place much value on this one month of data.DJ30 +69.75 NASDAQ +16.32 SP500 +6.42
09:14 am : S&P futures vs fair value: +5.0. Nasdaq futures vs fair value: +13.5. Crude oil futures are up 0.8% to $95.41 per barrel.
09:00 am : S&P futures vs fair value: +3.7. Nasdaq futures vs fair value: +11.3. Futures are well off their highs, but still point to a positive start. Target (TGT) missed its earnings estimate. Some of the disappointed has been mitigated, though, after the company announced its Board of Directors have authorized a new $10 billion share repurchase program, replacing the previous authorization.
08:32 am : S&P futures vs fair value: +6.9. Nasdaq futures vs fair value: +14.0. Futures reaction is limited to the housing starts data. Just reported, October housing starts rose to 1.229 million, compared to the prior reading of 1.193 million. Economists expected 1.17 million housing starts. Freddie Mac (FRE) is holding futures from making further gains after reporting a larger-than-expected third quarter loss of $3.29 per share. In addition, the company announced it has hired Goldman Sachs and Lehman Brothers as financial advisors to help it consider very near term capital raising alternatives, and said it is seriously considering reducing its fourth quarter common stock dividend by 50%.
08:01 am : S&P futures vs fair value: +6.9. Nasdaq futures vs fair value: +15.5. Early indications suggest an upbeat start to the trading day following a couple of better-than-expected earnings reports. After Monday's close, Dow component Hewlett-Packard (HPQ) reported fiscal fourth quarter earnings that topped expectations, and provided first quarter and fiscal 2008 guidance that was above consensus estimates. Meanwhile, retailer Nordstrom (JWM) also beat and issued FY08 guidance above current estimates. Good earnings news from Medtronic (MDT), a UBS upgrade of ExxonMobil (XOM) from Neutral to Buy, and Pfizer (PFE) winning a court victory in lawsuits regarding Celebrex are also factoring in to the positive tone.
06:21 am : S&P futures vs fair value: +9.4. Nasdaq futures vs fair value: +8.8.
06:21 am : FTSE...6149.90...+29.10...+0.5%. DAX...7562.41...+50.44...+0.7%.
06:21 am : Nikkei...15211.52...+168.96...+1.1%. Hang Seng...27771.21...+311.04...+1.1%.
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