4:20 pm : The major averages finished mixed as concerns about economic growth and trepidation ahead of key inflation data overshadowed more M&A news.
Per usual, investors were again greeted with another wave of M&A news Monday morning.
The biggest news was confirmation that DaimlerChrysler (DCX 83.16 +1.16) finally found a buyer for its struggling Chrysler unit. Cerberus Capital Management agreed to acquire an 80% stake for $7.45 bln. However, since Chrysler has been on the block for three months and the actual price tag masks a failed $36 bln merger effort between Daimler AG and Chrysler, investors didn't get too worked up about it.
Nevertheless, autos (+4.0%) comprised the best-performing S&P industry today. An analyst upgrade of General Motors (GM 30.53 + 1.07) contributed to the outperformance. GM's 3.6% surge accounted for nearly half of the Dow's 20-point advance. It was also reported that rival Ford Motor's (F 8.76 +0.39) founding family is mulling the divestiture of their controlling stake.
Despite the strength in autos, weakness in everything from restaurants and retail to homebuilding prevented the Discretionary sector from finishing higher. Investors also exhibited a sense of caution ahead of Tuesday's Consumer Price Index.
Even worse for the bulls was the fact that today's biggest laggards were also among the most influential sectors.
Financials, which carries the heaviest weighting on the S&P 500, paced the way lower. The Fed saying in a survey that U.S. banks dramatically tightened their lending standards over the first three months of 2007 took an intraday toll on the rate-sensitive sector.
A JP Morgan strategist downgrading Financials to "Underweight'' also weighed on the influential sector. Briefing.com lowered its rating on Financials to Underweight last month. DJ30 +20.56 NASDAQ -15.78 SP500 -2.70 NASDAQ Dec/Adv/Vol 2075/982/1.97 bln NYSE Dec/Adv/Vol 2137/1108/1.39 bln
3:30 pm : Equities continue to claw their way back but not nearly enough to make a significant change in the standings. The Dow is back above the flat, but a decidedly negative market sentiment doesn't offer much confidence on the part of blue-chip buyers.
As reflected in the A/D line, decliners on the NYSE hold a nearly 2-to-1 edge over advancers while those on the Nasdaq hold a more than 2-to-1 margin. The ratio of down to up volume further dictates the sense of reserve on the part of buyers unwilling to make any aggressive bets ahead of tomorrow's closely-watched. Bonds traders have exhibited a similarly guarded stance. The 10-year note finished down 4 ticks to yield 4.68%. DJ30 +7.25 NASDAQ -16.64 SP500 -3.34 NASDAQ Dec/Adv/Vol 2028/997/1.60 bln NYSE Dec/Adv/Vol 2108/1133/1.08 bln
3:00 pm : The major averages are bouncing off their worst levels of the day but buyer's last ditch efforts to cut their losses aren't amounting to much. The Dow briefly inched into the green, but 20 of its 30 components still trading lower poses a problem from a leadership standpoint.
Not only are the most influential of S&P 500 sectors also among today's biggest laggards, but below average volume merely underscores the lack of confidence the bulls have in sustaining a late-day push like the one yesterday that closed the indices mixed. With only an hour left in the session, the NYSE still hasn't seen more than 1.0 bln shares trade hands. DJ30 -6.95 NASDAQ -19.79 SP500 -4.36 NASDAQ Dec/Adv/Vol 2089/923/1.46 bln NYSE Dec/Adv/Vol 2114/1110/978 mln
2:30 pm : Stocks continue to hit fresh session lows, spearheaded this time around by a notable downturn in Financials (-0.8%). The rate-sensitive sector has spiked lower within the last 30 minutes after the Fed said U.S. banks dramatically tightened their lending standards over the first three months of 2007.
The survey noted that one-fifth of domestic banks reported weaker demand for all types of residential mortgages, with 56% making it increasingly hard to get a subprime loan and even 15% of banks making it more difficult to get a prime mortgage loan. A JP Morgan strategist advising investors to hold an "Underweight'' rating on Financials is also weighing on the influential sector. DJ30 -12.03 NASDAQ -20.57 SP500 -5.38 NASDAQ Dec/Adv/Vol 2046/949/1.35 bln NYSE Dec/Adv/Vol 2117/1099/894 mln
2:00 pm : Selling remains the name of the game over the last hour as the S&P 500 is the latest among the majors to turn negative. Six out of 10 sectors continue to attract buyers, but areas like Health Care, Discretionary and Staples are now clinging to an average gain of only 0.08%.
General Motors (GM 30.56 +1.10) now accounts for all of the Dow's intraday gain. Adding to the Nasdaq's recent struggles has been its inability to find support above the key technical level of 2551. Small-cap stocks, though, are faring even worse. The Russell 2000 is now down 0.9%. DJ30 +8.45 NASDAQ -16.82 SP500 -2.89 NASDAQ Dec/Adv/Vol 1973/1003/1.19 bln NYSE Dec/Adv/Vol 1944/1256/782 mln
1:30 pm : Sellers show some resolve within the last 15 minutes, pushing the indices to afternoon lows. Further deterioration in Technology is the most obvious catalyst behind the Nasdaq's more aggressive downturn.
Fortunately for the bulls still anticipating tech stocks to be significant contributors to overall earnings growth on the S&P 500 this year, the sector's 0.5% decline is still modest in scope. DJ30 +35.19 NASDAQ -11.15 SP500 +0.27 NASDAQ Dec/Adv/Vol 1770/1191/1.05 bln NYSE Dec/Adv/Vol 1722/1448/692 mln
1:00 pm : More of the same for the averages as the blue-chip indices and Nasdaq continue to trade in opposing directions. While the latter's biggest problem, not surprisingly, rests with weakness in tech companies (e.g. CSCO -1.1%, DELL -2.0%, CTSH -2.2%, NVDA -1.4%), there are also a handful of other areas weighing on the index.
Human Resources (-1.5%) ranks among today's worst performing S&P industry groups due to a 2.9% plunge in Monster Worldwide (MNST 46.77 -1.39). A 2.7% decline in Whole Foods Market (WFMI 39.88 -1.09) is contributing to pressure among Grocers while retailers (e.g. PETM -3.9%, ROST -1.6%, -2.1%) and Restaurants (e.g. SBUX -1.4%) are also losing ground. DJ30 +40.70 NASDAQ -6.52 SP500 +1.13 NASDAQ Dec/Adv/Vol 1739/1191/978 mln NYSE Dec/Adv/Vol 1705/1456/648 mln
12:30 pm : No real change in the proceedings as the afternoon session gets underway. Six of 10 sectors are still in positive territory; but the biggest gain from one of the least influential sectors (Utilities +0.5%) and an area also widely regarded for its defensive characteristics further underscores the lack of conviction on the part of buyers.
Energy ranks second; but its modest 0.4% advance and the fact that rising oil prices are contributing to the sector's move to the upside is hardly giving the bulls something to cheer about. Crude for June delivery is up 0.5% near $62.70/bbl amid more geopolitical unrest in Nigeria.DJ30 +38.83 NASDAQ -7.20 SP500 +0.39 NASDAQ Dec/Adv/Vol 1699/1209/878 mln NYSE Dec/Adv/Vol 1676/1451/576 mln
12:00 pm : The major averages remain mixed midday as another wave of Monday-morning M&A news offers little excitement this time around. Six out of 10 sectors are trading higher; but three of the four trading lower are also among the most heavily-weighted sectors on the S&P 500.
As has been the case lately, anticipation that Monday will again bring another round of supportive deal-making activity was evidently priced into stocks a day earlier. Last Friday, the Dow, S&P 500, and Nasdaq were up nearly 1.0% on average amid renewed hopes of a Fed rate cut sooner rather than later and in part amid the likelihood that this week would offer more proof that companies remain awash in liquidity.
The biggest news this morning is confirmation that DaimlerChrysler's (DCX 83.16 +1.16) Chrysler unit has finally found a buyer. Cerberus Capital Management is paying $7.45 bln for an 80% stake. However, since the actual deal price isn't large relative to other blockbuster deals of late, investors are also contending with a market that looks increasingly overbought given deteriorating fundamentals.
Autos (+4.6%) have also been today's brightest spot following an analyst upgrade on General Motors (GM 30.79 +1.33) and amid reports that Ford Motor's (F 8.76 +0.39) founding family is mulling the divestiture of their controlling stake.
Some M&A news has also kept the Health Care sector in focus. Mylan Labs (MYL 19.86 -2.54) has agreed to acquire Merck KGaA's generic drug division for $6.6 bln in cash. Cardinal Health (CAH 69.39 +0.32) has agreed to buy Viasys Healthcare (VAS 43.09 +11.54) for about $1.42 bln, a 35% premium to Friday's closing price.
With the Fed recently reiterating that inflation remains its "predominant" concern, the sense of reserve on the part of investors may also be attributed to tomorrow's release of the influential CPI report given its ability to move the market and influence Fed policy. DJ30 +27.66 NASDAQ -5.28 SP500 +0.14 NASDAQ Dec/Adv/Vol 1708/1174/776 mln NYSE Dec/Adv/Vol 1653/1428/504 mln
11:30 am : Stocks are still vacillating around the unchanged mark as split sector leadership continues to dictate this morning's action. The Dow is holding onto a small gain, but that's due largely to a upgrade-induced 4.2% surge in General Motors (GM 30.71 +1.25), which accounts for one third of the Dow's 30-point advance.
Gains of more than 1.0% from fellow components Caterpillar (CAT 75.80 +0.92) and Home Depot (HD 39.26 +0.40) account for another third of the price-weighted index's paltry 0.2% performance. Home Depot reports tomorrow morning.DJ30 +30.21 NASDAQ -6.43 SP500 +0.93 NASDAQ Dec/Adv/Vol 1773/1073/662 mln NYSE Dec/Adv/Vol 1668/1387/420 mln
11:00 am : The indices are off their worst levels but have only bounced enough to lift the S&P 500 back above the flat line. A rebound in Energy (+0.4%) can be attributed to part of the broader market's turnaround and why the Nasdaq is still languishing in negative territory.
None of the Energy sector's 33 components are listed on the tech-heavy Composite. In addition to weakness in Internet (e.g. YHOO -1.5%), Software (e.g. BEAS -1.6%), and Hardware (e.g. DELL -1.8%), the Nasdaq has also witnessed a reversal in the PHLX Semiconductor Sector Index within the 30 minutes. DJ30 +30.11 NASDAQ -5.93 SOX -0.1% SP500 +0.67 XOI +0.4% NASDAQ Dec/Adv/Vol 1687/1110/522 mln NYSE Dec/Adv/Vol 1632/1367/310 mln
10:30 am : The major averages are now trading in split fashion, spearheaded by reversals in two more heavily-weighted sectors. Technology (-0.3%) and Industrials (-0.2%) recently joining Financials (-0.1%) in negative territory remove some influential leadership.
Weakness in Internet Software & Services (-0.8%) is offsetting strength in Semiconductor Equipment (+1.4%), which ranks as today's third best performing S&P industry group. The Energy sector, which led the way just 30 minutes ago with a 0.7% advance, has also slipped into the red and taken some steam out of this morning's follow-through efforts, especially since oil prices are still trading modestly higher.DJ30 +25.84 DOT -0.3% NASDAQ -9.16 SP500 -0.64 NASDAQ Dec/Adv/Vol 1503/1225/346 mln NYSE Dec/Adv/Vol 1442/1466/190 mln
10:00 am : Equities are still on the offensive as nine of 10 economic sectors remain positive. Energy (+0.6%) is pacing the way higher, in sympathy with crude oil futures closing in on $63/bbl (+0.7%). Health Care ranks second (+0.4%), as Johnson & Johnson (JNJ 63.40 +1.13) surges 1.8% following a favorable court ruling late Friday regarding a drug (Aciphex) co-marketed by J&J.
Utilities are turning in a similar performance, led by a 1.7% gain in Xcel Energy (XEL 24.07 +.040) after it was upgraded. Fellow rate-sensitive area Financials, though, has temporarily slipped into the red, stalling early buying efforts. DJ30 +41.26 NASDAQ +3.98 SP500 +3.10 NASDAQ Dec/Adv/Vol 1119/1418/174 mln NYSE Dec/Adv/Vol 1002/1630/78 mln
09:40 am : Decent follow-through seen in stocks as further evidence that companies remain awash in liquidity help overshadow a market we feel has gotten ahead of itself given deteriorating fundamentals.
The biggest news this morning is confirmation that DaimlerChrysler's (DCX 85.00 +3.00) Chrysler unit has finally found a buyer. Cerberus Capital Management is paying $7.41 bln for an 80% stake. Mylan Labs (MYL 19.24 -3.16) agreeing to acquire Merck KGaA's generic drug division for $6.7 bln rounds out the day's other notable M&A new item. As an aside, Autos (+5.2%) are getting an additional lift as today's best performing S&P industry group amid an analyst upgrade on General Motors (GM 30.61 +1.15) and reports that Ford Motor's (F 8.76 +0.39) founding family is discussing the sale of part of their controlling stake in Ford.DJ30 +42.88 NASDAQ +5.54 SP500 +3.13 NASDAQ Vol 84 mln NYSE Vol 44 mln
09:15 am : S&P futures vs fair value: +1.4. Nasdaq futures vs fair value: +4.3.
09:00 am : S&P futures vs fair value: +1.3. Nasdaq futures vs fair value: +4.5. The futures market continues to suggest a flat to slightly higher open for the cash market. An improving bias heading into the opening bell further underscores the underlying bullish sentiment that was evident in Friday's strong market rebound.
Aside from the proposed Chrysler sale putting a bid in autos this morning, Tech stocks are likely to be a focal point as well. Nokia (NOK) is surging more than 3% in pre-market action after raising its Q2 guidance and market share outlook. Apple (AAPL) looks to open at a new all-time high after it reportedly snagged 10% of U.S. retail notebook sales in March.
08:30 am : S&P futures vs fair value: +0.8. Nasdaq futures vs fair value: +2.8. As evidenced by the S&P 500 futures recently inching above fair value, early sentiment is improving. However, indications still signal a relatively flat start for equities.
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