AI
Friday, January 18, 2008 6:53:42 PM
Market Update 080118
http://biz.yahoo.com/mu/update.html
4:25 pm : It was another exhausting day of trading on Friday as the major indices moved in wide ranges, driven sharply higher at the open by reassuring earnings news from General Electric (GE 34.31, +1.10) and IBM (IBM 103.40, +2.30), and then surrendering all of those gains and then some in a mid-morning selloff that lacked a specific news catalyst.
In essence, it was more of the same as concerns about a possible recession and the troubled state of bond insurers Ambac Financial (ABK 6.20, -0.04) and MBIA (MBI 8.55, -0.67) continued to weigh on sentiment and canceled the rally effort.
For the Dow, Nasdaq and S&P 500, the intraday swings between their high and low point were 318, 61, and 28 points, respectively. Volume was very heavy once again, bolstered in part by the monthly expiration of stock options and index options.
Although the major indices ended the day in negative territory, both GE and IBM closed the session higher. In the face of some dour reports on the U.S. economy, investors were heartened that GE reaffirmed its 2008 EPS growth target of at least 10% and that IBM's 2008 EPS growth guidance of 15% to 16% exceeded consensus expectations.
Their strength helped limit the losses in the broader market, but a 25% decline in Sprint Nextel (S 8.70, -2.87), which followed a wireless subscriber report that triggered concerns about a material loss of market share and fueled a 5.2% decline in the telecom services sector, was certainly a key drag.
The same can be said for the health care sector, which continued its underperformance, losing 1.6%. The financial sector, though, remained the key pocket of weakness as it declined 1.7% on continued concerns that the bond insurers will lose their Triple A rating and perhaps trigger a dislocation in the municipal bond market and another chain reaction of write-downs in the financial sector.
On a related note, Fitch cut its rating on Ambac Financial and its affiliated entities. Specifically, it cut its Insurer financial strength rating to 'AA' from 'AAA' and its Long-term rating to 'A' from 'AA.' The move was widely anticipated after Ambac abandoned a plan to raise new capital.
In other developments, President Bush spoke about instituting a fiscal stimulus package that is built on broad-based tax relief and amounts to roughly 1.0% of GDP, which puts it in the neighborhood of $140 billion. The president didn't provide any specific details on how the plan would actually be carried out, noting that he has charged Treasury Secretary Paulson to be his point person in working on the details with Congress.
The lack of details at this juncture left the market somewhat circumspect, so the news about the potential for a fiscal stimulus package being implemented didn't have much beneficial impact for the market. Similarly, neither did a report that consumer sentiment, as measured by the Univ. of Michigan, picked up surprisingly in January to 80.5 from 75.5.
The Leading Indicators report was also released today and showed a decline of 0.2%. That marked the third consecutive decline, a signal some pundits believe is a harbinger of an impending recession. Currently, Briefing.com continues to think the economy will avert a recession.
For the week, the Dow, Nasdaq and S&P 500 dropped 4.0%, 4.1% and 5.4%, respectively.DJ30 -59.91 NASDAQ -6.88 SP500 -8.06 NASDAQ Dec/Adv/Vol 1924/1102/2.99 bln NYSE Dec/Adv/Vol 2029/1132/2.45 bln
3:30 pm : A recovery effot was short-lived as the major indices fall back toward their session lows. Tech (+0.1%) has given up almost all of its intraday gains.
As we head into the final half-hour of trading, the stock market is poised to end the week sharply lower. The Dow, Nasdaq and S&P 500 are down 4.4%, 4.3% and 5.8%, respectively, this week. All sectors are set to finish lower. Telecom (-9.2%), energy (-8.9%) and financials (-8.4%) were hit the hardest. Consumer discretionary (-2.2%) is set to post the smallest loss.
Looking to next week, the U.S. stock and bond markets will be closed on Monday in observance of Martin Luther King Jr. Day. Earnings season gets into full gear with 85 S&P 500 companies set to report.DJ30 -110.20 NASDAQ -13.41 SP500 -14.56 NASDAQ Dec/Adv/Vol 1942/1062/2.45 bln NYSE Dec/Adv/Vol 2079/1055/1.89 bln
3:00 pm : The Dow hits a minor new session low and then recovers a bit. The S&P 500 is trading at its lowest level since September 2006 and is down 16.6% from its all-time November 2007 high.
Market breadth is bearish. Decliners outpace advancers by a 2-to-1 margin on the NYSE and Nasdaq. New 52-week lows outpace new highs by 440-to-1 on the NYSE and by 114-to-1 on the Nasdaq. Volume is heavy today due to option expirations.DJ30 -105.19 NASDAQ -14.07 SP500 -15.08 NASDAQ Dec/Adv/Vol 2018/949/2.17 bln NYSE Dec/Adv/Vol 2143/998/1.68 bln
2:30 pm : The major indices continue to trade in negative territory with the Nasdaq extending its losses.
The S&P 500 is underperforming the other major indices with 314 of the 500 stocks declining. Sprint Nextel (S 8.54, -3.03), Citigroup (C 24.21, -0.75) and Intel (INTC 19.09, -0.24) are the most traded S&P 500 stocks this session.
Bloomberg reports Standard & Poor's placed Ambac's (ABK 6.39, +0.15) credit ratings under review after the company said this morning it is not proceeding with its planned $1 billion offering. Moody's placed Ambac's credit rating under review yesterday. Ambac will report earnings and hold a conference call Tuesday. The company already announced it expects up to a $32.83 per share net loss for the fourth quarter, and up to a $5.80 per share operating loss.
Just hitting the wires, Fitch Ratings cut Ambac's long-term rating to A from AA, and its financial strength to AA from AAA, according to Reuters.DJ30 -108.28 NASDAQ -16.56 SP500 -15.63 NASDAQ Dec/Adv/Vol 1833/1130/2.07 bln NYSE Dec/Adv/Vol 2087/1041/1.62 bln
2:00 pm : Buyers remain on the sidelines as the major indices trade in the red.
Commodities as a whole are holding pretty close to the unchanged mark. The CRB Index is down 0.02%. Some of the commodities that make up the index have had some bigger moves though. Sugar is down 3.7%, while copper is up 1.7%. Crude oil is basically flat.
In currency trading, the dollar is up 0.31% against a basket of currencies.DJ30 -69.34 NASDAQ -3.46 SP500 -11.19 NASDAQ Dec/Adv/Vol 1859/1076/1.92 bln NYSE Dec/Adv/Vol 2022/1088/1.49 bln
1:30 pm : Selling pressure picks up as the major indices fall back toward their session lows. The Nasdaq is back in the red.
Oil exploration and engineering experts Schlumberger (SLB 76.41, -6.10) is weighing on the energy sector (-1.1%) after the company reported earnings that fell short of expectations.
A CNBC commentator focused on the trouble with bond insurers, noting that credit downgrades could lead to further write-downs at financial firms. He also mentioned it has the potential to unwind deals, such as Bank of America's (BAC 35.52, -1.39) purchase of Countrywide (CFC 5.09, -0.39).DJ30 -76.25 NASDAQ -4.88 SP500 -12.46 NASDAQ Dec/Adv/Vol 1715/1211/1.78 bln NYSE Dec/Adv/Vol 1947/1143/1.38 bln
1:00 pm : Recovery efforts stall as the major indices fail to climb higher. The Nasdaq continues to hold a slight gain thanks to the outperformance of the tech sector (+1.1%).
Semiconductor company Advanced Micro Devices (AMD 7.00, +0.66) is posting a 10% gain after the company reported a smaller loss than expected. Revenue increased by 8% and gross margin improved by 8%.
Treasuries have pared a portion of their losses. The 10-year note is down 5 ticks, pushing its yield up to 3.64%.DJ30 -27.64 NASDAQ +2.36 SP500 -7.68 NASDAQ Dec/Adv/Vol 1833/1090/1.66 bln NYSE Dec/Adv/Vol 1905/1167/1.27 bln
12:30 pm : For now, selling pressure eases, as the Nasdaq recovers into the green. The Dow and S&P are trading with a loss, but have recovered off their worst levels. Buying interest has been broad-based.
Treasury Secretary Paulson said the objective of the stimulus package is broad-based tax relief for those who are paying taxes, noting that it worked in 2001 and in 2003.DJ30 -18.37 NASDAQ +3.02 SP500 -7.54 NASDAQ Dec/Adv/Vol 1895/1017/1.48 bln NYSE Dec/Adv/Vol 2166/898/1.16 bln
12:05 pm : It has been a disappointing day on Wall Street, after the stock market fell into the red despite reassuring earnings reports from two Dow bellwethers. Once again, fear that the financial sector still has further to decline weighed on sentiment.
Stocks opened on a high note after General Electric (GE 34.41, +1.20) reported in-line fourth quarter earnings, with higher than expected revenue and strong total orders.
As pre-announced on Monday, IBM (IBM 103.10, +2.00) reported strong earnings that topped expectations. Its stock is trading 2% higher this session, after the company projected 2008 earnings would be approximately $8.20 to $8.30 per share, well above the analysts' estimate of $7.92 per share. The stock is up 5.6% since its pre-announcement on Monday.
Financials (-3.5%) once again weighed on sentiment, leading the stock market into the red around 11:00 ET.
Washington Mutual (WM 12.53, +0.07) reported a larger than expected fourth quarter loss as the mortgage crisis weighed on the company. The company expects further weakening in the housing market. Its stock is actually trading higher, presumably on speculation that the company will be a takeover target.
Fannie Mae (-31.36, -3.64) is being clipped after being downgraded to Underperform from Equal Weight at Morgan Stanley. Morgan Stanley also cut its rating on the U.S. mortgage and specialty finance sector to cautious from in-line, according to Reuters.
The struggling bond insurers are again in focus. MBIA (MBI 7.36, -1.86) announced its Aaa credit rating was placed under review for a possible downgrade at Moody's Investors Services yesterday.
Yesterday, Ambac (ABK 6.42, +0.18) got hammered after it announced its Aaa credit rating was placed under review for a possible downgrade. Today, it announced it no longer plans to raise $1 billion to shore up its capital position, citing current market conditions as one of the main reasons for the decision.
Ambac and MBIA were downgraded to Hold from Buy at Citibank and Neutral from Buy at Banc of America.
The worry is that if bond insurers lose their credit rating, the debt they insure would also get a lower credit rating. This would cause another wave of write-downs from financial institutions.
Eight of the ten sectors are lower, led by declines in financials (-3.5%) and telecom (-6.4%). Sprint Nextel (S 8.45, -3.12) is weighing on telecom after reporting disappointing subscriber numbers and outlook, and announcing it is cutting 4,000 jobs.
President Bush talked about his economic stimulus package. He said it needs to be enacted as soon as possible, and should be 1% of GDP. The package would focus on tax relief and not government spending. It did little to help the market, as stocks fell to fresh lows after his speech.
On the economic front, leading indicators came in slightly lower than expected while the University of Michigan consumer sentiment beat expectations .DJ30 -90.80 NASDAQ -13.66 SP500 -15.87 NASDAQ Dec/Adv/Vol 1854/1017/1.27 bln NYSE Dec/Adv/Vol 1834/1199/991 mln
11:30 am : The S&P 500 falls into the red as the financial sector extends its losses (-2.8%). A reversal in the energy sector (-0.8%) is also playing a role in the weakness. There has not been a specific catalyst for the change in sentiment, but presumably there is continued fear that bond insurers may lose their Aaa credit ratings.
There has been a broad-based decline within the financial sector, with 17 of the 19 groups now in the red. There is notable weakness in multi-line insurance (-5.5%), life & health insurance (-4.5%) and thrifts & mortgages (-4.2%).
Volume is heavy today due to options expirations.
Bush is about to speak on the economy.DJ30 +9.84 NASDAQ +4.05 SP500 -5.17 NASDAQ Dec/Adv/Vol 1497/1314/1.02 bln NYSE Dec/Adv/Vol 1528/1462/908 mln
11:00 am : Stocks retreat to their worst level of the session, led by a reversal in the financial sector (-1.2%).
Of the sector's 19 industry groups, 12 are in the red. Multi-line insurance (-2.7%) is the main laggard as AIG (AIG 52.70, -1.57) sheds 2.9%. Consumer finance (+2.9%) is providing leadership. Financials are down 12% in the first three weeks of trading in 2008.DJ30 +94.65 NASDAQ +20.60 SP500 +6.41 NASDAQ Dec/Adv/Vol 1249/1502/824 mln NYSE Dec/Adv/Vol 1097/1844/669 mln
10:30 am : Stocks climb to fresh highs and then pull back. Treasury bonds are under some selling pressure this session, which follows their strong gains yesterday.
The White House said that President Bush is going to talk about the size of the economic stimulus package in his remarks at 11:50 ET, according to Reuters. Part of the President's plan will reportedly include tax rebates of as much as $800 for individuals and $1600 for couples. Yesterday, Fed Chairman Bernanke gave support for a fiscal stimulus package, as long is it is efficient, temporary, and implemented quickly.DJ30 +132.36 NASDAQ +28.80 SP500 +11.43 NASDAQ Dec/Adv/Vol 1110/1538/600 mln NYSE Dec/Adv/Vol 1202/1624/493 mln
10:05 am : The stock market drifted off its highs, and then gets a boost on a pair of economic reports.
Just hitting the wires, December leading indicators fell 0.2%, this follows November's 0.4% decline. Economists expected a 0.1% drop. The January preliminary University of Michigan Confidence came in at 80.5, which is higher than the consensus estimate that predicted a reading of 74.5.
Seven of the ten economic are posting a gain. Industrials (+2.1%) are providing leadership thanks to General Electric's (GE 34.45, +1.24) reassuring earnings report. Telecom (-1.9%) is the main laggard as Sprint Nextel (S 9.36, -2.21) gets hammered. Sprint is down 19% after the company said it anticipates continued downward pressure on subscriber trends, revenue and profitably in 2008. The company is cutting 4,000 jobs and closing 125 retail stores.DJ30 +116.51 NASDAQ +18.20 SP500 +8.45 NASDAQ Dec/Adv/Vol 793/1608/305 mln
09:40 am : The stock market opens on a high note, but still has a long way to go to make up Thursday's share declines, when the Dow shed 307 points.
Underpinning Friday's positive open is in-line General Electric (GE) fourth quarter earnings, with higher than expected revenue and strong total orders. IBM (IBM) reported strong earnings that topped expectations, although that was already expected as the company pre-announced its results on Monday. It stock is still getting a nice boost though, after the company issued 2008 earnings guidance above the consensus estimate.DJ30 +129.98 NASDAQ +20.44 SP500 +10.75
09:14 am : S&P futures vs fair value: +16.1. Nasdaq futures vs fair value: +23.5.
09:00 am : S&P futures vs fair value: +19.0. Nasdaq futures vs fair value: +25.7. Futures are off their best levels, but still point to a sharply higher open. Two economic reports are set for release at 10:00 ET, including the Leading Indicators report for December and the preliminary University of Michigan Consumer Sentiment report for January
08:32 am : S&P futures vs fair value: +20.5. Nasdaq futures vs fair value: +25.5. It is still shaping up to be a strong start for the stock market. IBM (IBM) and General electric (GE) are both significantly higher in pre-market trading.
08:01 am : S&P futures vs fair value: +20.5. Nasdaq futures vs fair value: +27.5. Stocks are set for a rebound after Thursday’s sharp decline. General Electric (GE) posted in-line fourth quarter earnings of $0.68 and reaffirmed its full year guidance. IBM (IBM) had strong earnings, but that was already expected as the company pre-announced its results earlier this week. Meanwhile, President Bush is going to unveil his fiscal stimulus plan today, according to reports.
07:51 am : S&P futures vs fair value: +17.7. Nasdaq futures vs fair value: +21.2.
07:45 am : S&P futures vs fair value: +19.1. Nasdaq futures vs fair value: +22.5.
06:20 am : FTSE...5984.30...+81.90...+1.4%. DAX...7419.15...+5.62...+0.1%.
06:20 am : Nikkei...13861.29...+77.84...+0.6%. Hang Seng...25201.87...+86.89...+0.3%.
http://biz.yahoo.com/mu/update.html
4:25 pm : It was another exhausting day of trading on Friday as the major indices moved in wide ranges, driven sharply higher at the open by reassuring earnings news from General Electric (GE 34.31, +1.10) and IBM (IBM 103.40, +2.30), and then surrendering all of those gains and then some in a mid-morning selloff that lacked a specific news catalyst.
In essence, it was more of the same as concerns about a possible recession and the troubled state of bond insurers Ambac Financial (ABK 6.20, -0.04) and MBIA (MBI 8.55, -0.67) continued to weigh on sentiment and canceled the rally effort.
For the Dow, Nasdaq and S&P 500, the intraday swings between their high and low point were 318, 61, and 28 points, respectively. Volume was very heavy once again, bolstered in part by the monthly expiration of stock options and index options.
Although the major indices ended the day in negative territory, both GE and IBM closed the session higher. In the face of some dour reports on the U.S. economy, investors were heartened that GE reaffirmed its 2008 EPS growth target of at least 10% and that IBM's 2008 EPS growth guidance of 15% to 16% exceeded consensus expectations.
Their strength helped limit the losses in the broader market, but a 25% decline in Sprint Nextel (S 8.70, -2.87), which followed a wireless subscriber report that triggered concerns about a material loss of market share and fueled a 5.2% decline in the telecom services sector, was certainly a key drag.
The same can be said for the health care sector, which continued its underperformance, losing 1.6%. The financial sector, though, remained the key pocket of weakness as it declined 1.7% on continued concerns that the bond insurers will lose their Triple A rating and perhaps trigger a dislocation in the municipal bond market and another chain reaction of write-downs in the financial sector.
On a related note, Fitch cut its rating on Ambac Financial and its affiliated entities. Specifically, it cut its Insurer financial strength rating to 'AA' from 'AAA' and its Long-term rating to 'A' from 'AA.' The move was widely anticipated after Ambac abandoned a plan to raise new capital.
In other developments, President Bush spoke about instituting a fiscal stimulus package that is built on broad-based tax relief and amounts to roughly 1.0% of GDP, which puts it in the neighborhood of $140 billion. The president didn't provide any specific details on how the plan would actually be carried out, noting that he has charged Treasury Secretary Paulson to be his point person in working on the details with Congress.
The lack of details at this juncture left the market somewhat circumspect, so the news about the potential for a fiscal stimulus package being implemented didn't have much beneficial impact for the market. Similarly, neither did a report that consumer sentiment, as measured by the Univ. of Michigan, picked up surprisingly in January to 80.5 from 75.5.
The Leading Indicators report was also released today and showed a decline of 0.2%. That marked the third consecutive decline, a signal some pundits believe is a harbinger of an impending recession. Currently, Briefing.com continues to think the economy will avert a recession.
For the week, the Dow, Nasdaq and S&P 500 dropped 4.0%, 4.1% and 5.4%, respectively.DJ30 -59.91 NASDAQ -6.88 SP500 -8.06 NASDAQ Dec/Adv/Vol 1924/1102/2.99 bln NYSE Dec/Adv/Vol 2029/1132/2.45 bln
3:30 pm : A recovery effot was short-lived as the major indices fall back toward their session lows. Tech (+0.1%) has given up almost all of its intraday gains.
As we head into the final half-hour of trading, the stock market is poised to end the week sharply lower. The Dow, Nasdaq and S&P 500 are down 4.4%, 4.3% and 5.8%, respectively, this week. All sectors are set to finish lower. Telecom (-9.2%), energy (-8.9%) and financials (-8.4%) were hit the hardest. Consumer discretionary (-2.2%) is set to post the smallest loss.
Looking to next week, the U.S. stock and bond markets will be closed on Monday in observance of Martin Luther King Jr. Day. Earnings season gets into full gear with 85 S&P 500 companies set to report.DJ30 -110.20 NASDAQ -13.41 SP500 -14.56 NASDAQ Dec/Adv/Vol 1942/1062/2.45 bln NYSE Dec/Adv/Vol 2079/1055/1.89 bln
3:00 pm : The Dow hits a minor new session low and then recovers a bit. The S&P 500 is trading at its lowest level since September 2006 and is down 16.6% from its all-time November 2007 high.
Market breadth is bearish. Decliners outpace advancers by a 2-to-1 margin on the NYSE and Nasdaq. New 52-week lows outpace new highs by 440-to-1 on the NYSE and by 114-to-1 on the Nasdaq. Volume is heavy today due to option expirations.DJ30 -105.19 NASDAQ -14.07 SP500 -15.08 NASDAQ Dec/Adv/Vol 2018/949/2.17 bln NYSE Dec/Adv/Vol 2143/998/1.68 bln
2:30 pm : The major indices continue to trade in negative territory with the Nasdaq extending its losses.
The S&P 500 is underperforming the other major indices with 314 of the 500 stocks declining. Sprint Nextel (S 8.54, -3.03), Citigroup (C 24.21, -0.75) and Intel (INTC 19.09, -0.24) are the most traded S&P 500 stocks this session.
Bloomberg reports Standard & Poor's placed Ambac's (ABK 6.39, +0.15) credit ratings under review after the company said this morning it is not proceeding with its planned $1 billion offering. Moody's placed Ambac's credit rating under review yesterday. Ambac will report earnings and hold a conference call Tuesday. The company already announced it expects up to a $32.83 per share net loss for the fourth quarter, and up to a $5.80 per share operating loss.
Just hitting the wires, Fitch Ratings cut Ambac's long-term rating to A from AA, and its financial strength to AA from AAA, according to Reuters.DJ30 -108.28 NASDAQ -16.56 SP500 -15.63 NASDAQ Dec/Adv/Vol 1833/1130/2.07 bln NYSE Dec/Adv/Vol 2087/1041/1.62 bln
2:00 pm : Buyers remain on the sidelines as the major indices trade in the red.
Commodities as a whole are holding pretty close to the unchanged mark. The CRB Index is down 0.02%. Some of the commodities that make up the index have had some bigger moves though. Sugar is down 3.7%, while copper is up 1.7%. Crude oil is basically flat.
In currency trading, the dollar is up 0.31% against a basket of currencies.DJ30 -69.34 NASDAQ -3.46 SP500 -11.19 NASDAQ Dec/Adv/Vol 1859/1076/1.92 bln NYSE Dec/Adv/Vol 2022/1088/1.49 bln
1:30 pm : Selling pressure picks up as the major indices fall back toward their session lows. The Nasdaq is back in the red.
Oil exploration and engineering experts Schlumberger (SLB 76.41, -6.10) is weighing on the energy sector (-1.1%) after the company reported earnings that fell short of expectations.
A CNBC commentator focused on the trouble with bond insurers, noting that credit downgrades could lead to further write-downs at financial firms. He also mentioned it has the potential to unwind deals, such as Bank of America's (BAC 35.52, -1.39) purchase of Countrywide (CFC 5.09, -0.39).DJ30 -76.25 NASDAQ -4.88 SP500 -12.46 NASDAQ Dec/Adv/Vol 1715/1211/1.78 bln NYSE Dec/Adv/Vol 1947/1143/1.38 bln
1:00 pm : Recovery efforts stall as the major indices fail to climb higher. The Nasdaq continues to hold a slight gain thanks to the outperformance of the tech sector (+1.1%).
Semiconductor company Advanced Micro Devices (AMD 7.00, +0.66) is posting a 10% gain after the company reported a smaller loss than expected. Revenue increased by 8% and gross margin improved by 8%.
Treasuries have pared a portion of their losses. The 10-year note is down 5 ticks, pushing its yield up to 3.64%.DJ30 -27.64 NASDAQ +2.36 SP500 -7.68 NASDAQ Dec/Adv/Vol 1833/1090/1.66 bln NYSE Dec/Adv/Vol 1905/1167/1.27 bln
12:30 pm : For now, selling pressure eases, as the Nasdaq recovers into the green. The Dow and S&P are trading with a loss, but have recovered off their worst levels. Buying interest has been broad-based.
Treasury Secretary Paulson said the objective of the stimulus package is broad-based tax relief for those who are paying taxes, noting that it worked in 2001 and in 2003.DJ30 -18.37 NASDAQ +3.02 SP500 -7.54 NASDAQ Dec/Adv/Vol 1895/1017/1.48 bln NYSE Dec/Adv/Vol 2166/898/1.16 bln
12:05 pm : It has been a disappointing day on Wall Street, after the stock market fell into the red despite reassuring earnings reports from two Dow bellwethers. Once again, fear that the financial sector still has further to decline weighed on sentiment.
Stocks opened on a high note after General Electric (GE 34.41, +1.20) reported in-line fourth quarter earnings, with higher than expected revenue and strong total orders.
As pre-announced on Monday, IBM (IBM 103.10, +2.00) reported strong earnings that topped expectations. Its stock is trading 2% higher this session, after the company projected 2008 earnings would be approximately $8.20 to $8.30 per share, well above the analysts' estimate of $7.92 per share. The stock is up 5.6% since its pre-announcement on Monday.
Financials (-3.5%) once again weighed on sentiment, leading the stock market into the red around 11:00 ET.
Washington Mutual (WM 12.53, +0.07) reported a larger than expected fourth quarter loss as the mortgage crisis weighed on the company. The company expects further weakening in the housing market. Its stock is actually trading higher, presumably on speculation that the company will be a takeover target.
Fannie Mae (-31.36, -3.64) is being clipped after being downgraded to Underperform from Equal Weight at Morgan Stanley. Morgan Stanley also cut its rating on the U.S. mortgage and specialty finance sector to cautious from in-line, according to Reuters.
The struggling bond insurers are again in focus. MBIA (MBI 7.36, -1.86) announced its Aaa credit rating was placed under review for a possible downgrade at Moody's Investors Services yesterday.
Yesterday, Ambac (ABK 6.42, +0.18) got hammered after it announced its Aaa credit rating was placed under review for a possible downgrade. Today, it announced it no longer plans to raise $1 billion to shore up its capital position, citing current market conditions as one of the main reasons for the decision.
Ambac and MBIA were downgraded to Hold from Buy at Citibank and Neutral from Buy at Banc of America.
The worry is that if bond insurers lose their credit rating, the debt they insure would also get a lower credit rating. This would cause another wave of write-downs from financial institutions.
Eight of the ten sectors are lower, led by declines in financials (-3.5%) and telecom (-6.4%). Sprint Nextel (S 8.45, -3.12) is weighing on telecom after reporting disappointing subscriber numbers and outlook, and announcing it is cutting 4,000 jobs.
President Bush talked about his economic stimulus package. He said it needs to be enacted as soon as possible, and should be 1% of GDP. The package would focus on tax relief and not government spending. It did little to help the market, as stocks fell to fresh lows after his speech.
On the economic front, leading indicators came in slightly lower than expected while the University of Michigan consumer sentiment beat expectations .DJ30 -90.80 NASDAQ -13.66 SP500 -15.87 NASDAQ Dec/Adv/Vol 1854/1017/1.27 bln NYSE Dec/Adv/Vol 1834/1199/991 mln
11:30 am : The S&P 500 falls into the red as the financial sector extends its losses (-2.8%). A reversal in the energy sector (-0.8%) is also playing a role in the weakness. There has not been a specific catalyst for the change in sentiment, but presumably there is continued fear that bond insurers may lose their Aaa credit ratings.
There has been a broad-based decline within the financial sector, with 17 of the 19 groups now in the red. There is notable weakness in multi-line insurance (-5.5%), life & health insurance (-4.5%) and thrifts & mortgages (-4.2%).
Volume is heavy today due to options expirations.
Bush is about to speak on the economy.DJ30 +9.84 NASDAQ +4.05 SP500 -5.17 NASDAQ Dec/Adv/Vol 1497/1314/1.02 bln NYSE Dec/Adv/Vol 1528/1462/908 mln
11:00 am : Stocks retreat to their worst level of the session, led by a reversal in the financial sector (-1.2%).
Of the sector's 19 industry groups, 12 are in the red. Multi-line insurance (-2.7%) is the main laggard as AIG (AIG 52.70, -1.57) sheds 2.9%. Consumer finance (+2.9%) is providing leadership. Financials are down 12% in the first three weeks of trading in 2008.DJ30 +94.65 NASDAQ +20.60 SP500 +6.41 NASDAQ Dec/Adv/Vol 1249/1502/824 mln NYSE Dec/Adv/Vol 1097/1844/669 mln
10:30 am : Stocks climb to fresh highs and then pull back. Treasury bonds are under some selling pressure this session, which follows their strong gains yesterday.
The White House said that President Bush is going to talk about the size of the economic stimulus package in his remarks at 11:50 ET, according to Reuters. Part of the President's plan will reportedly include tax rebates of as much as $800 for individuals and $1600 for couples. Yesterday, Fed Chairman Bernanke gave support for a fiscal stimulus package, as long is it is efficient, temporary, and implemented quickly.DJ30 +132.36 NASDAQ +28.80 SP500 +11.43 NASDAQ Dec/Adv/Vol 1110/1538/600 mln NYSE Dec/Adv/Vol 1202/1624/493 mln
10:05 am : The stock market drifted off its highs, and then gets a boost on a pair of economic reports.
Just hitting the wires, December leading indicators fell 0.2%, this follows November's 0.4% decline. Economists expected a 0.1% drop. The January preliminary University of Michigan Confidence came in at 80.5, which is higher than the consensus estimate that predicted a reading of 74.5.
Seven of the ten economic are posting a gain. Industrials (+2.1%) are providing leadership thanks to General Electric's (GE 34.45, +1.24) reassuring earnings report. Telecom (-1.9%) is the main laggard as Sprint Nextel (S 9.36, -2.21) gets hammered. Sprint is down 19% after the company said it anticipates continued downward pressure on subscriber trends, revenue and profitably in 2008. The company is cutting 4,000 jobs and closing 125 retail stores.DJ30 +116.51 NASDAQ +18.20 SP500 +8.45 NASDAQ Dec/Adv/Vol 793/1608/305 mln
09:40 am : The stock market opens on a high note, but still has a long way to go to make up Thursday's share declines, when the Dow shed 307 points.
Underpinning Friday's positive open is in-line General Electric (GE) fourth quarter earnings, with higher than expected revenue and strong total orders. IBM (IBM) reported strong earnings that topped expectations, although that was already expected as the company pre-announced its results on Monday. It stock is still getting a nice boost though, after the company issued 2008 earnings guidance above the consensus estimate.DJ30 +129.98 NASDAQ +20.44 SP500 +10.75
09:14 am : S&P futures vs fair value: +16.1. Nasdaq futures vs fair value: +23.5.
09:00 am : S&P futures vs fair value: +19.0. Nasdaq futures vs fair value: +25.7. Futures are off their best levels, but still point to a sharply higher open. Two economic reports are set for release at 10:00 ET, including the Leading Indicators report for December and the preliminary University of Michigan Consumer Sentiment report for January
08:32 am : S&P futures vs fair value: +20.5. Nasdaq futures vs fair value: +25.5. It is still shaping up to be a strong start for the stock market. IBM (IBM) and General electric (GE) are both significantly higher in pre-market trading.
08:01 am : S&P futures vs fair value: +20.5. Nasdaq futures vs fair value: +27.5. Stocks are set for a rebound after Thursday’s sharp decline. General Electric (GE) posted in-line fourth quarter earnings of $0.68 and reaffirmed its full year guidance. IBM (IBM) had strong earnings, but that was already expected as the company pre-announced its results earlier this week. Meanwhile, President Bush is going to unveil his fiscal stimulus plan today, according to reports.
07:51 am : S&P futures vs fair value: +17.7. Nasdaq futures vs fair value: +21.2.
07:45 am : S&P futures vs fair value: +19.1. Nasdaq futures vs fair value: +22.5.
06:20 am : FTSE...5984.30...+81.90...+1.4%. DAX...7419.15...+5.62...+0.1%.
06:20 am : Nikkei...13861.29...+77.84...+0.6%. Hang Seng...25201.87...+86.89...+0.3%.
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