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Market Update 080228
http://biz.yahoo.com/mu/update.html
4:20 pm : The major indices remained in negative territory for the entirety of trade on Thursday as weak economic and corporate news weighed on the market. Negative headlines regarding small and regional banks also impacted sentiment. Stocks finished the day with significant losses, which sent the major indices back into negative territory for the month.

Financials (-3.0%) and the broader market fell to their worst levels of the session after Fed Chairman Bernanke said before the Senate Banking Committee that smaller U.S banks may fail. Also fueling the selling pressure was news that Moody's took negative rating actions on a number of regional banks. Moody's cited the banks' exposures to commercial real estate.

Adding to the financial sector's weakness was JPMorgan (JPM 42.44, -1.97) having its earnings estimate cut at Goldman Sachs and Merrill Lynch.

A pair of worse than expected economic reports kept buyers on the sidelines. The fourth quarter preliminary GDP reading was unchanged from the advanced reading at 0.6%. Economists were expecting a reading of 0.8%. Inventories subtracted a large 1.5% from the fourth quarter.

New unemployment claims for the week ended Feb. 23 rose to 373,000 from 354,000. The consensus estimate called for a reading of 350,000. This increase is not a good economic signal.

Treasuries rallied in response to the poor data. The 10-year gained 42/32 ticks.

In corporate news, Fannie Mae (FNM 27.90, +0.63) and Sears Holdings (SHLD 101.40, -0.20) missed earnings expectations.

Sprint Nextel (S 8.09, -0.86) topped its earnings expectations when excluding one time items. However, the stock got clipped after the company said it's ending its dividend, lost subscribers and is writing down nearly $30 billion in goodwill. The goodwill write-down is related to the premium Sprint paid for Nextel, and is a non-cash charge. Telecom (+1.2%) still finished the day as a leader, thanks to strength in AT&T (T 35.96, +0.76) and Verizon (VZ 37.18, +0.79).

Commodities hit all-time highs while the dollar hit all-time lows.

Oil hit an all-time non inflation adjusted intraday high of $102.97 per barrel, before settling at an all-time closing high of $102.60. Energy (+1.4%) was the best performing sector due to the gains in oil.

Likewise, the CRB Commodity Index hit an all-time high. Its 12% month-to-date gain is the largest since 1973.

The Dollar Index fell to lifetime lows as the euro climbed to lifetime highs. One euro now buys $1.5221. DJ30 -112.10 NASDAQ -22.21 NQ100 -0.3% R2K -1.5% SP400 -0.9% SP500 -12.34 NASDAQ Dec/Adv/Vol 2004/921/2.09 bln NYSE Dec/Adv/Vol 2152/964/1.46 bln

3:30 pm : As we head into the final half-hour of trading, the major indices go back on the retreat. The stock market remains off its worst level, but recovery efforts have faded.

The losses this session have sent the major indices back into the red this month. The stock market has not posted a monthly gain since last October.

As the stock market slides, the Treasury market rallies. The 10-year note is up 45/32 ticks, sending its yield down to 3.67%.DJ30 -135.54 NASDAQ -20.46 SP500 -13.64 NASDAQ Dec/Adv/Vol 1946/947/1.73 bln NYSE Dec/Adv/Vol 2151/947/1.13 bln

3:00 pm : The recovery effort fades as the major indices hold with modest losses. Energy (+1.6%) and telecom (+1.7%) stand alone in positive territory, as has been the case for the majority of the session. The financial sector (-2.3%) is the main laggard, but has recovered off its low when it was down 3.3%.

Crude oil settled at a non inflation adjusted record closing high of $102.60 per barrel, a gain of about three dollars.DJ30 -75.79 NASDAQ -6.53 SP500 -8.22 NASDAQ Dec/Adv/Vol 1796/1063/1.57 bln NYSE Dec/Adv/Vol 1981/1107/1.02 bln

2:35 pm : Stocks quickly spike higher, and have pared a good portion of their losses.

All sectors have participated in the upward move, with notable buying interest seen in the tech sector (-0.4%). The tech sector's strength is being led by large-cap names, as the Nasdaq 100 (+0.2%) crosses into positive territory.

Apple (AAPL 130.62, +7.66) continues to lead as it posts its largest percent gain since November. Gilead Sciences (GILD 45.83, +2.04) is also providing leadership as it trades higher on heavy volume.DJ30 -81.49 NASDAQ -12.28 SP500 -8.28 NASDAQ Dec/Adv/Vol 1900/953/1.43 bln NYSE Dec/Adv/Vol 2092/982/939 mln

2:00 pm : The stock market continues to trade in range-bound fashion modestly above its session lows. Crude oil continues to hit new record intraday highs, now up $2.96 to $102.59. The weakness in the dollar (-0.7%) is spurring buying interest in commodities (+1.6%).

Rising oil prices and the lack of any merger agreements continue to weigh on the Amex Airline Index (-3.6%). Airline stocks are down 9.1% this month.DJ30 -132.12 DJTA -1.5% NASDAQ -20.66 SP500 -12.66 NASDAQ Dec/Adv/Vol 1955/868/1.29 bln NYSE Dec/Adv/Vol 2186/868/849 mln

1:30 pm : Stocks remain in negative territory. In the S&P 500, 412 stocks are trending lower. Financial companies dominate the ten most lagging movers, taking up the first six spots.

Oil continues to climb higher and is now up 2.4% to $102.27, a fresh all-time intraday high.DJ30 -134.24 NASDAQ -22.27 SP500 -13.47 NASDAQ Dec/Adv/Vol 1960/848/1.20 bln NYSE Dec/Adv/Vol 2192/848/786 mln

1:00 pm : The major indices are off their lows, but losses remain substantial.

The CRB Index, which tracks a basket of commodities, is trading at an all-time intraday high. The index is up 11.2% this month, with silver up 16%, copper up 17% and wheat up 24%. This the largest monthly percent gain for the CRB Index since July 1973.DJ30 -129.19 NASDAQ -22.60 SP500 -13.20 NASDAQ Dec/Adv/Vol 1960/815/1.10 bln NYSE Dec/Adv/Vol 2211/811/717 mln

12:30 pm : The major indices are fluctuating modestly above the worst levels of the session. Energy (+1.1%) has passed telecom (+0.9%) for the leadership position.

Large-cap tech stocks are outperforming on a relative basis, as indicated by the 0.4% decline in the Nasdaq 100. Apple (AAPL) is the reason why, as it is adding 8.5 points to the index. Apple made some comments that raised expectations of the iPhone's demand. Only 15 of the 100 stocks are posting a gain in the index.DJ30 -128.30 NASDAQ -22.66 SP500 -13.27 NASDAQ Dec/Adv/Vol 1967/807/1.00 bln NYSE Dec/Adv/Vol 2209/803/665 mln

12:00 pm : The major indices opened on a low note on weak economic and corporate news. The market tried to recover, but news regarding U.S. bank ratings dropped the market sharply. The stock market is trading with a loss of nearly 1%, modestly above its worst level of the session.

Around 11:05 ET, credit rating firm Moody's said weak core outlook spurred negative rating actions on a number of U.S. banks. Moody's said the negative rating actions—on primarily regional and community banks—were based on the potential losses in the banks' commercial real estate portfolios. The news corresponded with a sudden 60 point drop in the Dow. Also adding to pressure in financials (-2.7%) was a statement from Fed Chairman Bernanke that some of the smaller U.S. banks may fail.

Bernanke is currently testifying before the Senate Banking Committee. He had already testified before the House yesterday, and his prepared text was identical for both appearances. Bernanke has been asked many questions regarding inflation concerns. He said the stabilization of oil prices will be sufficient to bring inflation down. Bernanke does not expect oil prices to retreat to pre-2007 levels.

Sentiment was already poor on a pair of worse than expected economic reports. The fourth quarter preliminary GDP reading was unchanged from the advanced reading at 0.6%. Economists were expecting a reading of 0.8%. Inventories subtracted a large 1.5% from the fourth quarter.

New unemployment claims for the week ended Feb. 23 rose to 373,000 from 354,000. The consensus estimate called for a reading of 350,000. This increase is not a good economic signal.

In corporate news, Fannie Mae (FNM 27.03, -0.24) and Sears Holdings (SHLD 101.58, -0.02) missed earnings expectations. Still, both stocks are outperforming the broader market. Struggling wireless phone provider Sprint Nextel (S 8.03, -0.92) topped its earnings expectations when excluding one time items. The stock is getting hammered after the company said it's ending its dividend, lost subscribers and is writing down nearly $30 billion in goodwill. The goodwill write-down is related to the premium Sprint paid for Nextel, and is a non-cash charge.

The commodity index is rallying, up 1.0%. The strength is aided by a strong 1.8% gain in oil. Meanwhile gold hit an all-time non inflation adjusted intraday high of $970 per ounce. The dollar index is also under pressure, posting a 0.5% decline.

Treasuries are seeing buying interest. The 30-year bond is up 48/32 ticks, the 10-year note is up 34/32 ticks and the 2-year is up 8/32. DJ30 -129.11 NASDAQ -13.29 SP500 -23.78 NASDAQ Dec/Adv/Vol 1963/777/907 mln NYSE Dec/Adv/Vol 2251/747/601 mln

11:30 am : The major indices are trading at or near their worst levels of the session.

It appears the recent selling pressure may have been spurred by the Dow Jones headline that stated Moody's has taken negative rating actions on a number of U.S. banks. The decline occurred as the headline hit, and the financial sector (-2.8%) saw the largest decline.

Only energy (+1.0%) and telecom (+1.4%) are trending higher. Energy is getting a lift from the $1.70 per barrel rise in crude oil prices.DJ30 -143.56 NASDAQ -26.38 SP500 -14.95 NASDAQ Dec/Adv/Vol 1918/776/760 mln NYSE Dec/Adv/Vol 2187/766/505 mln

11:05 am : The stock market quickly falls to session lows as Bernanke answers questions. It is not clear if the market is responding to Bernanke's comments, or its just pulling back on a technical based move. It may be a program trade as the response is pronounced, sudden and broad-based. A Dow Jones headline did say Moody's said "weak core outlook hurts some U.S. bank ratings."

Bernanke is currently answering questions from the Senate Banking Committee. When Bernanke was asked if the economic outlook is worse than eight years ago, Bernanke said it is fair to say that policy makers face more challenges now. He said the 2001 recession weighed more on corporate investment, while this time the consumer is taking the brunt.

Bernanke expects oil prices will remain high, and not retreat to pre-2007 levels, when prices rose 57%. If prices stabilize--not even fall--it will be sufficient to bring inflation down, according to Bernanke.

Telecom (+2.5%) continues to rally. AT&T (T 36.35, +1.15) and Verizon's (VZ 37.64, +1.25) strength may be due to Sprint Nextel (S 8.31, -0.64) unveiling an unlimited wireless plan that was not priced as low as previously feared. Sprint's unlimited wireless plan matched its competitors rates of $99.99, but does include some extra features including unlimited data.

Last week, AT&T and Verizon announced $99.99 per month wireless plans. Fear this would cause a pricing war, partially due to speculation that Sprint would undercut its competitors and offer a plan around $60, sent the telecom sector down more than 7% in two sessions. DJ30 -142.27 NASDAQ -20.54 SP500 -14.44 NASDAQ Dec/Adv/Vol 1825/831/616 mln NYSE Dec/Adv/Vol 2110/799/415 mln

10:30 am : The stock market is off its lows as the telecom (+2.0%) and energy (+1.1%) sectors climb to their best levels of the session.

There will be no surprises in Fed Chairman Ben Bernanke's prepared remarks before the Senate. Bernanke's prepared text for the Senate Finance Committee is exactly the same as his text yesterday for the House. Senate members will be asking Bernanke a series of questions. There is a possibility the market may respond to some of Bernanke's comments, but it is likely he will just be reiterating what he said yesterday.

In a press conference, President Bush said he does not think we are in a recession, but there is no question the economy is in a slowdown. He said the tax rebate checks for the recently passed fiscal stimulus plan will begin going out in the second week of May.DJ30 -66.18 NASDAQ -5.52 SP500 -5.32 NASDAQ Dec/Adv/Vol 1611/945/428 mln NYSE Dec/Adv/Vol 1924/905/283 mln

10:00 am : The stock market remains in the red, with eight of the ten sectors posting a loss. The financial sector (-1.7%) is the main laggard.

Telecom (+1.1%) was the main laggard, down as much as 2.1% on poor results from Sprint Nextel (S 8.16, -0.79). A spike in shares of Verizon (VZ 37.16, +0.77) and AT&T (T 35.78, +0.58) sent the sector into a leadership position. Sprint is off its worst levels, but is still posting a hefty loss. There is no immediate news that would account for the buying interest, although it may be on the view that the sector is oversold as it is down 15.8% this year.DJ30 -85.56 NASDAQ -11.37 SP500 -7.98 NASDAQ Dec/Adv/Vol 1663/806/267 mln NYSE Dec/Adv/Vol 2014/746/+182 mln

09:45 am : Stocks open on a low note. The selling pressure is understandable, as corporate and economic news was bearish this morning.

The fourth quarter preliminary reading was unchanged from the advanced reading at 0.6%. Economists were expecting a reading of 0.8%.

New unemployment claims for the week ended Feb. 23 rose to 373,000 from 354,000. The consensus estimate called for a reading of 350,000.

Earnings news was worse than expected for the most part. Freddie Mac (FRE 26.18, +1.09) and Sears Holdings (SHLD 98.76, -2.84) both missed their earnings estimates.

Meanwhile, Sprint Nextel (S 8.01, -0.94) topped its earnings expectations, but is getting clipped after eliminating its dividend and posting a decline in wireless subscribers. The company wrote down nearly $30 billion in goodwill. The write-down is related to the premium it paid in its acquisition of Nextel, and is a non-cash charge.DJ30 -77.50 NASDAQ -8.63 SP500 -7.12

09:15 am : S&P futures vs fair value: -11.1. Nasdaq futures vs fair value: -8.5.

08:59 am : S&P futures vs fair value: -11.4. Nasdaq futures vs fair value: -6.2. Futures are trading modestly above their worst levels. They continue to point to a negative start. Crude oil has recovered some of yesterday's losses, and is now above the $100 per barrel mark.

08:35 am : S&P futures vs fair value: -8.4. Nasdaq futures vs fair value: -9.0. Futures dip a bit on two disappointing economic readings. Fourth quarter preliminary GDP matched the advance reading of 0.6%. This was less than the expectations of 0.8% rise. Also, personal consumption was revised downward to 1.9% from 2.0%. Separetely, the weekly initial jobless claims rose to 373,000. Economists expected 350,000 claims.

08:05 am : S&P futures vs fair value: -7.5. Nasdaq futures vs fair value: -6.0. Early indications suggest a lower start to trading. In earnings news, Sears Holdings (SHLD) missed its EPS estimate by six cents. Freddie Mac (FRE) reported a fourth quarter loss of $3.97 per share, which is $1.63 worse than the First Call consensus. On Wednesday, Fannie Mae (FNM) also reported a larger than expected loss. Sprint (S) is down more than 10% in pre-market trading. The company had a massive write-down in the value of its wireless unit and eliminated its dividend. Bernanke will once again be testifying, this time before the Senate Banking Committee. Because he already testified before the House yesterday, there should not be any real surprises today.

06:18 am : FTSE...6010.40...-66.10...-1.1%. DAX...6928.08...-69.77...-1.0%.

06:18 am : S&P futures vs fair value: -7.7. Nasdaq futures vs fair value: -4.5.

06:18 am : Nikkei...13925.51...-105.79...-0.8%. Hang Seng...24591.69...+107.85...+0.4%.