Market Update 080211 http://biz.yahoo.com/mu/update.html 4:25 pm : It was a Dow day on Monday. That's not a typo by the way. The Dow Jones Industrial Average was the center of attention after the managing editor for The Wall Street Journal announced changes to the composition of the average. At the same time, Dow components AIG (AIG 44.74, -5.94), Microsoft (MSFT 28.21, -0.35) and ExxonMobil (XOM 83.22, +1.51) made headlines of their own that moved the market.
With respect to the impending changes, Bank of America (BAC 42.14, -0.02) and Chevron (CVX 80.43, +1.17) will be added to the Dow Jones Industrial Average, effective February 19. To make room for the new components, Altria Group (MO 72.42, -0.67) and Honeywell (HON 57.64, -0.19) are being removed.
The inclusion of the new components was predicated on the view that the financial services and oil & gas industries are playing an increasingly important role in the world economy, and hence, the added representation in the blue chip average that is looking less and less industrial was necessary.
Altria's removal was pinned on the realization that its restructuring effort leaves it too narrowly focused as a tobacco company. Honeywell, meanwhile, was targeted for removal on account of its revenues being relatively small among the industrials.
The changes were noteworthy given the historical connotations, yet they had little impact on the broader market since there are a greater number of portfolios structured around the S&P 500 versus the 30-stock Industrial Average.
As noted above AIG is one of those components and it suffered a material loss on Monday following a revelation that it still has been unable to determine the cumulative decline in the fair value of the super senior credit default portfolio of AIG Financial Products Corp. and AIG Trading Corp., and their subsidiaries. What AIG does know is that the cumulative decline in valuation, net of cash flow diversion features, stood at $5.2 billion as of Nov. 30 versus just $352 million at the end of September.
AIG's news cast a pall on the financial sector throughout the session as it fostered a new wave of concern regarding the sector's exposure to collateralized debt obligations.
Despite the drag created by the financials, which slipped 1.9%, the major indices still closed the session higher as every other economic sector, with the exception of health care, down 0.1%, ended with a gain.
The energy sector, up 2.5%, led the action as it responded favorably to a 2.1% jump in crude prices to $93.67 that followed news of a weather-related refinery shutdown in Delaware. Supply concerns stemming from a threat from Hugo Chavez that Venezuela might cut supplies to the U.S. after ExxonMobil succeeded in having $12 billion in Venezuelan oil assets frozen also played a part in the price increase.
ExxonMobil's leadership helped offset the losses in AIG and, combined with strength in the basic materials, technology, and consumer discretionary sectors, drove the S&P 500 back into positive territory after an early-morning dip that was linked to the AIG announcement.
Microsoft also weighed on things in the early-going. The software giant dipped on the report that Yahoo! (YHOO 29.87, +0.67) rejected its $44.6 billion buyout offer, saying it significantly undervalued the company. The notion that Microsoft will raise its bid to acquire Yahoo!, and an RBC Capital Markets downgrade to Sector Perform from Outperform, undercut its stock.
Volume was on the moderate side at the NYSE, which suggests there wasn't full conviction behind today's buying efforts.
(Disclosure: Briefing.com has a business relationship with Microsoft and Yahoo!)DJ30 +57.88 NASDAQ +15.21 NQ100 +1.1% R2K +0.9% SP400 +0.6% SP500 +7.84 NASDAQ Dec/Adv/Vol 1449/1544/2.13 bln NYSE Dec/Adv/Vol 1488/1648/1.39 bln
3:30 pm : The major indices climb to new session highs as we head into the final half-hour of trade. The stock market has spent the afternoon in positive territory after staying in the red for most of the morning.
Meanwhile, Reuters reports six U.S. lenders are going to release a plan on Tuesday to halt foreclosures for some delinquent borrowers, according to sources.
The three most actively traded stocks in the S&P 500 during this session are all trending lower. They include Microsoft (MSFT 28.26, -0.30) at a volume of 133 million, AIG (AIG 44.97, -5.71) at 86 million and Citigroup (C 25.92, -0.11) at 62 million.DJ30 +60.32 NASDAQ +19.31 SP500 +9.08 NASDAQ Dec/Adv/Vol 1387/1555/1.67 bln NYSE Dec/Adv/Vol 1530/1604/1.03 bln
3:00 pm : Stocks are climbing back toward their best levels of the session. Buying interest is broad-based, with the exception of financials (-1.9%), which are not participating.
Airlines (-0.5%) are managing to limit their losses despite the 1.9% gain in crude oil prices. Delta (DAL 17.97, -0.22) and Northwest (NWA 17.96, -0.49) are said to be on the path to a merger that could be completed within weeks, according to Bloomberg.com.DJ30 +34.47 NASDAQ +15.13 SP500 +5.68 NASDAQ Dec/Adv/Vol 1395/1537/1.53 bln NYSE Dec/Adv/Vol 1506/1610/935 mln
2:30 pm : The stock market dips off its best level but continues to post a modest gain.
Retailers (+1.9%) are outperforming, as they have throughout 2008. Target (TGT 54.00, +1.50), Home Depot (HD 28.62, +0.65) and Lowe's (LOW 24.19, +0.58) are providing leadership.DJ30 +24.80 NASDAQ +15.22 SP500 +4.79 NASDAQ Dec/Adv/Vol 1270/1642/1.41 bln NYSE Dec/Adv/Vol 1396/1708/857 mln
2:00 pm : The major indices are trading at or near their session highs. The financial sector (-1.3%) continues to trail the action, but strength in energy (+2.2%) is offsetting that weakness.
Crude oil (+2.1% to $93.77) extends its gains. Bloomberg.com reports that Valero (VLO 59.02, +0.25) shut down its Delaware refinery because of a power failure yesterday. In addition, Venezuelan President Hugo Chavez threatened that Venezuela will cut oil supplies to the U.S. if it feels it is being harmed by Exxon Mobil (XOM 83.05, +1.41). Exxon won a court order freezing assets of Petroleos de Venezuela.DJ30 +43.74 NASDAQ +17.16 SP500 +7.48 NASDAQ Dec/Adv/Vol 1310/1572/1.28 bln NYSE Dec/Adv/Vol 1383/1705/772 mln
1:30 pm : Stocks have been heading mostly sideways for the past half-hour, modestly below their best levels.
Advancers hold a slight edge over decliners on the NYSE and Nasdaq exchanges. New 52-week lows outpace new highs by 2-to-1 on the NYSE and by 7-to-1 on the Nasdaq.
The recent strength in stocks has taken some of the wind out of Treasuries. The 10-year note is now up only 3 ticks.DJ30 +39.67 NASDAQ +15.71 SP500 +7.36 NASDAQ Dec/Adv/Vol 1339/1537/1.18 bln NYSE Dec/Adv/Vol 1450/1651/714 mln
1:00 pm : The major indices rebound into the green hitting fresh session highs. Buying interest is broad-based and the market is receiving leadership from the energy (+1.9%) and tech (+1.0%) sectors.
Motorola (MOT 11.54, +0.28) is one of the tech stocks that is a standout this session. The Wall Street Journal reported this morning that Motorola is in talks with Nortel Networks (NT 11.13, +0.06) to combine their wireless infrastructure. Motorola would be the minority owner in the venture.DJ30 +40.01 NASDAQ +13.63 SP500 +6.77 NASDAQ Dec/Adv/Vol 1423/1415/1.04 bln NYSE Dec/Adv/Vol 1671/1400/619 mln
12:30 pm : Stocks climb back to the unchanged mark. Weakness in the heavily-weighted financial sector (-1.7%) is limiting the stock market's ability to advance this session.
Treasury bonds are off their best levels but continue to post a decent sized gain. The 10-year note is up 8 ticks, pushing its yield down to 3.61%.DJ30 -30.40 NASDAQ +3.03 SP500 -0.54 NASDAQ Dec/Adv/Vol 1460/1362/948 mln NYSE Dec/Adv/Vol 1807/1236/520 mln
12:00 pm : Stocks have spent the majority of the session in negative territory. Last week, the S&P 500 saw its biggest weekly decline on record in the month of February. At midday, stocks are trading with modest losses due to renewed write-down concerns.
Shares of AIG (AIG 45.04, -5.64) been clipped and they have hit multi-year lows. In an 8K filing this morning, the company indicated that its auditors have said its valuations on its CDOs are too high. The company said it has yet to determine the decline in value of its portfolio, and is still accumulating market data to update its valuation.
AIG is dragging the financial sector lower, which is posting the largest decline this session. Multi-line insurance (-9.1%) is the main laggard due to the weakness in AIG. Other insurance areas are under pressure, including life & health insurance (-2.9%) and property & casualty insurance (-2.3%).
Yahoo! (YHOO 29.55, +0.35) has rejected Microsoft's (MSFT 27.99, -0.57) offer, saying it is not in the best interest for Yahoo! and its stockholders. Yahoo! said the offer "substantially undervalues Yahoo!." When the offer was made on Feb. 3, it represented a 62% premium.
There will be changes to the components in the Dow Jones Industrial Average for the first time since 2004. Bank of America (BAC 42.28, +0.12) and Chevron (CVX 79.21, -0.05) will replace Altria (MO 73.07, -0.02) and Honeywell (HON 56.85, -0.98), effective Feb. 19. The decision to take action was spurred by Altria's restructuring, including the planned spin-off of Philip Morris, according to the managing editor of the Wall Street Journal.
Outside of financials things are not so dreary, as eight of the ten sectors are higher. Energy (+0.9%) is providing leadership as crude oil advances 1.6%. DJ30 -56.17 NASDAQ -2.31 SP500 -3.32 NASDAQ Dec/Adv/Vol 1561/1217/815 mln NYSE Dec/Adv/Vol 1763/1259/474 mln
11:30 am : The S&P 500 rebounds to the unchanged mark and then pulls back a bit. Buying interest is broad-based with eight of the ten economic sectors in positive territory. Financials (-1.4%) continue to struggle, but are off their worst levels.
Reuters reports Bear Stearns expects economic losses related to U.S. mortgage woes to range from $250 billion to $300 billion, and will affect investors worldwide.DJ30 -41.13 NASDAQ +2.33 SP500 -1.76 NASDAQ Dec/Adv/Vol 1400/1342/664 mln NYSE Dec/Adv/Vol 1803/1159/356 mln
10:55 am : The major indices are off their lows, with the Nasdaq making it back to the unchanged mark. Tech (+0.5%) is lending some support, although its gain is modest. The sector is the main laggard in 2008.
There will be changes to the components in the Dow Jones Industrial Average for the first time since 2004. Bank of America (BAC 41.85, -0.31) and Chevron (CVX 79.06, -0.20) will be replacing Altria (MO 74.43, -0.66) and Honeywell (HON 57.02, -0.81), effective Feb. 19. The decision to take action was spurred by Altria's restructuring, including the planned spin-off of Philip Morris, according to the managing editor of the Wall Street Journal.DJ30 -57.87 NASDAQ +0.92 SP500 -4.46 NASDAQ Dec/Adv/Vol 1510/1158/499 mln NYSE Dec/Adv/Vol 1878/1034/275 mln
10:30 am : The stock market continues to slide, taking out fresh lows in the process. Nine of the ten sectors are in the red, although only the financial sector (-2.5%) is down more than 1%.
All industry groups within the sector are lower. Multi-line insurance (-9.2%) is the main laggard due to the weakness in AIG (AIG 44.90, -5.78). Other insurance areas are under pressure, including life & health insurance (-3.3%) and property & casualty insurance (-2.7%).DJ30 -83.15 NASDAQ -6.46 SP500 -8.30 NASDAQ Dec/Adv/Vol 1618/1010/361 mln NYSE Dec/Adv/Vol 1937/908/191 mln
09:55 am : Stocks retreat a bit, and are now posting modest losses. Five of the ten sectors are lower, led by a steep 2% decline in financials.
AIG (AIG 45.77, -4.91) is a major drag on the financial sector, and the broader market. In a filing it released before the open, the company clarified its prior disclosures regarding CDOs. The company said it has yet to determine the decline in value of its portfolio, and is still accumulating market data to update its valuation. Clearly, traders have not liked what they have heard as they drive the company's stock lower.DJ30 -72.77 NASDAQ -4.72 SP500 -6.14 NASDAQ Dec/Adv/Vol 1145/1269/108 mln
09:40 am : It is a lackluster start to trading, with the stock market clutching the unchanged mark. The bulls are hoping for a rebound after last week, when the S&P 500 had its largest weekly decline ever in the month of February.
Dominating headlines this morning is news that Yahoo! (YHOO) has rejected Microsoft's (MSFT) offer. Yahoo! said that the deal undervalues the company, even though the offer represented a 62% premium when it was made on Feb. 3.DJ30 -39.26 NASDAQ -1.49 SP500 -1.79
09:15 am : S&P futures vs fair value: +0.3. Nasdaq futures vs fair value: +9.5. A modestly higher start to the trading day is expected. Bank of America (BAC) and Chevron (CVX) are being added to the DJIA, replacing Altria (MO) and Honeywell (HON). A Dow Jones official on CNBC said that Altria spurred the change due to its plan to spin off its Phillip Morris brand. He said this is the first change to the average since 2004.
08:57 am : S&P futures vs fair value: +1.9. Nasdaq futures vs fair value: +8.5.
08:30 am : S&P futures vs fair value: +3.7. Nasdaq futures vs fair value: +11.0. It continues to be a quiet morning. Futures have gained some ground with the Nasdaq set to outperform.
08:00 am : S&P futures vs fair value: +2.8. Nasdaq futures vs fair value: +3.0. Early indications suggest a slightly higher open for the stock market. News has been slow so far. A Wall Street Journal report that Yahoo! (YHOO) is going to reject Microsoft’s (BID) is garnering a good deal of attention this morning. The Journal states Yahoo is looking for $40 per share, compared to Microsoft’s current offer of $31 per share. The economic calendar is empty.
06:24 am : S&P futures vs fair value: -0.1. Nasdaq futures vs fair value: -2.0.
06:24 am : FTSE...5769.10...-14.90...-0.3%. DAX...6750.39...-16.89...-0.3%.
06:24 am : Nikkei...Holiday......... Hang Seng...22616.11...-853.35...-3.6%.
Market Data 
Markets 
AI
