AI
Wednesday, September 17, 2008 7:57:06 PM
Market Update 080917
http://biz.yahoo.com/mu/update.html
4:25 pm : Stocks tumbled nearly 5% for the second day this week after the government extended AIG (AIG 2.06, -1.69) an $85 billion emergency loan in a move that did little to ease credit market turmoil.
The major indices ended on a sour note at session lows. All ten of the economic sectors posted a loss, with financials (-8.9%) falling the most. Weakness was widespread, the best performing sector, energy, posted a loss of 2.4%.
To prevent an AIG bankruptcy filing, the Federal Reserve agreed to provide an $85 billion two-year loan in exchange for a 79.9% stake in the insurance giant. The Fed said a disorderly failure of AIG could add to already significant levels of financial market fragility. The loan does not come cheap; AIG has to pay the three-month Libor rate (currently at 3.06%) plus 8.5%.
The bailout did little to stop the turmoil in the credit markets. The TED spread --the difference between the three-month Treasury bill and the three-month Libor -- spiked to 3.02%, marking its highest level on record. The higher spread indicates increased fears of credit risk and reluctance of banks to lend to each other. In a flight to safety, investors flocked to the three-month Treasury bill, sending its yield to only 0.04%, down sharply from last Friday's yield of 1.47%.
In an attempt to quell some fears, Morgan Stanley (MS 21.17, -7.53) announced its third quarter earnings last night instead of the previously scheduled release of this morning. The company earned $1.32 per share, which blew past expectations by $0.54. Despite the earnings beat, the stock dropped 24% as Morgan Stanley's credit default swap -- which is the cost to protect debt -- rose to 728 basis points yesterday. By comparison, Lehman Brothers' (LEH 0.14, -0.16) swap traded at 707 basis points before it filed bankruptcy. Morgan’s CEO said the decline was unwarranted and blamed short-sellers, which did little to calm fears.
The government made other moves in addition to the AIG bailout. The Treasury is setting up a temporary financing program at the Fed's request. The program will auction Treasury bills to raise cash for the Fed's use. The initiative aims to help the Fed manage its balance sheet following its efforts to enhance its liquidity facilities over the previous few quarters.
The SEC took several actions to tighten rules regarding the short-selling of stocks. Short-sellers will now have to deliver securities by the close of business on the settlement date. The SEC eliminated an option market-maker exception for the close-out agreement. In addition, short-sellers who deceive market participants are now committing a fraud.
The uncertainty over the financial markets and concern that the Fed is getting funding from the Treasury sparked a rally in hard assets, as investors look to preserve wealth. Oil spiked 5.9% to $96.52 per barrel, gold rallied 11.0% and commodities as a whole gained 3.2%.
Conversely, the dollar fell 1.2%, losing 1.4% against the euro and 1.9% against the pound.
In corporate news outside the financial world, flash memory maker SanDisk (SNDK 20.93, +5.89) rejected a $26 per share offer from Korean conglomerate Samsung, despite the offer representing a 93% premium over SNDK's closing price on Sept. 4, the day before media reported the possible takeover. SanDisk, which traded at $55.98 in October 2007, said the offer undervalues the firm.
Nortel (NT 2.64, -2.66) gave a preliminary third quarter view of $2.3 billion in revenue, which falls short of the $2.7 billion consensus. Nortel, which provides networking solutions, expects customers to cut back on spending.
Software developer Adobe Systems (ADBE 36.41, -1.73) reported third quarter earnings that topped Wall Street's forecast, helped by sales of Adobe Acrobat.
General Mills (GIS 69.88, +1.33) easily beat estimates thanks to a strong 14% year-over-year increase in sales.
Economic news did not help sentiment, with the number of new housing starts declining 6.5% to 895,000, which is the lowest rate since January 1991. Economists expected that there would be 950,000 starts. Building permits fell 8.9% to 854,000, compared to the median economist estimate of 928,000. On the positive side, fewer building permits will presumably clear some of the excess inventory of homes for sale. Single-family starts declined just 1.9% from the prior month.
The S&P 500 is down 7.6% week-to date, putting it on pace for the largest one week percent decline in more than six years.DJ30 -449.36 NASDAQ -109.05 NQ100 -5.3% R2K -4.8% SP400 -4.4% SP500 -57.20 NASDAQ Adv/Vol/Dec 428/3.11 bln/2452 NYSE Adv/Vol/Dec 217/2.14 bln/2984
3:35 pm : Stocks fluctuate in the middle of their afternoon range as the final half hour of trade approaches.
AIG (AIG 2.22, -1.53) had most of its credit ratings revised to "developing" at Standard & Poor's. The ratings agency said the up to $85 billion lending facility from the Fed "greatly exceeds any near-term needs for liquidity."DJ30 -257.21 NASDAQ -65.47 SP500 -32.39 NASDAQ Adv/Vol/Dec 520/2.60 bln/2337 NYSE Adv/Vol/Dec 351/1.52 bln/2848
3:00 pm : Stocks climb to their best levels since 10:30 ET and then run into some modest resistance. Losses remain steep.
Meanwhile, commodities rally (+2.8%), with oil (+6.6%) and gold (+11.1%) prices spiking as the dollar (-1.4%) falls to session lows.
Against the dollar, the euro is up 1.6% and the pound is up 2.1%.DJ30 -230.01 NASDAQ -74.49 SP500 -33.21 NASDAQ Adv/Vol/Dec 450/2.32 bln/2394 NYSE Adv/Vol/Dec 275/1.37 bln/2912
2:30 pm : Losses remain widespread. Only the energy sector (+1.6%) is showing a gain. Every other sector is trading with losses ranging from 1.7% to 8.0%.
After slumping with oil prices in recent sessions, integrated oil and gas companies (+1.2%) and oil and gas exploration and production outfits (+1.7%) are leading the advance. Refiners (-1.0%), on the other hand, are moving lower.
Integrated businesses, along with exploration and production businesses, benefit from rising oil prices since they represent richer revenue streams. Refiners, however, can have their profitability crimped if rising crude prices are unmatched by rising gas prices. DJ30 -227.81 NASDAQ -74.43 SP500 -33.36 NASDAQ Adv/Vol/Dec 415/2.05 bln/2430 NYSE Adv/Vol/Dec 277/1.23 bln/2913
2:00 pm : The Nasdaq hits a fresh session low, and then recovers a bit. Meanwhile, oil prices spike to session highs, now up 5.0% to $95.70 per barrel.
Market breadth is bearish. Advancers outpace decliners by 37-to-2 on the NYSE and by 27-to-4 on the Nasdaq. Volume is heavy relative to the average this year, but is somewhat light considering the current circumstances.DJ30 -309.97 NASDAQ -85.85 SP500 -43.01 NASDAQ Adv/Vol/Dec 359/1.80 bln/2432 NYSE Adv/Vol/Dec 163/1.08 bln/3020
1:30 pm : The stock market is back on the decline on continued concern regarding the credit markets. Standard & Poor's said the world's financial institutions will face more securities write-downs combined with rising loan losses in the second half of 2008.
The financial market turmoil has been felt around the world this week, with nearly every major index posting a loss week-to-date: the S&P 500 (-6.9%), Mexico's Bolsa (-7.4%), Brazil's Bovespa (-11.1%), London's FTSE 100 (-9.3%), Germany's DAX (-6.0%), France's CAC 40 (-7.7%), Russia's RTS (-21.1%), India's Sensex (-5.3%) China's CSI 300 (-7.2%), Hong Kong's Hang Seng (-8.9%).
Declines in Russia were so severe that trading was halted yesterday and today. Russia injected $44 billion into its three largest banks, with the country getting hit especially hard after foreign investors pulled at least $35 billion following the war in Georgia last month, Bloomberg.com reports.DJ30 -343.10 NASDAQ -85.04 SP500 -46.39 NASDAQ Adv/Vol/Dec 381/1.64 bln/2390 NYSE Adv/Vol/Dec 184/1.01 bln/2992
1:00 pm : Stocks pare some losses, although the decline is still steep. The S&P 500 is currently down 3.3%, compared its recently reached session low of -4.2%.
Gold prices continue to rally, now up 8.4% to $842.00 per ounce. This marks the largest one-day percent gain since gold prices surged 9.3% on Sept. 28 1999.
European markets ended their session with sizeable declines, although they outperformed the U.S. on a relative basis. London's FTSE fell 2.3%, Germany's DAX fell 1.8% and France's CAC fell 2.1%.DJ30 -301.42 NASDAQ -74.55 SP500 -39.92 NASDAQ Adv/Vol/Dec 413/1.49 bln/2356 NYSE Adv/Vol/Dec 199/919 mln/2961
12:35 pm : The stock market stabilizes a bit and is now trading near recently reached session lows. The S&P 500 is now down 20.6% this year.
The financial sector is down 9.4% with all 86 of its components posting a loss. Goldman Sachs (GS 99.64, -33.51) plunges below the $100 mark for the first time in three years.DJ30 -350.19 NASDAQ -77.54 SP500 -45.35 NASDAQ Adv/Vol/Dec 383/1.34 bln/2375 NYSE Adv/Vol/Dec 188/825 mln/2966
12:05 pm : Stocks are being hammered on Wednesday as credit fears rock the market despite the government extending AIG (AIG 2.05, -1.70) an emergency loan of $85 billion.
At midday, the stock market is down more than 4%, at session lows, with all ten economic sectors in the red. Weakness is broad-based, as 95% of stocks within the S&P 500 posting a loss.
To prevent an AIG bankruptcy filing, the Federal Reserve agreed to provide an $85 billion two-year lending facility in exchange for a 79.9% stake in the insurance giant. The Fed felt a disorderly failure of AIG could add to already significant levels of financial market fragility. The loan does not come cheap; AIG has to pay the three-month Libor rate (currently at 3.06%) plus 8.5%.
The bailout did little to stop the turmoil in the credit markets. The TED spread --the difference between the three-month Treasury bill and the three-month Libor -- spiked to 2.90%, marking its highest level since the crash of 1987. The higher spread indicates banks are showing more reluctance to lend to each other.
In an attempt to quell some fears, Morgan Stanley (MS 19.02, -9.68) announced its third quarter earnings last night, which was a day early. The company earned $1.32 per share, which blew past expectations by $0.54. Despite the earnings beat, the stock is trading 35% lower as Morgan Stanley's credit default swap -- which is the cost to protect debt -- rose to 728 basis points yesterday. By comparison, Lehman Brothers' (LEH 0.11, -0.19) swap traded at 707 basis points before it filed bankruptcy.
The financial sector is down 7.8%.
The government made other moves in addition to the AIG bailout. The Treasury is setting up a temporary financing program at the Fed's request. The program will auction Treasury bills to raise cash for the Fed's use. The initiative aims to help the Fed manage its balance sheet following its efforts to enhance its liquidity facilities over the previous few quarters.
The SEC made several actions to tighten rules regarding the short-selling of stocks. Short-sellers will have to deliver securities by the close of business on the settlement date. The SEC eliminated an option market-maker exception for the close-out agreement. In addition, short-sellers who deceive market participants are now committing a fraud.
The uncertainty over the financial markets and concern that the Fed is getting funding from the Treasury sparked a rally in precious metals, as investors look to preserve wealth in the perceived value of the metals. Gold is up 6.7% and silver is up 7.3%.
Economic news did not help sentiment, with the number of new housing starts declining 6.5% to 895,000 their lowest rate since January 1991. Economists expected that there would be 950,000 starts. Building permits fell 8.9% to 854,000, compared to the consensus of 928,000. On the positive side, less building permits will presumably clear some of the excess inventory of homes for sale. Single-family starts declined just 1.9% from the prior month.
Homebuilding stocks are down 8.2%.DJ30 -387.39 NASDAQ -83.51 SP500 -49.80 NASDAQ Adv/Vol/Dec 418/1.16 bln/2306 NYSE Adv/Vol/Dec 214/714 mln/2918
11:30 am : The major indices weaken further -- the S&P 500 is now down more than 3.0%. There is not much buying interest out there considering 94% of stocks within the S&P 500 are posting a loss.
The financial sector is down 7.5% as investment banks & brokerages plummet 17.9% and multi-line insurance companies fall 13.1%.
Gold futures are rallying due to the financial turmoil, up 6.8% on the day. Silver is up 7.0%. The dollar, however, is managing to limit its losses to just 0.1%, as economies around the world are also being affected by the economic turmoil.DJ30 -340.99 NASDAQ -80.72 SP500 -44.95 NASDAQ Adv/Vol/Dec 439/915 mln/2230 NYSE Adv/Vol/Dec 247/569 mln/2844
11:00 am : Stocks stabilize near session lows. All ten sectors are posting a loss, and six are down more than 2%. Small-cap stocks are getting hit especially hard, with the Russell 2000 Index down 3.3%.
In typical fashion, oil prices trade in a volatile manner following the government's inventory data, which showed a larger-than-expected drop in stockpiles. Oil is currently up 2.9% to $93.64 per barrel, which is very close to preinventory levels.DJ30 -232.94 NASDAQ -57.20 SP500 -30.54 NASDAQ Adv/Vol/Dec 484/712 mln/2109 NYSE Adv/Vol/Dec 326/460 mln/2728
10:35 am : The Treasury is setting up a temporary financing program at the Fed's request. The program will auction Treasury bills to raise cash for the Fed's use. The initiative aims to help the Fed manage its balance sheet following its efforts to enhance its liquidity facilities over the previous few quarters.
The news gives a boost to gold prices (+3.0%), as investors seek to preserve their assets in the perceived value of the precious metal.
The stock market falls to fresh session lows, with the S&P 500 down more than 2%.
Just reported by the Department of Energy, crude inventories for the week ended Sept. 12 fell by 6.3 million barrels, which is a larger drop than the expected decline of 3.5 million. Gasoline inventories fell by 3.3 million barrels. Oil prices were up 3.1% to $94.01 per barrel just prior to the release.
In corporate news outside the financial world, flash memory maker SanDisk (SNDK 21.95, +6.90) rejected a $26 per share offer from Korean conglomerate Samsung, despite the offer representing a 93% premium over SNDK's closing price on Sept. 4, the day before media reported the possible takeover. SanDisk, which traded at $55.98 in October 2007, said the offer undervalues the firm.
Nortel (NT 3.39, -1.91) gave a preliminary third quarter view of $2.3 billion in revenue, which falls short of the $2.7 billion consensus. Nortel, which provides networking solutions, expects customers to cut back on spending.
Software developer Adobe Systems (ADBE 33.39, +1.22) is trading higher after topping Wall Street's forecast, helped by sales of Adobe Acrobat.
General Mills (GIS 69.77, +1.22) easily beat estimates thanks to a strong 14% year-over-year increase in sales.DJ30 -216.90 NASDAQ -47.19 SP500 -27.22 NASDAQ Adv/Vol/Dec 574/502 mln/1942 NYSE Adv/Vol/Dec 421/342 mln/2568
10:00 am : Stocks have halted their decline, but continue to post a large loss. All ten sectors are in the red, with the most weakness in industrials (-3.2%) and telecom (-1.5%).
The SEC issued a new short-selling rule, which will apply to all public companies. Rules are tightened, requiring a firm to deliver securities by the settlement date, according to reports.DJ30 -132.06 NASDAQ -26.93 SP500 -15.86 NASDAQ Adv/Vol/Dec 594/271 mln/1768 NYSE Adv/Vol/Dec 466/205 mln/2435
09:40 am : Stocks tumble at the open after a government plan to save AIG (AIG 2.60, -1.15) does little to calm market fears. The TED spread, which is the difference between the three month Treasury bill and the three month Libor -- spiked to its highest level since the crisis began, indicating tighter credit conditions.
To prevent an AIG bankruptcy filing, the Federal Reserve agreed to provide an $85 billion two-year loan in exchange for a 79.9% stake in the insurance giant. The Fed felt a disorderly failure of AIG could add to already significant levels of financial market fragility.
In an attempt to quell some fears, Morgan Stanley (MS 24.52, -4.20) announced its third quarter earnings a day early. The company earned $1.32 per share, which blew past expectations by $0.54. Despite the earnings beat, the stock is trading 14.5% lower as Morgan Stanley's credit default swap -- which is the cost to protect debt -- traded at 728 basis points yesterday. By comparison, Lehman Brothers' (LEH 0.17, -0.13) swap traded at 707 basis points before it filed bankruptcy. DJ30 -186.21 NASDAQ -39.71 SP500 -23.80
09:20 am : S&P futures vs fair value: -25.10. Nasdaq futures vs fair value: -29.30. S&P 500 futures extend losses, falling to session lows. Despite Morgan Stanley's (MS) better-than-expected third quarter earnings and revenue, the stock is down 17% in premarket trading. Yesterday, Morgan Stanley's credit default swap -- which is the cost to protect debt -- traded at 728. By comparison, Lehman Brothers' (LEH) swap traded at 707 before it filed bankruptcy. There is also concern with the TED spread -- the difference between three month Treasury bill and three month Libor -- spiking 30% to 2.83%, which is a higher spread than when Bear Stearns collapsed.
09:00 am : S&P futures vs fair value: -21.00. Nasdaq futures vs fair value: -21.50. Futures point to a sharply lower start for the stock market. The overnight dollar Libor rate -- the amount of interest banks charge other banks to lend dollars overnight -- improved to 5.03% from yesterday's level of 6.44% as the Fed and other central banks pumped liquidity in the system. Still, the level remains well above the 2.00% fed funds target rate -- the overnight Libor rate was 2.14% before the Lehman Brothers (LEH) bankruptcy. In news outside of the financial sector, General Mills (GIS) topped expectations on the both the top and bottom lines, as did software maker Adobe Systems (ADBE). Nortel (NT) gave a preliminary third quarter view of $2.3 billion in revenue, which falls short of the $2.7 billion consensus. Nortel expects customers to cut back on spending.
08:33 am : S&P futures vs fair value: -15.60. Nasdaq futures vs fair value: -17.30. Futures weaken and then have a mostly muted response as two economic releases hit the wires. The number of August housing starts slipped 59,000 to 895,000 on an seasonally adjusted annual rate, compared to the consensus estimate of 950,000. Building permits fell 83,000 to 854,000, versus the 928,000 consensus. The current account balance was -$183.1 billion in the second quarter, compared to the expected reading of -$180 billion. The New York Times reported earlier this morning that Barclays (BCS) bought Lehman Brothers' (LEH) core capital markets business for $1.75 billion, which was far less than Lehman had hoped for. Crude prices are rebounding to a gain of 3.5% at $94.37 per barrel after two session's of steep losses.
08:05 am : S&P futures vs fair value: -6.00. Nasdaq futures vs fair value: -6.80. Futures suggest a modestly lower open. To prevent an AIG (AIG) bankruptcy filing, the Federal Reserve agreed to provide a $85 billion two-year loan in exchange for a 79.9% stake in the insurance giant. The Fed felt a disorderly failure of AIG could add to already significant levels of financial market fragility. Morgan Stanley (MS) reported third quarter that beat on the top and bottom lines. The company earned $1.32 per share, which topped expectations by $0.54. In deal news, Sandisk (SNDK) rejected a $26 per share offer from Samsung, despite the offer representing a 93% premium over SNDK's closing price on Sept. 4, the day before media reported the possible takeover.
06:31 am : S&P futures vs fair value: -7.70. Nasdaq futures vs fair value: -11.30.
06:30 am : Nikkei...11749.79...+140.10...+1.20%. Hang Seng...17637.19...-663.40...-3.60%.
06:30 am : FTSE...5079.10...+53.50...+1.10%. DAX...5983.98...+18.80...+0.30%.
http://biz.yahoo.com/mu/update.html
4:25 pm : Stocks tumbled nearly 5% for the second day this week after the government extended AIG (AIG 2.06, -1.69) an $85 billion emergency loan in a move that did little to ease credit market turmoil.
The major indices ended on a sour note at session lows. All ten of the economic sectors posted a loss, with financials (-8.9%) falling the most. Weakness was widespread, the best performing sector, energy, posted a loss of 2.4%.
To prevent an AIG bankruptcy filing, the Federal Reserve agreed to provide an $85 billion two-year loan in exchange for a 79.9% stake in the insurance giant. The Fed said a disorderly failure of AIG could add to already significant levels of financial market fragility. The loan does not come cheap; AIG has to pay the three-month Libor rate (currently at 3.06%) plus 8.5%.
The bailout did little to stop the turmoil in the credit markets. The TED spread --the difference between the three-month Treasury bill and the three-month Libor -- spiked to 3.02%, marking its highest level on record. The higher spread indicates increased fears of credit risk and reluctance of banks to lend to each other. In a flight to safety, investors flocked to the three-month Treasury bill, sending its yield to only 0.04%, down sharply from last Friday's yield of 1.47%.
In an attempt to quell some fears, Morgan Stanley (MS 21.17, -7.53) announced its third quarter earnings last night instead of the previously scheduled release of this morning. The company earned $1.32 per share, which blew past expectations by $0.54. Despite the earnings beat, the stock dropped 24% as Morgan Stanley's credit default swap -- which is the cost to protect debt -- rose to 728 basis points yesterday. By comparison, Lehman Brothers' (LEH 0.14, -0.16) swap traded at 707 basis points before it filed bankruptcy. Morgan’s CEO said the decline was unwarranted and blamed short-sellers, which did little to calm fears.
The government made other moves in addition to the AIG bailout. The Treasury is setting up a temporary financing program at the Fed's request. The program will auction Treasury bills to raise cash for the Fed's use. The initiative aims to help the Fed manage its balance sheet following its efforts to enhance its liquidity facilities over the previous few quarters.
The SEC took several actions to tighten rules regarding the short-selling of stocks. Short-sellers will now have to deliver securities by the close of business on the settlement date. The SEC eliminated an option market-maker exception for the close-out agreement. In addition, short-sellers who deceive market participants are now committing a fraud.
The uncertainty over the financial markets and concern that the Fed is getting funding from the Treasury sparked a rally in hard assets, as investors look to preserve wealth. Oil spiked 5.9% to $96.52 per barrel, gold rallied 11.0% and commodities as a whole gained 3.2%.
Conversely, the dollar fell 1.2%, losing 1.4% against the euro and 1.9% against the pound.
In corporate news outside the financial world, flash memory maker SanDisk (SNDK 20.93, +5.89) rejected a $26 per share offer from Korean conglomerate Samsung, despite the offer representing a 93% premium over SNDK's closing price on Sept. 4, the day before media reported the possible takeover. SanDisk, which traded at $55.98 in October 2007, said the offer undervalues the firm.
Nortel (NT 2.64, -2.66) gave a preliminary third quarter view of $2.3 billion in revenue, which falls short of the $2.7 billion consensus. Nortel, which provides networking solutions, expects customers to cut back on spending.
Software developer Adobe Systems (ADBE 36.41, -1.73) reported third quarter earnings that topped Wall Street's forecast, helped by sales of Adobe Acrobat.
General Mills (GIS 69.88, +1.33) easily beat estimates thanks to a strong 14% year-over-year increase in sales.
Economic news did not help sentiment, with the number of new housing starts declining 6.5% to 895,000, which is the lowest rate since January 1991. Economists expected that there would be 950,000 starts. Building permits fell 8.9% to 854,000, compared to the median economist estimate of 928,000. On the positive side, fewer building permits will presumably clear some of the excess inventory of homes for sale. Single-family starts declined just 1.9% from the prior month.
The S&P 500 is down 7.6% week-to date, putting it on pace for the largest one week percent decline in more than six years.DJ30 -449.36 NASDAQ -109.05 NQ100 -5.3% R2K -4.8% SP400 -4.4% SP500 -57.20 NASDAQ Adv/Vol/Dec 428/3.11 bln/2452 NYSE Adv/Vol/Dec 217/2.14 bln/2984
3:35 pm : Stocks fluctuate in the middle of their afternoon range as the final half hour of trade approaches.
AIG (AIG 2.22, -1.53) had most of its credit ratings revised to "developing" at Standard & Poor's. The ratings agency said the up to $85 billion lending facility from the Fed "greatly exceeds any near-term needs for liquidity."DJ30 -257.21 NASDAQ -65.47 SP500 -32.39 NASDAQ Adv/Vol/Dec 520/2.60 bln/2337 NYSE Adv/Vol/Dec 351/1.52 bln/2848
3:00 pm : Stocks climb to their best levels since 10:30 ET and then run into some modest resistance. Losses remain steep.
Meanwhile, commodities rally (+2.8%), with oil (+6.6%) and gold (+11.1%) prices spiking as the dollar (-1.4%) falls to session lows.
Against the dollar, the euro is up 1.6% and the pound is up 2.1%.DJ30 -230.01 NASDAQ -74.49 SP500 -33.21 NASDAQ Adv/Vol/Dec 450/2.32 bln/2394 NYSE Adv/Vol/Dec 275/1.37 bln/2912
2:30 pm : Losses remain widespread. Only the energy sector (+1.6%) is showing a gain. Every other sector is trading with losses ranging from 1.7% to 8.0%.
After slumping with oil prices in recent sessions, integrated oil and gas companies (+1.2%) and oil and gas exploration and production outfits (+1.7%) are leading the advance. Refiners (-1.0%), on the other hand, are moving lower.
Integrated businesses, along with exploration and production businesses, benefit from rising oil prices since they represent richer revenue streams. Refiners, however, can have their profitability crimped if rising crude prices are unmatched by rising gas prices. DJ30 -227.81 NASDAQ -74.43 SP500 -33.36 NASDAQ Adv/Vol/Dec 415/2.05 bln/2430 NYSE Adv/Vol/Dec 277/1.23 bln/2913
2:00 pm : The Nasdaq hits a fresh session low, and then recovers a bit. Meanwhile, oil prices spike to session highs, now up 5.0% to $95.70 per barrel.
Market breadth is bearish. Advancers outpace decliners by 37-to-2 on the NYSE and by 27-to-4 on the Nasdaq. Volume is heavy relative to the average this year, but is somewhat light considering the current circumstances.DJ30 -309.97 NASDAQ -85.85 SP500 -43.01 NASDAQ Adv/Vol/Dec 359/1.80 bln/2432 NYSE Adv/Vol/Dec 163/1.08 bln/3020
1:30 pm : The stock market is back on the decline on continued concern regarding the credit markets. Standard & Poor's said the world's financial institutions will face more securities write-downs combined with rising loan losses in the second half of 2008.
The financial market turmoil has been felt around the world this week, with nearly every major index posting a loss week-to-date: the S&P 500 (-6.9%), Mexico's Bolsa (-7.4%), Brazil's Bovespa (-11.1%), London's FTSE 100 (-9.3%), Germany's DAX (-6.0%), France's CAC 40 (-7.7%), Russia's RTS (-21.1%), India's Sensex (-5.3%) China's CSI 300 (-7.2%), Hong Kong's Hang Seng (-8.9%).
Declines in Russia were so severe that trading was halted yesterday and today. Russia injected $44 billion into its three largest banks, with the country getting hit especially hard after foreign investors pulled at least $35 billion following the war in Georgia last month, Bloomberg.com reports.DJ30 -343.10 NASDAQ -85.04 SP500 -46.39 NASDAQ Adv/Vol/Dec 381/1.64 bln/2390 NYSE Adv/Vol/Dec 184/1.01 bln/2992
1:00 pm : Stocks pare some losses, although the decline is still steep. The S&P 500 is currently down 3.3%, compared its recently reached session low of -4.2%.
Gold prices continue to rally, now up 8.4% to $842.00 per ounce. This marks the largest one-day percent gain since gold prices surged 9.3% on Sept. 28 1999.
European markets ended their session with sizeable declines, although they outperformed the U.S. on a relative basis. London's FTSE fell 2.3%, Germany's DAX fell 1.8% and France's CAC fell 2.1%.DJ30 -301.42 NASDAQ -74.55 SP500 -39.92 NASDAQ Adv/Vol/Dec 413/1.49 bln/2356 NYSE Adv/Vol/Dec 199/919 mln/2961
12:35 pm : The stock market stabilizes a bit and is now trading near recently reached session lows. The S&P 500 is now down 20.6% this year.
The financial sector is down 9.4% with all 86 of its components posting a loss. Goldman Sachs (GS 99.64, -33.51) plunges below the $100 mark for the first time in three years.DJ30 -350.19 NASDAQ -77.54 SP500 -45.35 NASDAQ Adv/Vol/Dec 383/1.34 bln/2375 NYSE Adv/Vol/Dec 188/825 mln/2966
12:05 pm : Stocks are being hammered on Wednesday as credit fears rock the market despite the government extending AIG (AIG 2.05, -1.70) an emergency loan of $85 billion.
At midday, the stock market is down more than 4%, at session lows, with all ten economic sectors in the red. Weakness is broad-based, as 95% of stocks within the S&P 500 posting a loss.
To prevent an AIG bankruptcy filing, the Federal Reserve agreed to provide an $85 billion two-year lending facility in exchange for a 79.9% stake in the insurance giant. The Fed felt a disorderly failure of AIG could add to already significant levels of financial market fragility. The loan does not come cheap; AIG has to pay the three-month Libor rate (currently at 3.06%) plus 8.5%.
The bailout did little to stop the turmoil in the credit markets. The TED spread --the difference between the three-month Treasury bill and the three-month Libor -- spiked to 2.90%, marking its highest level since the crash of 1987. The higher spread indicates banks are showing more reluctance to lend to each other.
In an attempt to quell some fears, Morgan Stanley (MS 19.02, -9.68) announced its third quarter earnings last night, which was a day early. The company earned $1.32 per share, which blew past expectations by $0.54. Despite the earnings beat, the stock is trading 35% lower as Morgan Stanley's credit default swap -- which is the cost to protect debt -- rose to 728 basis points yesterday. By comparison, Lehman Brothers' (LEH 0.11, -0.19) swap traded at 707 basis points before it filed bankruptcy.
The financial sector is down 7.8%.
The government made other moves in addition to the AIG bailout. The Treasury is setting up a temporary financing program at the Fed's request. The program will auction Treasury bills to raise cash for the Fed's use. The initiative aims to help the Fed manage its balance sheet following its efforts to enhance its liquidity facilities over the previous few quarters.
The SEC made several actions to tighten rules regarding the short-selling of stocks. Short-sellers will have to deliver securities by the close of business on the settlement date. The SEC eliminated an option market-maker exception for the close-out agreement. In addition, short-sellers who deceive market participants are now committing a fraud.
The uncertainty over the financial markets and concern that the Fed is getting funding from the Treasury sparked a rally in precious metals, as investors look to preserve wealth in the perceived value of the metals. Gold is up 6.7% and silver is up 7.3%.
Economic news did not help sentiment, with the number of new housing starts declining 6.5% to 895,000 their lowest rate since January 1991. Economists expected that there would be 950,000 starts. Building permits fell 8.9% to 854,000, compared to the consensus of 928,000. On the positive side, less building permits will presumably clear some of the excess inventory of homes for sale. Single-family starts declined just 1.9% from the prior month.
Homebuilding stocks are down 8.2%.DJ30 -387.39 NASDAQ -83.51 SP500 -49.80 NASDAQ Adv/Vol/Dec 418/1.16 bln/2306 NYSE Adv/Vol/Dec 214/714 mln/2918
11:30 am : The major indices weaken further -- the S&P 500 is now down more than 3.0%. There is not much buying interest out there considering 94% of stocks within the S&P 500 are posting a loss.
The financial sector is down 7.5% as investment banks & brokerages plummet 17.9% and multi-line insurance companies fall 13.1%.
Gold futures are rallying due to the financial turmoil, up 6.8% on the day. Silver is up 7.0%. The dollar, however, is managing to limit its losses to just 0.1%, as economies around the world are also being affected by the economic turmoil.DJ30 -340.99 NASDAQ -80.72 SP500 -44.95 NASDAQ Adv/Vol/Dec 439/915 mln/2230 NYSE Adv/Vol/Dec 247/569 mln/2844
11:00 am : Stocks stabilize near session lows. All ten sectors are posting a loss, and six are down more than 2%. Small-cap stocks are getting hit especially hard, with the Russell 2000 Index down 3.3%.
In typical fashion, oil prices trade in a volatile manner following the government's inventory data, which showed a larger-than-expected drop in stockpiles. Oil is currently up 2.9% to $93.64 per barrel, which is very close to preinventory levels.DJ30 -232.94 NASDAQ -57.20 SP500 -30.54 NASDAQ Adv/Vol/Dec 484/712 mln/2109 NYSE Adv/Vol/Dec 326/460 mln/2728
10:35 am : The Treasury is setting up a temporary financing program at the Fed's request. The program will auction Treasury bills to raise cash for the Fed's use. The initiative aims to help the Fed manage its balance sheet following its efforts to enhance its liquidity facilities over the previous few quarters.
The news gives a boost to gold prices (+3.0%), as investors seek to preserve their assets in the perceived value of the precious metal.
The stock market falls to fresh session lows, with the S&P 500 down more than 2%.
Just reported by the Department of Energy, crude inventories for the week ended Sept. 12 fell by 6.3 million barrels, which is a larger drop than the expected decline of 3.5 million. Gasoline inventories fell by 3.3 million barrels. Oil prices were up 3.1% to $94.01 per barrel just prior to the release.
In corporate news outside the financial world, flash memory maker SanDisk (SNDK 21.95, +6.90) rejected a $26 per share offer from Korean conglomerate Samsung, despite the offer representing a 93% premium over SNDK's closing price on Sept. 4, the day before media reported the possible takeover. SanDisk, which traded at $55.98 in October 2007, said the offer undervalues the firm.
Nortel (NT 3.39, -1.91) gave a preliminary third quarter view of $2.3 billion in revenue, which falls short of the $2.7 billion consensus. Nortel, which provides networking solutions, expects customers to cut back on spending.
Software developer Adobe Systems (ADBE 33.39, +1.22) is trading higher after topping Wall Street's forecast, helped by sales of Adobe Acrobat.
General Mills (GIS 69.77, +1.22) easily beat estimates thanks to a strong 14% year-over-year increase in sales.DJ30 -216.90 NASDAQ -47.19 SP500 -27.22 NASDAQ Adv/Vol/Dec 574/502 mln/1942 NYSE Adv/Vol/Dec 421/342 mln/2568
10:00 am : Stocks have halted their decline, but continue to post a large loss. All ten sectors are in the red, with the most weakness in industrials (-3.2%) and telecom (-1.5%).
The SEC issued a new short-selling rule, which will apply to all public companies. Rules are tightened, requiring a firm to deliver securities by the settlement date, according to reports.DJ30 -132.06 NASDAQ -26.93 SP500 -15.86 NASDAQ Adv/Vol/Dec 594/271 mln/1768 NYSE Adv/Vol/Dec 466/205 mln/2435
09:40 am : Stocks tumble at the open after a government plan to save AIG (AIG 2.60, -1.15) does little to calm market fears. The TED spread, which is the difference between the three month Treasury bill and the three month Libor -- spiked to its highest level since the crisis began, indicating tighter credit conditions.
To prevent an AIG bankruptcy filing, the Federal Reserve agreed to provide an $85 billion two-year loan in exchange for a 79.9% stake in the insurance giant. The Fed felt a disorderly failure of AIG could add to already significant levels of financial market fragility.
In an attempt to quell some fears, Morgan Stanley (MS 24.52, -4.20) announced its third quarter earnings a day early. The company earned $1.32 per share, which blew past expectations by $0.54. Despite the earnings beat, the stock is trading 14.5% lower as Morgan Stanley's credit default swap -- which is the cost to protect debt -- traded at 728 basis points yesterday. By comparison, Lehman Brothers' (LEH 0.17, -0.13) swap traded at 707 basis points before it filed bankruptcy. DJ30 -186.21 NASDAQ -39.71 SP500 -23.80
09:20 am : S&P futures vs fair value: -25.10. Nasdaq futures vs fair value: -29.30. S&P 500 futures extend losses, falling to session lows. Despite Morgan Stanley's (MS) better-than-expected third quarter earnings and revenue, the stock is down 17% in premarket trading. Yesterday, Morgan Stanley's credit default swap -- which is the cost to protect debt -- traded at 728. By comparison, Lehman Brothers' (LEH) swap traded at 707 before it filed bankruptcy. There is also concern with the TED spread -- the difference between three month Treasury bill and three month Libor -- spiking 30% to 2.83%, which is a higher spread than when Bear Stearns collapsed.
09:00 am : S&P futures vs fair value: -21.00. Nasdaq futures vs fair value: -21.50. Futures point to a sharply lower start for the stock market. The overnight dollar Libor rate -- the amount of interest banks charge other banks to lend dollars overnight -- improved to 5.03% from yesterday's level of 6.44% as the Fed and other central banks pumped liquidity in the system. Still, the level remains well above the 2.00% fed funds target rate -- the overnight Libor rate was 2.14% before the Lehman Brothers (LEH) bankruptcy. In news outside of the financial sector, General Mills (GIS) topped expectations on the both the top and bottom lines, as did software maker Adobe Systems (ADBE). Nortel (NT) gave a preliminary third quarter view of $2.3 billion in revenue, which falls short of the $2.7 billion consensus. Nortel expects customers to cut back on spending.
08:33 am : S&P futures vs fair value: -15.60. Nasdaq futures vs fair value: -17.30. Futures weaken and then have a mostly muted response as two economic releases hit the wires. The number of August housing starts slipped 59,000 to 895,000 on an seasonally adjusted annual rate, compared to the consensus estimate of 950,000. Building permits fell 83,000 to 854,000, versus the 928,000 consensus. The current account balance was -$183.1 billion in the second quarter, compared to the expected reading of -$180 billion. The New York Times reported earlier this morning that Barclays (BCS) bought Lehman Brothers' (LEH) core capital markets business for $1.75 billion, which was far less than Lehman had hoped for. Crude prices are rebounding to a gain of 3.5% at $94.37 per barrel after two session's of steep losses.
08:05 am : S&P futures vs fair value: -6.00. Nasdaq futures vs fair value: -6.80. Futures suggest a modestly lower open. To prevent an AIG (AIG) bankruptcy filing, the Federal Reserve agreed to provide a $85 billion two-year loan in exchange for a 79.9% stake in the insurance giant. The Fed felt a disorderly failure of AIG could add to already significant levels of financial market fragility. Morgan Stanley (MS) reported third quarter that beat on the top and bottom lines. The company earned $1.32 per share, which topped expectations by $0.54. In deal news, Sandisk (SNDK) rejected a $26 per share offer from Samsung, despite the offer representing a 93% premium over SNDK's closing price on Sept. 4, the day before media reported the possible takeover.
06:31 am : S&P futures vs fair value: -7.70. Nasdaq futures vs fair value: -11.30.
06:30 am : Nikkei...11749.79...+140.10...+1.20%. Hang Seng...17637.19...-663.40...-3.60%.
06:30 am : FTSE...5079.10...+53.50...+1.10%. DAX...5983.98...+18.80...+0.30%.
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