4:20 pm : After taking a breather Tuesday, stocks got back on the buying track today and lifted the Dow to yet another record high. More M&A speculation and falling oil prices were the initial sources of market support. The absence of any surprises in today's Fed statement, though, helped clear the way for several weeks of underlying bullish momentum to resurface.
Per usual, all eyes were anxiously fixed on today's FOMC meeting, the first since March. As expected, policy makers left rates unchanged at 5.25% for a seventh straight time. The accompanying policy directive was also little changed from the prior statement, suggesting that rates are likely to stay steady for the foreseeable future. Even though the report did not imply a rate cut anytime soon, the mere culmination of the meeting removed the latest headwind and excuse for sellers to keep questioning current valuations in a market awash in liquidity.
With regard to ongoing speculation about further deal-making, Rio Tinto (RTP 295.39 +30.74) reportedly being eyed by BHP Billiton (BHP 53.45 +2.55) in a deal that could top $100 bln helped power the Materials sector higher even though Rio Tinto shot down such speculation.
Alltel (AT 66.53 +1.33) reportedly being targeted by three private-equity consortiums as a potential $25-30 bln takeover was another. Alltel's 2.0% surge helped vault Telecom to the day's number one spot.
Rarely does M&A news, rumored or not, fail to give brokerage stocks a boost. Financials was another bright spot today as was the Industrials sector. Both turned in similar gains of 0.6%.
Technology was also in focus Wednesday, but initially for negative reasons. Cisco Systems (CSCO 26.51 -1.85), a suggested holding in the Briefing.com Active Portfolio, beat analysts' forecasts Tuesday night; but its Q4 sales guidance left the market wanting more. Since Cisco is Tech's third most influential component, accounting for 6.8% of the sector's total weighting, Cisco's 6.5% tumble was a drag on tech all day. Two of the sector's saving graces were IBM (IBM 104.38 +1.09) and Texas Instruments (TXN 36.83 +1.66). IBM was upgraded to buy at Goldman Sachs while TI soared 4.7% amid encouraging developments out of its two-day analyst meeting.
The Energy sector's ability to withstand another pullback in oil prices was also noteworthy. Crude for June delivery fell 1.1% to a seven-week low of $61.55/bbl after the Energy Dept. reported the first build in gasoline supplies in 13 weeks. DJ30 +53.80 NASDAQ +4.59 SOX +1.7% SP500 +4.84 NASDAQ Dec/Adv/Vol 1353/1652/2.14 bln NYSE Dec/Adv/Vol 1177/2059/1.47 bln
3:30 pm : The major averages remain positive in the wake of today's Fed meeting, but that's not all that surprising since more often than not after recent FOMC statements the market has ended higher even when the statement brings no surprises.
It is worth noting, though, that market's advance is diminishing going into the close and influential areas like Tech, Health Care and Staples are merely clinging to a small gains. DJ30 +40.82 NASDAQ +3.51 SP500 +4.07 NASDAQ Dec/Adv/Vol 1409/1581/1.77 bln NYSE Dec/Adv/Vol 1198/2020/1.21 bln
3:00 pm : Evidently investors have completely forgotten that the Fed policy meeting at this time last year started the summer sell-off after policy makers provided no indication of a rate cut. Participants apparently remain somewhat comfortable with the likelihood of rates remaining steady for the foreseeable future also quiets concerns of a tightening anytime soon.
Even though market gains are modest in scope, all 10 sectors are now in positive territory as the underlying bullish momentum behind five straight weeks of gains has resurfaced now that today's FOMC meeting is in the rearview mirror.DJ30 +53.15 NASDAQ +5.65 SP500 +5.32 NASDAQ Dec/Adv/Vol 1327/1649/1.62 bln NYSE Dec/Adv/Vol 1365/1846/1.09 bln
2:30 pm : After further analysis of the Fed directive and the fact there weren't any significant surprises, stocks have recouped much of the market's initial knee-jerk reaction to the downside. However, equities are still failing to garner any conviction from either buyers or sellers, leaving the indices languishing around the unchanged mark.
The actual text of the statement reads: "Economic growth slowed in the first part of this year and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to expand at a moderate pace over coming quarters.
Core inflation remains somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.
In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information." DJ30 +2.76 NASDAQ -0.48 SP500 -0.63 NASDAQ Dec/Adv/Vol 1551/1413/1.38 bln NYSE Dec/Adv/Vol 1296/1884/930 mln
2:15 pm : As expected, the Federal Reserve left the fed funds rate unchanged at 5.25% for a seventh straight time. With respect to the accompanying policy directive, there has been little change to the wording from the last statement but the Fed has asserted that "core inflation remains somewhat elevated," further sidelining hopes of a rate cut anytime soon.
Initial responses in both the stock and bond markets have been negative, but market action is expected to be volatile throughout the rest of the session. The 10-year note, which was down 1 tick to yield 4.63%, is now down 6 ticks to yield 4.64%. DJ30 -5.44 NASDAQ -10.30 SP500 -2.67 NASDAQ Dec/Adv/Vol 1552/1396/1.33 bln NYSE Dec/Adv/Vol 1307/1868/890 mln
2:00 pm : In the 15 minutes ahead of the FOMC announcement, equities continue to settle into their usual pre-Fed, range-bound pattern. We believe the statement is not likely to show any major changes since recent data provide no reason for much adjustment.
We also expect the ever-so-slight inflation bias to remain rather than a softening to a balanced risk statement. Such a scenario is likely to sideline expectations of a potential easing until more evidence (i.e. core PCE inflation falling below 2%) becomes available to warrant a rate cut. DJ30 +17.74 NASDAQ -5.55 SP500 +0.84 NASDAQ Dec/Adv/Vol 1539/1416/1.28 bln NYSE Dec/Adv/Vol 1292/1891/860 mln
1:30 pm : The indices continue to trade near their best levels of the day, but recent recovery efforts have lost some steam. The market's holding pattern has been further evidenced in the A/D line. Advancers on the NYSE hold a slim 18-to-13 advantage over decliners while both advancing and declining issues on the Nasdaq remain evenly matched.
A split ratio of up to down volumes paints a similarly mixed picture at the Big Board and the Composite, underscoring the wait-and-see attitude typically exhibited ahead of a Fed decision and accompanying policy statement. DJ30 +25.76 NASDAQ -3.51 SP500 +1.70 NASDAQ Dec/Adv/Vol 1482/1433/1.19 bln NYSE Dec/Adv/Vol 1301/1898/786 mln
1:00 pm : More of the same for stocks as the Dow and Nasdaq continue to trade in opposing directions; but both are trading at improved levels. The biggest source of strength has come from Financials, fueled by a 1.4% surge in Dow component JP Morgan Chase (JPM 53.17 +0.72).
Technology seeing its losses more than halved since the last update, sparked by continued momentum in semiconductors, is also spearheading the recent recovery. Per usual ahead of a Fed meeting, though, total volume is well below normal. Such limited participation offers less conviction behind the renewed wave of buying interest that still leaves market gains modest at best. DJ30 +31.18 NASDAQ -2.04 SOX +1.1% SP500 +2.02 NASDAQ Dec/Adv/Vol 1471/1442/1.08 bln NYSE Dec/Adv/Vol 1354/1784/690 mln
12:30 pm : No real change in the proceedings as the afternoon session gets underway. Six of 10 sectors remain positive, but the barely influential Telecom sector (+0.6%) still leading the way merely speaks to why stocks are still struggling to find their footing.
Energy (-0.8%) paring some of its losses even as oil prices languish near session lows (-2.0%) is noteworthy. However, mixed market internals further underscore the hesitation among investors to more aggressively make any moves until the Fed policy statement hits the wires at 2:15 ET. DJ30 +5.64 NASDAQ -7.71 SP500 -0.25 NASDAQ Dec/Adv/Vol 1627/1248/990 mln NYSE Dec/Adv/Vol 1425/1693/618 mln
12:00 pm : Not surprising, uncertainty heading into the first FOMC meeting since March is underpinning a cautious tone to this morning's action. While it is a foregone conclusion that policy makers at 2:15 ET today will leave rates unchanged at 5.25% again, investors will be looking closely for hints pertaining to the course of monetary policy.
The blue-chip averages are mixed midday, but continue to hover around the unchanged mark with neither buyers nor sellers willing to make any bets ahead of the Fed. The price-weighted Dow, though, is again getting the bulk of its support from just a couple of names. IBM (IBM 104.17 0.88), which was upgraded to Buy at Goldman Sachs, accounts for all of the Dow's 5-point gain. Other winning blue chips include McDonald's (MCD 49.84 +0.52) and Verizon Communications (VZ 41.10 +0.48). Both are up more than 1.0%.
The Nasdaq, on the other hand, is exhibiting some clear selling pressure; but to its credit, the tech-heavy index's decline is largely attributed to a 6.7% plunge in shares of Cisco Systems (CSCO 26.45 -1.91). Cisco beat analysts' forecasts last night, but its Q4 sales guidance left the market wanting more. Cisco is Tech's third most influential component, accounting for 6.8% of the sector's total weighting. Electronic Arts (ERTS 50.69 -2.24), which also failed to live up to high expectations, is among the worst performers on the Nasdaq 100 as well and earmarks Home Entertainment Software (-4.2%) as today's biggest laggard.
One sector turning in an even poorer performance than Tech (-0.5%) is Energy (-1.0%). Investors are using a 2.1% drop in oil prices as a good reason to consolidate an impressive 9.5% year-to-date advance in the Energy sector even though oil is now lower for the year. Crude for June delivery has slipped below $61/bbl following a huge build in weekly crude supplies and the first rise in gasoline inventories in 13 weeks.
While oil's downturn is a net positive for consumers, the subsequent absence of Energy's leadership is acting as an offset to oil's diminishing inflationary characteristics. DJ30 +5.12 NASDAQ -8.07 NQ100 -0.3% R2K -0.1% SOX +1.0% SP400 +0.2% SP500 -0.49 XOI -0.9% NASDAQ Dec/Adv/Vol 1660/1190/862 mln NYSE Dec/Adv/Vol 1402/1660/526 mln
11:30 am : The major averages are now trading in split fashion as the bulk of industry leadership continues to improve. Consumer Discretionary and Utilities becoming the latest sectors to turn positive now tips the balance in favor of the bulls from a leadership standpoint. Retailers have gotten a boost as oil prices (-1.9%) extend their reach to the downside.
Of the seven sectors now posting gains, Telecom (+0.6%) is still leading the charge, as a 1.1% advance in Verizon Communications (VZ 41.08 +0.46) helps the Dow climb back above the flat line. The market continues to garner the bulk of its support from a modest strength in Financials (+0.4%); but below average volume offers little conviction on the part of buyers trying to get things back on track as most of the market remains on hold ahead of the Fed. DJ30 +2.36 NASDAQ -8.89 SP500 -0.61 NASDAQ Dec/Adv/Vol 1629/1169/744 mln NYSE Dec/Adv/Vol 1428/1599/438 mln
11:00 am : Not much has changed since the last update as oil prices spiking to session lows have yet to provide investors with enough evidence to build on recent market gains, especially ahead of today's Fed meeting. Crude for June delivery is now down 1.5% near $61.30/bbl following a huge build in weekly crude supplies and the first rise in gasoline inventories in 13 weeks.
However, while falling oil prices certainly bode well for consumers, further deterioration in Energy (-0.8%) removes enough leadership to act as an offset to oil's diminishing inflationary characteristics. As a reminder, policy makers now believe that the "impetus from energy prices" has been reduced so much that the aforementioned phrase has been absent from the last two FOMC statements. Oil is down about 13% from a year ago and up only 0.4% year-to-date. DJ30 -3.84 NASDAQ -11.33 SP500 -1.78 XOI -0.8% NASDAQ Dec/Adv/Vol 1684/1089/606 mln NYSE Dec/Adv/Vol 1454/1496/340 mln
10:30 am : Finally, the bulls are getting some support from turnarounds in a couple of influential areas. Financials, the most heavily weighted economic sector, has recently inched into positive territory. Renewed enthusiasm for Banks and strength across the REIT complex are providing the bulk of early support.
Industrials and Consumer Staples are the other sectors of note turning the corner while chip stocks spiking into positive territory over the last 30 minutes have helped the Tech sector pare some of its losses. Texas Instruments (TXN 36.02 +0.85) is surging 2.4% amid encouraging developments out of its two-day analyst meeting. DJ30 -2.82 NASDAQ -10.68 SOX +0.4% SP500 -0.93 NASDAQ Dec/Adv/Vol 1572/1095/420 mln NYSE Dec/Adv/Vol 1337/1544/204 mln
10:00 am : The indices are bouncing off their opening lows but hardly enough to make a significant change in the standings. The Dow briefly turned positive, entirely due to a 1.3% surge in shares of IBM (IBM 104.59 +1.30); but Big Blue's roughly 10-point contribution hasn't been enough to keep the Dow in the green.
Of the seven sectors now trading lower, Technology paces the way with a 0.6% decline and remains the biggest obstacle for the bulls to overcome early on. Telecom is today's best performing sector, getting its biggest lift from renewed takeover speculation in Alltel (AT 65.93 +0.73). However, a 0.4% advance in one of the S&P 500's least influential sectors hardly provides enough support to get overall buying efforts back on track. DJ30 -7.44 NASDAQ -14.29 SP500 -2.45 NASDAQ Dec/Adv/Vol 1714/827/242 mln NYSE Dec/Adv/Vol 1618/1120/94 mln
09:40 am : As expected, typical nervousness heading into a Fed decision and policy statement (2:15 ET) has sidelined buyers at the onset of trading. Even though policy makers are widely expected to leave the overnight lending rate unchanged at 5.25% for a seventh straight time, investors are exhibiting added concern that the Fed's directive will still hold enough of a tightening bias to keep pushing back hopes of a rate cut anytime soon.
As evidenced by the Nasdaq exhibiting the bulk of early weakness among the majors, one needs to look no further than to a 4.6% plunge in Cisco Systems (CSCO 27.05 -1.31). The tech bellwether topped Wall Street estimates last night, but its Q4 sales guidance failed to live up to the market's high expectations. If it weren't for an analyst upgrade on IBM (IBM 104.50 +1.21), which is lending some semblance of support for the price-weighted Dow, Technology (-0.7%) would be getting hit even harder since Cisco is among the influential sector's most heavily-weighted components. DJ30 -11.54 NASDAQ -15.63 SP500 -3.13 NASDAQ Vol 92 mln NYSE Vol 48 mln
09:15 am : S&P futures vs fair value: -3.5. Nasdaq futures vs fair value: -11.8.
09:00 am : S&P futures vs fair value: -3.1. Nasdaq futures vs fair value: -9.5. A negative bias still persists in pre-market action, signaling a dismal start for stocks at the bottom of the hour. There is some positive news, though, and it again comes in the form of M&A "speculation." Rio Tinto (RTP) is reportedly being eyed by BHP Billiton (BHP) in a deal that could top $100 bln while Alltel (AT) is reportedly being targeted by three private-equity consortiums as a potential $25-30 bln takeover.
08:30 am : S&P futures vs fair value: -3.6. Nasdaq futures vs fair value: -10.5. The futures market continues to deteriorate, suggesting an even weaker start for the indices. Mixed earnings news and trepidation ahead of the Fed aside, a growing sense that stocks are overbought is also contributing to the negative disposition. Such concerns weighed on sentiment throughout yesterday's session; but the major averages merely closing relatively unchanged offered little conviction on the part of sellers who today appear armed with more evidence to support their argument.
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