Market Update 071127 http://biz.yahoo.com/mu/update.html 4:20 pm : There was another large swing in stock prices Tuesday, only this time they swung higher thanks to gains in the financial sector (+2.6%) that were forged on the back of news that Abu Dhabi Investment Authority is going to invest $7.5 billion for a 4.9% stake in Citigroup (C 30.32, +0.52).
The Citigroup news, and word from Barclays (BCS 43.87, +3.49) that it expects to report 2007 earnings broadly in-line with expectations, got the market started on a positive note, yet the bullish bias was soon tested by a weaker than expected consumer confidence reading for November. Specifically, the Conference Board reported that its confidence reading dipped to 87.3 (consensus 91.0) from 95.2 in October.
Stock prices retreated as the confidence number hit the wires, but they shook off the headline disappointment knowing that (a) the decline wasn't really that surprising given the negative headlines of late and (b) Thanksgiving sales reports exposed the weak link between confidence and actual spending activity.
A noticeable dip in oil prices (-3.4% to $94.42), which was driven by talk of increased production from OPEC, provided a measure of support that helped prop up a number of beaten-down discretionary and transportation stocks.
Homebuilding stocks, which showed strength earlier in the session after Pulte Homes (PHM 9.08, -0.08) reaffirmed its fourth quarter outlook, ended up as notable laggards again. A contention from fellow builder D.R. Horton (DHI 10.41, -0.17) that 2008 will be worse than 2007, and the S&P/Case-Shiller Home Price Index showing a 4.5% year-over-year decline, succeeded in undoing the early rebound effort.
Overall, the market showed good resilience to selling activity that picked up again in the afternoon trade. Unlike Monday, it closed near its highs for the day thanks to late buying interest.
The financial sector led the charge, but had plenty of company. Altogether there were seven sectors that registered gains in excess of 1.0%. The only sector to lose ground today was energy (-0.5%), which moved lower in conjunction with oil prices.
In expected fashion, the stock market rally took some wind out of the Treasury market as some risk aversion trades came off. The 10-year note was down 27 ticks when stocks closed for the day, bringing its yield up to 3.94%.DJ30 +215.00 DJTA +1.9% NASDAQ +39.81 NQ100 +2.2% R2K +1.1% SP400 +1.1% SP500 +21.01 NASDAQ Dec/Adv/Vol 1317/1693/2.20 bln NYSE Dec/Adv/Vol 1089/2212/1.60 bln
3:30 pm : The stock market has had a decent gain off its recent low, but is back on the decline. The Dow, Nasdaq and S&P 500 are 138, 28, and 15 points, respectively, below their session highs.
Tomorrow, there are several economic releases, including durable orders, existing home sales, and the Fed's Beige Book. The government's weekly energy inventory report is also slated for release.DJ30 +103.64 NASDAQ +17.53 SP500 +5.61 NASDAQ Dec/Adv/Vol 1410/1570/1.73 bln NYSE Dec/Adv/Vol 1451/1834/1.14 bln
3:00 pm : A recent surge in selling pressure has pushed the indices to their worst levels since early in the trading day. The decline has been broad-based, and now the materials (-0.1%) and telecom sectors (-0.5%) have joined energy in negative territory. The Dow has dropped 122 points from its session high.
For now, it appears that selling interest has faded, but there has only been a slight pickup in buying interest.DJ30 +122.99 NASDAQ +19.97 SP500 +8.05 NASDAQ Dec/Adv/Vol 1469/1490/1.55 bln NYSE Dec/Adv/Vol 1263/2011/1.01 bln
2:30 pm : The major indices slipped a bit, led by a decline in the S&P Retailing Index (+1.2%), but are now back on the rise.
Chicago Fed President Evans said the potential U.S. GDP growth is now "slightly above 2.5%" according to Reuters.
According to a Bloomberg report this morning, Goldman Sachs said the U.S. Federal Reserve will slash its benchmark rate to 3% by the middle of next year to head off a recession. The risk of the economy contracting for two straight quarters has risen to between 40% and 45%, Goldman said, as a housing slump threatens to hurt consumer spending and employment. The Fed funds rate is currently 4.5%.DJ30 +167.37 NASDAQ +22.51 SP500 +11.64 NASDAQ Dec/Adv/Vol 1362/1575/1.40 bln NYSE Dec/Adv/Vol 1329/1929/927 mln
2:00 pm : Stocks decline following a resurgence in broad-based selling pressure. Despite the dip, the stock market is still trading with a good-sized gain, and nine out of ten sectors remain in positive territory.
In currency trading, the dollar has strengthened against leading world currencies as indicated by the 0.42% jump in the DXY Index. The CRB Index shows that commodities as a whole are down 1.5% this session, largely due to weakness in oil and gold.DJ30 +181.43 NASDAQ +27.63 SP500 +13.36 NASDAQ Dec/Adv/Vol 1201/1728/1.29 bln NYSE Dec/Adv/Vol 1092/2160/847 mln
1:30 pm : The major indices are trading at or near their best levels of the session. Chicago Fed President Evans will speak at 13:30 ET on economic outlook.
The Dow Jones Transportation Average and the Amex Airline Index (1.8%) are outperforming the broader market as they benefit from the slide in crude oil prices.
Dell (DELL 26.33, +0.62) announces it will sell the Google (GOOG 664.12, -1.88) Search Appliance and the Google Mini through Dell's direct corporate and public sales organizations. The Google Search Appliance starts at $30,000 and the Google Mini starts at $1,995. Both search appliances, aimed at helping companies find information on their networks, are covered by Google warranty and support services. DJ30 +242.40 DJTA 2.0% NASDAQ +40.94 SP500 +20.39 NASDAQ Dec/Adv/Vol 1165/1738/1.18 bln NYSE Dec/Adv/Vol 1080/2153/777 mln
1:00 pm : The major indices are back on the rise as the Dow Jones Industrial Average and the S&P 500 hit fresh intraday highs. The Nasdaq is trading slightly under its best levels of the session.
Of the 26 Dow components trading higher, Boeing (BA 92.07, +2.14) is showing the most strength. Yesterday, Boeing was upgraded to Outperform from Market Perform at Wachovia. Exxon Mobil (XOM 84.99, -0.70) is the main laggard as it falls in conjunction with crude oil prices.
Separately, the 10-year note yield is now above 4% as it gives up more of yesterday’s gains. DJ30 +222.40 NASDAQ +37.00 SP500 +18.11 NASDAQ Dec/Adv/Vol 1194/1685/1.08 bln NYSE Dec/Adv/Vol 1157/2058/701 mln
12:30 pm : The major indices slip from their best levels, but are still trading with healthy gains. The breadth of the market is bullish. Advancers outpace decliners on the NYSE by a 2-to-1 margin, while the Nasdaq comes in at a slightly lower 1.5-to-1 margin.
Philadelphia Fed President Plosser is currently speaking about the economic outlook. He expects the decline in housing activity to bottom out by the end of Q2 2008 and believes that unemployment may rise to about 5% next year. DJ30 +170.21 NASDAQ +29.88 SP500 +12.32 NASDAQ Dec/Adv/Vol 1177/1681/963 mln NYSE Dec/Adv/Vol 1117/2084/609 mln
12:00 pm : Stocks made some healthy gains this session. Once again financial companies are in focus, but this time they are the buying catalyst. This follows yesterday's steep decline, led by financials, that sent the S&P 500 and Dow 10% lower than their recent highs, marking an official "correction."
After hitting a five-year low in yesterday's trading, shares of Citigroup (C 30.22, +0.44) are trading higher following news that Abu Dhabi Investment Authority (ADIA) will invest $7.5 billion to acquire a 4.9% stake in Citigroup. The investment will make ADIA the bank's largest shareholder.
The terms of the transaction involve the purchase of equity units, pay a fixed annual rate of 11% and have a mandatory conversion into common shares. The high yield underscores the troubled state Citigroup is in, but the investment will help shore up Citigroup's capital position and it implies ADIA sees long-term value in the stock at current prices.
Citigroup was upgraded to Buy from Market Perform at Punk Ziegel. The firm believes Citi's dividend is well protected.
Meanwhile, London-based Barclays (BCS 43.40, +3.02) also offered a measure of support with an indication that it expects FY07 earnings to be broadly in-line with consensus estimates.
The Conference Board Consumer Confidence Index for November clocked in at a disappointing 87.3, below the consensus estimate of 91.5. The reading is also down from the prior month, which came in at 95.6. Stocks fell toward the unchanged mark shortly after the release, but quickly rallied back to make new intraday highs.
Of the nine sectors trading higher, financials (+2.0%) are providing the majority of the leadership, which follows its 4% decline yesterday. The tech sector (+1.4%), also a laggard yesterday, is another leader.
The energy sector (-1.6%) is the laggard, despite Bear Stearns upgrading several oil stocks this morning. A sharp decline in crude oil prices following speculation that OPEC will increase output is fueling the selling interest. Crude oil for January delivery is currently down 2.8% to $95.01.
Separately, bonds have given back almost all of the gains from yesterday's rally. DJ30 +195.01 NASDAQ +35.43 SP500 +16.46 NASDAQ Dec/Adv/Vol 1071/1722/859 mln NYSE Dec/Adv/Vol 1100/2089/526 mln
11:35 am : The stock market is hovering around its recently reached intraday highs, as it continues to post substantial gains. The major indices, though, still have a way to go to make up yesterday's plunge, when the Dow shed 237 points.
Citigroup (C 30.32, +0.52) has been upgraded to Buy from Market Perform at Punk Ziegel. The firm says that earnings estimates have not been revised and it recognizes that the company is prone to sizable write-offs in the fourth and first quarters. However, the firm believes Citi's dividend is well protected.DJ30 +177.37 NASDAQ +39.14 SP500 +15.28 NASDAQ Dec/Adv/Vol 1127/1647/718 mln NYSE Dec/Adv/Vol 1085/2059/455 mln
11:00 am : The disappointment following the weak consumer confidence reading is short-lived as the major indices bounce back to fresh intraday highs in impressive fashion.
The tech sector (+1.8%) is playing a large role in the recovery, as is the financial sector (+2.0%). Also of note, the energy sector (-0.9%) has pared a large portion of its intraday losses.
Treasuries, which rallied yesterday, are being sold-off today. The 10-year note yield, however, is still below 4%. DJ30 +162.17 NASDAQ +40.97 SP500 +18..31 NASDAQ Dec/Adv/Vol 1115/1589/543 mln NYSE Dec/Adv/Vol 1229/1838/349 mln
10:30 am : Stocks trade in choppy fashion following a weaker than expected economic report. The major indices have dropped, but remain in the green.
Reported at 10:00 ET, the Conference Board Consumer Confidence Index for November clocked in at 87.3, below the consensus estimate of 91.5. The reading is also down from the prior month, which came in at 95.6.
The Consumer Confidence Index is a monthly survey of 5,000 households. Because smaller moves are typically just noise, only index changes of at least five points should be considered significant, which this recent move surpasses.
Interestingly, Citigroup (C 29.82, -0.88), which gave futures a large boost in overnight trading, is now posting a loss and is underperforming its peers in the financial sector (+1.1%). DJ30 +68.44 NASDAQ +15.85 SP500 +4.97 NASDAQ Dec/Adv/Vol 1231/1352/360 mln NYSE Dec/Adv/Vol 1133/1835/220 mln
10:00 am : The major indices trade with healthy gains as broad-based leadership lends support.
Of the nine sectors trading higher, the financial sector (+1.4%) is providing leadership, with the regional banks (+2.4%) group pacing the advance. The sector led yesterday's decline, plunging 4%.
The energy sector (-1.6%) is a notable laggard, despite Bear Stearns upgrading several oil stocks this morning. The selling catalyst is a steep drop in crude oil on speculation that OPEC will decide to increase production at its December meeting. Crude oil for January delivery is down 2.9% to $94.90 per barrel. DJ30 +103.64 NASDAQ +25.56 SP500 +10.46
09:40 am : The stock market opened significantly higher, as the futures market suggested. After the sell-off yesterday, the S&P and Dow were down 10% from their recent highs, marking an official correction. Once again financial companies are making headlines, but this time they are the buying catalyst.
After hitting a five-year low in yesterday's trading, shares of Citigroup (C) got a pop in overnight action, following news that Abu Dhabi Investment Authority (ADIA) will invest $7.5 billion to acquire a 4.9% stake in Citigroup. The investment will make ADIA the bank's largest shareholder.
Meanwhile, London-based Barclays (BCS) also offered a measure of support with an indication that it expects FY07 earnings to be broadly in-line with consensus estimates. DJ30 +90.55 NASDAQ +28.82 SP500 +10.82
09:15 am : S&P futures vs fair value: +10.0. Nasdaq futures vs fair value: +19.0.
09:01 am : S&P futures vs fair value: +9.3. Nasdaq futures vs fair value: +17.3. Early indications continue to suggest a positive opening. The Consumer Confidence report for November is slated for release at 10:00 ET. Economists expect the reading to decline to 91.5, compared to prior reading of 95.6.
08:30 am : S&P futures vs fair value: +5.8. Nasdaq futures vs fair value: +9.5. Futures continue to point to a modestly higher open. Crude oil is down 2.0% to $95.75. The weakness in crude oil is reportedly due to speculation that OPEC will boost output.
08:00 am : S&P futures vs fair value: +5.0. Nasdaq futures vs fair value: +12.5. Stocks are poised for a rebound, although futures are off their best levels of the morning. The primary catalyst for the positive disposition is the news that Abu Dhabi Investment Authority is investing $7.5 billion for a 4.9% stake in Citigroup (C), making it the bank's largest shareholder. Homebuilder Pulte Homes (PHM) reaffirmed its fourth quarter outlook while acknowledging the continued weakness in the housing market.
06:19 am : S&P futures vs fair value: +15.0. Nasdaq futures vs fair value: +20.5.
06:19 am : FTSE...6165.80...-14.70...-0.2%. DAX...7536.03...-31.33...-0.4%.
06:19 am : Nikkei...15222.85...+87.64...+0.6%. Hang Seng...27210.21...-416.41...-1.5%.
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