Market Update 080123 http://biz.yahoo.com/mu/update.html 4:25 pm : There are volatile markets and then there are volatile markets. Wednesday's session was the latter variety, which is to say it was truly volatile. To wit, the swing in the S&P 500 between its low of the day, reached around 12:45 p.m. ET, and its high of the day, reached around 3:50 p.m. ET, was 69 points or 5.4%.
The bearish mood that predominated for the first half of today's session was driven by a relatively disappointing earnings report and outlook from Apple (AAPL 139.07, -16.57) and a remark from ECB President Jean-Claude Trichet that left participants inclined to believe the ECB won't be following the Fed's lead and cutting its key bank rate.
The latter precipitated a widespread sell-off in European bourses, most of which dropped between 3.0% and 5.0% for the day. Their poor showing carried over to the U.S., which was already on the defensive amid consumer spending concerns that flowed from Apple's conservative outlook.
Briefly, Apple forecast fiscal second quarter sales of $6.8 billion and earnings of $0.94 per share versus analysts' expectations of $6.98 billion and $1.09, respectively.
Correspondingly, the tech sector led the early retreat along with the energy, telecom, and materials sectors, which traded down sharply on growth concerns. Those concerns were reflected in falling oil prices, which hit $86.65 a barrel at their low before rebounding some to $87.59 at the end of the trading session.
The energy sector declined as much 6.3% at its low today. Remarkably, it closed with a gain of 0.6% after participating in the afternoon rally.
The catalyst for the aforementioned rally was a report that New York regulators and banks met to discuss a plan for raising new capital for bond insurers.
The fear that bond insurers, particularly MBIA (MBI 16.61, +4.08) and Ambac (ABK 13.70, +5.73), might get downgraded at Moody's and/or Standard & Poor's has been a major factor behind recent losses in the stock market as such a move would inevitably trigger another round of write-downs in bonds and CDOs that were backed by their triple-A rating.
Sensing that such a fate might be avoided, traders rushed back into both stocks which surged on short-covering interest. MBIA gained 33% while Ambac jumped 72%.
The late-day move was sweeping in nature. In turn, it was accented by an extension of the short-covering to other areas outside the financial sector (+6.8%) and got an added kick from an asset shift out of bonds and into stocks.
The yield on the benchmark 10-year note hit 3.29% before the start of trading, but closed the session at 3.55% - its worst level of the day. The S&P 500, meanwhile, closed near its high, as did the Dow and Nasdaq on very heavy volume.
3:30 pm : The market has found a new rally gear in the past half hour, greased by program trading activity that has carried the Dow more than 200 points higher in the last 30 minutes. The S&P and Nasdaq have followed suit, and now, all three major indices are on positive ground after being down sharply earlier in the day.
Buying efforts have been broad-based, but have been driven by a resurgence of buying interest in the financial sector (+6.5%) which is getting added support from short-covering activity following the Fed's surprise 75 basis point cut on Tuesday.
Other big movers today include consumer discretionary (+2.9%) and utilities (+2.4%).
We'd contend that there is some asset re-allocation taking place. While stocks have soared in the past half hour, the Treasury market has dropped precipitously. The yield on the 10-year note is now 3.50% after touching 3.29% earlier in the session.DJ30 +160.06 NASDAQ +5.54 SP500 +15.61 NASDAQ Dec/Adv/Vol 1519/1497/2.86 bln NYSE Dec/Adv/Vol 1546/1627/1.96 bln
3:00 pm : After fluctuating around the unchanged mark the Dow retreats. The major indices are still trading well off their session lows.
Citigroup's chief U.S. equity strategist was recently on CNBC discussing the firm's revised stock market outlook. The firm now expects the S&P 500 to end 2008 at 1,550 down from its prior forecast of 1,675.
Global slowdown concerns are taking a toll on commodities. The CRB Index is down 2.1%, with a steep 3.8% slide in grains. In currency trading, the dollar is up 0.16%DJ30 -61.86 NASDAQ -42.01 SP500 -11.40 NASDAQ Dec/Adv/Vol 1732/1249/2.53 bln NYSE Dec/Adv/Vol 1649/1512/1.69 bln
2:30 pm : The Dow is now up 3 points after being down as much as 326 points at its low point this session. Buying interest has been broad-based, as three other sectors join financials in the green.
The utilities sector (+0.8%) made it to positive territory for the first time this session. Citigroup upgraded several utility companies before the open this morning. Consumer discretionary (+1.0%) is back in the green as retailers rebound (+2.2%). Financials (+3.8%) are extending their gains.
Bonds have given up the majority of their gains as stocks recover.DJ30 +3.90 NASDAQ -29.86 SP500 -3.48 NASDAQ Dec/Adv/Vol 1934/1047/2.28 bln NYSE Dec/Adv/Vol 1755/1406/1.63 bln
2:00 pm : Stocks are paring their losses, led by gains in financials (+2.6%). Of the top ten leaders in the S&P 500 this session, eight are financial companies.
Wells Fargo (WFC 29.67, +2.72), JPMorgan Chase (JPM 43.64, +2.78) and Bank of America (BAC 39.67, +2.28) are posting the largest advance. Five of the top ten laggards are tech stocks, led by the steep 16% decline in Apple (AAPL 130.48, -25.16).DJ30 -132.01 NASDAQ -58.45 SP500 -17.82 NASDAQ Dec/Adv/Vol 2001/971/2.07 bln NYSE Dec/Adv/Vol 1816/1319/1.47 bln
1:30 pm : More rollercoaster action as the major indices climb well off their session lows.
Decliners outpace advancers by 3-to-2 on the NYSE and by 2-to-1 on the Nasdaq. New 52-week lows outpace new highs by 66-to-1 on the NYSE and by 189-to-1 on the Nasdaq. Volume is on the heavy side, as it has been the past week.
Bank of America (BAC 39.13, +1.74) declared a regular quarterly dividend on common stock of $0.64, unchanged from the company's last dividend. That leaves its yield at an attractive 6.5%.DJ30 -187.05 NASDAQ -68.21 SP500 -24.14 NASDAQ Dec/Adv/Vol 2063/893/1.87 bln NYSE Dec/Adv/Vol 1818/1320/1.35 bln
1:00 pm : The stock market falls to fresh session lows, without a specific catalyst for the wave of selling pressure. The major indices are currently trading modestly above their worst levels.
The energy (-6.1%) and telecom (-6.4%) sectors are down 20% year-to-date. Meanwhile, crude oil is down 2.8% this session. There are concerns that a global economic slowdown will lead to less crude demand.
Financials (+1.6%) have managed to stay in the green as the sector stands to benefit from the Fed's 75 basis point cut and is seeing some short covering.DJ30 -267.63 NASDAQ -77.91 SP500 -33.72 NASDAQ Dec/Adv/Vol 2016/916/1.64 bln NYSE Dec/Adv/Vol 1799/1316/1.19 bln
12:35 pm : Stocks have been trading in choppy fashion as the Nasdaq falls to fresh session lows and then recovers a bit.
The Nasdaq is down roughly 22% from its November highs. A decline over 20% is widely considered to be a bear market. Some of the high flyers in 2007 are getting hit especially hard today. Google (GOOG 538.52, -45.83) is down 7.8%, Apple (AAPL 129.60, -26.04) is down 17% and Amazon.com (AMZN 71.50, -6.98) is down 8.9%.
The Dow is posting a hefty loss, but is outperforming the S&P and Nasdaq this session. Ten of the 30 Dow components are making an advance, led by a 6% gain in JPMorgan Chase (JPM 43.30, +2.44). Exxon Mobil (XOM 78.79, -3.66) is the main laggard with a 4% decline.DJ30 -187.21 NASDAQ -64.81 SP500 -25.02 NASDAQ Dec/Adv/Vol 1926/992/1.46 bln NYSE Dec/Adv/Vol 1795/1322/1.08 bln
12:00 pm : The major indices are sharply lower at midday after several companies issued cautious outlooks and the European Central Bank (ECB) President implied he did not have plans to lower interest rates. Stocks are off their opening lows, though, thanks to leadership in financials (+1.8%) and other beaten down names.
ECB President Trichet said "particularly in demanding times of significant market correction and turbulences, it is the responsibility of the central bank to solidly anchor inflation expectations to avoid additional volatility." His comments were interpreted that the ECB is unlikely to follow the Fed's lead and lower rates. This weighed on European and U.S. stock markets.
Apple (AAPL 130.59, -25.05) is weighing on the stock market after the company's outlook disappointed investors. Notably, the company shipped less iPods than the Street expected, and issued second quarter guidance below the consensus estimate.
In the wake of Apple's disappointing outlook, tech (-2.8%) and the Nasdaq are underperforming. The Nasdaq is down roughly 15% in January.
In other earnings news, Abbot Laboratories (ABT 56.00, -1.49) and Motorola (MOT 9.77, -2.55) beat estimates, but issued disappointing earnings guidance. Student lender SLM Corp. (SLM 16.83, -2.19) handily missed its estimates.
There were some positive earnings reports this morning. Dow components United Technologies (UTX 69.02, +1.78) and Pfizer (PFE 22.38, +0.15) beat estimates. Pfizer even guided its profit estimates for the current quarter higher. Texas Instruments (TXN 29.44, +0.46) also topped expectations.
Nine of the ten sectors are lower. Some of the sectors that would be most effected by an economic recession are posting the largest loss, including materials (-4.7%) and energy (-4.5%). The financial sector stands alone in the green which follows yesterday's 2.2% advance.
As stocks struggle, Treasuries are rallying in a flight-to-safety bid. The 10-year note is up 31 ticks, sending its yield down to 3.32%.
There are no economic releases today. DJ30 -186.07 NASDAQ -65.74 SP500 -25.29 NASDAQ Dec/Adv/Vol 1853/1031/1.23 bln NYSE Dec/Adv/Vol 1679/1396/880 mln
11:30 am : Stocks fluctuate around the middle of their trading ranges and then come under some selling pressure. Only financials (+2.3%) remain in the green after consumer discretionary (-0.2%) gave up its gains.
Shares of student lender SLM Corp. (SLM 16.86, -2.16), widely known as Sallie Mae, are once again getting hammered. For its fiscal fourth quarter, Sallie Mae posted a loss of $0.36 per share. That was far worse than analysts anticipated. On average, earnings were expected to total $0.55 per share. The company said the Securities and Exchange Commission is investigating stock sales of directors and executives made around December 2007, according to Reuters. SLM is down 71% from its 52-week high.DJ30 -138.14 NASDAQ -53.22 SP500 -20.18 NASDAQ Dec/Adv/Vol 1760/1090/997 mln NYSE Dec/Adv/Vol 1652/1395/754 mln
11:00 am : Stocks climb close to the unchanged mark and then go back on the retreat. The major indices remain off their lows, though, as they trade roughly in the middle of their intraday ranges.
The energy sector (-2.2%) is a laggard as it falls in conjunction with crude oil (-1.9% to $87.55). Crude is down over 9% this year on fears that an economic slowdown will decrease demand.
Treasuries have made some hefty gains but are well off their highs seen before the open after stocks pared a portion of their losses. The 10-year note is up 24 ticks, sending its yield down to 3.25%.DJ30 -99.96 NASDAQ -32.63 SP500 -12.44 NASDAQ Dec/Adv/Vol 1685/1100/765 mln NYSE Dec/Adv/Vol 1638/1325/537 mln
10:30 am : Stocks are in recovery mode with relative strength seen in the beaten down financial sector (+2.7%).
Within the sector, 16 of the 19 industry groups are posting a gain. Diversified banks are up 6.4% and regional banks are up 5.0%. Large cap banks were upgraded to Overweight from Underweight at Bear Stearns.
Retailers (+2.5%) are again posting a large gain after surging 5% yesterday in an overall down day. Homebuilders (+8.8%) are also posting a healthy gain, which is helping the retailers lift the consumer discretionary sector (+0.4%) into the green.
The eight other sectors remain in the red, but have pared a portion of their losses.DJ30 -60.72 NASDAQ -23.29 SP500 -6.93 NASDAQ Dec/Adv/Vol 1770/836/471 mln NYSE Dec/Adv/Vol 2137/742/258 mln
10:00 am : The major indices have made a slight recovery, but are still trading with significant losses. Nine of the ten sectors are posting a loss. Tech (-3.1%) is posting a large decline in the wake of Apple's (AAPL 137.18, -18.46) and Motorola's (MOT 10.50, -1.82) disappointing outlooks. Tech was also a laggard yesterday.
Motorola topped its earnings expectations, but issued an outlook well below the consensus estimate. Motorola said it expects a first quarter loss of $0.05 to $0.07 per share, sharply below the Street's expectation for a profit of $0.10.
Financials (+0.4%) were one of the few sectors to post a gain yesterday, and are again outperforming on a relative basis.DJ30 -186.64 NASDAQ -47.15 SP500 -23.04 NASDAQ Dec/Adv/Vol 1972/455/187 mln
09:40 am : Stocks open sharply lower, which follows yesterday's poor opening when the Dow dropped 459 points. Yesterday, stocks managed to rebound, ending the day in the red but paring the majority of their losses.
Sentiment has again soured though, after disappointment with Apple's (AAPL) outlook and discouraging comments from the European Central Bank President (ECB).
Apple is weighing on the market after the company did not beat expectations by as much as the market had grown accustomed to seeing, with its iPod shipments missing Street expectations. The company also issued second quarter guidance below the consensus estimate.
The ECB President made it clear that his main focus is to fight inflation. This was interpreted that the ECB may not follow the Fed's decision to cut rates. France's CAC 40 Index is down 4% and Germany's Dax is down 4.7%. DJ30 -240.70 NASDAQ -56.94 SP500 -31.86
09:15 am : S&P futures vs fair value: -39.6. Nasdaq futures vs fair value: -69.4.
09:00 am : S&P futures vs fair value: -40.6. Nasdaq futures vs fair value: -67.9. As the futures market slides, Treasury bonds are making strong gains. The 10-year note is up 38/32, sending its yield down to 3.31%. Crude oil for March delivery is down 2.0% to $87.40 per barrel. The government’s weekly energy statistics will be released on Thursday instead of Wednesday due to the market closure on Monday.
08:31 am : S&P futures vs fair value: -37.1. Nasdaq futures vs fair value: -67.7. Futures fall to session lows in the past half-hour. A significantly lower open is expected. European markets have also slipped. The French stock market CAC 40 Index is down more than 4%. There are no economic releases today.
08:03 am : S&P futures vs fair value: -23.4. Nasdaq futures vs fair value: -47.4. Futures suggest a significantly lower open for the stock market, although not nearly as sharp as Tuesday’s opening plunge. Apple (AAPL) is weighing on futures trade after the company did not beat expectations by as much as the market had grown accustomed to seeing. The company also issued second quarter guidance below the consensus estimate. Meanwhile, the European Central Bank President made it clear that keeping inflation in check is the ECB’s priority, indicating it may not cut rates. This helped send European markets into negative territory. Asian markets performed better, with the Hong Kong Hang Seng surging 10.7%. Several companies have reported earnings, including Pfizer (PFE) which beat expectations by $0.05 per share.
06:17 am : S&P futures vs fair value: -18.4. Nasdaq futures vs fair value: -28.4.
06:16 am : FTSE...5681.60...-58.50...-1.0%. DAX...6634.98...-134.95...-2.0%.
06:16 am : Nikkei...12829.06...+256.01...+2.0%. Hang Seng...24090.17...+2332.54...+10.7%.
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