Market Update 071113 http://biz.yahoo.com/mu/update.html 4:25 pm : After four straight days of losses, the stock market came roaring back on Tuesday. Falling oil prices, a favorable earnings outlook from Wal-Mart (WMT 45.97, +2.65), and reassuring comments on subprime exposure from several financial firms at the Merrill Lynch Financial Conference provided the fuel for the rally that was helped along by short-covering activity and a sense the market had gotten oversold.
Recall that it was last Wednesday when the S&P 500 dropped 45 points in a session where virtually nothing worked from a stock standpoint. Today the complete opposite held true as virtually everything worked from a stock standpoint.
Providing today's leadership were the financial (+4.9%) and technology (+4.0%) sectors, which drew significant bargain hunting interest. E*Trade Financial (ETFC 5.00, +1.45), which plummeted nearly 60% on Monday, surged 40% on Tuesday; meanwhile, Apple (AAPL 169.96, +16.20), which had fallen 20% in the last four sessions, jumped 11% on reports China Mobile is in talks to sell the company's iPhone.
Goldman Sachs (GS 233.04, +18.33) played a large role in the financial sector rally when it said again at the Merrill Lynch Conference that it won't be announcing a write-down. Separately, JPMorgan Chase (JPM 45.05, +2.66) CEO, Jamie Dimon, said at the same conference that he thinks his bank is "fine" on CDO and subprime exposure and that he doesn't think the subprime problem is a big deal for the U.S. economy.
The investment banking group soared 6.8% and was the best-performing industry group in the trading session.
From a sector standpoint, the laggard today was utilities (+0.7%), but that is understandable given its defensive orientation. To this point, the consumer staples (+1.9%) and health care (+1.4%) sectors also trailed the broader market. Nonetheless, their gains were still significant and reflected the broad-based buying interest.
Wal-Mart was among the leading stocks in the Dow, as it received a handsome boost after topping third quarter EPS expectations by two cents and providing a fiscal 2008 EPS forecast that was ahead of the market's expectations.
The retailer's good news launched a rally in the retail stocks that have been among the market's hardest hit issues in the recent pullback that saw the S&P 500 drop nearly 9.0% from its Oct. 11 high. Even Home Depot (HD 29.12, +0.66) caught a bid after missing the third quarter consensus EPS estimate by a penny and warning earnings from continuing operations, on a 52-week basis, will decline as much as 11%.
The run on retailers was helped along by another sharp sell-off in oil prices, which fell 3.7% to $91.17 per barrel after the IEA reduced its global demand forecast for 2008. Oil prices are now down 8.0% from the high they hit last Wednesday.
The move in oil prices didn't hurt the energy sector, which gained 2.3%.
It should also be noted that the market extended its gains in the final half-hour, helped by a better-than-expected pending home sales report that showed a 0.2% increase for September versus an expectation for a 2.0% decline, and closed at its highs for the day. This action is a reversal of the activity in the past two sessions in which the market sold off in the final half-hour and closed at its lows.
With stocks in rally-mode, the Treasury market was on the defensive. The 10-year note dropped 13 ticks, raising its yield to a still-low 4.26%.
3:30 pm : The stock market gets a pop following the better-than-expected pending home sales data. The financial sector is now up an impressive 4.4% and the tech sector is up 3.5%. If the market holds onto its gains, it will be the first positive finish in four days.
The only Dow components in the red are DuPont (DD 46.03, -0.37) and Altria (MO 72.38, -0.09). IBM (IBM 105.19, +3.74) and JPMorgan (JPM 45.20, 2.81) are providing leadership.
Tomorrow before the open brings the potentially market-moving October Retail Sales and Sales ex-auto, and October total and core PPI. Earnings season is winding down, with 22 companies reporting by tomorrow's open.DJ30 +276.54 NASDAQ +77.06 SP500 +34.82 NASDAQ Dec/Adv/Vol 937/2071/2.12 bln NYSE Dec/Adv/Vol 677/2587/1.15 bln
3:00 pm : Just reported, the National Association of Realtors Pending Home Sales Index for September grew by 0.2%. A decline of 2.5% was expected.
The major indices continue to extend their gains in impressive fashion following a broad-based increase in buying interest. Meanwhile, the Treasury market is seeing an increase in selling interest this session.
In currency trading, the dollar index is down 0.06% on the heels of yesterday's gain of nearly 1%. DJ30 +236.47 NASDAQ +65.29 SP500 +29.25 NASDAQ Dec/Adv/Vol 997/1978/1.88 bln NYSE Dec/Adv/Vol 773/2476/1.04 bln
2:30 pm : The stock market continues to march upward. Strikingly, the energy sector (+0.5%) has recovered into the green, despite the steep decline in crude oil prices. That leaves the utilities (-0.5%) sector alone in negative territory.
Apple (AAPL 168.25, +14.49) is pacing this session's advance. The stock is up nearly 10% on reports that the company is negotiating with China Mobile to sell the iPhone in China.
On the economic front, the treasury budget for October came in at -55.6, which is lower than the consensus estimate of -53.0. Only in April, the most important month for tax inflows to the Treasury, does the market pay any attention to this report. DJ30 +227.44 NASDAQ +59.38 SP500 +26.47 NASDAQ Dec/Adv/Vol 1010/1946/1.70 bln NYSE Dec/Adv/Vol 817/2414/939 mln
2:00 pm : The major indices hit fresh highs as the bullish bias persits. The energy sector (-0.1%) has pared most of its intraday losses, and further gains in the tech sector (+2.7%) are fueling the advance.
The breadth of the stock market is bullish this session. As reflected in the A/D line, advancers outpace decliners on the NYSE by 2.5-to-1 margin, while the Nasdaq comes in at 1.8-to-1.DJ30 +215.74 NASDAQ +57.29 SP500 +23.92 NASDAQ Dec/Adv/Vol 1027/1891/1.51 bln NYSE Dec/Adv/Vol 928/2285/836 mln
1:35 pm : A slight pickup in buying interest pushes the major indices near their best levels of the session. Crude continues to plummet, as it is now down 4.1% to $90.66. Although this drop makes a nice headline, keep in mind crude is still up 36% year-to-date.
Meanwhile, small-cap and mid-cap stocks are trading generally in-line with their large-cap counterparts.DJ30 +181.19 NASDAQ +50.55 R2K +1.5% SP400 +1.2% SP500 +20.79 NASDAQ Dec/Adv/Vol 1076/1835/1.42 bln NYSE Dec/Adv/Vol 975/2219/789
1:00 pm : The market has been trading in a very tight range near its intraday high since 11:30 ET. The healthcare sector (-0.03%) has slipped into the red, but the losses are more than offset by the gains made in the influential financial sector (+3.6%).
Gold has slid 1.0% to $799.50. Gold had steep declines yesterday, but is still up 19.5% year-to-date.DJ30 +153.80 NASDAQ +40.69 SP500 +16.89 NASDAQ Dec/Adv/Vol 1036/1849/1.26 bln NYSE Dec/Adv/Vol 922/2266/708 mln
12:30 pm : The major indices are trading near their intraday highs as the general tone of the market is much improved compared to the last few trading sessions. Reuters reports that the CEO of JP Morgan Chase (JPM 46.15, +2.84) says, 'we think we're fine' on collateral debt obligations (CDO) and subprime exposure, but cautions that there is risk associated with subprime and CDO hedges against loss.
Wal-Mart (WMT 46.18, +2.86) is not the only retailer aiding the turnaround in the retailing index. Leading off-price retailer TJX Companies (TJX 30.97, +1.65) posted relatively stable third-quarter results this morning and also increased its earnings outlook. The company operates over 2,500 discount apparel stores, notably T.J. Maxx and Marshalls. DJ30 +169.24 NASDAQ +46.48 SP500 +18.15 NASDAQ Dec/Adv/Vol 1014/1851/1.12 bln NYSE Dec/Adv/Vol 869/2264/592
12:00 pm : At the East Coast lunch hour, the stock market is on the rebound. An underlying belief that the market is now oversold, after dropping close to 9.0% from the October high hit roughly a month ago, has been a driving influence in the positive bias. Presumably, short-covering is also playing a role in this session's strength.
The performance of the ten major sectors supports the assumption that investors view the market as oversold, and are looking for bargains. Some of the hardest hit sectors last week, including tech (+2.4%) and financials (+2.9%), are outperforming. Furthermore, the S&P 500 Retailing Index (+2.9%), which has been trampled lately, is providing leadership.
Only the utilities (-0.6%) and energy (-0.3%) sectors are in the red.
News has been relatively light, although retail bellwethers Wal-Mart (WMT 46.18, +2.86) and Home Depot (HD 28.52, +0.06) reported their earnings before the open.
Wal-Mart reported third quarter net income of $2.86 billion, an 8.0% increase from the prior-year period. Its profit of $0.69 per share, excluding items, was two cents ahead of the consensus estimate.
The company's outlook, though, is the item that is driving the stock in today's trading. Its estimate for FY08 earnings to be between $3.13 and $3.17, which includes an after-tax restructuring charge of approximately $40 million for Seiyu, puts it out ahead of the current consensus estimate of $3.09.
Meanwhile, fellow Dow component Home Depot reported disappointing earnings, although expectations were not high. Home Depot's profit of $0.59 per share, excluding items, was a penny below the consensus estimate.
Crude oil is again on the retreat. Crude for December delivery has slipped 3.5% to $91.40 per barrel. Bloomberg.com reports that the International Energy Agency cut its forecast for global demand of oil for the remainder of the year, and for 2008. DJ30 +171.76 NASDAQ +48.72 SP500 +18.52 NASDAQ Dec/Adv/Vol 940/1885/990 mln NYSE Dec/Adv/Vol 811/2298/523 mln
11:30 am : The stock market is pushing higher as the financial sector (+2.6%) gains some steam. Investors, though, will be keeping a close eye on how the market closes, as the last two sessions had a broad-based sell-off late in the trading day.
Within the financial sector, all industry groups are in the green with investment banks & brokerages (+4.5%) providing leadership.DJ30 +173.22 NASDAQ +51.62 SP500 +20.57 NASDAQ Dec/Adv/Vol 922/1874/828 mln NYSE Dec/Adv/Vol 775/2330/448 mln
11:00 am : The major indices are trading at or near their best levels of the session following an increase in buying interest led by the tech sector (+2.2%). The increase is broad-based, with the exception of the energy sector, which is on the decline. Separately, Reuters reports that the the CFO of Bank of America (BAC 44.65, +0.66) says the company's write-down could be greater if market conditions worsen.
Similar to yesterday, the Amex Airline Index (+3.4%) and the Dow Jones Transportation Average (+1.2%) are outperforming the broader market in response to the decline in crude oil prices.DJ30 +131.85 NASDAQ +41.88 SP500 +14.48 NASDAQ Dec/Adv/Vol 902/1842/655 mln NYSE Dec/Adv/Vol 772/2268/347 mln
10:30 am : The major indices are trading near their best levels of the session. During a Merrill Lynch (MER 55.05, +1.85) conference, the CEO of Goldman Sachs (GS 227.01, +12.20) reiterated that the company will not announce a further write-down. The financial sector (+2.1%) got a pop following the statement, but has since retreated off its best levels of the session.
Meanwhile, crude oil for December delivery is down 2.3% to $92.40. Bloomberg.com reports that the International Energy Agency cut its forecast for global demand of oil for the remainder of the year, and for 2008. The energy sector (-0.5%) has followed suit.DJ30 +132.01 NASDAQ +40.46 SP500 +17.63 NASDAQ Dec/Adv/Vol 775/1867/456 mln NYSE Dec/Adv/Vol 622/2305/192 mln
10:00 am : The view that investors currently feel the market is oversold is certainly being supported by the performance of the major indices. Some of the hardest hit sectors last week, including financials (+1.8%) and tech (+1.4%), are providing leadership as investors go bargain hunting. In addition, the S&P 500 Retailing Index (+2.0%), which also had steep declines, is outperforming the broader market.
All ten of the sectors are in positive territory. Of course, as we saw during the volatility last week, investor sentiment could change at any moment. DJ30 +108.60 NASDAQ +33.30 SP500 +15.14
09:40 am : The stock market opens in strong fashion. The upside opening is being supported by the underlying belief that the stock market is now oversold, considering the S&P 500 has dropped close to 9.0% in roughly a month.
Additionally, Wal-Mart (WMT) reported fiscal third quarter earnings that topped the consensus estimate of $0.67 by two cents and provided guidance for its fiscal fourth quarter that is in-line with the consensus estimate.DJ30 +121.09 NASDAQ +38.10 SP500 +17.61
09:16 am : S&P futures vs fair value: +12.6. Nasdaq futures vs fair value: +27.3.
09:00 am : S&P futures vs fair value: +9.7. Nasdaq futures vs fair value: +25.5. A strong start is expected. Crude oil has eased 0.7% to $93.91 per barrel.
08:30 am : S&P futures vs fair value: +8.2. Nasdaq futures vs fair value: +19.8. Futures continue to point to an encouraging start. On the economic front, pending home sales data will be released at 15:00 ET and it is expected to show a 2.0% decline versus a 6.5% decline in the prior month.
08:00 am : S&P futures vs fair value: +9.5. Nasdaq futures vs fair value: +17.0. Early indicators suggest a higher open. An underlying belief that the market is now oversold, after dropping close to 9.0% from the October high hit roughly a month ago, is a driving influence in the early-going. Meanwhile, Wal-Mart (WMT) topped expectations, while fellow Dow component Home Depot (HD) fell short of its consensus estimate.
06:20 am : S&P futures vs fair value: +7.0. Nasdaq futures vs fair value: +4.5.
06:19 am : FTSE...6315.90...-22.00...-0.3%. DAX...7768.79...-38.05...-0.5%.
06:19 am : Nikkei...15126.63...-70.46...-0.5%. Hang Seng...27803.35...+137.62...+0.5%.
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