AI
Tuesday, February 26, 2008 7:16:46 PM
Market Update 080226
http://biz.yahoo.com/mu/update.html
4:30 pm : The stock market was provided several excuses to sell off on Tuesday, yet it soldiered on and added to Monday's gains.
Dow component IBM (IBM 114.38, +4.30) led the troops in the battle as it sparked a broad-based rally with its announcement that the company's board of directors authorized an additional $15 billion for its stock repurchase program.
IBM said it expects to spend $12 billion in 2008 on stock repurchases that it will fund from cash from operations. Given the expected buyback activity, IBM bumped up its 2008 EPS forecast by $0.05, noting it should earn at least $8.25 per share versus prior guidance of $8.20 to $8.30.
The technology sector drafted off IBM's encouraging news and carried the broader market higher along with the retailers, many of which rallied following a mixed batch of earnings results from the likes of Home Depot (HD 28.83, +0.01), Target (TGT 54.89, +1.64), Macy's (M 26.52, +1.76), Nordstrom (JWN 38.46, +1.48), AutoZone (AZO 124.93, +7.56) and RadioShack (RSH 19.13, +3.39).
On balance, the retail rally was driven by a sense that bad news had already been priced in and a measure of relief that the results weren't worse than feared. Home Depot typified this response as it ended the day little changed despite missing analysts' consensus fourth quarter EPS estimate by three cents and warning that it anticipates earnings from continuing operations to decline 19% to 24% on a per share basis in 2008.
The disappointing report from Home Depot was one of the excuses the market could have used to sell off. Tuesday's economic releases provided plenty of excuses too.
The Producer Price Index offered the most stirring excuse since it piqued inflation concerns with a 1.0% reading in total PPI that took the year-over-year gain to 7.4%, the highest rate of increase since October 1981. Core-PPI, which excludes food and energy, jumped 0.4%, leaving the year-over-year increase at 2.3%.
Fittingly, commodity prices continued to move higher Tuesday, as evidenced by the 1.1% gain in the CRB Index. Wheat prices, which surged 8.0% to $12.14 per bushel, led the advance. Oil prices increased 1.9% to $101.09 per barrel, marking a new, non-inflation adjusted closing high.
Strikingly, neither the PPI data nor the commodity inflation caused much fallout in either the stock or bond markets. Participants had already digested the CPI data for January, so it wasn't entirely surprising that the PPI data were worse than expected. Fed Vice Chairman Donald Kohn, meanwhile, gave a speech in which he said he doesn't expect elevated inflation rates to last and that credit market turmoil and growth risks are the greater threat.
On that note, the Conference Board reported that consumer confidence fell to a 5-year low in February while the S&P/Case-Shiller home price index for 20 U.S. metropolitan areas declined 9.1% in December.
The disappointing economic data notwithstanding, all ten economic sectors closed higher Tuesday. Energy, up 1.4%, was the best-performer, followed by consumer discretionary and technology, which gained 1.2% and 1.0%, respectively. The financial sector tacked on 0.2% with Moody's following on the heels of Standard & Poor's and affirming MBIA's (MBI 15.28, +0.70) 'AAA' rating.DJ30 +114.70 NASDAQ +17.51 NQ100 +0.3% R2K +1.0% SP400 +1.0% SP500 +9.49 NASDAQ Dec/Adv/Vol 1075/1907/2.30 bln NYSE Dec/Adv/Vol 980/2160/1.53 bln
3:35 pm : Stocks are spiking after the market began a downturn that halved previous session gains. The spike has come on news that a possible deal to help Ambac (ABK 12.70, +0.29) includes banks and private equity firms that are not exposed to subprime assets. MBIA (MBI 15.39, +0.81) had its AAA credit rating reiterated by Moody's earlier today.
The dollar index has hit an all time low. It is currently down 1.03% to 74.75. Meanwhile, the euro is up 0.94% to 1.497 against the dollar, a record high.
Year-to-date, the dollar index is 2.6% lower and the euro is 2.6% higher against the dollar.
Crude closed at a new high of $100.86. Crude prices hit a fresh intraday high of $101.15 earlier in the session.DJ30 +94.84 NASDAQ +13.57 SP500 +6.70 NASDAQ Dec/Adv/Vol 1069/1849/1.93 bln NYSE Dec/Adv/Vol 1080/2022/1.19 bln
3:00 pm : Large tech names such as IBM (IBM 114.95, +4.87), Intel (INTC 20.80, +0.86), and Microsoft (MSFT 28.82, +0.98) are leading the market higher. The S&P is trending toward earlier highs, and the Nasdaq is encroaching upon a new high.
Google (GOOG 463.97, -22.47), on the other hand, is trading lower in response to comScore's data. ComScore reported that Google's paid clicks fell 7% in January from the previous month, according to MarketWatch.DJ30 +141.00 NASDAQ +31.44 SP500 +13.11 NASDAQ Dec/Adv/Vol 897/2023/1.74 bln NYSE Dec/Adv/Vol 794/2283/1.06 bln
2:30 pm : The stock market continues to trade along a range-bound line in positive territory as each of the ten major economic sectors remains in the green. Consumer discretionary (+1.4%) and materials (+0.2%) are the two sectors in positive ground year-to-date.
As mentioned in the previous post, the Commodity Index (+1.0%) hit an all-time high this session, in part due to the decline in the dollar. It is up a steep 13.0% this year. Of the 19 commodities in the index, 17 are trending higher.
Wheat, up 8.0%, hit an all-time high as traders remain wary of dwindling supply. Also giving the commodity a boost was reports that Kazakhstan is putting tariffs on its wheat exports. Wheat has soared 128% compared to a year ago.
Silver is up 3.7% and gold is up 0.9%. Year-to-date gold is up 12.4% and silver is up 25.7%.DJ30 +130.74 NASDAQ +28.76 SP500 +11.42 NASDAQ Dec/Adv/Vol 108/913/1971 NYSE Dec/Adv/Vol 862/2219/961 mln
2:05 pm : The stock market is trading with a healthy gain, although it remains off its best levels.
Crude prices hit an all-time intraday high today. Prices hit $101.15 per barrel, topping the previous intraday high of $100.86. Prices have since eased to $100.68.
Crude has reached new highs, as has the commodity index (+0.9%), in part, due to a weakening dollar.
The dollar index has declined 0.82% this session and is down 2.4% this year. The euro has gained 0.71% against the dollar this session, while the British pound has advanced 0.82% against the dollar. Against the yen, the dollar has lost 0.55% during this session.DJ30 +105.42 NASDAQ +22.39 SP500 +8.56 NASDAQ Dec/Adv/Vol 940/1921/1.49 bln NYSE Dec/Adv/Vol 932/2126/893 mln
1:30 pm : The stock market has come off its recent peak, but remains well into positive territory. Stocks hit highs on news that MBIA (MBI 15.03, +0.45) had its AAA credit rating reaffirmed by Moody's.
Gains in the financial sector (+0.7%) have moderated as market participants digest the news.
Sentiment remains largely positive in afternoon trading. Advancing issues are outpacing decliners by more than 3-to-1 on the NYSE.DJ30 +124.72 NASDAQ +23.80 SP500 +10.49 NASDAQ Dec/Adv/Vol 880/1946/1.36 bln NYSE Dec/Adv/Vol 800/2243/805 mln
1:05 pm : Financials (+1.0%) spiked suddenly on news that Moody's has confirmed MBIA's (MBI 15.16, +0.58) AAA rating. The sector traded in choppy manner on word that the bond insurer's outlook is negative, but financials currently remain at their best levels. In the most likely scenario, Moody's believes the company will incur lifetime losses of nearly $4 billion.
The S&P 500 and Dow are now posting slight gains for the month, both up 0.4%. Although this may not seem like much, when considering how far they were down it is more significant. From their monthly lows, the S&P is up 4.2% and the Dow is up 5.7%.DJ30 +144.74 NASDAQ +26.36 SP500 +12.97 NASDAQ Dec/Adv/Vol 838/1955/1.22 bln NYSE Dec/Adv/Vol 768/2259/733.4 mln
12:30 pm : The market pauses a bit and then spikes to new highs as Fed Vice Chairman Kohn's comments hit the news wires. All ten economic sectors are now in the green, and the Dow and Nasdaq are now posting a gain in excess of 1%. The Nasdaq's advance is notable, as the composite was a laggard in the early going, down as much as 0.7%.
Kohn said he does not expect elevated inflation rates to last, noting that growth risks are a bigger threat, according to Reuters. This is common to what the Fed has been saying lately, which indicates further rate cuts are to come. Fed funds futures price a 88% chance of a 50 basis point cut, with the rest of the bets on a 25 basis point cut. The fed funds rate currently stands at 3.00%.DJ30 +130.50 NASDAQ +24.62 SP500 +11.74 NASDAQ Dec/Adv/Vol 846/1956/1.09 bln NYSE Dec/Adv/Vol 763/2249/644 mln
12:00 pm : Tuesday is shaping up to be another busy day for market participants. The stock market opened modestly lower on higher than expected inflation reading, although there are some indications the market was not surprised by the number. Stocks then caught a bid on news a tech industry bellwether substantially increased its share buybacks. At the East Coast lunch hour, stocks are trading at their best levels, with decent-sized gains.
IBM (IBM 113.82, +3.74) lifted the market into positive territory after its press release stated the company has authorized an additional $15 billion in funds to buyback shares. This brings IBM's repurchase program to roughly $15.4 billion. The company also raised its full year earnings per share expectation to at least $8.25, marking 16% year-over-year growth. It previously expected earnings per share of $8.20 to $8.30. Of note, the increased earnings per share outlook is due to the buyback program, and not a forecast for increased growth. IBM shares spiked to their highest level since November, and gave the tech sector (+0.8%) a boost.
In regard to the inflation data, the January Producer Price Index (PPI) rose 1.0% month-over-month, compared to the expected rise of 0.4%. Excluding food and energy, PPI rose 0.4% month-over-month, higher than the consensus estimate that called for a rise of 0.2%. That leaves PPI up 7.4% year-over-year (highest level since Oct '81) and PPI ex-food and energy up 2.3%.
This reading is not good, but the market was not too surprised by the numbers as January CPI was already released. This was demonstrated by treasuries trading higher and gold trading with a slight loss shortly after the report. If the market was shocked by the inflation numbers, gold would have been higher and Treasuries would have sold off on the release. Of note, gold (+0.3%) is now trading slightly higher, but it rose in conjunction with the stock market's recovery and not on the data. The 10-year note continues to post a gain.
In other economic news, the Conference Board said February consumer confidence fell to 75.0 from the prior reading of 87.3. Economists expected a reading of 82.0. The market tends to overreact to these readings, as they are only surveys. Briefing.com puts more weight into the personal consumption data that comprise 72% of the GDP, which will be released later this week.
There were a number of earnings reports released, with retailers catching the most attention. The S&P Retailing Index (+1.5%) is handily outperforming after Auto Zone (AZO 123.73, +6.36), Macy's (M 25.93, +1.17), Nordstrom (JWN 38.53, +1.55) and Target (TGT 55.14, +1.89) all topped estimates. Home Depot (HD 28.97, +0.15) missed estimates, yet its stock is still posting a slight gain. Some of these companies provided somewhat poor outlooks, however the market shrugged off the news as much of the negativity is already priced into the stocks.
As a result, the consumer discretionary sector (+1.1%) is outperforming. Nine of the ten sectors are higher. Energy (1.2%) is posting the largest gain as crude is on the rise, hitting as high as $100.59 per barrel. Financials stand alone in the red, with a slight 0.1% decline.DJ30 +91.99 NASDAQ +16.59 NQ100 +0.3% R2K +1.3% SP400 +1.0% SP500 +6.88 NASDAQ Dec/Adv/Vol 871/1872/842 mln NYSE Dec/Adv/Vol 898/2083/556 mln
11:35 am : Stocks are trading with modest gains near their session highs after floating around the unchanged mark for most of the past half-hour. The Dow is outperforming as IBM (IBM 113.06, +2.98) gives the Average a 25 point boost.
IBM’s recent $15 billion authorization brings its repurchase program to roughly $15.4 billion. The company also raised its full year earnings per share expectation to at least $8.25, marking 16% year-over-year growth. It previously expected earnings per share of $8.20 to $8.30. Of note, the higher earnings expectations are due to the buyback, not because it expects higher growth.
After trading lower, oil (+0.9%) and gold (+0.6%) caught a bid as equities recovered.DJ30 +50.39 NASDAQ +5.47 SP500 +3.62 NASDAQ Dec/Adv/Vol 1027/1694/801 mln NYSE Dec/Adv/Vol 1085/1861/477 mln
11:00 am : Stocks were languishing near their lows and then spiked into positive territory as news hit the wires regarding bellwether IBM's (IBM 113.73, +3.63) full year earnings per share outlook. However, the major indices gains are slight.
IBM announced it has raised its full year earnings per share outlook. It also authorized $15 billion for stock repurchases. The stock spiked to a fresh 3 month high on the news and is posting its largest daily percent gain since Jan. 23.
Tech is now modestly outperforming the broader market after spending the early-going as a laggard. IBM has lifted the computer hardware group, now up 0.8%. Four of the ten sectors are now trading higher.DJ30 +31.18 NASDAQ +0.37 SP500 +0.92 NASDAQ Dec/Adv/Vol 1284/1320/524 mln NYSE Dec/Adv/Vol 1436/1453/328 mln
10:30 am : After some choppy trading, the stock market falls back near its lows. Losses remain modest, and the major indices have not veered far from the unchanged mark. Consumer discretionary (+0.2%) and consumer staples (+0.1%) are outperforming on a relative basis thanks to strength in retailers (+0.5%).
Target (TGT 54.33, +1.08) is providing leadership after reporting earnings that topped expectations by a penny. Department store Macy's (M 25.72, +0.96) also is a standout after beating estimates by a nickel. Auto Zone (122.25, +4.88 ) is posting its largest gain this month after topping estimates by a nickel. Even Home Depot (HD 28.63, -0.19), which missed estimates, is managing to limit its losses.
The other eight sectors are trending lower. Telecom (-1.1%), the main laggard this year with a 17% decline, is facing the most selling pressure.DJ30 -39.00 NASDAQ -11.05 SP500 -6.29 NASDAQ Dec/Adv/Vol 1213/1322/435 mln NYSE Dec/Adv/Vol 1467/1399/273 mln
10:05 am : Stocks fall near their worst level of the session on a lower than expected consumer confidence reading. Losses remain modest.
Just hitting the news wires, The Conference Board said February consumer confidence fell to 75.0 from the prior reading of 87.3. Economists expected a reading of 82.0. The market tends to overreact to these readings, as they are only surveys. Briefing.com puts more weight into the personal consumption data that comprise 72% of the GDP, which will be released later this week.
Separately, the Richmond Fed manufacturing index, a regional manufacturing survey, fell to -5. Economists expected a reading of -12. A reading below 0 reflects contraction in manufacturing in that region. Because of the small area this survey covers, it does not garner much of the market's attention. Regardless, this better than expected reading is somewhat surprising, as the there were recently larger than expected declines in New York and Philadelphia manufacturing.DJ30 -41.93 NASDAQ -10.69 SP500 -7.29 NASDAQ Dec/Adv/Vol 1181/1236/231 mln NYSE Dec/Adv/Vol 1445/1293/153 mln
09:45 am : The major indices open a modestly lower note, as futures suggested. The slight selling pressure was fueled by a higher than expected inflation reading.
January Producer Price Index (PPI) rose 1.0% month-over-month, compared to the expected rise of 0.4%. Excluding food and energy, PPI rose 0.4% month-over-month, higher than the consensus estimate that called for a rise of 0.2%. That leaves PPI up 7.4% year-over-year and PPI ex-food and energy is up 2.3%.
This reading is not good, but the market was not too surprised by the numbers as January CPI was already released. This is demonstrated by treasuries trading flat and gold trading with a slight loss. If the market was shocked by the inflation numbers, gold would be trading higher and Treasuries would be under selling pressure. Furthermore, stocks are holding up relatively well considering the S&P 500 saw its largest gains this month in yesterday's trade.DJ30 -16.12 NASDAQ -5.74 SP500 -2.22
09:15 am : S&P futures vs fair value: -7.0. Nasdaq futures vs fair value: -11.0.
09:02 am : S&P futures vs fair value: -4.5. Nasdaq futures vs fair value: -9.8. Futures are off their worst levels, but continue to point to a modestly lower start to the trading day as the market digests the higher than expected PPI report. European markets saw a dip following the U.S. PPI report, but are still holding onto healthy gains. The FTSE is up 0.8% and the Dax is up 1.0%. The S&P/Case-Shiller Composite 20, which measures home prices in 20 metropolitan areas, showed prices are down 9.1% year over year, modestly better than the expected 9.7% decline.
08:30 am : S&P futures vs fair value: -5.8. Nasdaq futures vs fair value: -6.8. Futures slide on a higher than expected inflation reading. January Produce Price Index (PPI) rose 1.0% month over month, compared to the expected rise of 0.4%. Excluding food and energy, PPI rose 0.4% month over month, higher than the consensus estimate that called for a rise of 0.2%. That leaves PPI up 7.4% year-over-year and PPI ex food and energy is up 2.3%. In earnings news, retailer Macy’s (M) reported earnings that beat expectations by $0.05, and guided FY09 EPS in-line with current estimates. Target (TGT) topped its earnings estimates by a penny.
08:00 am : S&P futures vs fair value: -2.1. Nasdaq futures vs fair value: +0.8. It is shaping up to be a slightly lower start to the trading day. Futures saw a dip after Dow component Home Depot (HD) reported earnings that failed to live up to expectations, and provided a disappointing outlook. MBIA (MBI), which was a key component to yesterday’s late-day rally, is again garnering the market’s attention after it announced it is eliminating its dividend, and will split the company in a five-year period. Futures may go on the move at 8:30 ET with the release of January PPI. Economists expect a 0.4% rise in PPI, and for core PPI to rise 0.2%.
06:14 am : S&P futures vs fair value: +0.3. Nasdaq futures vs fair value: +4.0.
06:13 am : FTSE...6070.50...+71.00...+1.2%. DAX...6991.90...+109.39...+1.6%.
06:13 am : Nikkei...13824.72...-89.85...-0.7%. Hang Seng...23714.75...+455.61...+1.9%.
http://biz.yahoo.com/mu/update.html
4:30 pm : The stock market was provided several excuses to sell off on Tuesday, yet it soldiered on and added to Monday's gains.
Dow component IBM (IBM 114.38, +4.30) led the troops in the battle as it sparked a broad-based rally with its announcement that the company's board of directors authorized an additional $15 billion for its stock repurchase program.
IBM said it expects to spend $12 billion in 2008 on stock repurchases that it will fund from cash from operations. Given the expected buyback activity, IBM bumped up its 2008 EPS forecast by $0.05, noting it should earn at least $8.25 per share versus prior guidance of $8.20 to $8.30.
The technology sector drafted off IBM's encouraging news and carried the broader market higher along with the retailers, many of which rallied following a mixed batch of earnings results from the likes of Home Depot (HD 28.83, +0.01), Target (TGT 54.89, +1.64), Macy's (M 26.52, +1.76), Nordstrom (JWN 38.46, +1.48), AutoZone (AZO 124.93, +7.56) and RadioShack (RSH 19.13, +3.39).
On balance, the retail rally was driven by a sense that bad news had already been priced in and a measure of relief that the results weren't worse than feared. Home Depot typified this response as it ended the day little changed despite missing analysts' consensus fourth quarter EPS estimate by three cents and warning that it anticipates earnings from continuing operations to decline 19% to 24% on a per share basis in 2008.
The disappointing report from Home Depot was one of the excuses the market could have used to sell off. Tuesday's economic releases provided plenty of excuses too.
The Producer Price Index offered the most stirring excuse since it piqued inflation concerns with a 1.0% reading in total PPI that took the year-over-year gain to 7.4%, the highest rate of increase since October 1981. Core-PPI, which excludes food and energy, jumped 0.4%, leaving the year-over-year increase at 2.3%.
Fittingly, commodity prices continued to move higher Tuesday, as evidenced by the 1.1% gain in the CRB Index. Wheat prices, which surged 8.0% to $12.14 per bushel, led the advance. Oil prices increased 1.9% to $101.09 per barrel, marking a new, non-inflation adjusted closing high.
Strikingly, neither the PPI data nor the commodity inflation caused much fallout in either the stock or bond markets. Participants had already digested the CPI data for January, so it wasn't entirely surprising that the PPI data were worse than expected. Fed Vice Chairman Donald Kohn, meanwhile, gave a speech in which he said he doesn't expect elevated inflation rates to last and that credit market turmoil and growth risks are the greater threat.
On that note, the Conference Board reported that consumer confidence fell to a 5-year low in February while the S&P/Case-Shiller home price index for 20 U.S. metropolitan areas declined 9.1% in December.
The disappointing economic data notwithstanding, all ten economic sectors closed higher Tuesday. Energy, up 1.4%, was the best-performer, followed by consumer discretionary and technology, which gained 1.2% and 1.0%, respectively. The financial sector tacked on 0.2% with Moody's following on the heels of Standard & Poor's and affirming MBIA's (MBI 15.28, +0.70) 'AAA' rating.DJ30 +114.70 NASDAQ +17.51 NQ100 +0.3% R2K +1.0% SP400 +1.0% SP500 +9.49 NASDAQ Dec/Adv/Vol 1075/1907/2.30 bln NYSE Dec/Adv/Vol 980/2160/1.53 bln
3:35 pm : Stocks are spiking after the market began a downturn that halved previous session gains. The spike has come on news that a possible deal to help Ambac (ABK 12.70, +0.29) includes banks and private equity firms that are not exposed to subprime assets. MBIA (MBI 15.39, +0.81) had its AAA credit rating reiterated by Moody's earlier today.
The dollar index has hit an all time low. It is currently down 1.03% to 74.75. Meanwhile, the euro is up 0.94% to 1.497 against the dollar, a record high.
Year-to-date, the dollar index is 2.6% lower and the euro is 2.6% higher against the dollar.
Crude closed at a new high of $100.86. Crude prices hit a fresh intraday high of $101.15 earlier in the session.DJ30 +94.84 NASDAQ +13.57 SP500 +6.70 NASDAQ Dec/Adv/Vol 1069/1849/1.93 bln NYSE Dec/Adv/Vol 1080/2022/1.19 bln
3:00 pm : Large tech names such as IBM (IBM 114.95, +4.87), Intel (INTC 20.80, +0.86), and Microsoft (MSFT 28.82, +0.98) are leading the market higher. The S&P is trending toward earlier highs, and the Nasdaq is encroaching upon a new high.
Google (GOOG 463.97, -22.47), on the other hand, is trading lower in response to comScore's data. ComScore reported that Google's paid clicks fell 7% in January from the previous month, according to MarketWatch.DJ30 +141.00 NASDAQ +31.44 SP500 +13.11 NASDAQ Dec/Adv/Vol 897/2023/1.74 bln NYSE Dec/Adv/Vol 794/2283/1.06 bln
2:30 pm : The stock market continues to trade along a range-bound line in positive territory as each of the ten major economic sectors remains in the green. Consumer discretionary (+1.4%) and materials (+0.2%) are the two sectors in positive ground year-to-date.
As mentioned in the previous post, the Commodity Index (+1.0%) hit an all-time high this session, in part due to the decline in the dollar. It is up a steep 13.0% this year. Of the 19 commodities in the index, 17 are trending higher.
Wheat, up 8.0%, hit an all-time high as traders remain wary of dwindling supply. Also giving the commodity a boost was reports that Kazakhstan is putting tariffs on its wheat exports. Wheat has soared 128% compared to a year ago.
Silver is up 3.7% and gold is up 0.9%. Year-to-date gold is up 12.4% and silver is up 25.7%.DJ30 +130.74 NASDAQ +28.76 SP500 +11.42 NASDAQ Dec/Adv/Vol 108/913/1971 NYSE Dec/Adv/Vol 862/2219/961 mln
2:05 pm : The stock market is trading with a healthy gain, although it remains off its best levels.
Crude prices hit an all-time intraday high today. Prices hit $101.15 per barrel, topping the previous intraday high of $100.86. Prices have since eased to $100.68.
Crude has reached new highs, as has the commodity index (+0.9%), in part, due to a weakening dollar.
The dollar index has declined 0.82% this session and is down 2.4% this year. The euro has gained 0.71% against the dollar this session, while the British pound has advanced 0.82% against the dollar. Against the yen, the dollar has lost 0.55% during this session.DJ30 +105.42 NASDAQ +22.39 SP500 +8.56 NASDAQ Dec/Adv/Vol 940/1921/1.49 bln NYSE Dec/Adv/Vol 932/2126/893 mln
1:30 pm : The stock market has come off its recent peak, but remains well into positive territory. Stocks hit highs on news that MBIA (MBI 15.03, +0.45) had its AAA credit rating reaffirmed by Moody's.
Gains in the financial sector (+0.7%) have moderated as market participants digest the news.
Sentiment remains largely positive in afternoon trading. Advancing issues are outpacing decliners by more than 3-to-1 on the NYSE.DJ30 +124.72 NASDAQ +23.80 SP500 +10.49 NASDAQ Dec/Adv/Vol 880/1946/1.36 bln NYSE Dec/Adv/Vol 800/2243/805 mln
1:05 pm : Financials (+1.0%) spiked suddenly on news that Moody's has confirmed MBIA's (MBI 15.16, +0.58) AAA rating. The sector traded in choppy manner on word that the bond insurer's outlook is negative, but financials currently remain at their best levels. In the most likely scenario, Moody's believes the company will incur lifetime losses of nearly $4 billion.
The S&P 500 and Dow are now posting slight gains for the month, both up 0.4%. Although this may not seem like much, when considering how far they were down it is more significant. From their monthly lows, the S&P is up 4.2% and the Dow is up 5.7%.DJ30 +144.74 NASDAQ +26.36 SP500 +12.97 NASDAQ Dec/Adv/Vol 838/1955/1.22 bln NYSE Dec/Adv/Vol 768/2259/733.4 mln
12:30 pm : The market pauses a bit and then spikes to new highs as Fed Vice Chairman Kohn's comments hit the news wires. All ten economic sectors are now in the green, and the Dow and Nasdaq are now posting a gain in excess of 1%. The Nasdaq's advance is notable, as the composite was a laggard in the early going, down as much as 0.7%.
Kohn said he does not expect elevated inflation rates to last, noting that growth risks are a bigger threat, according to Reuters. This is common to what the Fed has been saying lately, which indicates further rate cuts are to come. Fed funds futures price a 88% chance of a 50 basis point cut, with the rest of the bets on a 25 basis point cut. The fed funds rate currently stands at 3.00%.DJ30 +130.50 NASDAQ +24.62 SP500 +11.74 NASDAQ Dec/Adv/Vol 846/1956/1.09 bln NYSE Dec/Adv/Vol 763/2249/644 mln
12:00 pm : Tuesday is shaping up to be another busy day for market participants. The stock market opened modestly lower on higher than expected inflation reading, although there are some indications the market was not surprised by the number. Stocks then caught a bid on news a tech industry bellwether substantially increased its share buybacks. At the East Coast lunch hour, stocks are trading at their best levels, with decent-sized gains.
IBM (IBM 113.82, +3.74) lifted the market into positive territory after its press release stated the company has authorized an additional $15 billion in funds to buyback shares. This brings IBM's repurchase program to roughly $15.4 billion. The company also raised its full year earnings per share expectation to at least $8.25, marking 16% year-over-year growth. It previously expected earnings per share of $8.20 to $8.30. Of note, the increased earnings per share outlook is due to the buyback program, and not a forecast for increased growth. IBM shares spiked to their highest level since November, and gave the tech sector (+0.8%) a boost.
In regard to the inflation data, the January Producer Price Index (PPI) rose 1.0% month-over-month, compared to the expected rise of 0.4%. Excluding food and energy, PPI rose 0.4% month-over-month, higher than the consensus estimate that called for a rise of 0.2%. That leaves PPI up 7.4% year-over-year (highest level since Oct '81) and PPI ex-food and energy up 2.3%.
This reading is not good, but the market was not too surprised by the numbers as January CPI was already released. This was demonstrated by treasuries trading higher and gold trading with a slight loss shortly after the report. If the market was shocked by the inflation numbers, gold would have been higher and Treasuries would have sold off on the release. Of note, gold (+0.3%) is now trading slightly higher, but it rose in conjunction with the stock market's recovery and not on the data. The 10-year note continues to post a gain.
In other economic news, the Conference Board said February consumer confidence fell to 75.0 from the prior reading of 87.3. Economists expected a reading of 82.0. The market tends to overreact to these readings, as they are only surveys. Briefing.com puts more weight into the personal consumption data that comprise 72% of the GDP, which will be released later this week.
There were a number of earnings reports released, with retailers catching the most attention. The S&P Retailing Index (+1.5%) is handily outperforming after Auto Zone (AZO 123.73, +6.36), Macy's (M 25.93, +1.17), Nordstrom (JWN 38.53, +1.55) and Target (TGT 55.14, +1.89) all topped estimates. Home Depot (HD 28.97, +0.15) missed estimates, yet its stock is still posting a slight gain. Some of these companies provided somewhat poor outlooks, however the market shrugged off the news as much of the negativity is already priced into the stocks.
As a result, the consumer discretionary sector (+1.1%) is outperforming. Nine of the ten sectors are higher. Energy (1.2%) is posting the largest gain as crude is on the rise, hitting as high as $100.59 per barrel. Financials stand alone in the red, with a slight 0.1% decline.DJ30 +91.99 NASDAQ +16.59 NQ100 +0.3% R2K +1.3% SP400 +1.0% SP500 +6.88 NASDAQ Dec/Adv/Vol 871/1872/842 mln NYSE Dec/Adv/Vol 898/2083/556 mln
11:35 am : Stocks are trading with modest gains near their session highs after floating around the unchanged mark for most of the past half-hour. The Dow is outperforming as IBM (IBM 113.06, +2.98) gives the Average a 25 point boost.
IBM’s recent $15 billion authorization brings its repurchase program to roughly $15.4 billion. The company also raised its full year earnings per share expectation to at least $8.25, marking 16% year-over-year growth. It previously expected earnings per share of $8.20 to $8.30. Of note, the higher earnings expectations are due to the buyback, not because it expects higher growth.
After trading lower, oil (+0.9%) and gold (+0.6%) caught a bid as equities recovered.DJ30 +50.39 NASDAQ +5.47 SP500 +3.62 NASDAQ Dec/Adv/Vol 1027/1694/801 mln NYSE Dec/Adv/Vol 1085/1861/477 mln
11:00 am : Stocks were languishing near their lows and then spiked into positive territory as news hit the wires regarding bellwether IBM's (IBM 113.73, +3.63) full year earnings per share outlook. However, the major indices gains are slight.
IBM announced it has raised its full year earnings per share outlook. It also authorized $15 billion for stock repurchases. The stock spiked to a fresh 3 month high on the news and is posting its largest daily percent gain since Jan. 23.
Tech is now modestly outperforming the broader market after spending the early-going as a laggard. IBM has lifted the computer hardware group, now up 0.8%. Four of the ten sectors are now trading higher.DJ30 +31.18 NASDAQ +0.37 SP500 +0.92 NASDAQ Dec/Adv/Vol 1284/1320/524 mln NYSE Dec/Adv/Vol 1436/1453/328 mln
10:30 am : After some choppy trading, the stock market falls back near its lows. Losses remain modest, and the major indices have not veered far from the unchanged mark. Consumer discretionary (+0.2%) and consumer staples (+0.1%) are outperforming on a relative basis thanks to strength in retailers (+0.5%).
Target (TGT 54.33, +1.08) is providing leadership after reporting earnings that topped expectations by a penny. Department store Macy's (M 25.72, +0.96) also is a standout after beating estimates by a nickel. Auto Zone (122.25, +4.88 ) is posting its largest gain this month after topping estimates by a nickel. Even Home Depot (HD 28.63, -0.19), which missed estimates, is managing to limit its losses.
The other eight sectors are trending lower. Telecom (-1.1%), the main laggard this year with a 17% decline, is facing the most selling pressure.DJ30 -39.00 NASDAQ -11.05 SP500 -6.29 NASDAQ Dec/Adv/Vol 1213/1322/435 mln NYSE Dec/Adv/Vol 1467/1399/273 mln
10:05 am : Stocks fall near their worst level of the session on a lower than expected consumer confidence reading. Losses remain modest.
Just hitting the news wires, The Conference Board said February consumer confidence fell to 75.0 from the prior reading of 87.3. Economists expected a reading of 82.0. The market tends to overreact to these readings, as they are only surveys. Briefing.com puts more weight into the personal consumption data that comprise 72% of the GDP, which will be released later this week.
Separately, the Richmond Fed manufacturing index, a regional manufacturing survey, fell to -5. Economists expected a reading of -12. A reading below 0 reflects contraction in manufacturing in that region. Because of the small area this survey covers, it does not garner much of the market's attention. Regardless, this better than expected reading is somewhat surprising, as the there were recently larger than expected declines in New York and Philadelphia manufacturing.DJ30 -41.93 NASDAQ -10.69 SP500 -7.29 NASDAQ Dec/Adv/Vol 1181/1236/231 mln NYSE Dec/Adv/Vol 1445/1293/153 mln
09:45 am : The major indices open a modestly lower note, as futures suggested. The slight selling pressure was fueled by a higher than expected inflation reading.
January Producer Price Index (PPI) rose 1.0% month-over-month, compared to the expected rise of 0.4%. Excluding food and energy, PPI rose 0.4% month-over-month, higher than the consensus estimate that called for a rise of 0.2%. That leaves PPI up 7.4% year-over-year and PPI ex-food and energy is up 2.3%.
This reading is not good, but the market was not too surprised by the numbers as January CPI was already released. This is demonstrated by treasuries trading flat and gold trading with a slight loss. If the market was shocked by the inflation numbers, gold would be trading higher and Treasuries would be under selling pressure. Furthermore, stocks are holding up relatively well considering the S&P 500 saw its largest gains this month in yesterday's trade.DJ30 -16.12 NASDAQ -5.74 SP500 -2.22
09:15 am : S&P futures vs fair value: -7.0. Nasdaq futures vs fair value: -11.0.
09:02 am : S&P futures vs fair value: -4.5. Nasdaq futures vs fair value: -9.8. Futures are off their worst levels, but continue to point to a modestly lower start to the trading day as the market digests the higher than expected PPI report. European markets saw a dip following the U.S. PPI report, but are still holding onto healthy gains. The FTSE is up 0.8% and the Dax is up 1.0%. The S&P/Case-Shiller Composite 20, which measures home prices in 20 metropolitan areas, showed prices are down 9.1% year over year, modestly better than the expected 9.7% decline.
08:30 am : S&P futures vs fair value: -5.8. Nasdaq futures vs fair value: -6.8. Futures slide on a higher than expected inflation reading. January Produce Price Index (PPI) rose 1.0% month over month, compared to the expected rise of 0.4%. Excluding food and energy, PPI rose 0.4% month over month, higher than the consensus estimate that called for a rise of 0.2%. That leaves PPI up 7.4% year-over-year and PPI ex food and energy is up 2.3%. In earnings news, retailer Macy’s (M) reported earnings that beat expectations by $0.05, and guided FY09 EPS in-line with current estimates. Target (TGT) topped its earnings estimates by a penny.
08:00 am : S&P futures vs fair value: -2.1. Nasdaq futures vs fair value: +0.8. It is shaping up to be a slightly lower start to the trading day. Futures saw a dip after Dow component Home Depot (HD) reported earnings that failed to live up to expectations, and provided a disappointing outlook. MBIA (MBI), which was a key component to yesterday’s late-day rally, is again garnering the market’s attention after it announced it is eliminating its dividend, and will split the company in a five-year period. Futures may go on the move at 8:30 ET with the release of January PPI. Economists expect a 0.4% rise in PPI, and for core PPI to rise 0.2%.
06:14 am : S&P futures vs fair value: +0.3. Nasdaq futures vs fair value: +4.0.
06:13 am : FTSE...6070.50...+71.00...+1.2%. DAX...6991.90...+109.39...+1.6%.
06:13 am : Nikkei...13824.72...-89.85...-0.7%. Hang Seng...23714.75...+455.61...+1.9%.
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