Asian markets gapped down, and only China was able to rebound, and rebound it did to 4% green. European markets gapped down initially, but not quite as far, I'm seeing signs of a decent rebound, maybe some of the european indices will be in the green.
What are your thoughts on the futures being up? All 3 are up quite a bit at the moment. My laymans observation is that it usually means market opens higher than the previous day, but I'm not sure of that.
4:20 pm : With many believing that the stock market had gotten ahead of itself, it appears Tuesday's drubbing may have been the long-overdue consolidation that had been talked about for some time. As a result, a sense that yesterday's corrective activity was an overreaction, which plays into our reiteration that market fundamentals overall remain moderately bullish, triggered enough bottom-fishing interest to help stocks bounce back.
Even though the market was poised for a rebound before Fed Chairman Bernanke began speaking before the House Budget Committee at 10:00 ET, there's no question that his ensuing thoughts about Tuesday's sell-off helped provide the reassurance investors needed to stay the course long enough to recoup some of the market's meltdown.
After all, the spate of economic data hitting the wires before Bernanke even took the podium today was disappointing on the whole. At 8:30 ET, Q4 GDP was revised lower, as expected, checking in at 2.2%. The advance read a month earlier showed the U.S. economy grew at a 3.5% pace. At 9:45 ET, the Chicago PMI fell to its lowest level (47.9%) in February since April 2003, serving as a reminder that the manufacturing sector is struggling. Then at 10:00 ET, new home sales in January plunged 16.6%, the biggest drop in 13 years, adding insult to the ongoing injury that is housing.
Be that as it may, Bernanke surprisingly answered questions pertaining to yesterday's plunge and did so with a slew of remarks that helped participants look past the day's disappointing economic reports, rising interest rates and higher energy prices. Nine out of 10 sectors posting gains.
Bernanke reassured investors, saying "there didn't seem to be any single trigger'' for Tuesday's sell-off. He also noted that financials markets "seem to be working well" and there has been "no material change" in the Fed's expectation for the U.S. economy. In fact, he said today's downward revision to Q4 GDP is "more consistent with our overall view of the economy'' than the original report and that there's a "reasonable possibility" that the economy will show signs of strengthening as the year progresses.
The Fed Chairman also put to rest concerns about sub-prime mortgage lending spreading into the broader economy and said he sees no liquidity problem. Both items contributed to yesterday's widespread panic, have provided an added sense of comfort for bargain hunters believing the sell-off was overdone.
Further underscoring renewed bullishness were notable declines of 15.5% and 11.5% on the VIX (CBOE Volatility Index) and the VXN (CBOE Nasdaq Volatility Index), respectively. Both "investor fear gauges" erasing some of the heightened anxiety priced into yesterday's session, amid aggressive put buying, suggests a short-term bottom is being formed as sellers began to cover some of their short positions. DJ30 +51.91 NASDAQ +8.27 SP500 +7.73 NASDAQ Dec/Adv/Vol 1370/1685/2.50 bln NYSE Dec/Adv/Vol 1123/2181/1.96 bln
3:30 pm : Buyers are showing some resolve going into the close, determined to declare victory in the wake of yesterday's widespread panic. Of the 10 sectors trading higher, Telecom (+2.2%) continues to lead the charge.
Wireless Services has been the day's best performing S&P industry group as investors applauded Sprint Nextel (S 19.48 +1.03) following up a 33% rise in Q4 profits by reiterating its forecast for a net gain in postpaid customers. The more notable support, though, is coming from a 1.2% advance in the more influential Consumer Staples sector, due in part to its defensive characteristics, as well as strength in the S&P 500's two most heavily-weighted sectors -- Financials and Technology. Both are up 0.8% after averaging a 3.7% decline Tuesday. DJ30 +88.86 NASDAQ +16.03 SP500 +11.71 NASDAQ Dec/Adv/Vol 1283/1752/2.17 bln NYSE Dec/Adv/Vol 1164/2105/1.72 bln
3:00 pm : With only an hour left in the trading day, buyers are jumping back in but not nearly enough to make a significant change in the standings. Keep in mind, the market's exaggerated late-day plunge occurred exactly 24 hours ago.
The Dow is currently up a respectable 0.5%, but that's well off its best levels of the day (+1.1%). The S&P 500 and Nasdaq are rising in synch with the Dow and logging similar gains, amid above average volume, which further suggests that program trading is behind today's broad-based recovery efforts. It is also worth noting that tomorrow is the first trading day of a new month, which is typically a strong day for stocks as new fund flows hit the market. Today's huge volumes suggests that some of those inflows may be hitting the market a day or two earlier than anticipated. DJ30 +60.29 NASDAQ +10.87 SP500 +7.18 NASDAQ Dec/Adv/Vol 1320/1692/2.04 bln NYSE Dec/Adv/Vol 1184/2088/1.61 bln
2:30 pm : As presaged in the last comment, the bulls were in good hands, assuming oil prices behaved. Crude recently rallying into the close and briefly eclipsing the psychological $62/bbl barrier has injected an added sense of uneasiness with regard to today's bounce.
Even though the commodity has since pulled back, sellers are using oil's uptick as a catalyst to sideline some buyers. DJ30 +37.17 NASDAQ +8.01 SP500 +6.02 NASDAQ Dec/Adv/Vol 1234/1760/1.90 bln NYSE Dec/Adv/Vol 1081/2177/1.50 bln
2:00 pm : Not much has changed since the last update as the major averages settle into a relatively narrow range. Crude recently turning positive, though, continues to prevent a more aggressive move to the upside for equities.
Fortunately for the bulls, oil's gains are modest at best and, so long as the April contract stays below $62/bbl for another 30 minutes heading into the close of trading on the NYMEX, the commodity's potential inflation characteristics will continue to take a back seat to Bernanke's upbeat commentary. As a reminder, the Fed at its last meeting did not even mention energy prices as an inflation risk.DJ30 +72.42 NASDAQ +13.35 SP500 +9.70 NASDAQ Dec/Adv/Vol 1240/1749/1.80 bln NYSE Dec/Adv/Vol 1080/2186/1.40 bln
1:30 pm : The indices continue to turn in a notable performance, but recent buying efforts have lost some steam. Crude oil prices, albeit still in negative territory, are retracing their best levels of the session highs and giving the bears a reason to have their overbought argument heard.
To their dismay, though, positive market internals continue to favor the bulls' attempts to recoup some of Tuesday's broad-based downturn. Subsequent leadership throughout the Energy sector, in sympathy with the paring of crude futures' intraday losses, is acting as somewhat of an offset. DJ30 +72.90 NASDAQ +13.71 SP500 +9.93 NASDAQ Dec/Adv/Vol 1233/1739/1.67 bln NYSE Dec/Adv/Vol 1087/2131/1.29 bln
1:00 pm : So much for concerns as to whether or not today's Bernanke-fueled rally would be sustainable after the conclusion of his testimony. While the market's latest push higher has not been significant, it does leave all three major averages near their best levels of the day.
On the Dow, 21 of 30 components are trading higher. Procter & Gamble (PG 63.47 +2.22) is pacing the way with a 3.6% advance; but that's not surprising given its 5.0% pullback Tuesday and a Banc of America analyst subsequently citing the weakness in P&G shares as a buying opportunity. Walt Disney (DIS 34.02 +0.92), yesterday's biggest Dow disappointment (-5.7%), ranks second among today's winners. American Express (AXP 56.90 +1.31) is the blue-chip index's third best performer after being upgraded at Friedman Billings. DJ30 +94.13 NASDAQ +16.99 SP500 +12.85 NASDAQ Dec/Adv/Vol 1290/1656/1.54 bln NYSE Dec/Adv/Vol 1198/2002/1.18 bln
12:30 pm : Buyers are kicking off the afternoon session on a higher note. Even though all ears remain focused on Bernanke's ongoing Q&A session, investors are also appear to be embracing White House Economic Adviser Lazear recently saying yesterday's U.S. stock market decline appeared to be an anomaly.
Anomaly or not, yesterday's huge decline in the S&P 500 yesterday was a much-anticipated, and needed, consolidation given the sizable gains over the last seven months in the face of slowing profit growth. DJ30 +66.00 NASDAQ +12.36 SP500 +10.15 NASDAQ Dec/Adv/Vol 1329/1593/1.44 bln NYSE Dec/Adv/Vol 1234/1961/1.09 bln
12:00 pm : The indices are off their best levels midday but holding onto respectable gains following encouraging comments from Fed Chairman Bernanke.
A day after the Dow suffered its worst one-day point decline since the markets reopened on September 17, 2001, it was anyone's guess as to whether investors would be able to regroup. However, with investors waiting anxiously for remarks from Bernanke regarding yesterday's sell-off, his voice of reason has been enough to underpin a positive tone and play into our reiteration that market fundamentals overall remain moderately bullish.
Bernanke noted that "there didn't seem to be any single trigger'' for the sell-off, the financials markets are working well, and nothing has happened to change the Fed's forecast for moderate economic growth. In fact, he said today's downward revision to Q4 GDP is "more consistent with our overall view of the economy'' than the original report.
Another economic report in focus today was new home sales for January, which plunged 16.6%, the biggest percentage drop in 13 years. Be that as it may, Bernanke also saying that if the housing sector stabilizes, it is reasonable to expect the U.S. economy to strengthen as the year progresses.
Bernanke also putting to rest concerns about sub-prime mortgage lending spreading into the broader market and liquidity concerns, which contributed to yesterday's debacle, have provided an added sense of comfort for bargain hunters believing the sell-off was overdone. For instance, Energy, this year's worst performing sector (-4.2%), is among today's best performers, even in the face of plunging oil prices. All 10 economic sectors are in positive territory after averaging losses of 3.5% a day earlier. DJ30 +56.80 NASDAQ +7.90 SP500 +8.25 NASDAQ Dec/Adv/Vol 1265/1641/1.27 bln NYSE Dec/Adv/Vol 1027/2132/940 mln
11:30 am : Onward and upward remains the driving mantra as Bernanke's reassuring comments continue to provide a floor of support behind today's rebound. Further underscoring renewed bullishness has been significant declines on the VIX (CBOE Volatility Index) and the VXN (CBOE Nasdaq Volatility Index), which are plunging 18% and 16%, respectively.
Both "investor fear gauges" erasing some of the heightened anxiety priced into yesterday's session, amid aggressive put buying, suggests a short-term bottom has been put in place as sellers continue to cover their short positions. DJ30 +106.55 NASDAQ +18.75 SP500 +14.38 NASDAQ Dec/Adv/Vol 1223/1680/1.12 bln NYSE Dec/Adv/Vol 1079/2046/818 mln
11:00 am : The market is extending its reach into positive territory after Fed Chairman Bernanke said that yesterday was nothing but a speed bump and that nothing has happened to change his forecast for moderate economic growth. In fact, he noted today's downward revision to Q4 GDP is "more consistent with our overall view of the economy'' than the advance reading last month.
Bernanke also putting to rest concerns about liquidity issues and sub-prime mortgage lending spreading into the broader market, which contributed to yesterday's pullback, have lent some additional reassurance that Tuesday's sell-off may have been an overreaction.DJ30 +93.20 NASDAQ +15.74 SP500 +13.04 NASDAQ Dec/Adv/Vol 1283/1542/904 mln NYSE Dec/Adv/Vol 1219/1816/632 mln
10:30 am : The indices are retracing morning highs, but there is little rhyme or reason for the market's latest uptick as trading remains volatile and conviction is lagging. Decliners still outpace advancers at both the NYSE and the Nasdaq. Not to mention, new home sales in January plunged 16.6%, the lowest pace in four years, while inventories rose to their highest levels in three months.
Meanwhile, Bernanke is reiterating that the U.S. faces a budget crisis unless Congress acts to the cut the federal deficit. However, no mention of Fed policy or interest rates leaves investors waiting for a Q&A session that is likely to result in members pressing him for his thoughts on Tuesday's selloff.DJ30 +68.47 NASDAQ +8.93 SP500 +9.57 NASDAQ Dec/Adv/Vol 1709/1040/640 mln NYSE Dec/Adv/Vol 1655/1315/418 mln
10:00 am : After initially spiking to morning lows and into negative territory, the major averages are now trading in split fashion. While a weaker than expected read on Chicago PMI exacerbated the recent pullback, it is worth noting that stocks were already deteriorating ahead of the report. The Chicago PMI fell to its lowest level (47.9%) in February since April 2003, and below the 50 level to indicate contraction in the region. The prices paid component rose to 63.2 from 54.9 a month earlier.
However, the report now appears to be taking a back seat to tomorrow's more influential national ISM manufacturing index as the indices have almost as quickly turned around. Trading though, as expected, continues to be choppy. Investors now await testimony from Fed Chairman Bernanke and new home sales, which will both be out momentarily. DJ30 +38.29 NASDAQ -2.19 SP500 +4.34 NASDAQ Dec/Adv/Vol 1488/1106/318 mln NYSE Dec/Adv/Vol 1042/1620/128 mln
09:40 am : With many believing that the stock market had gotten ahead of itself, it appears yesterday's drubbing may have been the long-overdue consolidation that has been talked about for some time. After all, the S&P 500 had surged almost 18% since bottoming in July without so much as a 2% pullback, which is an excessive move when taking into account an environment of stable interest rates and declining earnings growth.
As a result, a sense that Tuesday's tumble was overdone has triggered some early bottom fishing on the part of buyers who remain confident that fundamentals are still intact. All 10 economic sectors are in positive territory after averaging losses of 3.5% a day earlier. Not surprising, Energy, this year's worst performing sector (-4.2%), is today's best performer (+0.7%), even in the face of falling oil prices.DJ30 +71.06 NASDAQ +8.63 SP500 +7.48 NASDAQ Vol 120 mln NYSE Vol 80 mln
09:15 am : S&P futures vs fair value: +4.0. Nasdaq futures vs fair value: +3.8.
09:00 am : S&P futures vs fair value: +3.3. Nasdaq futures vs fair value: +2.2. Futures indications are off their best levels but still point to a slightly higher start for stocks as investors continue to regroup and try to figure out what yesterday's sell-off means for the immediate-term outlook. As a reminder, valuations are very reasonable at this time in comparison to conditions prior to the 1987 market crash or the 2000 downturn, and the fundamentals have not changed, which supports our view that the S&P 500 will end the year with a mid-single digit percentage gain.
Meanwhile, participants are currently listening to New York Fed President and Voting Fed official Timothy Geithner who is speaking on "Developments in the Financial System and Their Implications."
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