Options Wonderland

[3xBuBu]

Market Update 080214
http://biz.yahoo.com/mu/update.html
4:10 pm : Stocks posted a loss today with all three major indices losing more than 1% in today's session. Though the market opened modestly higher, stocks remained well into negative territory for the remainder of the day. Weighing on stocks was a negative response to comments from Fed Chairman Bernanke, along with weakness in the financial and technology sectors. Despite the downturn, stocks remain more than 1% higher for the week.

Fed Chairman Bernanke, Treasury Secretary Paulson, and SEC Chairman Cox testified before the Senate Banking Committee this afternoon. Bernanke alluded to the possibility the U.S. is nearing a recession and continued to emphasize downside risks to the economy, indicating the Fed will likely continue to ease interest rates. Bernanke and Treasury Secretary Paulson continued to forecast slow growth. The Fed Chairman stated that financial companies will likely face further write-downs. Bernanke's comments had a noticeably negative effect on financial stocks.

FGIC has become the first major bond insurer to lose its AAA rating. Many pundits believe the loss of a major bond insurer's AAA rating could lead to a wave of further downgrades in the bond market. In turn, financial institutions could face another round of write-downs. Moody's noted, however, MBIA (MBI 12.62, +0.98) and Ambac (ABK 10.53, +1.16) are better positioned from a capitalization and business franchise perspective; their shares climbed higher in response to the comments. News of the downgrade sent stocks to their worst levels of the session, with selling interest concentrated in financials.

Within the tech sector, Intel (INTC 20.46, -0.75) was today's main laggard in the Dow. The company was removed from Goldman Sachs' Conviction Buy list due to economic concerns, according to the Associated Press. NVIDIA (NVDA 22.61, -4.41) reported earnings that bested expectations, but details of the company's report displeased market participants.

Comcast (CMCSA 19.24, +1.43) earned $0.20 per share in its most recent quarter. The result topped the consensus EPS forecast by $0.03. The company also announced it will begin issuing a quarterly dividend that translates to a 1.4% annual dividend yield relative to yesterday's closing price. That, along with repurchasing up to $6.9 billion in outstanding stock by 2009, reflects the company's renewed commitment to return capital to shareholders.

Jobless claims for the week ended Feb. 9 fell to 348,000 from the previous week's reading of 357,000. The number of filings was essentially in-line with economists' expectations and should be seen as a good sign since it is below levels that typically precede a recession. Additionally, the December trade deficit was better than expected. The deficit fell to $58.8 billion, down from $63.1 billion, suggesting an upward revision to the net exports component of fourth quarter GDP.

Crude prices finished the day more than $2.00 higher. The commodity closed at $95.43 per barrel. DJ30 -175.26 NASDAQ -41.39 NQ100 -1.9% R2K -2.3% SP400 -1.6% SP500 -18.35 NASDAQ Dec/Adv/Vol 2109/754/2.23 bln NYSE Dec/Adv/Vol 2465/681/1.40 bln

3:30 pm : Stocks have made a late-day pull off their session lows. Financials remain the session's main laggard, along with technology.

Despite a downgrade to FGIC's credit rating from AAA to A3, fellow bond insurers MBIA (MBI 12.88, +1.24) and Ambac (ABK 10.74, +1.37) are both trading higher. Ambac's CEO stated there is no question of the company's solvency, as reported by CNBC.DJ30 -106.73 NASDAQ -29.40 SP500 -9.68 NASDAQ Dec/Adv/Vol 2030/827/1.89 bln NYSE Dec/Adv/Vol 2356/774/1.11 bln

3:00 pm : Stocks have pushed lower to their worst levels of the session on news that FGIC has become the first major bond insurer to lose its coveted AAA rating, according to Reuters. Moody's cut the company's rating to A3.

Financials have been among today's most active stocks. Six financial firms are present in the ten most heavily traded names.DJ30 -153.23 NASDAQ -38.59 SP500 -14.96 NASDAQ Dec/Adv/Vol 2091/745/1.70 bln NYSE Dec/Adv/Vol 2441/689/977 mln

2:30 pm : Stocks remain off their session lows, but the major indices remain well into negative territory.

The negative sentiment surrounding stocks is primarily restricted to the U.S. The Dow Jones World Index, excluding U.S., is currently trading 1.5% higher. The advance stems from a stronger than expected economic growth report from Japan. Japan's Nikkei Average closed 3.7% higher.

Chicago Fed President Evans stated that recent rate reductions should help boost growth in the latter part of this year and into 2009, despite current headwinds, according to Dow Jones. DJ30 -118.92 NASDAQ -29.43 SP500 -11.02 NASDAQ Dec/Adv/Vol 1958/855/1.54 bln NYSE Dec/Adv/Vol 2320/791/886 mln

2:00 pm : Stocks have taken a step off their session lows, though pessimism remains prevalent. Declining issues outpace advancers by more than 3-to-1 on the NYSE.

The clothing and accessories industry (-3.7%) has been trading lower than the broader market. This morning Liz Claiborne (LIZ 18.73, -3.70) pre-announced a fourth quarter earnings range that fell well short of the consensus estimate.DJ30 -145.75 NASDAQ -34.51 SP500 -14.87 NASDAQ Dec/Adv/Vol 2001/813/1.43 bln NYSE Dec/Adv/Vol 2375/720/810 mln

1:30 pm : The major indices take out new lows. There is relative weakness in materials, transports, retail and housing. The Russell 2000 is now down over 2%.

New York Insurance Dept. Superintendent Eric Dinallo is considering splitting bond insurers, according to Bloomberg.com. The plan would split the municipal and other healthy parts of the bond insurance companies with the structured vehicles that have been under pressure. MBIA (MBI 11.90, +0.26) said earlier today that no government bailout is needed. There will be more testimony on the bond insurers later this session, including CEOs from the major companies.

The Senate Banking Commitee question and answer session has wrapped up.DJ30 -142.41 NASDAQ -35.39 SP500 -14.56 NASDAQ Dec/Adv/Vol 1992/795/1.32 bln NYSE Dec/Adv/Vol 2395/693/754 mln

1:00 pm : The major indices fall back toward their session lows. Once again large-cap tech names are struggling, as indicated by the underperformance of the Nasdaq 100.

Small-cap stocks are underperforming their large-cap counterparts. The Russell 2000 is down 1.6% and the S&P 600 is down 1.4%.DJ30 -92.18 NASDAQ -25.50 NQ100 -1.3% SP500 -10.56 NASDAQ Dec/Adv/Vol 1913/879/1.17 bln NYSE Dec/Adv/Vol 2231/830/641 mln

12:30 pm : The major indices are off their worst levels, but continue to post decent sized losses. Industrials, tech and financials continue to show weakness.

Treasuries are also facing some selling pressure. The 10-year note is down 16 ticks.DJ30 -80.72 NASDAQ -23.13 SP500 -8.24 NASDAQ Dec/Adv/Vol 1911/838/1.09 bln NYSE Dec/Adv/Vol 2240/811/624 mln

12:00 pm : At midday, the major indices are trading near their worst levels of the session, with notable weakness in tech and financials. Dominating news is ongoing testimony in front of the Senate Banking Committee by Fed Chairman Bernanke, Treasury Secretary Paulson, and SEC Chairman Cox.

Stocks fell to their worst levels of the session in conjunction with the testimony. Of note, financials saw a pullback after Bernanke said financial companies will likely face more write-downs.

Bernanke continues to emphasize downside risks to the economy, indicating the Fed will likely continue to ease interest rates. Bernanke was asked if he sees U.S. banks failing. He responded that the Fed's main concern is liquidity issues, noting that banks have strong capital positions and there is no immediate risk of insolvency.

Financial companies are weighing on the market. In addition to Bernanke's comments, weighing on financials is a cut to earnings estimates on several investment bank & brokerages at Lehman Brothers. Some companies getting hit hard include Bear Stearns (BSC 77.73, -2.80) and Goldman Sachs (GS 177.39, -2.79). Wachovia (WB 33.75, -1.30) and Wells Fargo (WFC 29.84, -0.63) are also under pressure.

Bellwether Intel (INTC 20.60, -0.61) is one the main laggards this session. Earlier today, Goldman Sachs took Intel off its Conviction Buy list, according to CNBC. Intel has led tech and the Nasdaq into laggard positions.

Comcast (CMSCA 19.01, +1.20) is a standout this session. The cable company reported fourth quarter earnings of $0.20, topping the consensus estimate by $0.03. Much of its success is due to its triple play offering, which bundles voice, data, and video services. The company also announced a quarterly dividend of $0.0625 per share, which translates to an annual yield of 1.4% at yesterday's closing price.

Energy is providing leadership once again as crude crosses $95 per barrel. Crude oil is up $1.79 on the day.

On the economic front, jobless claims for the week ended Feb. 9 fell to 348K from the previous reading of 357K. The number was basically in-line with expectations, but should be seen as a good sign as it is below levels that typically precede a recession. Separately, the December trade deficit fell to $58.8 billion from $63.1 billion. This suggests an upward revision to the net exports component of GDP. DJ30 -100.79 NASDAQ -25.18 SP500 -10.46 NASDAQ Dec/Adv/Vol 1873/850/966 mln NYSE Dec/Adv/Vol 2243/769/557 mln

11:30 am : The major indices fall to their worst levels of the session. Weakness is broad-based, with notable selling pressure among financial and tech stocks.

Bernanke was asked if he sees U.S. banks failing. He responded that the Fed's main concern is liquidity issues, noting that banks have strong capital positions and he does not currently foresee any risk of insolvency.

Comcast (CMCSA 18.96, +1.15) is a standout this session. The cable company reported fourth quarter earnings of $0.20, topping the consensus estimate by $0.03. Much of its success is due to its triple play offering, which bundles voice, data, and video services. The company also announced a quarterly dividend of $0.0625 per share, which translates to an annual yield of 1.4%.DJ30 -105.18 NASDAQ -23.65 SP500 -10.67 NASDAQ Dec/Adv/Vol 1798/873/827 mln NYSE Dec/Adv/Vol 2158/831/478 mln

11:00 am : The stock market falls near its worst level, although losses remain modest.

According to the National Association of Realtors, fourth quarter median home prices fell 5.8% compared to last year. The West was hit the hardest with a 8.7% slide, while the Midwest performed the best with a 3.2% loss. The median home price in Lansing, MI fell most, a 18.8% decline.

Bernanke and Paulson are currently answering questions, and have completed their prepared speeches.DJ30 -60.72 NASDAQ -11.78 SP500 -5.12 NASDAQ Dec/Adv/Vol 1475/1120/597 mln NYSE Dec/Adv/Vol 1842/1047/300 mln

10:30 am : The major indices regain some ground as they trade with a slight loss. Energy is managing to buck the negative trend this session. A $1.18 gain in crude oil prices to $94.38 is giving the sector support.

Fed Chairman Bernanke has not given the market any revelations in his prepared comments, and as a result the market has had a muted response thus far. He continues to emphasize downside risks, indicating the Fed is likely to continue to ease rates. Of note, he said weakening of bond insurers are forcing banks to take markdowns, which is adding to market strains, according to Reuters.

Treasury Secretary Paulson is currently speaking.
DJ30 -18.66 NASDAQ -0.13 SP500 -2.84 NASDAQ Dec/Adv/Vol 1463/1021/415 mln NYSE Dec/Adv/Vol 1792/1022/192 mln

10:00 am : The major indices are off their lows, but remain in the red. Fed Chairman Bernanke and Treasury Secretary Paulson are set to testify before the Senate Banking Committee as this comment gets posted.

The two most influential sectors, financials and tech, are laggards this morning. The market will have a hard time making a significant advance without the support of at least one of these heavily-weighted sectors.

Bellwether Intel (INTC 20.60, -0.61) is playing a large role in the tech sector's weakness. Earlier today, Goldman Sachs took Intel off its Conviction Buy list, according to CNBC. DJ30 -37.55 NASDAQ -4.67 SP500 -2.29 NASDAQ Dec/Adv/Vol 1344/926/177 mln

09:45 am : Stocks open on a flat note and then fall into the red. Losses remain modest, with the Nasdaq underperforming after providing leadership yesterday.

On the economic front, Jobless claims for the week ended Feb. 9 fell to 348K from the previous reading of 357K. The number was basically in-line with expectations, but should be seen as a good sign as it is below levels that typically precede a recession. Separately, the December trade deficit fell to $58.8 billion from $63.1 billion. This suggests an upward revision to the net exports component of GDP.DJ30 -27.47 NASDAQ -10.88 SP500 -2.12

09:15 am : S&P futures vs fair value: +0.9. Nasdaq futures vs fair value: +1.5.

09:01 am : S&P futures vs fair value: +0.1. Nasdaq futures vs fair value: +1.0. S&P futures gain a few points and now suggest a flat open. Comcast (CMCSA) is helping to keep sellers at bay after topping its earnings expectations and issuing a dividend.

08:33 am : S&P futures vs fair value: -1.8. Nasdaq futures vs fair value: +1.3. Stock futures have a muted reaction to some generally in-line economic data. Jobless claims for the week ended Feb. 9 fell to 349K. Economists expected a reading of 350K. The December trade balance was close to expected at -58.8 billion compared to the estimate of -62.0 billion

08:00 am : S&P futures vs fair value: -3.0. Nasdaq futures vs fair value: -2.0. It’s shaping up to be a flat start for the stock market. The key event of the day will be testimony before the Senate Banking Commitee by Fed Chairman Bernanke, Treasury Secretary Paulson and SEC Chairman Cox. The weekly initial jobless claims are set for release at 8:30.

06:18 am : S&P futures vs fair value: -1.6. Nasdaq futures vs fair value: -1.8.

06:17 am : FTSE...5904.40...+24.30...+0.4%. DAX...7003.94...+30.27...+0.4%.

06:17 am : Nikkei...13626.45...+558.15...+4.3%. Hang Seng...24021.68...+852.13...+3.7%.