AI
Thursday, January 17, 2008 6:48:08 PM
Market Update 080117
http://biz.yahoo.com/mu/update.html
4:20 pm : Stock market bulls did not have much to cheer about on Thursday. Stocks posted a large loss, finishing near their session lows. As has been the case for 2008, worries about further financial market turmoil and a slowing economy spurred the selling interest.
Stocks took a nose dive after the Philadelphia Fed Index hit the wires at 10:30 ET. The regional manufacturing survey came in at -20.9, its lowest number since October 2001. The consensus estimate predicted a reading of -1.5. Since the number is below zero, it reflects a contraction in manufacturing in that region.
The report has weighed on the broader market and especially the materials sector (-5.4%), as the poor reading raised concerns about growth. Conversely, the Treasury market rallied in a flight-to-quality trade.
The financial sector (-4.7%) also played a large role in Thursday's weakness.
Merrill Lynch (MER 49.53, -5.56) reported a much larger than expected loss. Merrill posted a loss of $10.3 billion in the fourth quarter, or $12.57 per share, which fell well short of the expected loss of $4.93. The dismal results were largely due to an $11.5 billion write-down for subprime and CDO exposure and a $2.6 billion credit valuation adjustment related to its hedges with financial guarantors.
In regard to financial guarantors, bond insurer Ambac (ABK 6.24, -6.73) was clipped 52% after Moody's announced this morning it is putting Ambac's Aaa credit rating under review for a downgrade. Ambac stock also got pummeled on Wednesday, after the company announced it is cutting its dividend and is planning to raise $1 billion to shore up its capital position in the face of a $5.4 billion pretax write-down. Other bond insurers fell on the news, including MBIA (MBI 9.22, -4.18).
The fear is that if bond insurers lose their credit rating, the debt the companies insure would get a lower rating, which would spur another wave of write-downs at financial companies. As noted above, Merrill already has written down some of its hedges with bond insurers.
In other economic news, December housing starts dropped a larger than expected 14.2% and housing permits also fell. The market did not respond too negatively to the report, as homebuilding (+1.2%) was one of the few groups to trade higher.
Not all economic data were negative. Initial jobless claims for the week ended Jan. 12 unexpectedly fell to 301,000, its lowest reading since May 11. Economists expected claims to rise to 335,000. This is good news as it shows business are not moving into recessionary mode by cutting jobs.
Bernanke testified on the economic outlook in front of House Budget Committee. He did not reveal much new information, other than publicly supporting a fiscal stimulus plan, which he was widely expected to do. He said subprime losses could mount to "several multiples" of $100 billion, but won't top $500 billion. The Fed is forecasting slow growth, not a recession.
All ten sectors posted a loss in excess of 1%.
2008 has not been good for the stocks. The Dow, Nasdaq and S&P 500 are down 8.3%, 11.5%, and 9.2% , respectively, year-to-date. DJ30 -306.95 NASDAQ -47.69 NQ100 -1.6% R2K -2.8% SP400 -2.9% SP500 -39.95 NASDAQ Dec/Adv/Vol 2327/698/2.83 bln NYSE Dec/Adv/Vol 2694/475/2.17 bln
3:35 pm : The stock market retreats to fresh lows as we head into the final half-hour of trade. With the exception of the first half-hour of the session, sellers have been in control. The Dow is currently down more than 300 points, and is down 8.4% in 2008. Meanwhile, Treasuries continue to rally.
More headlines are coming out regarding a stimulus plan. Dow Jones reported Bush is going to outline his economic stimulus plan on Friday. Meanwhile, The Wall Street Journal reports Bush is going to delay tax cut issues until after the stimulus deal.
DJ30 -309.66 NASDAQ -45.17 SP500 -39.23 NASDAQ Dec/Adv/Vol 2140/841/2.24 bln NYSE Dec/Adv/Vol 2491/663/1.53 bln
3:00 pm : Selling pressure eases as stocks bounce of their lows, but losses remain substantial. Stock market bulls do not have much to cheer about today. Bond investors are having a better day, as the 10-year note extends its gains, sending its yield down to 3.63%.
Market breadth is bearish. Decliners outpace advancers by 4-to-1 on the NYSE, and by 3-to-1 on the Nasdaq. New 52-week lows outpace new highs by 30-to-1 on the NYSE and by 17-to-1 on the Nasdaq. Volume is on the heavy side, as it was yesterday.DJ30 -188.59 NASDAQ -24.41 SP500 -24.73 NASDAQ Dec/Adv/Vol 2266/704/1.99 bln NYSE Dec/Adv/Vol 2577/568/1.36 bln
2:30 pm : The stock market falls to its session low, as financials (-3.5%) continue to face selling pressure. Multi-line insurance is posting the largest loss of 5.1%. Retail REITs (+0.2%) is the only group in financials that is posting a gain.
Atlanta Fed President Lockhart said additional interest rate cuts may be needed in the face of the recent economic weakness. He expects weak growth in the first half of 2008, followed by a gradual pickup.DJ30 -218.02 NASDAQ -32.38 SP500 -28.33 NASDAQ Dec/Adv/Vol 2083/860/1.81 bln NYSE Dec/Adv/Vol 2401/740/1.23 bln
2:00 pm : More choppy action as stocks pare some losses and then go back on the retreat. Tech (-0.4%) has made up a portion of its losses, and briefly touched positive territory.
Bonds have fared better than stocks in today's trade. The 10-year yield is trading near its lowest level since early 2004, aided by the weak Philadelphia Fed reading.
Lehman Brothers (LEH 55.69, -2.37) said earlier today that it is going to cut its U.S. residential mortgage origination resources and suspend its unit wholesale/correspondent lending activity.DJ30 -149.00 NASDAQ -15.68 SP500 -19.99 NASDAQ Dec/Adv/Vol 1920/1014/1.66 bln NYSE Dec/Adv/Vol 2340/775/1.11 bln
1:30 pm : The stock market is trading in choppy fashion modestly above its session lows. All ten sectors remain in the red.
Investment manager BlackRock (BLK 212.91, +9.21) is bucking the negative trend, gaining 4.5% in the face of the large 2.9% drop in financials. BlackRock reported fourth quarter earnings of $2.52, topping the First Call consensus estimate by $0.37. BlackRock's strong performance is a bright spot for Merrill Lynch (MER 51.10, -3.99) in an otherwise dreary day, as Merrill owns roughly 56% of shares outstanding.DJ30 -133.56 NASDAQ -13.86 SP500 -18.06 NASDAQ Dec/Adv/Vol 2061/857/1.51 bln NYSE Dec/Adv/Vol 2448/646/1.03 bln
1:00 pm : The major indices are slowly paring their losses, but continue to trade substantially in the red. Reuters reports the White House is getting closer to proposing a fiscal stimulus plan that it wants to pass quickly, according to an official.
The S&P 500 is underperforming the other major indices this session with 387 of the 500 stocks trading lower. Agriculture company Monsanto (MON 101.18, -11.52) is one of the main laggards largely on a comment from UBS which notes a potential shift in acres this year away from corn. Conglomerate PPG Industries (PPG 64.33, +2.76) is the best-performing S&P 500 stock, after the company topped earnings expectations.DJ30 -152.42 NASDAQ -19.93 SP500 -21.22 NASDAQ Dec/Adv/Vol 2054/828/1.36 bln NYSE Dec/Adv/Vol 2421/649/927 mln
12:30 pm : A bit of buying interest lifts the stock market above its recently reached session lows. Fed Chairman Bernanke continues to answer questions before the House Budget Committee. He has not revealed much new information, other than publicly supporting a fiscal stimulus plan, which he was widely expected to do.DJ30 -159.57 NASDAQ -22.37 SP500 -22.30 NASDAQ Dec/Adv/Vol 2130/746/1.21 bln NYSE Dec/Adv/Vol 2383/674/781 mln
12:00 pm : It has been a roller coaster day of trade on Thursday, which seems to be the norm in 2008. Stocks opened higher on a lower than expected jobless claim number, but sentiment soured after a sharply lower than expected manufacturing reading and as Chairman Bernanke testified before the House Budget Committee. The stock market is currently trading with significant losses, at its lowest level of the session.
The market opened on a high note after initial jobless claims for the week ended Jan. 12 unexpectedly fell to 301,000, its lowest reading since May 11. Economists expected claims to rise to 335K. The reading helped offset disappointment that December housing starts dropped a larger than expected 14.2% and housing permits also fell.
The positive sentiment was short-lived, though, as the major indices fell into the red after the January Philadelphia Index reading plummeted and comments from Fed Chairman Bernanke hit the wires.
The Philadelphia Fed regional manufacturing survey came in at -20.9, its lowest number since October 2001. The consensus estimate predicted a reading of -1.5. Since the number is below zero, it reflects a contraction in manufacturing in that region. The report has weighed on the materials sector (-4.2%), as the poor reading raises concerns about growth, which would decrease the demand for materials.
Bernanke said in testimony that any fiscal stimulus plan should be implemented quickly and last for 12 months. He noted if the plan comes too late it might do more harm than good. He said the economic outlook has worsened, and that downside risks to growth are now more pronounced. The Fed is forecasting slower growth, not a recession. He said subprime losses could mount to "several multiples" of $100 billion, but won't top $500 billion.
In corporate news, Merrill Lynch (MER 50.75, -4.34) reported a much larger loss than expected, which is weighing on finacials this session. Merrill lost $10.3 billion in the fourth quarter, or $12.57 per share, which fell well short of the expected loss of $4.93. The loss was largely due to a $11.5 billion write-down for subprime and CDO exposure and a $2.6 billion credit valuation adjustment related to its hedges with financial guarantors.
In regard to financial guarantors, bond insurer Ambac (ABK 6.48, -6.49) has been absolutely hammered today after Moody's announced this morning it is putting Ambac's Aaa credit rating under review for a downgrade. Yesterday, Ambac announced it is cutting its dividend, and is planning to raise $1 billion to offset its $5.4 billion pretax write-down. The fear is that if bond insurers lose their credit rating, it would spur another wave of write-downs from financial companies.
All ten sectors are lower. Financials (-3.0%) and materials (-4.2%) are the main laggards. Consumer staples (-0.3%) and tech (-0.5%) is outperforming on a relative basis. DJ30 -152.58 NASDAQ -22.18 SP500 -22.06 NASDAQ Dec/Adv/Vol 1916/912/1.06 bln NYSE Dec/Adv/Vol 2183/847/693 mln
11:30 am : Stocks were unable to maintain upward momentum as stocks go back fall back toward their session lows. Bernanke speech is over, as he now answers questions before the House Budget Committee. There will be more Fed speakers today. Dallas Fed President Fisher will talk at 12:30 ET, and Atlanta President Lockhart will speak at 13:15 ET.DJ30 -113.98 NASDAQ -9.93 SP500 -16.48 NASDAQ Dec/Adv/Vol 1710/1043/887 mln NYSE Dec/Adv/Vol 2173/799/507 mln
11:00 am : After dropping to fresh lows since the last update, the major indices have made a modest recovery effort. Financials are down 1.9% and are weighing on the broader market.
Bond insurer Ambac (ABK 6.88, -6.09) is getting hammered, which follows its 39% loss yesterday. This morning, Moody's put Ambac's Aaa credit rating under review for a possible downgrade. Yesterday, Ambac announced it is cutting its dividend, and is planning to raise $1 billion to offset its $5.4 billion pretax write-down. MBIA (MBI 10.32, -3.08) is also lower on the news.DJ30 -76.82 NASDAQ -7.28 SP500 -11.49 NASDAQ Dec/Adv/Vol 1833/861/679 mln NYSE Dec/Adv/Vol 2184/740/410 mln
10:30 am : The stock market retreats in choppy fashion as Bernanke comments and the Philadelphia Fed Index hits the wires. The three major indices are now in the red, with only consumer staples (+0.1%) managing to post a gain.
The Philadelphia Fed Index, a regional manufacturing survey, was sharply lower at -20.9, its lowest number since Oct. 2001. The consensus estimate predicted a reading of -1.5. Since the number is below zero, it reflects a contraction in manufacturing. The report has weighed on the materials sector (-2.7%), as the poor reading raises concerns about growth, which would decrease the demand for materials.
Meanwhile, Chairman Bernanke is testifying before the House Budget Committee. Bernanke said any fiscal stimulus plan should be implemented quickly and last for 12 months. He noted if the plan comes too late it might do more harm than good. He said the economic outlook has worsened, and that downside risks to growth are now more pronounced.DJ30 -68.42 NASDAQ -8.83 SP500 -11.75 NASDAQ Dec/Adv/Vol 1307/1232/406 mln NYSE Dec/Adv/Vol 1157/1611/187 mln
10:00 am : The stock market is holding onto slight gains, with six of the ten sectors in the green. The market's attention will soon turn to Fed Chairman Bernanke, who is set testify before the House Budget Committee as this comment gets posted.
Financials (-0.8%), which provided leadership yesterday, is currently the main laggard. Merrill Lynch's (MER 53.01, -2.08) shares have shed 3.8% on the larger than expected loss.
Meanwhile two of yesterday's beaten down sectors, energy (+1.6%) and tech (+0.9%), are providing leadership. Tech is getting a boost from Microsoft (MSFT 33.77, +0.54), after Goldman Sachs added the company to a list of preferred stocks, according to the AP. Energy is benefiting from a 1.3% rebound in energy prices.
The strength in tech is aiding the Nasdaq's outperformance the S&P 500.DJ30 +45.60 NASDAQ +20.84 SP500 +3.47 NASDAQ Dec/Adv/Vol 921/1341/157 mln
09:45 am : After a few swings in futures trading, the stock market opens modestly higher. Merrill Lynch (MER) reported a larger loss than expected, which weighed on sentiment.
A better than expected jobless claims reading managed to offset disappointment in Merril's loss. Jobless claims for the week ended Jan. 12 unexpectedly fell to 301,000, its lowest reading since May 11. Economists expected claims to rise to 335K.
Meanwhile, December housing starts dropped a larger than expected 14.2% and housing permits also fell.DJ30 +29.59 NASDAQ +14.23 SP500 +1.89
09:14 am : S&P futures vs fair value: +5.6. Nasdaq futures vs fair value: +12.3.
09:00 am : S&P futures vs fair value: +7.0. Nasdaq futures vs fair value: +15.8. S&P 500 and Nasdaq futures are now pointing to a higher start. The better than expected jobless claims reading is fueling the buying interest, and is offsetting the lower than expected housing starts and building permits numbers. There are a couple of potentially market-moving events left on the agenda today. Fed Chairman Bernanke will testify on the economic outlook before the House Budget Committee at 10:00 ET and the Philadelphia Fed Index is set for release at 10:00 ET.
08:32 am : S&P futures vs fair value: -2.6. Nasdaq futures vs fair value: +2.8. Futures shed a few points and then regain some ground on a better than expected jobless claims reading. Jobless claims for the week ended Jan. 12 fell to 301K, compared to the prior reading of 322K claims. Economists expected 331K claims. Separately, Dec. housing starts came in at 1006K and building permits came in at 1006K. Economists expected 1145K starts and 1135K permits.
08:00 am : S&P futures vs fair value: -2.5. Nasdaq futures vs fair value: +2.3. Futures point to a mixed open, but are close to the flat line. The stock market was poised for a higher start, but a larger than expected loss at Merrill Lynch (MER) weighed on sentiment. Merrill lost $10.3 billion in the fourth quarter, or $12.57 per share, which fell well short of the expected loss of $4.93. The loss was largely due to a $11.5 billion write-down for subprime and CDO exposure and a $2.6 billion credit valuation adjustment related to hedges on U.S. ABS CDOs. On the economic front, the Dec. housing starts and weekly initial jobless claims reports are slated for release at 8:30 ET.
06:18 am : S&P futures vs fair value: +3.3. Nasdaq futures vs fair value: +8.0.
06:18 am : FTSE...5955.80...+12.90...+0.2%. DAX...7514.25...+42.68...+0.6%.
06:18 am : Nikkei...13783.45...+278.94...+2.1%. Hang Seng...25114.98...+664.13...+2.7%.
http://biz.yahoo.com/mu/update.html
4:20 pm : Stock market bulls did not have much to cheer about on Thursday. Stocks posted a large loss, finishing near their session lows. As has been the case for 2008, worries about further financial market turmoil and a slowing economy spurred the selling interest.
Stocks took a nose dive after the Philadelphia Fed Index hit the wires at 10:30 ET. The regional manufacturing survey came in at -20.9, its lowest number since October 2001. The consensus estimate predicted a reading of -1.5. Since the number is below zero, it reflects a contraction in manufacturing in that region.
The report has weighed on the broader market and especially the materials sector (-5.4%), as the poor reading raised concerns about growth. Conversely, the Treasury market rallied in a flight-to-quality trade.
The financial sector (-4.7%) also played a large role in Thursday's weakness.
Merrill Lynch (MER 49.53, -5.56) reported a much larger than expected loss. Merrill posted a loss of $10.3 billion in the fourth quarter, or $12.57 per share, which fell well short of the expected loss of $4.93. The dismal results were largely due to an $11.5 billion write-down for subprime and CDO exposure and a $2.6 billion credit valuation adjustment related to its hedges with financial guarantors.
In regard to financial guarantors, bond insurer Ambac (ABK 6.24, -6.73) was clipped 52% after Moody's announced this morning it is putting Ambac's Aaa credit rating under review for a downgrade. Ambac stock also got pummeled on Wednesday, after the company announced it is cutting its dividend and is planning to raise $1 billion to shore up its capital position in the face of a $5.4 billion pretax write-down. Other bond insurers fell on the news, including MBIA (MBI 9.22, -4.18).
The fear is that if bond insurers lose their credit rating, the debt the companies insure would get a lower rating, which would spur another wave of write-downs at financial companies. As noted above, Merrill already has written down some of its hedges with bond insurers.
In other economic news, December housing starts dropped a larger than expected 14.2% and housing permits also fell. The market did not respond too negatively to the report, as homebuilding (+1.2%) was one of the few groups to trade higher.
Not all economic data were negative. Initial jobless claims for the week ended Jan. 12 unexpectedly fell to 301,000, its lowest reading since May 11. Economists expected claims to rise to 335,000. This is good news as it shows business are not moving into recessionary mode by cutting jobs.
Bernanke testified on the economic outlook in front of House Budget Committee. He did not reveal much new information, other than publicly supporting a fiscal stimulus plan, which he was widely expected to do. He said subprime losses could mount to "several multiples" of $100 billion, but won't top $500 billion. The Fed is forecasting slow growth, not a recession.
All ten sectors posted a loss in excess of 1%.
2008 has not been good for the stocks. The Dow, Nasdaq and S&P 500 are down 8.3%, 11.5%, and 9.2% , respectively, year-to-date. DJ30 -306.95 NASDAQ -47.69 NQ100 -1.6% R2K -2.8% SP400 -2.9% SP500 -39.95 NASDAQ Dec/Adv/Vol 2327/698/2.83 bln NYSE Dec/Adv/Vol 2694/475/2.17 bln
3:35 pm : The stock market retreats to fresh lows as we head into the final half-hour of trade. With the exception of the first half-hour of the session, sellers have been in control. The Dow is currently down more than 300 points, and is down 8.4% in 2008. Meanwhile, Treasuries continue to rally.
More headlines are coming out regarding a stimulus plan. Dow Jones reported Bush is going to outline his economic stimulus plan on Friday. Meanwhile, The Wall Street Journal reports Bush is going to delay tax cut issues until after the stimulus deal.
DJ30 -309.66 NASDAQ -45.17 SP500 -39.23 NASDAQ Dec/Adv/Vol 2140/841/2.24 bln NYSE Dec/Adv/Vol 2491/663/1.53 bln
3:00 pm : Selling pressure eases as stocks bounce of their lows, but losses remain substantial. Stock market bulls do not have much to cheer about today. Bond investors are having a better day, as the 10-year note extends its gains, sending its yield down to 3.63%.
Market breadth is bearish. Decliners outpace advancers by 4-to-1 on the NYSE, and by 3-to-1 on the Nasdaq. New 52-week lows outpace new highs by 30-to-1 on the NYSE and by 17-to-1 on the Nasdaq. Volume is on the heavy side, as it was yesterday.DJ30 -188.59 NASDAQ -24.41 SP500 -24.73 NASDAQ Dec/Adv/Vol 2266/704/1.99 bln NYSE Dec/Adv/Vol 2577/568/1.36 bln
2:30 pm : The stock market falls to its session low, as financials (-3.5%) continue to face selling pressure. Multi-line insurance is posting the largest loss of 5.1%. Retail REITs (+0.2%) is the only group in financials that is posting a gain.
Atlanta Fed President Lockhart said additional interest rate cuts may be needed in the face of the recent economic weakness. He expects weak growth in the first half of 2008, followed by a gradual pickup.DJ30 -218.02 NASDAQ -32.38 SP500 -28.33 NASDAQ Dec/Adv/Vol 2083/860/1.81 bln NYSE Dec/Adv/Vol 2401/740/1.23 bln
2:00 pm : More choppy action as stocks pare some losses and then go back on the retreat. Tech (-0.4%) has made up a portion of its losses, and briefly touched positive territory.
Bonds have fared better than stocks in today's trade. The 10-year yield is trading near its lowest level since early 2004, aided by the weak Philadelphia Fed reading.
Lehman Brothers (LEH 55.69, -2.37) said earlier today that it is going to cut its U.S. residential mortgage origination resources and suspend its unit wholesale/correspondent lending activity.DJ30 -149.00 NASDAQ -15.68 SP500 -19.99 NASDAQ Dec/Adv/Vol 1920/1014/1.66 bln NYSE Dec/Adv/Vol 2340/775/1.11 bln
1:30 pm : The stock market is trading in choppy fashion modestly above its session lows. All ten sectors remain in the red.
Investment manager BlackRock (BLK 212.91, +9.21) is bucking the negative trend, gaining 4.5% in the face of the large 2.9% drop in financials. BlackRock reported fourth quarter earnings of $2.52, topping the First Call consensus estimate by $0.37. BlackRock's strong performance is a bright spot for Merrill Lynch (MER 51.10, -3.99) in an otherwise dreary day, as Merrill owns roughly 56% of shares outstanding.DJ30 -133.56 NASDAQ -13.86 SP500 -18.06 NASDAQ Dec/Adv/Vol 2061/857/1.51 bln NYSE Dec/Adv/Vol 2448/646/1.03 bln
1:00 pm : The major indices are slowly paring their losses, but continue to trade substantially in the red. Reuters reports the White House is getting closer to proposing a fiscal stimulus plan that it wants to pass quickly, according to an official.
The S&P 500 is underperforming the other major indices this session with 387 of the 500 stocks trading lower. Agriculture company Monsanto (MON 101.18, -11.52) is one of the main laggards largely on a comment from UBS which notes a potential shift in acres this year away from corn. Conglomerate PPG Industries (PPG 64.33, +2.76) is the best-performing S&P 500 stock, after the company topped earnings expectations.DJ30 -152.42 NASDAQ -19.93 SP500 -21.22 NASDAQ Dec/Adv/Vol 2054/828/1.36 bln NYSE Dec/Adv/Vol 2421/649/927 mln
12:30 pm : A bit of buying interest lifts the stock market above its recently reached session lows. Fed Chairman Bernanke continues to answer questions before the House Budget Committee. He has not revealed much new information, other than publicly supporting a fiscal stimulus plan, which he was widely expected to do.DJ30 -159.57 NASDAQ -22.37 SP500 -22.30 NASDAQ Dec/Adv/Vol 2130/746/1.21 bln NYSE Dec/Adv/Vol 2383/674/781 mln
12:00 pm : It has been a roller coaster day of trade on Thursday, which seems to be the norm in 2008. Stocks opened higher on a lower than expected jobless claim number, but sentiment soured after a sharply lower than expected manufacturing reading and as Chairman Bernanke testified before the House Budget Committee. The stock market is currently trading with significant losses, at its lowest level of the session.
The market opened on a high note after initial jobless claims for the week ended Jan. 12 unexpectedly fell to 301,000, its lowest reading since May 11. Economists expected claims to rise to 335K. The reading helped offset disappointment that December housing starts dropped a larger than expected 14.2% and housing permits also fell.
The positive sentiment was short-lived, though, as the major indices fell into the red after the January Philadelphia Index reading plummeted and comments from Fed Chairman Bernanke hit the wires.
The Philadelphia Fed regional manufacturing survey came in at -20.9, its lowest number since October 2001. The consensus estimate predicted a reading of -1.5. Since the number is below zero, it reflects a contraction in manufacturing in that region. The report has weighed on the materials sector (-4.2%), as the poor reading raises concerns about growth, which would decrease the demand for materials.
Bernanke said in testimony that any fiscal stimulus plan should be implemented quickly and last for 12 months. He noted if the plan comes too late it might do more harm than good. He said the economic outlook has worsened, and that downside risks to growth are now more pronounced. The Fed is forecasting slower growth, not a recession. He said subprime losses could mount to "several multiples" of $100 billion, but won't top $500 billion.
In corporate news, Merrill Lynch (MER 50.75, -4.34) reported a much larger loss than expected, which is weighing on finacials this session. Merrill lost $10.3 billion in the fourth quarter, or $12.57 per share, which fell well short of the expected loss of $4.93. The loss was largely due to a $11.5 billion write-down for subprime and CDO exposure and a $2.6 billion credit valuation adjustment related to its hedges with financial guarantors.
In regard to financial guarantors, bond insurer Ambac (ABK 6.48, -6.49) has been absolutely hammered today after Moody's announced this morning it is putting Ambac's Aaa credit rating under review for a downgrade. Yesterday, Ambac announced it is cutting its dividend, and is planning to raise $1 billion to offset its $5.4 billion pretax write-down. The fear is that if bond insurers lose their credit rating, it would spur another wave of write-downs from financial companies.
All ten sectors are lower. Financials (-3.0%) and materials (-4.2%) are the main laggards. Consumer staples (-0.3%) and tech (-0.5%) is outperforming on a relative basis. DJ30 -152.58 NASDAQ -22.18 SP500 -22.06 NASDAQ Dec/Adv/Vol 1916/912/1.06 bln NYSE Dec/Adv/Vol 2183/847/693 mln
11:30 am : Stocks were unable to maintain upward momentum as stocks go back fall back toward their session lows. Bernanke speech is over, as he now answers questions before the House Budget Committee. There will be more Fed speakers today. Dallas Fed President Fisher will talk at 12:30 ET, and Atlanta President Lockhart will speak at 13:15 ET.DJ30 -113.98 NASDAQ -9.93 SP500 -16.48 NASDAQ Dec/Adv/Vol 1710/1043/887 mln NYSE Dec/Adv/Vol 2173/799/507 mln
11:00 am : After dropping to fresh lows since the last update, the major indices have made a modest recovery effort. Financials are down 1.9% and are weighing on the broader market.
Bond insurer Ambac (ABK 6.88, -6.09) is getting hammered, which follows its 39% loss yesterday. This morning, Moody's put Ambac's Aaa credit rating under review for a possible downgrade. Yesterday, Ambac announced it is cutting its dividend, and is planning to raise $1 billion to offset its $5.4 billion pretax write-down. MBIA (MBI 10.32, -3.08) is also lower on the news.DJ30 -76.82 NASDAQ -7.28 SP500 -11.49 NASDAQ Dec/Adv/Vol 1833/861/679 mln NYSE Dec/Adv/Vol 2184/740/410 mln
10:30 am : The stock market retreats in choppy fashion as Bernanke comments and the Philadelphia Fed Index hits the wires. The three major indices are now in the red, with only consumer staples (+0.1%) managing to post a gain.
The Philadelphia Fed Index, a regional manufacturing survey, was sharply lower at -20.9, its lowest number since Oct. 2001. The consensus estimate predicted a reading of -1.5. Since the number is below zero, it reflects a contraction in manufacturing. The report has weighed on the materials sector (-2.7%), as the poor reading raises concerns about growth, which would decrease the demand for materials.
Meanwhile, Chairman Bernanke is testifying before the House Budget Committee. Bernanke said any fiscal stimulus plan should be implemented quickly and last for 12 months. He noted if the plan comes too late it might do more harm than good. He said the economic outlook has worsened, and that downside risks to growth are now more pronounced.DJ30 -68.42 NASDAQ -8.83 SP500 -11.75 NASDAQ Dec/Adv/Vol 1307/1232/406 mln NYSE Dec/Adv/Vol 1157/1611/187 mln
10:00 am : The stock market is holding onto slight gains, with six of the ten sectors in the green. The market's attention will soon turn to Fed Chairman Bernanke, who is set testify before the House Budget Committee as this comment gets posted.
Financials (-0.8%), which provided leadership yesterday, is currently the main laggard. Merrill Lynch's (MER 53.01, -2.08) shares have shed 3.8% on the larger than expected loss.
Meanwhile two of yesterday's beaten down sectors, energy (+1.6%) and tech (+0.9%), are providing leadership. Tech is getting a boost from Microsoft (MSFT 33.77, +0.54), after Goldman Sachs added the company to a list of preferred stocks, according to the AP. Energy is benefiting from a 1.3% rebound in energy prices.
The strength in tech is aiding the Nasdaq's outperformance the S&P 500.DJ30 +45.60 NASDAQ +20.84 SP500 +3.47 NASDAQ Dec/Adv/Vol 921/1341/157 mln
09:45 am : After a few swings in futures trading, the stock market opens modestly higher. Merrill Lynch (MER) reported a larger loss than expected, which weighed on sentiment.
A better than expected jobless claims reading managed to offset disappointment in Merril's loss. Jobless claims for the week ended Jan. 12 unexpectedly fell to 301,000, its lowest reading since May 11. Economists expected claims to rise to 335K.
Meanwhile, December housing starts dropped a larger than expected 14.2% and housing permits also fell.DJ30 +29.59 NASDAQ +14.23 SP500 +1.89
09:14 am : S&P futures vs fair value: +5.6. Nasdaq futures vs fair value: +12.3.
09:00 am : S&P futures vs fair value: +7.0. Nasdaq futures vs fair value: +15.8. S&P 500 and Nasdaq futures are now pointing to a higher start. The better than expected jobless claims reading is fueling the buying interest, and is offsetting the lower than expected housing starts and building permits numbers. There are a couple of potentially market-moving events left on the agenda today. Fed Chairman Bernanke will testify on the economic outlook before the House Budget Committee at 10:00 ET and the Philadelphia Fed Index is set for release at 10:00 ET.
08:32 am : S&P futures vs fair value: -2.6. Nasdaq futures vs fair value: +2.8. Futures shed a few points and then regain some ground on a better than expected jobless claims reading. Jobless claims for the week ended Jan. 12 fell to 301K, compared to the prior reading of 322K claims. Economists expected 331K claims. Separately, Dec. housing starts came in at 1006K and building permits came in at 1006K. Economists expected 1145K starts and 1135K permits.
08:00 am : S&P futures vs fair value: -2.5. Nasdaq futures vs fair value: +2.3. Futures point to a mixed open, but are close to the flat line. The stock market was poised for a higher start, but a larger than expected loss at Merrill Lynch (MER) weighed on sentiment. Merrill lost $10.3 billion in the fourth quarter, or $12.57 per share, which fell well short of the expected loss of $4.93. The loss was largely due to a $11.5 billion write-down for subprime and CDO exposure and a $2.6 billion credit valuation adjustment related to hedges on U.S. ABS CDOs. On the economic front, the Dec. housing starts and weekly initial jobless claims reports are slated for release at 8:30 ET.
06:18 am : S&P futures vs fair value: +3.3. Nasdaq futures vs fair value: +8.0.
06:18 am : FTSE...5955.80...+12.90...+0.2%. DAX...7514.25...+42.68...+0.6%.
06:18 am : Nikkei...13783.45...+278.94...+2.1%. Hang Seng...25114.98...+664.13...+2.7%.
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