AI
Wednesday, April 30, 2008 6:22:57 PM
Market Update 080430
http://biz.yahoo.com/mu/update.html
4:30 pm : It was an incredibly busy day for market participants on Wednesday. The market was bombarded with an FOMC announcement, several economic releases and a plethora of earnings reports. The stock market posted a healthy gain for most of the session on news the U.S. economy expanded by a larger than expected amount in the first quarter, but then retreated into negative territory shortly after the FOMC announcement.
As expected, the Federal Reserve cut the fed funds rate by 25 basis points to 2.00%, bringing its total easing since September to 325 basis points. The discount rate was also cut by 25 basis points to 2.25%. The FOMC cited continued weakness in economic activity.
The Fed's statement regarding inflation concerns was largely unchanged from the March 18 release. The Fed said readings on core inflation have improved somewhat, but energy and commodity prices have increased, as have inflation expectations. The Fed believes inflation will moderate in the coming quarters and will continue to monitor inflation developments carefully.
Similar to its previous statement, the Fed said its rate cut easing to date and other efforts to improve market liquidity will help "promote moderate growth over time and mitigate risks to economic activity." However, this release left out the statement that "downside risks to growth remain." The absence of this comment indicates the Fed plans to stand pat on rates, but as it noted, will act as needed depending on future economic and financial developments.
Basically the Fed is giving the indication that its latest rate-cutting cycle is over. That does not mean the Fed is going to raise rates imminently though. Rather it means the Fed is in a wait-and-see mode. The stock market spiked as high as 1.0% on the release, but quickly reversed course to trade down as much as 0.5%. In the end, the stock market settled with a modest loss, near its worst level of the session. At the same time, the long end of the Treasury curve saw buying interest.
Although the FOMC announcement overshadowed the day's prior events, there were plenty of important items -- most importantly a better than expected reading on the state of the U.S. economy.
Advance first quarter GDP rose by 0.6%, topping the consensus estimate of 0.5%. Although growth remains sluggish, this reading shows the economy is not deteriorating rapidly as many alarmists have claimed. The GDP deflator -- an inflation measure -- rose at an annual rate of 2.6%. This is better than the expected rise of 3%, but is up from the 2.4% increase in the fourth quarter.
Separately, the ADP Employment Report, a measure of nonfarm private employment, showed an increase of 10,000 jobs in April, easily beating the consensus estimate that called for a decline of 60,000. Although the better than expected data are encouraging, the ADP report has a history of being inaccurate when compared to the government's monthly jobs report, which will be released on Friday.
In corporate news, Citigroup (C 25.27, -1.05) announced it is raising $4.5 billion in a common stock offering at a 4% discount from Tuesday's closing price. The dilutive nature of the offering kept Citigroup's stock depressed, and sent the financial sector (-1.0%) into a laggard position.
The majority of earnings reports were better than expected. Colgate-Palmolive (CL 70.70, -5.08), General Motors (GM 23.20, +2.00), Kellogg (K 51.17, -0.81), Kraft (KFT 31.63, +0.86) and Procter & Gamble (PG 67.05, +1.15) all topped expectations. Time Warner (TWX 14.85, -0.42), however, missed its earnings estimate.
Crude oil had an interesting day of trade, going from a gain of 0.9% to a loss of 2% after the Department of Energy said in its weekly report that crude stockpiles rose by a larger than expected amount. Crude eventually recovered to a loss of just 0.6% at $114.90 per barrel after the dollar (-0.4%) weakened following the FOMC rate cut.
Although the stock market did not end the month of April on a strong note, the bulls are pleased with the end result. The S&P 500 rebounded 4.8%, snapping its five-month losing streak, and marking its largest monthly percent gain since December 2003. Commodities also had a strong month, gaining 5.8% with crude oil rallying 13.1%.DJ30 -11.81 NASDAQ -13.30 NQ100 -0.8% R2K -0.4% SP400 -0.1% SP500 -5.35 NASDAQ Dec/Adv/Vol 1463/1403/2.20 bln NYSE Dec/Adv/Vol 1475/1652/1.44 bln
3:30 pm : The major indices extend their declines, with only the Dow remaining in positive territory thanks to strength in General Motors (GM 23.39, +2.19). Six sectors are now in the red, with notable weakness in financials (-0.7%), tech (-0.8%) and consumer discretionary (-0.9%).
Meanwhile, the long end of the Treasury curve is seeing some buying interest. The 10-year note is up 18 ticks and the 30-year bond is up 33/32 ticks.DJ30 +3.91 NASDAQ -18.78 SP500 -0.37 NASDAQ Dec/Adv/Vol 1584/1234/1.75 bln NYSE Dec/Adv/Vol 1523/1581/1.03 bln
3:00 pm : The major indices are now trading below their preannouncement levels. Tech (-0.2%) is taking the brunt of the selling pressure, which caused the Nasdaq to fall into negative territory as it trails the S&P 500 for the first time this session.
Energy stocks (+1.5%), and the price of oil (-0.9%), saw the biggest boost following the FOMC announcement. Notably, only the energy and materials (+0.9%) sectors are trading above their preFOMC levels. Consumer stocks, such as staples (+0.3%) and discretionary (-0.4%) retreated.DJ30 +60.00 NASDAQ -5.60 SP500 +0.49 NASDAQ Dec/Adv/Vol 1340/1467/1.49 bln NYSE Dec/Adv/Vol 1243/1847/894 mln
2:35 pm : The stock market traded in a volatile manner following the FOMC announcement, which is typically the case. Currently, the stock market is modestly higher than prerelease levels as the Fed's outlook on inflation was not too stern, and it did not rule out the possibility of future rate cuts.
The Fed's statement regarding inflation concerns was largely unchanged from the March 18 release. The Fed said readings on core inflation have improved somewhat, but energy and commodity prices have increased, as have inflation expectations. The Fed will continue to monitor inflation developments carefully.
Similar to its previous statement, the Fed said its 3.25% in easing to date and other efforts to improve market liquidity will help "promote moderate growth over time and mitigate risks to economic activity." However, this release left out the statement that "downside risks to growth remain." The absence of this comment indicates the Fed plans to stand pat on rates, but as it noted, will act as needed depending on future economic and financial developments.
Dallas Fed president Fisher and Philadelphia Fed President Plosser both dissented, preferring no change. This is no surprise as both members dissented against the Fed's 75 basis point cut on March 18, and have publicly stated concerns over inflation.DJ30 +158.60 NASDAQ +18.16 SP500 +11.69 NASDAQ Dec/Adv/Vol 1071/1717/1.31 bln NYSE Dec/Adv/Vol 978/2097/790 mln
2:20 pm : The FOMC just announced it cut the fed funds and discount rates by 25 basis points. This leaves the fed funds rate at 2.00% and the discount rate at 2.25%.
The Fed said economic activity remains weak, while inflation expectations are picking up. It noted the substantial easing should promote growth. This action had two dissensions, with both Plosser and Fisher preferring no change. As a reminder, the Fed cut rates by 75 basis point at its March 18 meeting, with Fed presidents Fisher and Plosser dissenting, as they preferred less aggressive action.
The stock market had a positive reaction immediately following the release.
Briefing.com will provide additional analysis at the bottom of the hour.DJ30 +176.43 NASDAQ +19.91 SP500 +13.30 NASDAQ Dec/Adv/Vol 1444/1615/1.18 bln NYSE Dec/Adv/Vol 1095/1989/713 mln
2:00 pm : Stocks have traded mostly sideways as traders await the FOMC announcement due in roughly 15 minutes.
In late March, traders had been pricing in a 50% chance of a 50 basis point cut to the fed funds rate with the remaining odds on a 25 basis point cut for this session's FOMC meeting. But increased inflation concerns due to the sustained spike in commodity prices, and a narrowing of credit spreads prompted traders to ease their bets. Traders now anticipate a 78% chance of a 25 basis point cut to the fed funds rate and a 22% chance of no change.
It is likely that the Fed will cut rates by 25 basis points, but put more emphasis in its statement regarding inflation risks -- indicating that the Fed is essentially done with this rate-cutting cycle.
Briefing.com will provide an update once the announcement hits the wires.DJ30 +106.88 NASDAQ +13.04 SP500 +6.02 NASDAQ Dec/Adv/Vol 1087/1670/1.10 bln NYSE Dec/Adv/Vol 1062/1994/664 mln
1:30 pm : The stock market is slowly drifting toward session highs. Market breadth is postive. Advancers outpace decliners by nearly 2-to-1 on the NYSE, and by 8-to-5 on the Nasdaq. Volume is average, but will pick up after the FOMC announcement.
The materials sector is now only up 0.3% after being the market leader with a 1.5% gain. Telecom (+1.5%) has taken the leadership spot thanks to strength in AT&T (T 39.16, +0.57) and Verizon (VZ 38.85, +0.64).DJ30 +118.14 NASDAQ +16.24 SP500 +6.57 NASDAQ Dec/Adv/Vol 1032/1698/997 mln NYSE Dec/Adv/Vol 1042/1003/606 mln
1:00 pm : The stock market continues to trade sideways as market participants are unwilling to show their hands prior to the FOMC's policy decision. Still, the general tone remains positive.
The Dow Jones is now up 100 points as only five of its 30 components are trading with a loss. General Motors (GM 24.01, +2.81) remains the Dow's best performer this session. Shares of GM are up more than 13% this session, following the automaker's favorable quarterly results announced this morning.DJ30 +100.96 NASDAQ +13.57 SP500 +4.40 NASDAQ Dec/Adv/Vol 1101/1613/919.42 mln NYSE Dec/Adv/Vol 1101/1934/560.36 mln
12:35 pm : The major indices dip off their best levels, but remain in the green. The stock market has had a very good month, and the second quarter is definitely going better than how the first quarter ended.
Unless the market sees an extremely steep sell-off, the S&P 500 is set to break its five-month losing streak -- its worst since the 1990. The S&P 500 has rebounded 5.5% this month, which is its best monthly showing in nearly six years. The Nasdaq, up 7%, is on pace for its best month in three years. The Dow is up 5.4%, which is its largest gain in one year.
All ten economic sectors are poised to end the month higher. Energy is posting the largest advance of 10%, aided by a 13% spike in crude prices. Industrials (+2.4%) have trailed the broader market, after investors were disappointed with GE's earnings results. GE's stock is down 10.7%, its largest monthly percent decline since 2002.DJ30 +98.84 NASDAQ +12.74 SP500 +4.81 NASDAQ Dec/Adv/Vol 1078/1608/837 mln NYSE Dec/Adv/Vol 1072/1935/517 mln
12:00 pm : With plenty of trading catalysts this morning, the stock market has strayed from its typical wait-and-see mode ahead of the FOMC meeting. A confluence of better than expected economic data and earnings reports have kept stocks in positive territory throughout the session. At midday, the stock market is posting a healthy gain, with all economic sectors in positive territory. Meanwhile, the Dow and Nasdaq are posting more substantial gains.
The economic data are acting as the main driver behind the buying interest. Specifically, the Department of Commerce's first quarter GDP report showed the U.S. economy expanded by a larger than expected amount.
Advance first quarter GDP rose by 0.6%, topping the consensus estimate of 0.5%. Although growth remains sluggish, this reading shows the economy is not deteriorating rapidly as many pundits have claimed. The GDP deflator -- an inflation measure -- rose at an annual rate of 2.6%. This is better than the expected rise of 3%, but is up from the 2.4% increase in the fourth quarter.
Separately, the ADP Employment Report, a measure of nonfarm private employment, showed an increase of 10,000 jobs in April, easily beating the consensus estimate that called for a decline of 60,000. The data only gave the market a modest boost, as the ADP report has a history of being inaccurate when compared to the government's monthly jobs report, which will be released on Friday.
The last piece of economic news was the April Chicago Purchasing Managers' Index. The regional manufacturing survey came ahead of expectations at 48.3, which is up from the previous reading of 48.2. Economists expected the index to slip to 47.5. Because the number is below 50, it reflects contraction in manufacturing activity in the Chicago region.
The majority of earnings reports were better than expected. Colgate-Palmolive (CL 72.38, -3.40), General Motors (GM 23.98, +2.78), Kellogg (K 51.91, -0.07), Kraft (KFT 31.89, +1.12) and Procter & Gamble (PG 68.15, +2.25) all topped expectations. Time Warner (TWX 15.18, -0.09), however, missed its earnings estimate.
In other corporate news, Citigroup (C 25.55, -0.77) announced it is raising $4.5 billion in a common stock offering at a 4% discount from Tuesday's closing price. The dilutive nature of the offering has kept Citigroup's stock depressed, and has limited the financial sector's (+0.04%) gain.
Crude oil prices were up 0.9% in early trade, but quickly declined after the Department of Energy said crude stockpiles rose by a larger than expected amount. Crude oil is currently down 1.8%, extending its two-day decline to a total of 4.4%. Energy stocks (+0.3%) dipped as oil retreated, but the rest of the stock market saw renewed buying interest shortly after the release.
Market participants are now turning their attention toward the FOMC policy announcement that is set for release around 2:15 ET. Fed fund futures indicate an 80% chance of a 25 basis point rate cut, and a 20% chance of the Fed taking no action. The Fed has already cut rates by 3% since September in response to the credit market turmoil and slowing economy, leaving the current fed funds rate at 2.25%. DJ30 +114.90 NASDAQ +16.38 SP500 +7.12 NASDAQ Dec/Adv/Vol 977/1649/713 mln NYSE Dec/Adv/Vol 999/1976/450 mln
11:30 am : The major indices hit fresh session highs. All ten economic sectors are now in positive territory.
The materials sector (+1.0%) is posting a decent gain in a bit of a rebound trade after falling 3% in yesterday's session. Agriculture chemical company Monsanto (MON 115.25, +4.32) is providing leadership after falling more than 9% yesterday. This advance is coming in the face of a 0.4% decline in commodities.DJ30 +114.15 NASDAQ +19.30 SP500 +7.53 NASDAQ Dec/Adv/Vol 932/1673/605 mln NYSE Dec/Adv/Vol 969/1971/391 mln
11:05 am : Crude oil prices were up as much as 0.9% in earlier trade, but reversed sharply into the red on the larger than expected increase in inventories level. Prices are currently down 1.6% to $113.87 per barrel, bringing the two-day decline to a total of 4.1%.
The energy sector is now only up 0.1% after being up as much as 1.7%. The sector gave up most of its gains on crude's reversal.
As the energy sector slid, the rest of the stock market has made some gains. Only the financial sector (-0.2%) remains in the red but is well off its worst level. Materials (+1.0%), industrials (+0.9%) and telecom (+0.8%) are showing some strength.DJ30 +93.98 NASDAQ +15.21 SP500 +5.64 NASDAQ Dec/Adv/Vol 957/1593/500 mln NYSE Dec/Adv/Vol 1034/1859/329 mln
10:30 am : The stock market has been heading sideways, holding onto slight gains.
The Department of Energy just released its weekly energy inventory data. For the week ended April 25, crude oil stockpiles rose 3.85 million barrels, which is larger than the expected increase of 0.9 million barrels. Crude oil was trading up 0.7% to $116.46 per barrel just prior to the report.
With this session's economic releases and earnings reports out of the way, all eyes are on the FOMC directive that is set for release around 2:15 ET. Fed fund futures indicate a 78% chance of a 25 basis point rate cut, and a 22% chance of the Fed taking no action. The Fed has already cut rates by 3% since September in response to the credit market turmoil and slowing economy, leaving the current fed funds rate at 2.25%.
(Note: Briefing.com originally incorrectly reported that crude oil stockpiles fell 3.85 million barrels. Crude oil stockpiles actually rose 3.85 million barrels. The error has been corrected.)DJ30 +59.43 NASDAQ +10.29 SP500 +4.12 NASDAQ Dec/Adv/Vol 1098/1726/342 mln NYSE Dec/Adv/Vol 1077/1736/226 mln
10:00 am : Released about fifteen minutes ago, the Chicago Purchasing Managers' Index, a regional manufacturing survey, rose to 48.3 from 48.2, topping the consensus estimate of 47.5. Because this number is below 50, it reflects a decline in manufacturing activity in the Chicago area. Employment showed some weakness, falling to 35.3 from 44.6, but was offset by a gain in inventories to 51.9 from 42.0.
The major indices continue to sport modest gains, and had a muted reaction to the financial data. Only two sectors are in the red. Financials are the main laggards, with a 0.5% decline. This is largely due to weakness in Citigroup (C 25.58, -0.74), which announced a dilutive $4.5 billion common stock offering at a 4% discount to yesterday's closing price. This offering was for a smaller discount than many other firms' recent capital raising efforts, which is helping to mitigate selling interest in the broader market.DJ30 +49.98 NASDAQ +5.73 SP500 +4.09 NASDAQ Dec/Adv/Vol 946/1353/205 mln NYSE Dec/Adv/Vol 1028/1686/142 mln
09:45 am : The stock market opens modestly higher on what has been a very busy morning for market participants. Better than expected economic reports lifted stocks out of the red in premarket action.
The headliner was the Department of Commerce's advance first quarter GDP reading, which showed the U.S. economy expanded by a larger than expected amount. First quarter GDP rose by 0.6%, topping the consensus estimate of 0.5%. Although growth remains sluggish, this reading shows the economy is not deteriorating rapidly as many pundits have claimed. The GDP deflator -- an inflation measure -- rose at an annual rate of 2.6%. This is better than the expected rise of 3%, but is up from the 2.4% increase in the fourth quarter.
The ADP Employment Report, a measure of nonfarm private employment, showed an increase of 10,000 jobs in April, easily beating the consensus estimate that called for a decline of 60,000. While this better than expected reading is encouraging, keep in mind that the ADP report has a history of inaccuracy compared to the government's jobs report, which is set for release on Friday.
In corporate news, earnings reports have been mostly postive, with Colgate-Palmolive (CL), General Motors (GM), Kellog (K), Kraft (KFT) and Procter & Gamble (PG) all topping their respective estimates. Time Warner (TWX), however, missed its earnings estimate.
The day has just begun since there is more big news on tap. The FOMC will be announcing its decision regarding the fed funds and discount rates at 2:15 ET.DJ30 +30.94 NASDAQ +5.75 SP500 +3.41 NASDAQ Dec/Adv/Vol 823/1318/90 mln NYSE Dec/Adv/Vol 977/1614/72 mln
09:16 am : S&P futures vs fair value: +3.3. Nasdaq futures vs fair value: +4.0. Futures indicate a modestly higher open for the stock market. European stock markets rebounded into the green on the better than expected U.S. GDP reading. The FTSE is now up 0.2% after being down as much as 0.9% in earlier trade. Asian markets ended their day with slight losses, with the Nikkei falling 0.3% and the Hang Seng shedding 0.6%.
09:00 am : S&P futures vs fair value: +3.7. Nasdaq futures vs fair value: +4.5. Futures have dipped a few points from their best levels, but are still holding onto most of their GDP induced gains. Citigroup announced it has increased its common stock offering size to $4.5 billion from the $3.0 billion it announced yesterday. The offering will be priced at $25.27 per share, a 4% discount from Tuesday's closing price.
08:35 am : S&P futures vs fair value: +5.1. Nasdaq futures vs fair value: +6.2. Futures catch a bid on news the US economy grew by a larger than expected amount, although growth remains sluggish. The Dept. of Commerce said first quarter GDP rose by 0.6% at an annualized rate, which was better than the consensus estimate that called for growth of 0.5%. The fourth quarter of 2007 also grew by 0.6%. The GDP deflator, an inflation measure, increased by 2.6%, and core PCE increased by 2.2%. Economists expected the GDP deflator to rise by 3.0% and the core PCE to increase by 2.2%.
08:20 am : S&P futures vs fair value: -0.4. Nasdaq futures vs fair value: -2.2. S&P 500 futures pare their losses and now point to a flat start on a better than expected employment reading. The ADP National Employment Report indicated nonfarm private employment increased by 10,000 in April, from the 3,000 increase in March. Economists expected a decline of 60,000 jobs. The ADP report is a measure of nonfarm private employement, while the government's jobs report on Friday includes nonfarm public and private employment. ADP's record has been somewhat spotty, with its numbers not always coinciding with the government's report.
08:00 am : S&P futures vs fair value: -3.3. Nasdaq futures vs fair value: -5.5. Futures point to a slightly lower open ahead of the first quarter GDP reading at 8:30 ET and the FOMC announcement at 14:15 ET. Market particpants will also be digesting the ADP private payroll reading at 8:15 ET and the Chicago PMI at 9:45 ET. In corporate news, Citigroup (C) announced it is offering $3 billion in common stock, which follows its recent $6 billion preferred stock offering. Time Warner (TWX) reported earnings of $0.22 per share, falling one cent short of expectations. However, earnings reports have been mostly postive, with Colgate-Palmolive (CL), General Motors (GM), Kellog (K), Kraft (K) and Procter & Gamble (PG) all topping their respective estimates.
06:18 am : S&P futures vs fair value: -3.3. Nasdaq futures vs fair value: -2.0.
06:18 am : FTSE...6055.00...-34.40...-0.6%. DAX...6863.28...-22.06...-0.3%.
06:18 am : Nikkei...13849.99...-44.38...-0.3%. Hang Seng...25755.35...-158.80...-0.6%.
http://biz.yahoo.com/mu/update.html
4:30 pm : It was an incredibly busy day for market participants on Wednesday. The market was bombarded with an FOMC announcement, several economic releases and a plethora of earnings reports. The stock market posted a healthy gain for most of the session on news the U.S. economy expanded by a larger than expected amount in the first quarter, but then retreated into negative territory shortly after the FOMC announcement.
As expected, the Federal Reserve cut the fed funds rate by 25 basis points to 2.00%, bringing its total easing since September to 325 basis points. The discount rate was also cut by 25 basis points to 2.25%. The FOMC cited continued weakness in economic activity.
The Fed's statement regarding inflation concerns was largely unchanged from the March 18 release. The Fed said readings on core inflation have improved somewhat, but energy and commodity prices have increased, as have inflation expectations. The Fed believes inflation will moderate in the coming quarters and will continue to monitor inflation developments carefully.
Similar to its previous statement, the Fed said its rate cut easing to date and other efforts to improve market liquidity will help "promote moderate growth over time and mitigate risks to economic activity." However, this release left out the statement that "downside risks to growth remain." The absence of this comment indicates the Fed plans to stand pat on rates, but as it noted, will act as needed depending on future economic and financial developments.
Basically the Fed is giving the indication that its latest rate-cutting cycle is over. That does not mean the Fed is going to raise rates imminently though. Rather it means the Fed is in a wait-and-see mode. The stock market spiked as high as 1.0% on the release, but quickly reversed course to trade down as much as 0.5%. In the end, the stock market settled with a modest loss, near its worst level of the session. At the same time, the long end of the Treasury curve saw buying interest.
Although the FOMC announcement overshadowed the day's prior events, there were plenty of important items -- most importantly a better than expected reading on the state of the U.S. economy.
Advance first quarter GDP rose by 0.6%, topping the consensus estimate of 0.5%. Although growth remains sluggish, this reading shows the economy is not deteriorating rapidly as many alarmists have claimed. The GDP deflator -- an inflation measure -- rose at an annual rate of 2.6%. This is better than the expected rise of 3%, but is up from the 2.4% increase in the fourth quarter.
Separately, the ADP Employment Report, a measure of nonfarm private employment, showed an increase of 10,000 jobs in April, easily beating the consensus estimate that called for a decline of 60,000. Although the better than expected data are encouraging, the ADP report has a history of being inaccurate when compared to the government's monthly jobs report, which will be released on Friday.
In corporate news, Citigroup (C 25.27, -1.05) announced it is raising $4.5 billion in a common stock offering at a 4% discount from Tuesday's closing price. The dilutive nature of the offering kept Citigroup's stock depressed, and sent the financial sector (-1.0%) into a laggard position.
The majority of earnings reports were better than expected. Colgate-Palmolive (CL 70.70, -5.08), General Motors (GM 23.20, +2.00), Kellogg (K 51.17, -0.81), Kraft (KFT 31.63, +0.86) and Procter & Gamble (PG 67.05, +1.15) all topped expectations. Time Warner (TWX 14.85, -0.42), however, missed its earnings estimate.
Crude oil had an interesting day of trade, going from a gain of 0.9% to a loss of 2% after the Department of Energy said in its weekly report that crude stockpiles rose by a larger than expected amount. Crude eventually recovered to a loss of just 0.6% at $114.90 per barrel after the dollar (-0.4%) weakened following the FOMC rate cut.
Although the stock market did not end the month of April on a strong note, the bulls are pleased with the end result. The S&P 500 rebounded 4.8%, snapping its five-month losing streak, and marking its largest monthly percent gain since December 2003. Commodities also had a strong month, gaining 5.8% with crude oil rallying 13.1%.DJ30 -11.81 NASDAQ -13.30 NQ100 -0.8% R2K -0.4% SP400 -0.1% SP500 -5.35 NASDAQ Dec/Adv/Vol 1463/1403/2.20 bln NYSE Dec/Adv/Vol 1475/1652/1.44 bln
3:30 pm : The major indices extend their declines, with only the Dow remaining in positive territory thanks to strength in General Motors (GM 23.39, +2.19). Six sectors are now in the red, with notable weakness in financials (-0.7%), tech (-0.8%) and consumer discretionary (-0.9%).
Meanwhile, the long end of the Treasury curve is seeing some buying interest. The 10-year note is up 18 ticks and the 30-year bond is up 33/32 ticks.DJ30 +3.91 NASDAQ -18.78 SP500 -0.37 NASDAQ Dec/Adv/Vol 1584/1234/1.75 bln NYSE Dec/Adv/Vol 1523/1581/1.03 bln
3:00 pm : The major indices are now trading below their preannouncement levels. Tech (-0.2%) is taking the brunt of the selling pressure, which caused the Nasdaq to fall into negative territory as it trails the S&P 500 for the first time this session.
Energy stocks (+1.5%), and the price of oil (-0.9%), saw the biggest boost following the FOMC announcement. Notably, only the energy and materials (+0.9%) sectors are trading above their preFOMC levels. Consumer stocks, such as staples (+0.3%) and discretionary (-0.4%) retreated.DJ30 +60.00 NASDAQ -5.60 SP500 +0.49 NASDAQ Dec/Adv/Vol 1340/1467/1.49 bln NYSE Dec/Adv/Vol 1243/1847/894 mln
2:35 pm : The stock market traded in a volatile manner following the FOMC announcement, which is typically the case. Currently, the stock market is modestly higher than prerelease levels as the Fed's outlook on inflation was not too stern, and it did not rule out the possibility of future rate cuts.
The Fed's statement regarding inflation concerns was largely unchanged from the March 18 release. The Fed said readings on core inflation have improved somewhat, but energy and commodity prices have increased, as have inflation expectations. The Fed will continue to monitor inflation developments carefully.
Similar to its previous statement, the Fed said its 3.25% in easing to date and other efforts to improve market liquidity will help "promote moderate growth over time and mitigate risks to economic activity." However, this release left out the statement that "downside risks to growth remain." The absence of this comment indicates the Fed plans to stand pat on rates, but as it noted, will act as needed depending on future economic and financial developments.
Dallas Fed president Fisher and Philadelphia Fed President Plosser both dissented, preferring no change. This is no surprise as both members dissented against the Fed's 75 basis point cut on March 18, and have publicly stated concerns over inflation.DJ30 +158.60 NASDAQ +18.16 SP500 +11.69 NASDAQ Dec/Adv/Vol 1071/1717/1.31 bln NYSE Dec/Adv/Vol 978/2097/790 mln
2:20 pm : The FOMC just announced it cut the fed funds and discount rates by 25 basis points. This leaves the fed funds rate at 2.00% and the discount rate at 2.25%.
The Fed said economic activity remains weak, while inflation expectations are picking up. It noted the substantial easing should promote growth. This action had two dissensions, with both Plosser and Fisher preferring no change. As a reminder, the Fed cut rates by 75 basis point at its March 18 meeting, with Fed presidents Fisher and Plosser dissenting, as they preferred less aggressive action.
The stock market had a positive reaction immediately following the release.
Briefing.com will provide additional analysis at the bottom of the hour.DJ30 +176.43 NASDAQ +19.91 SP500 +13.30 NASDAQ Dec/Adv/Vol 1444/1615/1.18 bln NYSE Dec/Adv/Vol 1095/1989/713 mln
2:00 pm : Stocks have traded mostly sideways as traders await the FOMC announcement due in roughly 15 minutes.
In late March, traders had been pricing in a 50% chance of a 50 basis point cut to the fed funds rate with the remaining odds on a 25 basis point cut for this session's FOMC meeting. But increased inflation concerns due to the sustained spike in commodity prices, and a narrowing of credit spreads prompted traders to ease their bets. Traders now anticipate a 78% chance of a 25 basis point cut to the fed funds rate and a 22% chance of no change.
It is likely that the Fed will cut rates by 25 basis points, but put more emphasis in its statement regarding inflation risks -- indicating that the Fed is essentially done with this rate-cutting cycle.
Briefing.com will provide an update once the announcement hits the wires.DJ30 +106.88 NASDAQ +13.04 SP500 +6.02 NASDAQ Dec/Adv/Vol 1087/1670/1.10 bln NYSE Dec/Adv/Vol 1062/1994/664 mln
1:30 pm : The stock market is slowly drifting toward session highs. Market breadth is postive. Advancers outpace decliners by nearly 2-to-1 on the NYSE, and by 8-to-5 on the Nasdaq. Volume is average, but will pick up after the FOMC announcement.
The materials sector is now only up 0.3% after being the market leader with a 1.5% gain. Telecom (+1.5%) has taken the leadership spot thanks to strength in AT&T (T 39.16, +0.57) and Verizon (VZ 38.85, +0.64).DJ30 +118.14 NASDAQ +16.24 SP500 +6.57 NASDAQ Dec/Adv/Vol 1032/1698/997 mln NYSE Dec/Adv/Vol 1042/1003/606 mln
1:00 pm : The stock market continues to trade sideways as market participants are unwilling to show their hands prior to the FOMC's policy decision. Still, the general tone remains positive.
The Dow Jones is now up 100 points as only five of its 30 components are trading with a loss. General Motors (GM 24.01, +2.81) remains the Dow's best performer this session. Shares of GM are up more than 13% this session, following the automaker's favorable quarterly results announced this morning.DJ30 +100.96 NASDAQ +13.57 SP500 +4.40 NASDAQ Dec/Adv/Vol 1101/1613/919.42 mln NYSE Dec/Adv/Vol 1101/1934/560.36 mln
12:35 pm : The major indices dip off their best levels, but remain in the green. The stock market has had a very good month, and the second quarter is definitely going better than how the first quarter ended.
Unless the market sees an extremely steep sell-off, the S&P 500 is set to break its five-month losing streak -- its worst since the 1990. The S&P 500 has rebounded 5.5% this month, which is its best monthly showing in nearly six years. The Nasdaq, up 7%, is on pace for its best month in three years. The Dow is up 5.4%, which is its largest gain in one year.
All ten economic sectors are poised to end the month higher. Energy is posting the largest advance of 10%, aided by a 13% spike in crude prices. Industrials (+2.4%) have trailed the broader market, after investors were disappointed with GE's earnings results. GE's stock is down 10.7%, its largest monthly percent decline since 2002.DJ30 +98.84 NASDAQ +12.74 SP500 +4.81 NASDAQ Dec/Adv/Vol 1078/1608/837 mln NYSE Dec/Adv/Vol 1072/1935/517 mln
12:00 pm : With plenty of trading catalysts this morning, the stock market has strayed from its typical wait-and-see mode ahead of the FOMC meeting. A confluence of better than expected economic data and earnings reports have kept stocks in positive territory throughout the session. At midday, the stock market is posting a healthy gain, with all economic sectors in positive territory. Meanwhile, the Dow and Nasdaq are posting more substantial gains.
The economic data are acting as the main driver behind the buying interest. Specifically, the Department of Commerce's first quarter GDP report showed the U.S. economy expanded by a larger than expected amount.
Advance first quarter GDP rose by 0.6%, topping the consensus estimate of 0.5%. Although growth remains sluggish, this reading shows the economy is not deteriorating rapidly as many pundits have claimed. The GDP deflator -- an inflation measure -- rose at an annual rate of 2.6%. This is better than the expected rise of 3%, but is up from the 2.4% increase in the fourth quarter.
Separately, the ADP Employment Report, a measure of nonfarm private employment, showed an increase of 10,000 jobs in April, easily beating the consensus estimate that called for a decline of 60,000. The data only gave the market a modest boost, as the ADP report has a history of being inaccurate when compared to the government's monthly jobs report, which will be released on Friday.
The last piece of economic news was the April Chicago Purchasing Managers' Index. The regional manufacturing survey came ahead of expectations at 48.3, which is up from the previous reading of 48.2. Economists expected the index to slip to 47.5. Because the number is below 50, it reflects contraction in manufacturing activity in the Chicago region.
The majority of earnings reports were better than expected. Colgate-Palmolive (CL 72.38, -3.40), General Motors (GM 23.98, +2.78), Kellogg (K 51.91, -0.07), Kraft (KFT 31.89, +1.12) and Procter & Gamble (PG 68.15, +2.25) all topped expectations. Time Warner (TWX 15.18, -0.09), however, missed its earnings estimate.
In other corporate news, Citigroup (C 25.55, -0.77) announced it is raising $4.5 billion in a common stock offering at a 4% discount from Tuesday's closing price. The dilutive nature of the offering has kept Citigroup's stock depressed, and has limited the financial sector's (+0.04%) gain.
Crude oil prices were up 0.9% in early trade, but quickly declined after the Department of Energy said crude stockpiles rose by a larger than expected amount. Crude oil is currently down 1.8%, extending its two-day decline to a total of 4.4%. Energy stocks (+0.3%) dipped as oil retreated, but the rest of the stock market saw renewed buying interest shortly after the release.
Market participants are now turning their attention toward the FOMC policy announcement that is set for release around 2:15 ET. Fed fund futures indicate an 80% chance of a 25 basis point rate cut, and a 20% chance of the Fed taking no action. The Fed has already cut rates by 3% since September in response to the credit market turmoil and slowing economy, leaving the current fed funds rate at 2.25%. DJ30 +114.90 NASDAQ +16.38 SP500 +7.12 NASDAQ Dec/Adv/Vol 977/1649/713 mln NYSE Dec/Adv/Vol 999/1976/450 mln
11:30 am : The major indices hit fresh session highs. All ten economic sectors are now in positive territory.
The materials sector (+1.0%) is posting a decent gain in a bit of a rebound trade after falling 3% in yesterday's session. Agriculture chemical company Monsanto (MON 115.25, +4.32) is providing leadership after falling more than 9% yesterday. This advance is coming in the face of a 0.4% decline in commodities.DJ30 +114.15 NASDAQ +19.30 SP500 +7.53 NASDAQ Dec/Adv/Vol 932/1673/605 mln NYSE Dec/Adv/Vol 969/1971/391 mln
11:05 am : Crude oil prices were up as much as 0.9% in earlier trade, but reversed sharply into the red on the larger than expected increase in inventories level. Prices are currently down 1.6% to $113.87 per barrel, bringing the two-day decline to a total of 4.1%.
The energy sector is now only up 0.1% after being up as much as 1.7%. The sector gave up most of its gains on crude's reversal.
As the energy sector slid, the rest of the stock market has made some gains. Only the financial sector (-0.2%) remains in the red but is well off its worst level. Materials (+1.0%), industrials (+0.9%) and telecom (+0.8%) are showing some strength.DJ30 +93.98 NASDAQ +15.21 SP500 +5.64 NASDAQ Dec/Adv/Vol 957/1593/500 mln NYSE Dec/Adv/Vol 1034/1859/329 mln
10:30 am : The stock market has been heading sideways, holding onto slight gains.
The Department of Energy just released its weekly energy inventory data. For the week ended April 25, crude oil stockpiles rose 3.85 million barrels, which is larger than the expected increase of 0.9 million barrels. Crude oil was trading up 0.7% to $116.46 per barrel just prior to the report.
With this session's economic releases and earnings reports out of the way, all eyes are on the FOMC directive that is set for release around 2:15 ET. Fed fund futures indicate a 78% chance of a 25 basis point rate cut, and a 22% chance of the Fed taking no action. The Fed has already cut rates by 3% since September in response to the credit market turmoil and slowing economy, leaving the current fed funds rate at 2.25%.
(Note: Briefing.com originally incorrectly reported that crude oil stockpiles fell 3.85 million barrels. Crude oil stockpiles actually rose 3.85 million barrels. The error has been corrected.)DJ30 +59.43 NASDAQ +10.29 SP500 +4.12 NASDAQ Dec/Adv/Vol 1098/1726/342 mln NYSE Dec/Adv/Vol 1077/1736/226 mln
10:00 am : Released about fifteen minutes ago, the Chicago Purchasing Managers' Index, a regional manufacturing survey, rose to 48.3 from 48.2, topping the consensus estimate of 47.5. Because this number is below 50, it reflects a decline in manufacturing activity in the Chicago area. Employment showed some weakness, falling to 35.3 from 44.6, but was offset by a gain in inventories to 51.9 from 42.0.
The major indices continue to sport modest gains, and had a muted reaction to the financial data. Only two sectors are in the red. Financials are the main laggards, with a 0.5% decline. This is largely due to weakness in Citigroup (C 25.58, -0.74), which announced a dilutive $4.5 billion common stock offering at a 4% discount to yesterday's closing price. This offering was for a smaller discount than many other firms' recent capital raising efforts, which is helping to mitigate selling interest in the broader market.DJ30 +49.98 NASDAQ +5.73 SP500 +4.09 NASDAQ Dec/Adv/Vol 946/1353/205 mln NYSE Dec/Adv/Vol 1028/1686/142 mln
09:45 am : The stock market opens modestly higher on what has been a very busy morning for market participants. Better than expected economic reports lifted stocks out of the red in premarket action.
The headliner was the Department of Commerce's advance first quarter GDP reading, which showed the U.S. economy expanded by a larger than expected amount. First quarter GDP rose by 0.6%, topping the consensus estimate of 0.5%. Although growth remains sluggish, this reading shows the economy is not deteriorating rapidly as many pundits have claimed. The GDP deflator -- an inflation measure -- rose at an annual rate of 2.6%. This is better than the expected rise of 3%, but is up from the 2.4% increase in the fourth quarter.
The ADP Employment Report, a measure of nonfarm private employment, showed an increase of 10,000 jobs in April, easily beating the consensus estimate that called for a decline of 60,000. While this better than expected reading is encouraging, keep in mind that the ADP report has a history of inaccuracy compared to the government's jobs report, which is set for release on Friday.
In corporate news, earnings reports have been mostly postive, with Colgate-Palmolive (CL), General Motors (GM), Kellog (K), Kraft (KFT) and Procter & Gamble (PG) all topping their respective estimates. Time Warner (TWX), however, missed its earnings estimate.
The day has just begun since there is more big news on tap. The FOMC will be announcing its decision regarding the fed funds and discount rates at 2:15 ET.DJ30 +30.94 NASDAQ +5.75 SP500 +3.41 NASDAQ Dec/Adv/Vol 823/1318/90 mln NYSE Dec/Adv/Vol 977/1614/72 mln
09:16 am : S&P futures vs fair value: +3.3. Nasdaq futures vs fair value: +4.0. Futures indicate a modestly higher open for the stock market. European stock markets rebounded into the green on the better than expected U.S. GDP reading. The FTSE is now up 0.2% after being down as much as 0.9% in earlier trade. Asian markets ended their day with slight losses, with the Nikkei falling 0.3% and the Hang Seng shedding 0.6%.
09:00 am : S&P futures vs fair value: +3.7. Nasdaq futures vs fair value: +4.5. Futures have dipped a few points from their best levels, but are still holding onto most of their GDP induced gains. Citigroup announced it has increased its common stock offering size to $4.5 billion from the $3.0 billion it announced yesterday. The offering will be priced at $25.27 per share, a 4% discount from Tuesday's closing price.
08:35 am : S&P futures vs fair value: +5.1. Nasdaq futures vs fair value: +6.2. Futures catch a bid on news the US economy grew by a larger than expected amount, although growth remains sluggish. The Dept. of Commerce said first quarter GDP rose by 0.6% at an annualized rate, which was better than the consensus estimate that called for growth of 0.5%. The fourth quarter of 2007 also grew by 0.6%. The GDP deflator, an inflation measure, increased by 2.6%, and core PCE increased by 2.2%. Economists expected the GDP deflator to rise by 3.0% and the core PCE to increase by 2.2%.
08:20 am : S&P futures vs fair value: -0.4. Nasdaq futures vs fair value: -2.2. S&P 500 futures pare their losses and now point to a flat start on a better than expected employment reading. The ADP National Employment Report indicated nonfarm private employment increased by 10,000 in April, from the 3,000 increase in March. Economists expected a decline of 60,000 jobs. The ADP report is a measure of nonfarm private employement, while the government's jobs report on Friday includes nonfarm public and private employment. ADP's record has been somewhat spotty, with its numbers not always coinciding with the government's report.
08:00 am : S&P futures vs fair value: -3.3. Nasdaq futures vs fair value: -5.5. Futures point to a slightly lower open ahead of the first quarter GDP reading at 8:30 ET and the FOMC announcement at 14:15 ET. Market particpants will also be digesting the ADP private payroll reading at 8:15 ET and the Chicago PMI at 9:45 ET. In corporate news, Citigroup (C) announced it is offering $3 billion in common stock, which follows its recent $6 billion preferred stock offering. Time Warner (TWX) reported earnings of $0.22 per share, falling one cent short of expectations. However, earnings reports have been mostly postive, with Colgate-Palmolive (CL), General Motors (GM), Kellog (K), Kraft (K) and Procter & Gamble (PG) all topping their respective estimates.
06:18 am : S&P futures vs fair value: -3.3. Nasdaq futures vs fair value: -2.0.
06:18 am : FTSE...6055.00...-34.40...-0.6%. DAX...6863.28...-22.06...-0.3%.
06:18 am : Nikkei...13849.99...-44.38...-0.3%. Hang Seng...25755.35...-158.80...-0.6%.
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