Briefing: Stock Market Update
Updated: 09-Jun-08
Market Snapshot
Dow 12280.32 +70.51 (+0.57%)
Nasdaq 2459.46 -15.10 (-0.61%)
SP 500 1361.76 +1.08 (+0.08%)
10-yr Note -21/32 3.99%
NYSE Adv 1111 Dec 2004 Vol 1.36 bln
Nasdaq Adv 913 Dec 1952 Vol 2.13 bln
Industry Watch
Strong: aluminum; coal & consumable fuels; oil & gas drilling; automobile mfg.; airlines; oil & gas exploration & producers; auto parts & equip; gas utilities; oil & gas equip & services; restaurants
Weak: thrifts & mortgage finance; photo products; divsfd financial services; real estate mgt & dev; regional banks; investment banking & brokerage; forest products; residential reits; divsfd banks; education services
Moving the Market
* Lehman Brothers reports massive $2.8 billion second quarter loss, will raise $6.0 billion in new capital
* April pending home sales unexpectedly rise 6.3%
* McDonald's May same-store sales growth tops expectations
* NY Fed President Geithner says global inflation will probably require tighter policy
16:25 ET
Mixed Finish to Choppy Day
Dow +70.51 at 12280.32, Nasdaq -15.10 at 2459.46, S&P +1.08 at 1361.76
[BRIEFING.COM] After a volatile day of trade Monday, the major indices ended the session in mixed fashion. The S&P 500 gained one point, as strength in energy (+2.7%) helped offset weakness in financials (-2.3%).
This result is somewhat disappointing, considering the S&P 500 could only muster a 0.1% gain after falling more than 3% on Friday -- especially taking into consideration that the session's economic data topped expectations and that crude prices posted a steep decline.
Large-cap tech was under pressure, which caused the Nasdaq to fall 0.6%. A better-than-expected same-store sales report from McDonald's (MCD 59.33, +2.38) and speculation that Alcoa (AA 42.17, +2.95) could be a takeover target helped lift the Dow to a 0.6% gain.
Selling interest within financials was fueled by a disappointing earnings preannouncement from Lehman Brothers (LEH 29.62, -2.67). Lehman expects a massive $2.8 billion second quarter loss and plans to raise $6.0 billion in new capital in common and preferred stock offerings -- which is on the high end of previous speculation. The $4.0 billion common stock offering was priced at $28 per share, a 13% discount to Friday's closing price. The firm also priced a $2.0 billion public offering of 2 million shares of 8.75% noncumulative mandatory convertible preferred stock.
The financial sector traded as high as 0.8% in a rebound bid following Friday's decline of roughly 5%, but plummeted to a new five-year low after New York Fed President Geithner said global inflation will probably require tighter policy.
This isn't an earth-shattering revelation since Geithner is simply stating the obvious. Nevertheless, his remarks fit neatly with commentary of late from other Fed officials who are sounding more hawkish about keeping inflation in check than they have in the recent past.
There were some positive items on Monday. Crude oil fell 2.9% to $134.54 as investors took some profits following Friday's 8.4% spike. The dollar gained 0.65% in the wake of hawkish Fed comments, which also played a role in crude's retreat. A Saudi official said the current price of oil is not supported by fundamentals, although OPEC has been expressing this view long before oil hit $100.
In economic news, April pending home sales unexpectedly rose 6.3% on a seasonally adjusted annual rate, according to the National Association of Realtors. Economists expected sales to fall 0.4%.
In corporate news, Honeywell (HON 54.81, +0.80) announced that it signed a definitive agreement to sell its Aerospace Consumable Solutions business to B/E Aerospace (BEAV 29.96, +2.98) for $1.05 billion. Honeywell feels the Consumables Solutions unit no longer fits with Honeywell Aerospace's focus on advanced technologies.
Apple (AAPL 181.61, -4.03) traded in a volatile manner leading up to and following its unveiling of the new iPhone, which is set for release on July 11. AT&T (T 37.56, -0.65), which will remain the exclusive carrier of the phone, got clipped after announcing it expects the phone will pressure its margins and earnings.
..Nasdaq 100 -0.5%. ..S&P Midcap 400 -0.1%. ..Russell 2000 -0.7%.
15:35 ET
Financials Retreat to Multi-Year Low
Dow +28.14 at 12243.78, Nasdaq -28.04 at 2446.52, S&P -5.10 at 1356.10
[BRIEFING.COM] The financial sector extends its losses, falling 3.2% to session lows. The sector hit 302.68, which marks a new five-year low.
Meanwhile, enthusiasm fades over Apple's (AAPL 178.18, -7.40) new iPhone, as its stock trades with a loss of more than 4%. On a related note, AT&T (T 37.10, -1.12) announced that it plans to offer the next generation iPhone, and will remain the exclusive carrier. The company expects the deal to pressure its margins and earnings, which sent its stock and telecom (-2.2%) into negative territory.
14:55 ET
Apple Unveils New iPhone
Dow +28.82 at 12236.92, Nasdaq -30.17 at 2443.70, S&P -4.90 at 1355.80
[BRIEFING.COM] The stock market is posting a slight loss, as continued weakness in financials (-2.5%) is preventing the market from making it back to positive territory.
The tech sector (-0.7%) pares a portion of its losses as Apple (AAPL 180.85, -4.79) CEO Steve Jobs unveils the new iPhone 3G at an Apple conference. Jobs said the new iPhone will have a better battery life and a built-in GPS. The phone will be available in 22 countries on July 11. The eight gigabyte version will be priced at $199 and the 16 gigabyte will be priced at $299. Apple stock is down 2.6% this session, but is well off its low when it was down 5.3%.
14:30 ET
Crude Extends Decline
Dow +36.47 at 12245.23, Nasdaq -32.94 at 2441.62, S&P -4.31 at 1356.18
[BRIEFING.COM] The major indices fall to session lows and then recover a bit, with the Dow briefly touching negative ground.
Meanwhile, crude oil prices are trading at session lows. Crude is down 3.0% to $134.35 per barrel. Commodities as whole are down 0.8%, although corn gained 1%, hitting a record high for the third straight session.
14:00 ET
Market Follows Financials Lower
Dow +35.90 at 12244.82, Nasdaq -36.27 at 2439.02, S&P -5.64 at 1356.19
[BRIEFING.COM] A fresh wave of broad-based selling interest sends the major indices to session lows. The Dow is holding onto a slight gain, although its advance is modest. Strength in energy (+1.8%) is unable to offset weakness in the two largest sectors -- tech (-1.2%) and financials (-2.2%).
Within the financial sector, 83% of stocks are posting a loss. Thrifts & mortgage stocks (-5.5%) are posting the largest decline, with Washington Mutual (WM 6.69, -0.85) down 11% and MGIC Investment Corp (MTG 10.62, -0.71) down 6.3%.
13:30 ET
Inflation Remarks Undercut Market
Dow +48.61 at 12261.10, Nasdaq -27.74 at 2447.76, S&P -0.77 at 1360.32
[BRIEFING.COM] The major indices have suffered a sharp contraction in the the past half-hour after news wires ran headlines that noted New York Fed President Geithner said global inflation will probably require tighter policy.
This isn't an earth-shattering revelation since Geithner is simply stating the obvious. Nevertheless, his remarks fit neatly with commentary of late from other Fed officials who are sounding more hawkish about keeping inflation in check than they have in the recent past.
The added understanding that Dallas Fed President Fisher was doing an interview at the same time with CNBC, and voiced his support for Geithner's remarks, also contributed to the knee-jerk selling interest.
The financial sector, down 0.7% at the last report, is now down 1.7%.
13:00 ET
Market Shows Split Personality
Dow +100.06 at 12209.80, Nasdaq -12.20 at 2462.38, S&P +6.62 at 1367.32
[BRIEFING.COM] The split nature of today's stock market persists with the Nasdaq holding in negative territory and the blue chip averages sporting gains.
The advance in the broader market has been spearheaded by the energy and materials sector, but unlike Friday's broad-based sell-off, the participation on the upside today isn't that pronounced. This evidence presents itself in the advance-decline line at the NYSE, which actually favors declining issues by a small margin at this juncture.
As far as participation goes, the financial sector (-0.7%) is the most conspicuous laggard. Its performance will be watched closely in afternoon trading since the sector has the influence either to help the broader market build on today's modest gains or to see those gains evaporate.
12:30 ET
Financials Drift Toward Low
Dow +91.76 at 12301.24, Nasdaq -16.61 at 2457.95, S&P +5.80 at 1366.44
[BRIEFING.COM] Investors are hesitant to send the market higher, as the major indices continue to trade in a mixed and choppy fashion. Financials (-0.5%) are trading near session lows, although some financial names are showing strength.
Global commercial finance company CIT Group (CIT 9.92, +0.73) is getting a nice boost after announcing this morning that it has agreed to a $3 billion long-term committed financing facility provided by Goldman Sachs. CIT believes the transaction will help strengthen its balance sheet. The company has been hit hard by the credit market turmoil, with its stock down 84% from its 52-week high.
11:55 ET
Modest Gains at Midday
Dow +82.68 at 12291.72, Nasdaq -15.95 at 2458.61, S&P +5.24 at 1365.88
[BRIEFING.COM] The stock market is posting a modest gain at midday. A better-than-expected housing report and a drop in crude prices are fueling the buying interest. However, weakness in tech and financials is limiting the broader market's advance.
A second quarter earnings preannouncement from Lehman Brothers (LEH 29.97, -2.32) topped headlines this morning. The struggling Wall Street firm expects a massive $2.8 billion second quarter loss and plans to raise $6.0 billion in new capital in common and preferred stock offerings -- which is on the high end of previous speculation. The $4.0 billion common stock offering was priced at $28 per share, a 13% discount to Friday's closing price. The firm also priced a $2.0 billion public offering of 2 million shares of 8.75% noncumulative mandatory convertible preferred stock.
This news has weighed on the financial sector, which is underperforming with a loss of 0.2%.
Meanwhile, the tech sector (-0.6%) is facing selling pressure as shares of Apple (APPL 183.61, -2.03) and Google (GOOG 555.13, -11.87) fall. The weakness in large-cap tech is causing the Nasdaq 100 to retreat 0.6%.
The rest of the stock market is faring better, with seven of the ten economic sectors posting a gain. The energy and materials sectors are leading the way with advances of 2.6% and 1.5%, respectively. A bit of a rebound bid following Friday's steep losses, as well as a 1.3% drop in crude prices is helping to lift the market.
Also giving the market a boost is word that April pending home sales unexpectedly rose 6.3% on a seasonally adjusted annual rate, according to National Association of Realtors. Economists expected sales to fall 0.4%.
In corporate news, Honeywell (HON 55.43, +1.42) announced that it signed a definitive agreement to sell its Aerospace Consumable Solutions business to B/E Aerospace (BEAV 28.95, +1.97) for $1.05 billion. Honeywell feels the Consumables Solutions unit no longer fits with Honeywell Aerospace's focus on advanced technologies.
Dow component McDonald's (MCD 59.20, +2.25) said its global same-store sales rose 7.7% in May, topping the Briefing.com consensus estimate of 3.6%. International comparable sales rose 16.0%, or 9.1% in constant currencies. U.S. comparable sales rose 4.2%.
11:30 ET
Financials Pare Losses
Dow +105.19 at 12314.76, Nasdaq -14.88 at 2459.55, S&P +6.97 at 1367.70
[BRIEFING.COM] The major indices are on the rise, but continue to trade in mixed fashion. Large-cap tech is taking a toll on the Nasdaq 100 (-0.8%).
Financials (+0.1%) have managed to make it back to positive ground, although the sector's advance is slight.
11:00 ET
Large Cap Tech Struggles
Dow +70.43 at 12280.97, Nasdaq -19.75 at 2454.86, S&P +4.24 at 1364.92
[BRIEFING.COM] The Dow and S&P 500 give up a portion of their gains, while the Nasdaq extends its loss.
Technology stocks Apple (AAPL 181.97, -3.67) and Google (GOOG 553.95, -13.05) are acting as the biggest drags. Financials (-0.3%) have retreated into the red after being up as much as 0.8%. Lehman Brothers (LEH 29.50, -2.79) is the main laggard, and AIG (AIG 33.53, -0.40) is also under pressure after The Wall Street Journal reported major shareholders are not happy with current management.
Diversified technology and manufacturing company Honeywell (HON 55.20, +1.19) is outperforming this session. The company announced that it signed a definitive agreement to sell its Aerospace Consumable Solutions business to B/E Aerospace for $1.05 billion. Honeywell feels the Consumables Solutions unit no longer fits with Honeywell Aerospace's focus on advanced technologies.
10:30 ET
McDonald's Lifts Dow
Dow +100.63 at 12314.43, Nasdaq -8.30 at 2466.26, S&P +7.06 at 1368.17
[BRIEFING.COM] The major indices are trading in mixed fashion. The Dow is handily outperforming the Nasdaq and S&P 500.
Dow component McDonald's (MCD 59.48, +2.53) said its global same-store sales rose 7.7% in May, topping the Briefing.com consensus estimate of 3.6%. International comparable sales rose 16.0%, or 9.1% in constant currencies. U.S. comparable sales rose 4.2%.
10:05 ET
Pending Home Sales Unexpectedly Rise
Dow +81.25 at 12290.09, Nasdaq -12.98 at 2461.58, S&P +4.87 at 1365.64
[BRIEFING.COM] Just hitting the wires, April pending home sales unexpectedly bounced 6.3% on a seasonally adjusted annual rate, according to National Association of Realtors. Economists expected sales to fall 0.4%. The reading is the highest since October, but is still 13% below one year ago.
The major indices get a boost from the better-than-expected report, although the Nasdaq is in the red. The tech sector (-0.5%) is facing selling pressure, with Apple (AAPL 181.83, -3.81) in negative territory as the Apple Worldwide Developers Conference kicks off. Barron's reported this morning that production of the new iPhone is behind schedule.
The energy (+1.6%) and materials (+1.3%) are providing leadership.
09:40 ET
Stocks Higher Despite Lehman's Loss
Dow +41.44 at 12251.41, Nasdaq +0.83 at 2475.51, S&P +4.45 at 1365.03
[BRIEFING.COM] Stocks open on a modestly higher note, although the gain is slight compared to last Friday's massive losses. Crude prices have eased 2.3% to $135.48 per barrel.
Lehman Brothers (LEH 29.49, -2.80) is once again a focal point this morning. The struggling Wall Street firm preannounced a massive $2.8 billion second quarter loss and plans to raise $6.0 billion in new capital in common and preferred stock offerings -- which is on the high end of previous speculation. The $4.0 billion common stock offering was priced at $28 per share, a 13% discount to Friday's closing price. The firm also priced a $2.0 billion public offering of 2 million shares of 8.75% noncumulative mandatory convertible preferred stock.
Moody's lowered Lehman's credit ratings to negative from stable, citing the second quarter loss and decline in hedge effectiveness.
09:16 ET
Market is Closed
[BRIEFING.COM] S&P futures vs fair value: +5.0. Nasdaq futures vs fair value: flat.
09:01 ET
Market is Closed
[BRIEFING.COM] S&P futures vs fair value: +3.1. Nasdaq futures vs fair value: +5.0. Futures continue to indicate a higher open to the trading day, but the positive opening is slight, especially when considering the scope of Friday's losses. McDonald's reported May same-store sales rose 7.7%, topping the 3.6% Briefing.com consensus estimate. Financial services company CIT Group (CIT) is getting a lift in premarket action on word that the company it has agreed to a $3 billion long-term committed financing facility with Goldman Sachs (GS).
08:32 ET
Market is Closed
[BRIEFING.COM] S&P futures vs fair value: +2.5. Nasdaq futures vs fair value: +5.2. Stock futures suggest a slightly higher start to the trading day. In deal news, Honeywell (HON) announced that it signed a definitive agreement to sell its Consumables Solutions business to B/E Aerospace (BEAV) for $1.05 billion.
08:05 ET
Market is Closed
[BRIEFING.COM] S&P futures vs fair value: +1.5. Nasdaq futures vs fair value: +3.8. Futures point to a modestly higher open for the stock market following last Friday's steep losses. As previously speculated, Lehman Brothers (LEH) preannounced a massive $2.8 billion second quarter loss, and announced plans to raise $6 billion in capital. Stock futures dipped on this news, but have since recovered. Meanwhile crude has slipped 1.0% to $137.14 per barrel, which follows its record run last Friday.
06:23 ET
Market is Closed
[BRIEFING.COM] S&P futures vs fair value: +2.5. Nasdaq futures vs fair value: +5.5.
06:21 ET
Market is Closed
[BRIEFING.COM] FTSE...5912.80...+6.00...+0.1%. DAX...6795.84...-7.97...-0.1%.
06:21 ET
Market is Closed
[BRIEFING.COM] Nikkei...14181.38...-308.06...-2.1%. Hang Seng...Holiday.........
16:25 ET
Stocks Plummet as Oil Soars
Dow -394.64 at 12209.81, Nasdaq -75.38 at 2474.56, S&P -43.37 at 1360.68
[BRIEFING.COM] Unless you were long oil futures, there was nothing pretty about Friday's session, which was governed by a relatively disappointing employment report for May and a stunning rise in oil prices.
According to the Bureau of Labor Statistics, nonfarm payrolls declined by 49,000 positions in May, hourly earnings rose 0.3% and the average workweek held steady at 33.7 hours. These numbers, however, weren't the problem for the market. An unemployment rate that jumped to 5.5% from 5.0% was.
Careful examination of the data revealed that the jump in the unemployment rate was not a reflection of lower employment levels (or an indication that the nonfarm payroll data are misleading). It was due either to a large number of people re-entering the labor force and being counted as unemployed, or to a one-month aberrant swing in the data. Our bet would be on a combination of the two.
Notwithstanding this interpretation, the jump in the jobless rate is certain to weigh on consumer sentiment and the stock market didn't like the thought of that as it relates to consumer spending behavior. That consideration got Friday's trade started on a negative note, but it wasn't long before the employment report took a backseat to oil prices and another unsettling outing by the financial sector.
Crude futures set records on two fronts today. First, the $10.75 increase in prices marked the largest, single-day price gain ever, eclipsing the prior record which stood for all of 24 hours. Secondly, oil prices closed at a new record high of $138.54 per barrel, eclipsing the prior record of $133.17 reached May 21.
The spike in prices was a response to a dollar that weakened following the employment report, saber-rattling in Israel toward Iran, and a view from Morgan Stanley that oil prices could hit $150 -- by July 4!
In the face of this oil price spike, equity investors found little incentive to step up and buy on the weakness.
The energy sector spent a good bit of its time in positive territory today, but even it succumbed to selling pressure late in the session that culminated in all ten economic sectors recording a loss and the S&P 500 falling 3.1%.
Hard hit were oil-sensitive groups, such as the transports and the retailers. There just wasn't any leadership. For some perspective, the energy sector, which declined 1.6%, was the best-performing sector today. All other sectors dropped at least 2.0%, yet none fell more than the financial sector, which declined 5.0%.
Weakness in the financials was driven by a Wall Street Journal report that the SEC is investigating Dow component AIG (AIG 33.93, -2.48) for its swaps accounting and growing concerns about rising consumer loan defaults that hit the bank stocks extra hard.
The retreat in the equity market and the jump in the unemployment rate drove a healthy bid at the back end of the Treasury yield curve. The yield on the benchmark 10-year note, which hit 4.04% Thursday, closed the week at 3.93%.
The S&P 500 was up 0.3% for the week entering Friday's session, but with the drubbing on Friday, it ended the week down 2.8%.
..Nasdaq 100 -3.2%. ..S&P Midcap 400 -2.6%. ..Russell 2000 -3.0%.
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