Market Update 071218 http://biz.yahoo.com/mu/update.html 4:25 pm : It was a seesaw trade on Tuesday as the market traded down in the morning and then traded up in the afternoon. If anything, that was the opposite of what market watchers might have expected when taking stock of the positive developments before the open and the market's propensity of late to close trading sessions on a weak note.
Despite the negative trend in the first half of the day, it should be noted that the market did start the session on a higher note. The positive move followed a favorable trade in the futures market, which was driven by news of a whopping $500 billion cash injection into the banking system by the European Central Bank, better than expected earnings reports from Goldman Sachs (GS 201.51, -7.12), Best Buy (BBY 51.62, +0.48) and Adobe Systems (ADBE 42.03, +1.13), and a Housing Starts report for November that wasn't as bad as feared.
Those good vibes quickly disappeared, however, when the stocks of both Goldman Sachs and Best Buy rolled over amid concerns about the companies' near-term outlook. The sight of those stocks giving up early gains sparked a disappointment trade that carried the indices well into negative territory.
At their lows for the day, which were reached around 12:00 ET, the Dow, Nasdaq and S&P were down 75, 20 and 10 points, respectively.
For the S&P its low marked a 5.8% decline from the intraday high it reached just a week ago. Sensing that the market had gotten oversold on a short-term basis, buyers returned to the action and drove the indices back into positive territory with broad-based buying interest that favored small-cap stocks.
The financial sector (+0.1%) helped lead the turn, although it trailed the broader market as the weak showing from Goldman Sachs and the investment banks weighed on its performance.
Best Buy managed to get things turned around in the afternoon rally to finish with a modest gain for the day. Its positive showing contributed to a solid 1.4% gain in the S&P Retailing Index which, in turn, underpinned the gain seen in the consumer discretionary sector (+0.9%). News that General Motors (GM 26.93, +0.54) and the UAW reached agreement on the first phase of an employee buyout plan that will reduce GM's compensation expense also contributed to the sector's outperformance.
All 10 economic sectors closed higher today with the income-oriented utilities sector (+1.5%) leading the pack. The energy sector (+1.4%) followed close behind, having garnered a bargain hunting bid with the sector down 4.2% at its low today from the intraday high it reached last Thursday.
Separately, the Housing Starts report showed a 3.7% decline in starts to an annualized rate of 1.187 million units (consensus 1.176 mln) and a 1.5% decline in building permits to an annualized rate of 1.15 million (consensus 1.15 mln). The data reflected a continued weak housing market, but because they were largely in line with expectations, they didn't have much bearing on today's proceedings.DJ30 +65.27 NASDAQ +21.57 NQ100 +0.4% R2K +2.0% SP400 +0.7% SP500 +9.08 NASDAQ Dec/Adv/Vol 1190/1823/2.00 bln NYSE Dec/Adv/Vol 1225/1972/1.46 bln
3:30 pm : The stock market is trading modestly below its best level of the session, with all economic sectors posting a gain.
Best Buy (BBY 51.44, +0.31) has recovered into positive territory, after spending almost all of the session in the red despite handily topping its earnings estimate. Meanwhile, Goldman Sachs (GS 202.43, -6.10), which also topped earnings expectations, has not managed to recover.
Tomorrow before the open, Morgan Stanley (MS 48.37, -1.16) and General Mills (GIS 58.89, +0.20) are set to report their earnings. Stanley is expected to report a loss of $0.39 per share, and General Mills is expected to post earnings of $1.13 per share.DJ30 +79.74 NASDAQ +23.49 SP500 +9.84 NASDAQ Dec/Adv/Vol 1212/1751/1.61 bln NYSE Dec/Adv/Vol 1247/1923/1.09 bln
3:00 pm : Stocks ease off their best levels of the session, but continue to trade with significant gains. It has been another volatile day of trading. The S&P was down 10.3 points at its trough, and up 12.5 points at its peak.
In commodity trading, the CRB Index is largely unchanged this session. The Dollar Index is also basically flat for the day.DJ30 +62.26 NASDAQ +18.44 SP500 +6.76 NASDAQ Dec/Adv/Vol 1242/1716/1.49 bln NYSE Dec/Adv/Vol 1193/1972/998 mln
2:30 pm : The Nasdaq climbs to fresh intraday highs, while the S&P and Dow trade near their best levels of the session. All ten sectors are back in the green. As buying interest picks up in stocks, bonds are seeing selling interest.
The Nasdaq's outperformance is being fueled by Microsoft (MSFT 34.66, +0.27), Adobe (ADBE 42.31, +1.40) and Cisco (CSCO 28.35, +0.40). GPS maker Garmin (GRMN 95.60, -6.22) is the main laggard after a report showed the company lost market share, according to the AP.
Separately, crude oil had a wild ride today, eventually finishing the day unchanged at $91.05 per barrel.DJ30 +86.57 NASDAQ +27.38 SP500 +11.03 NASDAQ Dec/Adv/Vol 1265/1675/1.34 bln NYSE Dec/Adv/Vol 1496/1651/889 mln
2:00 pm : Stocks remain in positive territory, but are trading well off their highs. The Dow Jones Industrial Average is underperforming the other major indices despite 20 of its 30 components trading higher.
The main laggards are JPMorgan Chase (JPM 43.79, -0.75) and Proctor & Gamble (PG 72.65, -0.59). IBM (IBM 106.25, +1.72) and United Technologies (UTX 75.83, +0.79) are providing leadership.
Meanwhile, Best Buy (BBY 50.50. -0.64) and Goldman Sachs (GS 201.35, -7.42) remain in the red.DJ30 +8.63 NASDAQ +13.04 SP500 +2.02 NASDAQ Dec/Adv/Vol 1353/1576/1.19 bln NYSE Dec/Adv/Vol 1599/1534/798 mln
1:30 pm : A broad-based pickup in buying interest sends the major indices back into positive territory. Eight of the ten economic sectors are now posting a gain. Notably, energy (+0.5%) has managed to recover into the green, despite continued weakness in crude (-1.3% to $89.43).
There has not been a specific news item that would account for the recent gains, and it may be a technical based move.DJ30 +23.89 NASDAQ +8.67 SP500 +3.10 NASDAQ Dec/Adv/Vol 1633/1266/1.05 bln NYSE Dec/Adv/Vol 1809/1312/703 mln
1:00 pm : Stocks pare some of their losses, but remain in the red.
Since the last update, there have been several reports regarding financial stocks. Bloomberg reports that multiple banks, including Bank of America (BAC 41.05, -0.64) and Citigroup (C 30.19, -0.58), plan to start a "SuperSIV" fund in the "weeks ahead."
Meanwhile, a CNBC commentator said that the board of directors at Bear Stearns (BSC 91.70, -2.37) is actively talking about succession for the CEO Jimmy Cayne. The commentator also said that Merrill Lynch (MER 54.87, -1.38) could take another $3 billion to $6 billion in write-downs, and that new CEO John Thain may pre-announce earnings for release in January. DJ30 -34.63 NASDAQ -8.99 SP500 -4.25 NASDAQ Dec/Adv/Vol 1686/1182/958 mln NYSE Dec/Adv/Vol 1844/1275/647 mln
12:30 pm : Selling pressure eases, but buying interest has not picked up much either, as the major indices hold in negative territory. Only three sectors remain in positive territory.
Crude oil reverses, as it is now down 1.5% to $89.27 per barrel. Reportedly, the decline is due to news that Turkey is withdrawing from Northern Iraq. The slip in oil has caused the energy sector (-0.2%) to fall into negative territory.
A CNBC commentator said that Goldman Sachs' (GS 199.10, -9.53) performance in November was "horrible" and the last two weeks were probably "the worst in the firm's history."DJ30 -37.64 NASDAQ -11.60 SP500 -4.81 NASDAQ Dec/Adv/Vol 1609/1222/861 mln NYSE Dec/Adv/Vol 1897/1197/564 mln
12:00 pm : The stock market got off to a strong start, but was unable to hold its gains as the future outlook of the economy continues to be an area of concern. Investors are disappointed that the market was unable to rally after the European Central Bank (ECB) worked to improve liquidity, and after Goldman Sachs (GS 200.00, -8.63) and Best Buy (BBY 49.65, -1.49) topped earnings expectations. Currently, the stock market is posting a loss of about 0.6%, after being up as much as 0.75%.
The ECB shocked the markets today with an unprecedented $500 billion two-week injection to the banking system. Estimates suggest the operation was about twice the size technically needed. Today's operation by the ECB effectively drove a 50 basis point reduction in the two-week loan rate in euros to 4.45%.
Goldman Sachs reported fourth quarter earnings of $7.01 per share, topping the consensus estimate by $0.40. The company also reported larger revenue than expected. Goldman benefited after it was on the right side of the mortgage trade in 2007. The stock is actually trading down 4%, though, after Goldman's CFO issued a cautious near-term outlook, according to Bloomberg.com.
Goldman is up roughly 5% year-to-date, compared to the financial sector which is down more than 21%.
Best Buy reported third quarter earnings of $0.53 per share, which was higher than the consensus estimate of $0.41. The company also raised FY2008 guidance. Despite topping expectations, shares of Best Buy are trading lower as investors show caution regarding future outlook. During its conference call, the company said the fourth quarter gross profit rate will be down modestly from the prior year, which added to selling pressure.
On the economic front, November housing starts dropped 3.7% and housing permits slipped 1.5%. The data show a continued weak housing market. Market reaction has been limited, however, because the data are much in line with expectations. The rate of decline in the housing market is slowing a bit, which means that residential construction won't take as much off the GDP numbers in coming quarters as in past quarters, but that is little comfort to an industry in a deep slump.
Six of the ten sectors are trading lower, led by the decline in financials (-1.1%). The utilities sector (+1.0%) is posting the largest gain.DJ30 -56.66 NASDAQ -17.93 SP500 -7.61 NASDAQ Dec/Adv/Vol 1351/1461/716 mln NYSE Dec/Adv/Vol 1452/1606/467 mln
11:30 am : After a short-lived recovery effort, stocks fall back toward their worst levels of the session. Despite the slide, the stock market is still posting a slight gain.
Four of the ten sectors are now in the red. The main laggards are financials (-0.7%) and materials (-0.6%). Meanwhile the energy sector (+0.7%) has given up most of its gains, as crude for January delivery is now only up 0.3% to $90.86.
The 10-year note, meanwhile, is up 10 ticks, pushing its yield down to 4.10%.DJ30 +11.46 NASDAQ +3.65 SP500 +1.32 NASDAQ Dec/Adv/Vol 1190/1591/585 mln NYSE Dec/Adv/Vol 1216/1808/377 mln
11:00 am : As buying interest fades, the stock market falters with financials (-0.3%) and industrials (-0.1%) falling into the red. The major indices are still in the green, but the majority of their earlier gains have been given up.
Adobe Systems (ADBE 42.51, +1.61) is outperforming after the company last evening reported fourth quarter financial results that surpassed estimates and also provided a positive outlook for 2008. The company has been on a solid growth track recently. The response from brokerages was mixed. Deutsche Bank upgraded Adobe to Buy from Hold, while Kaufman downgraded the company to Hold from Buy.DJ30 +21.29 NASDAQ +6.66 SP500 +3.13 NASDAQ Dec/Adv/Vol 1176/1523/430 mln NYSE Dec/Adv/Vol 1023/1951/258 mln
10:30 am : The stock market comes under some selling pressure that pares a portion of its earlier gains. The financial sector (+0.1%) is the main laggard.
Eight of its 19 groups are posting a loss, led by the decline in investment banks & brokerages (-1.8%). Despite topping earnings expectations, Goldman Sachs (GS 206.82, -3.35) is trading lower.
Selling pressure has been broad-based, as even the energy sector (+1.0%) is well off its high.DJ30 +48.79 NASDAQ +13.03 SP500 +6.34 NASDAQ Dec/Adv/Vol 1004/1608/283 mln NYSE Dec/Adv/Vol 736/2144/158 mln
10:00 am : Stocks are holding their significant gains. All ten sectors are advancing, with energy (+1.3%) providing leadership as it rises in conjunction with crude oil (+1.8% to $92.30). The sector was the main laggard yesterday, shedding 2.1%.
Meanwhile, the Fed has proposed new consumer protections for mortgage borrowers. The proposal would require mortgage broker to disclose to borrower any incentives from the lender. The new mortgage rules will "apply to all mortgage lenders," not just those supervised by the Fed. Bernanke notes the rules are designed to deter improper lending, not to restrict credit access.DJ30 81.04 NASDAQ +18.34 SP500 +10.32 NASDAQ Dec/Adv/Vol 701/1715/117 mln
09:40 am : Stocks rebound on the open, after being beaten down on Monday. Several factors are aiding in the positive opening, including bargain hunting, an announcement from the European Central Bank that is injecting a half trillion dollars into the banking systems, and better than expected earnings reports from Best Buy (BBY) and Goldman Sachs (GS).
On the economic front, housing starts and building permits fell, but had a muted effect on the stock market as they were mostly in line with expectations.DJ30 +68.20 NASDAQ +18.90 SP500 +9.80
09:14 am : S&P futures vs fair value: +11.4. Nasdaq futures vs fair value: +19.5. Stocks are still poised for a rebound. Crude oil for January delivery is up 1.9% to $92.37 on news that Turkey has sent soldiers into northern Iraq to pursue Kurdish rebels.
08:59 am : S&P futures vs fair value: +11.6. Nasdaq futures vs fair value: +18.5. Nasdaq and S&P 500 futures slip a bit, but are still holding onto the majority of their gains. There are no more economic reports slated for release during this session.
08:30 am : S&P futures vs fair value: +13.7. Nasdaq futures vs fair value: +20.5. Futures climb slightly higher on two key earnings reports and then have a muted response immediately after a recently released economic report. Housing starts came in at 1.187 million, compared to the consensus estimate of 1.175 million. Building permits came in at 1.152 million, compared to the consensus estimate of 1.150 million. Best Buy (BBY) reported third quarter earnings of $0.53, which was $0.12 better than the consensus estimate. Meanwhile, Goldman Sachs reported fourth quarter earnings of $7.01, topping the consensus estimate of $6.61.
08:00 am : S&P futures vs fair value: +13.3. Nasdaq futures vs fair value: +18.5. Early indications suggest a significantly higher start for the stock market. Bargain hunting efforts this morning are being helped along by an announcement that the European Central Bank is injecting a whopping $500 billion into the banking system in an effort to ease liquidity strains so that banks are comfortable lending to one another. The market awaits quarterly results from both Best Buy (BBY) and Goldman Sachs (GS).
06:26 am : S&P futures vs fair value: +11.8. Nasdaq futures vs fair value: +19.0.
06:25 am : FTSE...6323.00...+45.20...+0.7%. DAX...7888.08...+62.64...+0.8%.
06:25 am : Nikkei...15207.86...-41.93...-0.3%. Hang Seng...26732.87...+136.29...+0.5%.
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