Market Update 071213 http://biz.yahoo.com/mu/update.html 4:15 pm : On Thursday, the major indices erased early losses in a late day recovery to finish mixed. The Dow and S&P 500 eked out slight gains, while the Nasdaq Composite finished with a slight loss. There were a handful of economic reports that garnered the market's attention. Also, financials were once again in the spotlight.
The financial (-0.5%) sector was the main laggard for the third straight day today, but did stage an impressive recovery off its intraday low (-2.9%) thanks to strength in the flagging thrifts & mortgages group (+3.6%). Lehman Brothers (LEH 61.37, -0.45) reported earnings that topped expectations, but its shares were still sent lower. Lehman's inability to make gains in the face of a better than expected earnings report represents the credibility gap the financial sector is currently facing.
Of the six sectors that traded higher, utilities (+1.2%) and industrials (+0.8%) showed the most strength.
In corporate news, shares of biotech company Biogen Idec (BIIB 57.91, -17.97) got clipped 24% after the company said it has not found a potential buyer after months of exploring a potential sale. Biogen played a large role in the Nasdaq's underperformance today.
Today's economic data counter claims of recession, but also raise some inflation concerns.
November PPI jumped 3.2%, the most since 1973, as energy prices surged 14.1%. The reading was well above the expected 1.5% gain, but the energy surge could prove temporary and even reverse some next month. The core rate was also up more than expected at 0.4%
The data reflects the inflation issues that the Fed noted in their policy statement on Tuesday. The PPI data are not good news, but shouldn't be overstated either. CPI will be out tomorrow.
Better news comes from the November retail sales report. Total sales were up a very strong 1.2%, which was two times more than economists expected. Excluding autos, the increase was 1.8%. Excluding gasoline sales, total retail sales were still up a strong 0.6%. These data are a long way from showing a consumer spending pullback that is the basis of most recession forecasts.
Despite the better than expected retail data, the S&P Retailing Index (-1.1%) was a laggard today. Costco (COST 68.54, -1.65) weighed heavily on the index, even though the company reported earnings that were in-line with estimates. Analysts were unimpressed with the company's profit margin.
Further good news on the economy comes from the drop in new claims for unemployment for the week ended Dec. 8 to 333,000 from 340,000 the week prior.
Investors still expect a 25 basis point rate cut on Jan. 30, despite the increased inflation concerns and stronger than expected retail numbers. Fed funds futures suggest a 98% chance the Fed will cut by 25 basis points, which is, in effect, unchanged from yesterday. DJ30 +44.06 NASDAQ -2.65 NQ100 -0.3% R2K -0.3% SP400 -0.02% SP500 +1.82 NASDAQ Dec/Adv/Vol 1783/1196/2.07 bln NYSE Dec/Adv/Vol 2169/1000/1.29 bln
3:30 pm : Choppy action continues as the market heads into the final half-hour of trading. The Dow is back in the green, as it hits a fresh intraday high. Meanwhile, the S&P and Nasdaq are closing in on the unchanged mark, thanks to a rebound in the energy sector (+0.5%).
JetBlue (JBLU 7.08, +0.83) and Deutsche Lufthansa AG announced an agreement for Lufthansa to make a minority equity investment in JetBlue. This transaction represents the first significant investment by a European air carrier in a U.S. point-to-point air carrier. Under the terms of the agreement, which has been approved by the Boards of both companies, Lufthansa will purchase in a private placement approximately 42 million newly issued common shares of JetBlue, or 19% of JetBlue's equity after giving effect to the issuance. Lufthansa is acquiring the shares at a price of $7.27 per share, or a total of approximately $300 million, representing approximately a 16% premium to yesterday's closing price of $6.25. Shares reopened for trading at 3:25 ET.DJ30 +27.15 NASDAQ -7.72 SP500 -1.25 NASDAQ Dec/Adv/Vol 1960/976/1.70 bln NYSE Dec/Adv/Vol 2307/850/1.04 bln
3:00 pm : Stocks are holding with modest losses, near their best levels of the session. CNBC reports Greenspan said there is now a 50% chance that the U.S. will go into a recession.
Despite the recent gains, the breadth of the market remains bearish. Decliners outpace advancers on the NYSE by nearly a 3-to-1 margin. The Nasdaq comes in at 2-to-1. Volume is on the normal side.
Jet Blue (JBLU 7.15, +0.90) trading has been halted, news pending. There were previous reports that Lufthansa is in talks to buy a stake of nearly 25% of the company.DJ30 -17.23 NASDAQ -15.56 SP500 -6.70 NASDAQ Dec/Adv/Vol 1921/993/1.57 bln NYSE Dec/Adv/Vol 2294/859/968 mln
2:30 pm : A surge in buying interest sends the Dow into positive territory for the first time since shortly after the opening bell. The Dow has since slipped back into the red, but is trading near its best level of the session. slightly below the unchanged mark. Participation has been broad-based, with all sectors coming off their lows. Four of the ten sectors are now in positive territory.
The Dollar Index is up 0.68%, which is spurring some buying interest in commodities. The CRB Index, which tracks a basket of commodities, is down 0.98% this session. Precious metals (-2.9%) have given up the most gains. Grains (+0.5%) are the only group managing to post a gain. DJ30 -9.11 NASDAQ -13.25 SP500 -5.41 NASDAQ Dec/Adv/Vol 2018/888/1.43 bln NYSE Dec/Adv/Vol 2455/691/843 mln
1:55 pm : The stock market pares some of its losses, but continues to trade within its afternoon range.
Washington Mutual (WM 15.23, -0.83) is once again facing selling pressure. Shares of WaMu were downgraded to Sell from Neutral at Banc of America. WaMu's stock is down 62% year-to-date due to the credit market and subprime turmoil.
Despite WaMu's underperformance, thrifts & mortgages (+0.7%) is the only group in the financial sector (-2.4%) to post a gain. Fannie Mae (FNM 33.69, +1.54) is offsetting WaMu's losses on news it sold $5 billion in one-month discount notes.DJ30 -58.04 NASDAQ -23.39 SP500 -10.94 NASDAQ Dec/Adv/Vol 2091/784/1.31 bln NYSE Dec/Adv/Vol 2449/694/776 mln
1:25 pm : Buyers remain on the sidelines as the stock market trades with a loss.
The Amex Airline Index (+1.4%) has reversed into positive territory after spending the session in the red. The strength can be attributed to New York Times Deal Book, which stated Lufthansa is in talks to buy a stake of just under 25% of the discount airline Jet Blue (JBLU 7.76, +1.51), people briefed on the matter told Deal Book. The boards of both airlines are reportedly meeting this afternoon to finalize a deal.
At yesterday's closing price, the Amex Airline Index was down 36.7% year-to-date, as it struggled with the 41% climb in crude oil prices during that same period.DJ30 -84.30 NASDAQ -24.84 SP500 -13.16 NASDAQ Dec/Adv/Vol 2105/762/1.19 bln NYSE Dec/Adv/Vol 2477/633/695 mln
1:00 pm : The major indices are trading modestly above their worst levels of the session as sellers remain in control this session. The weakness in equities has not spurred any buying interest in bonds, which are also down today.
Honeywell (HON 59.98, +2.24) is bucking this session's negative trend. The company reaffirmed its 2007 outlook this morning and offered guidance for 2008 that is in-line with analysts' forecasts. Though the company believes there will be greater uncertainty in the global economy next year, it remains confident favorable macro trends will help the company deliver a strong financial performance.DJ30 -88.77 NASDAQ -24.06 SP500 -13.88 NASDAQ Dec/Adv/Vol 2104/853/1.08 bln NYSE Dec/Adv/Vol 2474/619/638 mln
12:30 pm : Stocks continue to trade with a loss, but are off their session lows. The major indices have had a choppy run today.
After Microsoft (MSFT 35.37, +0.90), Dow Chemical (DOW 44.92, +3.17) is currently the best performing stock in the S&P 500. The company and Petrochemical Industries Company of the State of Kuwait, a wholly owned subsidiary of Kuwait Petroleum, announce plans to form a 50/50 joint venture that will be a market-leading, global petrochemicals company.
Only 125 stocks in the S&P 500 are posting a gain.DJ30 -68.37 NASDAQ -22.78 SP500 -11.96 NASDAQ Dec/Adv/Vol 2084/729/980 mln NYSE Dec/Adv/Vol 2458/638/572 mln
12:00 pm : Stocks are off their lows, but remain in the red, as investors question the effectiveness of the Fed's liquidity plan. Short term lending between banks, as measured by the LIBOR rate compared to the fed funds rate, remains at a seven year high according to Bloomberg.com.
The financial sector (-2.5%) is the main laggard for the third straight session. Investment bank Lehman Brothers (LEH 60.14, -1.68) reported earnings that topped expectations, but its shares are still under pressure. The issue confronting Lehman Bros. revolves around a credibility gap, not so much for the company itself but for the industry in general.
Utilities (+0.7%) and industrials (+0.1%) are the only two sectors that traded higher at the East Coast lunch hour.
Today's economic data counter claims of recession, but also raise some inflation concerns.
November PPI jumped 3.2% as energy prices surged 14.1%. This is the largest jump in PPI since 1973. The reading was well above the expected 1.5% gain, but the energy surge could prove temporary and even reverse some next month. The core rate was also up more than expected at 0.4%
The data reflects the inflation issues that the Fed noted in their policy statement on Tuesday.
Better news comes from the November retail sales report. Total sales were up a very strong 1.2%. Excluding autos, the increase was 1.8%. Excluding gasoline sales, total retail sales were up only 0.6%. These data are a long way from showing a consumer spending pullback that is the basis of most recession forecasts.
Despite the better than expected retail data, the S&P Retailing Index (-2.5%) is a laggard today. Costco (COST 69.07, -1.12) is the main drag, even though the company reported earnings that were in line with estimates. Analysts were unimpressed with company's profit margin.
Further good news on the economy comes from the drop in new claims for unemployment for the week ended Dec. 8 to 333,000 from 340,000 the week prior. The jump to 353,000 the week of Nov. 24 now appears totally aberrant.DJ30 -48.61 NASDAQ -20.84 SP500 -10.54 NASDAQ Dec/Adv/Vol 2055/718/873 mln NYSE Dec/Adv/Vol 2455/621/5001 mln
11:35 am : The stock market is wavering near its session trough.
During its conference call, Lehman Brothers (LEH 59.04, -2.78) was questioned about further write-downs, the company said its not suggesting that it won't see any further valuation reductions in its assets. Lehman also said it is not calling this the bottom.
On a related note, Merrill Lynch said that Lehman Brothers' 2008 profit estimates made by analysts are "too high", according to Bloomberg.DJ30 -83.32 NASDAQ -26.90 SP500 -13.52 NASDAQ Dec/Adv/Vol 1990/764/761 mln NYSE Dec/Adv/Vol 2417/625/426 mln
11:00 am : Stocks continue their choppy run. After slipping a bit, the major indices are trading at or near their intraday lows. Financials (-2.5%) continue to weigh on the stock market.
The defensive oriented utilities sector (+0.8%) has rebounded into positive territory.
Shares of Biogen Idec (BIIB 54.46, -21.42) are down nearly 30% after the company said it has not found a potential buyer after months of exploring a potential sale. As a result, the Cambridge, Mass.-based biotechnology company, which continues to face increasing competitive pressures and slowing growth for its key drugs, will remain an independent company. The company is the main laggard in the Nasdaq 100 this session.DJ30 -91.79 NASDAQ -26.75 SP500 -14.20 NASDAQ Dec/Adv/Vol 1905/752/559 mln NYSE Dec/Adv/Vol 2294/678/292 mln
10:30 am : After some choppy action, the stock market pares some of its losses, but is back on the retreat.
The S&P 500 Retailing Index (-0.9%) is underperforming the broader market despite the better than expected retail sales data. Costco (COST 66.80, -3.48) is a major drag on the index. The company reported earnings that were in-line with expectations, but investors were disappointed with profit margins.
The Dept. of commerce reported October business inventories rose 0.1%, which was less than the expected rise of 0.3%. September had a gain of 0.4%. DJ30 -26.10 NASDAQ -15.66 SP500 -7.91 NASDAQ Dec/Adv/Vol 1794/768/413 mln NYSE Dec/Adv/Vol 2336/556/185 mln
10:00 am : The stock market extends its losses, with all ten economic sectors in the red.
For the third day in a row, the financial sector (-2.0%) is the main laggard. Once again the thrifts & mortages group (-3.9%) is under selling pressure.
All other sectors are posting a loss, although none are posting a loss larger than 1%.DJ30 -64.46 NASDAQ -19.02 SP500 -11.48 NASDAQ Dec/Adv/Vol 1502/780/166 mln
09:40 am : Stocks are trading slightly lower as the market sifts through a number of economic reports.
November PPI surged 3.2% caused by a 14% spike in energy prices. The core rate was also up more than expected at 0.4%. The PPI data are not good news, but shouldn't be overstated either. CPI will be out tomorrow.
New claims for unemployment for the week ended December 8 fell to 333,000 from 340,000 the prior week. The number remains below recessionary levels.
November retail sales were strong across the board. Total sales were up 1.2% and excluding autos the gain was 1.8%.
Lehman Brothers (LEH) reported earnings that topped expectations. Its stock was trading lower in premarket, but is currently in the green as the trading day gets underway.DJ30 -6.83 NASDAQ -6.62 SP500 -3.05
09:14 am : S&P futures vs fair value: -11.0. Nasdaq futures vs fair value: -15.5.
08:59 am : S&P futures vs fair value: -8.7. Nasdaq futures vs fair value: -11.5. The futures market gains a few points, but still points to a lower start. Crude oil is trading down 0.8% to $93.63, which follows its more than 4% gain yesterday.
08:31 am : S&P futures vs fair value: -15.8. Nasdaq futures vs fair value: -21.5. Futures slide on a number of economic reports. November PPI Ex food & energy rose 0.4% month over month, compared to the expected rise of 0.2%. November retail sales less autos rose 1.8%, compared to the consensus estimate that called for a rise of 0.6%. Jobless claims for the week ended Dec. 8 came in at 333K, while economist expected 335K claims. Prior to the reports, Lehman Brothers (LEH) reported earnings that topped expectations, but did not give futures a lift.
08:00 am : S&P futures vs fair value: -11.3. Nasdaq futures vs fair value: -17.8. Early indications suggest a bearish start to the trading day for stocks. Washington Mutual (WM) was downgraded by Banc of America today from Neutral to Sell and had its price target cut to $13 from $24. Biogen Idec (BIIB) announced that it will remain independent after it failed to receive any definitive offers for the company. Biogen's stock fell nearly 30% in after hours action and is a key drag on the Nasdaq futures this morning. The Retail Sales, PPI and weekly initial claims reports will be released at 08:30 ET. Each carries potential to be a market mover, unlike the Business Inventories report at 10:00 ET which won't cause much of a stir for traders.
06:22 am : S&P futures vs fair value: -3.3. Nasdaq futures vs fair value: -6.0.
06:20 am : FTSE...6457.70...-102.10...-1.6%. DAX...8002.99...-73.13...-0.9%.
06:20 am : Nikkei...15536.52...-395.74...-2.5%. Hang Seng...27744.45...-776.61...-2.7%.
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