Market Update 080206 http://biz.yahoo.com/mu/update.html 4:25 pm : The indication from the futures market this morning suggested the cash market was going to wage a recovery effort when the opening bell rang. While it did just that, aided by Disney's (DIS 31.50, +1.43) better than expected earnings results and BHP Billiton's (BHP 66.10, -3.38) eye-popping $147 billion offer to acquire Rio Tinto (RTP 409.37, -12.13) that was ultimately rejected, the recovery try was short-lived.
As Briefing.com noted in its pre-market commentary, how the session began wasn't going to be as important as how it ended. With the major indices closing near their worst levels of the day, then, Wednesday's session can indeed be labeled a disappointment by market bulls.
Most media sources will attribute comments from Philadelphia Fed President Plosser as the catalyst for the downturn. The fact of the matter is that the market was already fading from its highs (the Dow +125; the Nasdaq +29; and the S&P +15) when comments from Mr. Plosser hit the wires around 13:30 ET.
In particular, Mr. Plosser expressed concerns about the potential for core inflation to remain elevated and conceded that there may be early signs the Fed's credibility is weakening. Soon after, though, he also noted that one can "never say never" about deeper rate cuts. In other words, it was a typical "on the one hand, on the other hand" type of delivery that usually characterizes Fed speeches.
The market, after Tuesday's sell-off, focused on the negative elements of his remarks, namely the inflation concerns, and continued sliding in the early afternoon. There was a brief upturn following the Plosser dip, which goes to show the market wasn't as rattled by the remarks as some contended, yet that rebound try also ran out of steam as growth concerns continued to prevail.
Once again, the losses were fairly broad-based. The health care sector (+0.03%) eked out a slight gain and was the only sector to close the session with a gain. Strikingly, the utilities sector (-0.15%) and the consumer staples sector (-0.27%) exhibited relative strength, which fits with their defensive appeal in times of uncertainty and slower growth.
The energy sector (-1.58%) suffered the biggest loss on Wednesday as a bearish inventory report sparked a 1.5% drop in crude futures to $87.09. Earlier in the day, the Dept. of Energy reported crude stockpiles rose 7.05 million barrels versus an expected build of 2.6 million barrels. The larger than expected build played into concerns about an economic slowdown. Many of the transportation stocks caught a bid, though, with the drop in oil prices and outperformed the market.
Separately, the financial sector, which fell 1.06%, underperformed again with big losses in the exchange space taking a toll. Shares of CME Group (CME 485.25, -103.55) plummeted 17% in the wake of a report that the Dept. of Justice issued a comment letter suggesting the separation of clearing operations from the futures exchanges.
Technology, down 1.4%, was another influential weak spot that weighed on the broader market. True to recent form, the big-cap technology issues were out of favor as evidenced by the 1.8% decline in the Nasdaq 100 that preceded Cisco's (CSCO 23.08, -0.18) earnings report after the close.DJ30 -65.03 NASDAQ -30.82 R2K -1.3% SP400 -1.2% SP500 -10.19 NASDAQ Dec/Adv/Vol 1934/1070/2.42 bln NYSE Dec/Adv/Vol 1980/1143/1.52 bln
3:30 pm : The stock market falls in quick fashion, sending it to a fresh session low and then recovers a bit. Volatility is slightly higher today, as measured by the VIX. Only healthcare (+0.2%) and materials (+0.1%) remain in the green. The bulls will not be pleased if the market closes with a loss after yesterday's steep declines.
Earnings will likely be in focus tomorrow, with 158 companies scheduled to report after today's close and before tomorrow's open. Headliners include Cisco (CSCO 23.34, +0.08) and PepsiCo (PEP 66.42, -1.53).DJ30 -14.63 NASDAQ -13.01 SP500 -3.44 NASDAQ Dec/Adv/Vol 1543/1429/1.83 bln NYSE Dec/Adv/Vol 1530/1583/1.08 bln
3:00 pm : The stock market is trading slightly above the unchanged mark after regaining some ground. Philly Fed President Plosser said rate cuts won't solve bond insurers' problems, and that the crisis is complicated, according to Reuters.
242 stocks in the in the S&P 500 are posting a gain. Disney (DIS 31.61, +1.54) and Oracle (ORCL 19.61, +0.35) are posting the largest gains. CME Corp. (CME 509.78, -79.02), the operator of the Chicago Mercantile Exchange, is the main laggard due to the reports that Dept. of Justice is looking to enact new regulations. Apple (AAPL 125.14, -4.22) is also a laggard.
The commodity index is basically flat for the day. The 1.5% slide in crude oil is being offset by the 1.5% gain in gold futures.DJ30 +13.09 NASDAQ -5.11 SP500 +0.60 NASDAQ Dec/Adv/Vol 1537/1404/1.66 bln NYSE Dec/Adv/Vol 1588/1515/981 mln
2:30 pm : The major indices are trading in negative territory and have hit fresh session lows. There does not appear to be a specific catalyst for the recent selling interest, although some of the declines were concentrated around the same time Philadelphia Fed President Plosser commented on the economy.
The decline is broad-based and tech (-0.6%) is showing notable weakness. The IT consulting & services (-3.8%) group is seeing the most weakness. Apple (AAPL 124.63, -4.69) is also a laggard, and is now down 38% from its 52-week high.DJ30 -18.29 NASDAQ -8.84 SP500 -1.82 NASDAQ Dec/Adv/Vol 1521/1402/1.48 bln NYSE Dec/Adv/Vol 1284/1804/840 mln
2:00 pm : The major indices have given up all of their intraday gains as the major indices trade near the unchanged mark. Financials (-0.3%) and energy (-0.2%) are playing a large role in the retreat. Retailers (-0.5%) are also seeing a good deal of selling interest. The major indices have traded in a choppy fashion this session as traders remain nervous about the economic outlook.
Philadelphia Fed President Plosser said core inflation likely to remain elevated despite slower conditions. The rate cuts so far have been proactive, and will take a couple of quarters before the begin to affect the economy, he noted.
1:30 pm : Selling interest has subsided as the major indices hold in the middle of their intraday ranges. All ten sectors are posting a gain.
American automakers General Motors (GM 26.07, -0.40) and Ford (F 6.07, -0.07) are both notable laggards this session. Bear Stearns downgraded Ford to Peer Perform from Outperform and GM to Underperform from Peer Perform. Sterns said the downgrade reflects the deterioration of automotive consumers' ability to purchase vehicles.DJ30 +53.16 NASDAQ +13.85 SP500 +7.14 NASDAQ Dec/Adv/Vol 1195/1676/1.21 bln NYSE Dec/Adv/Vol 1144/1923/722 mln
1:00 pm : The stock market remains in the green but continues to give up its gains. The retreat has been broad-based.
Advancers outpace decliners by 2-to1 on the NYSE and by 1.5-to-1 on the Nasdaq. New 52-week lows outpace new highs by 3-to-1 on the NYSE and by 8.5-to1 on the Nasdaq Composite.
12:30 pm : The stock market continues to post a gain, but is retreating off its best levels.
Merrill Lynch (MER 53.70, -0.80) fell into the red after Reuters reported that the company is most at risk of a downgrade from bond insurer and CDO troubles, according to Standard & Poor's. Financials are now only up a slight 0.1%
The Amex Airline Index (+5.0%) is posting a hefty gain in response to the 1.5% drop in crude oil prices. The index is also handily outperforming the broader market year to date, with roughly a 10% advance.DJ30 +65.28 NASDAQ +15.53 SP500 +7.41 NASDAQ Dec/Adv/Vol 1021/1803/978 mln NYSE Dec/Adv/Vol 920/2137/598 mln
12:00 pm : There has been some choppy action in this session's trade as investor sentiment remains shaky after yesterday's steep declines. At midday the major indices are posting decent gains, but are off their best levels.
Part of this session's strength is due to reflexive buying interest in response to yesterday's sell-off. The S&P 500 saw its largest percentage drop since February 2007 yesterday.
Earnings reports were positive this morning. Briefing.com active portfolio holding Walt Disney (DIS 31.86, +1.79) is posting a large gain after its better than expected results. Time Warner (TWX 16.13, +0.73) is also showing strength as market participants embrace the company's results.
Also lending support was a better than expected fourth quarter productivity reading. Productivity rose 1.8%, compared to the expected rise of 1.5%. The reading is down from the third quarter's 6.0% increase.
Futures exchange companies CME Group (CME 521.60, -67.20) and NYMEX (NMX 93.58, -13.08) are getting hammered. The weakness is due to a Dow Jones report that indicated the U.S. Dept. of Justice no longer wants to allow futures exchanges to be able to own or control clearing functions. The Dept. of Justice believes the control over clearing functions has impeded competition. On a related note, CME Group and NYMEX announced on Jan. 28 that they are engaged in preliminary discussions regarding CME Group's potential acquisition of NYMEX.
All ten economic sectors are posting a gain, and five have advanced more than 1%. Materials (+1.5%) and consumer discretionary (+1.7%) are providing leadership.
Energy stocks (+0.1%) are underperforming on a relative basis due to a 1.4% drop in crude oil prices. Crude is seeing selling interest after the government's weekly report showed that inventories rose by a larger than expected amount. DJ30 +90.48 NASDAQ +22.16 R2K +1.1% SP400 +0.7% SP500 +11.76 NASDAQ Dec/Adv/Vol 982/1778/849 mln NYSE Dec/Adv/Vol 851/2159/518 mln
11:25 am : The major indices continue to climb higher, hitting fresh intraday highs. The Dow's 115 point gain is still has a long way to make up yesterday's 370 point decline.
All ten of the economic sectors are in the green, and five are posting a gain in excess of 1%. Consumer discretionary (+1.9%) is providing leadership, as traders have embraced earnings from Disney (DIS 32.12, +2.05) and Time Warner (TWX 16.09, +0.69) earnings.
The strength in stocks is spurring some selling in Treasuries. The 10-year note is now down 14 ticks.DJ30 +115.92 NASDAQ +25.48 SP500 +14.45 NASDAQ Dec/Adv/Vol 940/1756/697 mln NYSE Dec/Adv/Vol 978/1986/423 mln
11:00 am : The major indices climb to fresh session highs. The rebound is being led by financials (+1.1%). Within the sector, residential REITs (+3.6%) and consumer finance (+2.3%) are seeing the most buying interest. Notably, specialized finance (-4.2%) is still a laggard, as the group includes the futures exchanges that have been hit hard by the Dow Jones report that indicated new regulation.
Energy is now the main laggard with a 0.2% loss. The sector fell in conjunction with crude, which is now down 1.5% to $87.08. Crude saw selling interest after the government's weekly report showed inventories rose more than analysts had expected.DJ30 +75.92 NASDAQ +17.54 SP500 +8.70 NASDAQ Dec/Adv/Vol 1077/1554/555 mln NYSE Dec/Adv/Vol 1076/1811/298 mln
10:35 am : The major indices catch a modest bid. There has been relative strength in tech (+0.8%) thanks to leadership from Cisco (CSCO 23.80, +0.54) and Apple (AAPL 130.48, +1.12). Cisco is set to reports its earnings after the close.
Future exchange companies CME Group (CME 536.04, -52.76) and NYMex (NMX 93.81, -12.85) are getting hammered. The weakness is due to a Dow Jones report that indicated the U.S. Dept. of Justice is calling for an end for futures exchanges being able to own or control clearing functions. The Dept. of Justice believes the control over clearing functions has impeded competition.
Just hitting the wires, crude oil inventories for the week ended Feb. 2 rose by 7.05 million barrels. Analysts were expecting inventories to increase by a smaller 2.6 million barrels. Crude was trading up 0.1% to $88.46 just prior to the release.DJ30 +42.11 NASDAQ +7.00 SP500 +3.78 NASDAQ Dec/Adv/Vol 986/1553/386 mln NYSE Dec/Adv/Vol 1052/1749/210 mln
10:00 am : Stocks give up most of their opening gains as the financial sector (-1.0%) falls into negative territory. 17 of the 18 groups within the sector are posting a loss, led by thrifts & mortgages (-2.5%) and specialized finance (-3.5%). The sector was the main laggard yesterday, shedding 4.6%.
Six of the ten economic sectors are posting a gain, led by utilities (+0.5%).
Treasuries, which rallied yesterday, are seeing a bit of selling interest. The 10-year note is down five ticks, sending its yield up to 3.59%.DJ30 +6.10 NASDAQ +3.62 SP500 +0.54 NASDAQ Dec/Adv/Vol 932/1334/122 mln
09:40 am : Stocks open modestly higher, but still have a long way to go to make up yesterday's steep losses that were spurred by economic concerns. All ten sectors are posting a gain.
This session's buying interest is being spurred by a rebound bid after yesterday the S&P 500 posted its largest decline since February 2007. Dow component Walt Disney (DIS) is also lending support after the company reported earnings that topped expectations.DJ30 +52.11 NASDAQ +11.07 SP500 +6.75
09:16 am : S&P futures vs fair value: +8.7. Nasdaq futures vs fair value: +8.8.
08:55 am : S&P futures vs fair value: +11.3. Nasdaq futures vs fair value: +11.0. Stocks are looking to start the trading day on a high note. Crude oil is up 0.4% to $88.77 per barrel.
08:35 am : S&P futures vs fair value: +12.9. Nasdaq futures vs fair value: +11.5. Stock futures continue to point to a higher open. Nonfarm productivity rose 1.8%, compared to the expected rise of 0.5%. This release had a slightly positive but mostly muted effect on futures.
08:00 am : S&P futures vs fair value: +11.6. Nasdaq futures vs fair value: +13.3. Stock futures suggest a modest rebound following yesterday’s steep decline when the S&P 500 had its worst day since February 2007. Dow component Walt Disney (DIS) is providing support after the company topped its profit expectations. Time Warner (TWX) met its earning estimates.
06:39 am : S&P futures vs fair value: +12.9. Nasdaq futures vs fair value: +12.0.
06:39 am : FTSE...5870.20...+2.20...+0.0%. DAX...6795.06...+29.81...+0.4%.
06:39 am : Nikkei...13099.24...-646.26...-4.7%. Hang Seng...23469.46...-1339.24...-5.4%.
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