Mid-day Summary
The mkt opened higher this morning following Fed Chairman Bernanke's comments last night that seem to have validated investors' belief that the FOMC is likely to cut interest rates at its Dec 11 meeting, and after the Wall Street Journal reported the Treasury Department and financial institutions are working on a plan to freeze rates on certain subprime loans. But the opening prints were also the highs of the day as the major averages have slowly slid lower since. Note the S&P opened just below a major resistance level between 1490 and 1500. Dow is currently +62 to ~13374; Nasdaq is currently -1.5 to ~2666.5; S&P is currently +10 to ~1480. Today's strongest sectors include Homebuilders, Banks, Airlines, Brokers, Steel and Retail. Today's weakest sectors include Coal, Energy and Gold/Silver... The reports of a White House-led plan to curtail foreclosures is giving the financial and homebuilding sectors a huge boost. Presumably, if the plan gets finalized, banks won't get hit as hard due to a decrease in foreclosure costs, and homebuilders will face less pressure as less foreclosures mean there will be less inventory of existing homes for sale. Since the open, Bloomberg.com reported that a Treasury spokeswoman would not discuss specifics of the plan, but said "we are encouraged progress is being made"... The Nasdaq is underperforming due to weakness in the technology sector. Dell (DELL) is trading lower by 14% after the computer maker's Q3 earnings didn't live up to the mkt's expectations. Gross margins declined, and the co said its near-term results could be negatively impacted by a slower decline in component costs. Research In Motion (RIMM) is also a drag on the sector after Piper Jaffray reduced its FY08 earnings ests on the stock this morning (though there is a positive article in Gizmodo on the co's upcoming Blackberry 9000)... The Bond mkt saw a modest decline overnight, but the bottom fell out as the treasury pits opened for trade at 8:20ET with information leaking on a govt bail-out of the mortgage industry, despite the idea that the FOMC will certainly cut rates on Dec 11. However, bonds have managed to rebound off their lows by mid-session. The 10-yr is currently -14/32 to 3.985%. Note there are still some Fed speakers on today's agenda, with Governor Kroszner speaking at 13:40ET on the financial markets and St. Louis President Poole talking at 16:00ET... In Commodities, Jan crude oil ($89.50 -1.51) continues to see major profit-taking as it hit a low of $88.52 early this morning and has range-traded near its low through the morning. Note crude has support at $87.46. Dec copper ($3.1515 +0.0880) continued its 2-day rally overnight following the comments from Fed Chairman Bernanke, and has held the majority of its gains into mid-day. Dec gold ($782.50 -12.80) and Dec silver ($14.020 -0.217) declined this morning following a rally in the dollar against the other major currencies... In Europe, mkts rallied as banks took pole position on rising prospects for cuts in U.S. interest rates. FTSE closed +1.3%; DAX closed +1.4%; CAC closed +1.3%. Note in Asia, the Nikkei closed +1.1%, the Hang Seng closed +0.6% and the Shanghai Composite closed -2.6%... On the Earnings calendar, no cos are confirmed to report today after the close. Monday before the open: CPWM, ISLE and PVH are the only cos confirmed to report... On the Economic calendar, nothing remains on the schedule for today, nor is anything scheduled for Monday before the open.
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