Market Update 080227 http://biz.yahoo.com/mu/update.html 4:25 pm : The stock market opened on a down note, following three consecutive sessions of gains. Investor sentiment was lifted, however, when regulators announced the lending caps on Fannie Mae (FNM 27.27, +0.30) and Freddie Mac (FRE 25.09, -0.12) would be removed to promote additional lending in the housing market. Despite the announcement, stocks slipped in afternoon trading to finish the day slightly lower.
Fed Chairman Bernanke made no surprises at his semiannual testimony before the Financial Services Committee on Capitol Hill. Bernanke indicated that the economy continues to face challenging headwinds and the Fed will likely move to continue fighting those challenges with further rate cuts, rather than hold back as a result of inflationary pressures.
January durable goods fell 5.3% when compared with December orders, which had shown an increase of 4.4% from the previous month. Though the drop was steeper than economists expected, the news is not entirely grim as the trailing three-month average indicates orders are flat.
New home sales in January fell to 588,000 from 605,000 in December, on a seasonally adjusted annualized basis. The results were worse than expected as economists pegged January sales at 600,000 units.
New home sales remain one of the weakest segments in the housing industry. Such weakness was made further evident by a first quarter earnings loss of $0.61 per share by luxury homebuilder Toll Brothers (TOL 23.83, +0.71). Analysts were calling for a loss of just $0.50 per share.
According to subsidized home lender Fannie Mae, the housing industry is unlikely to improve any time soon. The company announced today a loss of $2.1 billion, or $2.63 per share, in 2007. Last year the company earned $4.1 billion, or $3.65 per share. Fannie Mae believes there will be further tightening in the mortgage lending market in 2008. Should current conditions persist, the company will likely face additional write-downs.
In a move to help restore the home-lending market, the Office of Federal Housing Enterprise Oversight (OFHEO) will remove the portfolio growth caps for both Fannie Mae and its smaller cousin Freddie Mac, effective March 1, 2008. OFHEO is also considering relaxing the capital requirements the two lenders adhere to. OFHEO's move should bode well for the mortgage market since increased capital availability adds liquidity to the secondary mortgage market.
In other regulatory news, Microsoft (MSFT 28.26, -0.12) was slapped with a $1.35 billion fine by the European Union for violating antitrust laws. The penalty was the largest ever levied by European regulators. Microsoft had already announced efforts to increase product openness and interoperability.
A bearish report from the Department of Energy induced oil to pull off the $100 mark. The report indicated that oil stores increased by 3.2 million barrels, or 1%, to 308.5 million barrels. Analysts were anticipating a build of 2.7 million barrels, according to Bloomberg.com. Prior to the announcement, oil hit an all-time intraday high of $102.08 per barrel.
Gold also hit an all-time high of $967.70 per ounce in intraday trading. Commodities have been stretching higher partly as a result of a weak dollar.
The dollar index hit an all-time low today, falling to 74.07. Meanwhile, the euro hit an all-time high against the dollar, stretching upward to $1.514. DJ30 +9.36 NASDAQ +8.63 NQ100 +0.5% R2K -0.1% SP400 -0.5% SP500 -1.27 NASDAQ Dec/Adv/Vol 1504/1388/2.22 bln NYSE Dec/Adv/Vol 1707/1411/1.46 bln
3:30 pm : The stock market has broken back into positive territory. After paring earlier losses, the S&P 500 had been struggling to break through the unchanged mark.
The S&P 500 has been unable to register gains in four straight sessions since December.
Crude prices settled $1.31 lower at $99.57 per barrel. Crude hit an all time intraday high of $102.08 after a bearish inventory report.DJ30 +30.69 NASDAQ +13.30 SP500 +1.42 NASDAQ Dec/Adv/Vol 1438/1408/1.85 bln NYSE Dec/Adv/Vol 1631/1469/1.14 bln
3:00 pm : The market is turning upward out of its recent trough, but remains in negative territory. Tech (+0.6%) has become the day's relative leader, replacing financials (+0.4%).
Cisco (CSCO 24.98, +0.91) is leading the S&P 500. Conversely, Microsoft (MSFT 28.28, -0.10) is one of the session's largest laggards. Microsoft was slapped with a $1.35 billion antitrust penalty by the European Union, the largest fine ever imposed by the EU.DJ30 -1.38 NASDAQ +3.35 SP500 -2.41 NASDAQ Dec/Adv/Vol 1504/1345/1.69 bln NYSE Dec/Adv/Vol 1716/1350/1.04 bln
2:30 pm : Selling activity is currently weighing on the market, which has extended deeper into negative territory. With the exception of the financial (+0.1%) and tech (+0.1%) sectors, the remaining major economic sectors are trading in the red.
Energy (-0.9%) stocks have traded in choppy fashion this session. A 1.3% decline in crude oil prices has pulled the sector to its session low.
The 10-year Treasury note has pared earlier losses, and now stands 5 ticks to the upside. The benchmark 10-year note is currently yielding 3.84%.DJ30 -38.91 NASDAQ -8.86 SP500 -6.82 NASDAQ Dec/Adv/Vol 1676/1131/1.54 bln NYSE Dec/Adv/Vol 1943/1139/937 mln
2:00 pm : The stock market has taken a pronounced downturn and has dipped into negative ground. The downturn is broad based as the energy (-0.2%), financial (+0.6%), and consumer discretionary (-0.3%) sectors turned south.
Despite the dip, financial stocks continue to lead the market. The sector's leading movers include Citigroup (C 25.61, +0.66), Goldman Sachs (GS 178.14, +5.44), and Wells Fargo (WFC 31.94, +0.54).DJ30 +10.34 NASDAQ +3.62 SP500 -0.04 NASDAQ Dec/Adv/Vol 1450/1365/1.39 bln NYSE Dec/Adv/Vol 1649/1422/848 mln
1:30 pm : The stock market continues to trade in range-bound manner in positive territory. News has slowed down.
Five of the ten sectors are trading higher. Utilities (-1.0%) is the main laggard. The sector's light weighting is helping to limit its impact on the broader market.DJ30 +54.71 NASDAQ +14.25 SP500 +4.75 NASDAQ Dec/Adv/Vol 1237/1560/1.25 bln NYSE Dec/Adv/Vol 1375/1664/769 mln
1:05 pm : The major indices climb back toward their session highs. The two most heavily weighted sectors--financials (+1.3%) and tech (+1.0%)--are providing leadership. It appears Bernanke's testimony has wrapped up.
Shares of airline companies are under pressure this session, indicated by the 3.6% slide in the Amex Airline Index. Reports indicated that a merger agreement between Delta Air lines (DAL 14.87, -1.04) and Northwest Airlines (NWA 14.78, -1.28) may be in jeopardy. The Wall Street Journal reported top executives of Delta issued an internal memo saying no "potential transaction meets all our principles." Much of the airlines relative outperformance this year is due to merger speculation, considering oil is trading near all-time highs. Airlines are down 0.5% in 2008 compared to the S&P 500's 5.6% decline.DJ30 +60.00 NASDAQ +17.17 SP500 +6.27 NASDAQ Dec/Adv/Vol 1149/1604/1.14 bln NYSE Dec/Adv/Vol 1237/1794/708 mln
12:30 pm : The stock market remains in the green as it trades modestly below its best level of the session. Treasuries are trading in the red after the recovery in stocks, despite the increased expectations of a fed funds rate cut. The inflation sensitive 30-year bond is seeing the largest decline, down 19 ticks.
The Nasdaq 100 is outperforming. Apple (AAPL 120.70, +1.55) is providing leadership. The company is down 40.5% from its 52-week high reached in late December.DJ30 +47.02 NASDAQ +11.01 SP500 +3.46 NASDAQ Dec/Adv/Vol 1218/1504/1.03 bln NYSE Dec/Adv/Vol 1298/1702/647 mln
12:05 pm : It has been another active day on Wall Street, with a large number of market moving corporate and economic news. Fed Chairman Ben Bernanke's testimony in front of the House Financial Services Committee was slated to be the headliner, but news of a plan that may help the housing market stole the limelight.
After rebounding from a negative opening, stocks are trading higher for the fourth session in a row, with decent sized gains.
The Office of Federal Housing Enterprise Oversight (OFHEO) is going to remove portfolio growth caps on Fannie Mae (FNM 28.67, +1.70) and Freddie Mac (FRE 26.25, +1.04) on March 1. Fannie and Freddie spiked on the news and then gave up some of those gains as brokerages remain cautious on the stocks. Fannie had hit a 52-week low this morning after it reported a fourth quarter loss of $3.80 per share.
The OFHEO statement notes that it will discuss with Fannie and Freddie management the gradual decreasing of the current 30% OFHEO-directed capital requirement. Doing so would free up extra capital that will enable companies to purchase more mortgages and improve overall liquidity in the mortgage market.
Regarding Chairman Bernanke's testimony, Bernanke continues to emphasize downside risk to growth more than inflation. However, he said upside risks to inflation are greater than a month ago, noting commodity price gains. He said this may cause an increase in the Fed's outlook on inflation. Bernanke continues to answer questions on Capitol Hill.
Economic data were poor this morning.
January durable good orders fell 5.3%, which is more than the consensus estimate that called for a decline of 4.0%. Excluding transportation, orders fell 1.6%, compared to the expected decline of 1.4%. Some of the weakness in this reading is due to it being compared to a relatively strong previous number. Durable goods order are basically flat over the last three months, which is better when compared to the 2001 recession trends.
New home sales in January fell to an annualized rate of 588K, a decline from a prior reading of 605K. The number marks a 2.8% decline month-over-month. Economists were expecting a slightly better reading of 600K. The non seasonally adjusted rate in 2007 is the lowest level since 1996. The new home sales situation remains dire.
The worse than expected economic data spurred traders to up their bets on a Fed rate cut. Fed funds futures now point to a 12% chance of a 75 basis point rate cut to 2.25%, with the rest of the bets on a 50 basis point cut. Yesterday, there was no chance of a 75 basis point cut.
Other notable items this morning include news that Microsoft (MSFT 28.52, +0.14) was fined a record $1.35 billion by the European Union for violating its antitrust decision.
Once again, the dollar and commodities are on the move. The Dollar Index, down a sharp 0.8%, hit all-time lows. Meanwhile, the euro is rallying 1.5%. It surpassed $1.50 for the first time.
Meanwhile, crude spiked to an all-time unadjusted for inflation intraday high over $102 per barrel before retreating below $100.24 after inventories grew by a larger than expected amount.
Gold also hit an all-time non inflation adjusted intraday high of $967.00 per ounce. It is currently trading up 1.2% to $960.70 per ounce. DJ30 +45.35 NASDAQ +14.83 SP500 +4.68 NASDAQ Dec/Adv/Vol 1172/1535/919 mln NYSE Dec/Adv/Vol 1209/1786/581 mln
11:35 am : After some choppy action, the major indices are trading near their best levels of the session. Gains remain modest, although the advance off their opening lows is significant. Five of the ten sectors are trading higher. Financials (+0.9%) is now providing leadership as it gets a boost from the removal of portfolio caps for Fannie Mae (FNM 28.66, +1.69) and Freddie Mac (FRE 26.01, +0.80).
Crude oil is now down 0.6% to $100.30 per barrel due to the bearish inventory numbers. Crude often trades in a volatile and unpredictable manner following the weekly inventory report. For instance, the six previous weeks showed inventory builds--many of which were larger than expected--yet crude managed to climb to an all-time high early this morning.
Bernanke is currently answering questions before the House Financial Service Committee. Congress members have expressed concerns over the recent increase in mortgage rates and poor economic data.DJ30 +44.94 NASDAQ +11.14 SP500 +3.09 NASDAQ Dec/Adv/Vol 1150/1518/790 mln NYSE Dec/Adv/Vol 1222/1725/506 mln
11:00 am : The market spikes into positive territory as Bernanke starts answering questions from Congress members. The meeting is currently suspended as Congress members had to go to a vote. However, news that the Office of Federal Housing Enterprise Oversight (OFHEO) is going to remove portfolio growth caps on Fannie Mae (FNM 31.19, +4.22) and Freddie Mac (FRE 28.61, +3.40) on March 1 is the actual underlying catalyst for the recent buying interest.
The OFHEO statement notes that it will discuss with the management of both Fannie and Freddie the gradual decreasing of the current 30% OFHEO-directed capital requirement. Doing so would free up extra capital that will enable companies to purchase more mortgages and improve overall liquidity in the mortgage market.
In other news, IBM's (IBM 115.92, +1.54) CFO said he feels better about the company's U.S. business two months into the first quarter than he did in the fourth quarter of last year, according to Reuters. Yesterday, IBM announced a massive $15 billion stock buyback program, including $12 billion in 2008. Because IBM is using cash from operations for its buyback, it is an indication the company feels confident about its outlook.DJ30 +40.63 NASDAQ +10.52 SP500 +3.63 NASDAQ Dec/Adv/Vol 1053/1542/614 mln NYSE Dec/Adv/Vol 1109/1803/385 mln
10:35 am : The stock market is trading with modest losses after some choppy action. Materials (+0.5%) is outperforming on a relative basis thanks to strength in commodities (+0.5%). The best performing stock in materials is metal mining company Freeport-McMoRan (FCX 104.09, +3.77).
Freshly reported, the Department of Energy said crude inventories rose for the seventh straight week. For the week ended Feb. 22, crude inventories rose 3.23 million, more than the expected rise of 2.70 million. Just prior to the release, crude was trading down 0.2% to $100.66 per barrel after hitting all-time highs in early morning trade.
Bernanke is currently testifying on Capitol Hill. His prepared speech is already posted on the FOMC website, so what he is currently saying should not come as a surprise. He will be answering questions from Congress, which may reveal some new information.DJ30 -39.16 NASDAQ -7.26 SP500 -6.50 NASDAQ Dec/Adv/Vol 1426/113/435 mln NYSE Dec/Adv/Vol 1595/1237/270 mln
10:10 am : The major indices climb off their lows and then dip a bit as Bernanke's prepared texts hits the wires and on a worse than expected economic release.
Just reported, new home sales in January fell to an annualized rate of 588K, compared to the prior reading of 605K. The decline marks a 2.8% decline month over month. Economists were expecting a reading of 600K. The non seasonally adjusted rate in 2007 is the lowest level since 1996.
Meanwhile, Bernanke's prepared text is hitting the wires. He said upside risks to inflation are greater than a month ago, noting commodity price gains. Additionally he noted downside risk to growth. At first glance, it appears Bernanke is noting inflation risks more than his previous testimony.DJ30 -44.54 NASDAQ -10.65 SP500 -6.27 NASDAQ Dec/Adv/Vol 1327/1112/278 mln NYSE Dec/Adv/Vol 1462/1305/176 mln
09:40 am : The major indices open on a lower note. There is some profit taking after the market posted healthy gains in the three previous sessions. Most of the news this morning has been negative, which is adding to the selling pressure. Fed Chairman Bernanke testifies on the economy and monetary policy at 10:00 ET, which may spur some volatility.
In corporate news, Microsoft (MSFT) was fined a record $1.3 billion by the European Union for failing to comply with Union's previous antitrust decision. The fine is not as much as some feared, which is helping to limit Microsoft's losses in early trade.
Fannie Mae (FNM) reported a larger than expected loss. In 2007, the company lost $2.1 billion, or $2.63 per share, in 2007. By comparison, Fannie Earned $4.1 billion in 2006. Its losses are linked to the recent housing downturn.
In economic news, January durable good orders declined by a larger than expected amount.
The dollar continues to weaken, with the dollar index (-0.41%) falling to fresh all-time lows. The euro is up a strong 1.01%, sending it above 1.5 for the first time.
The weakness in the dollar is spurring some buying interest in commodities. Crude, currently trading flat, hit an all-time high of $102.28 in earlier trade. Meanwhile gold (+$10.40 to $959.00) hit an all-time nominal high of $967.70 per ounce. Of note, gold is trading well below its inflation adjusted highs reached in the late 70s and early 80s.DJ30 -56.33 NASDAQ -16.48 SP500 -7.74
09:14 am : S&P futures vs fair value: -8.3. Nasdaq futures vs fair value: -15.0.
08:59 am : S&P futures vs fair value: -9.0. Nasdaq futures vs fair value: -15.0. Futures continue to indicate a lower start for the stock market, and are currently trading near their worst levels of the session. On top of the Bernanke speech, the market will be digesting new home sales data at 10:00 ET and the weekly energy inventory report at 10:30 ET.
08:33 am : S&P futures vs fair value: -8.6. Nasdaq futures vs fair value: -14.5. Futures come under additional selling pressure, and then dip a bit more on an economic report. Just released, January durable good orders fell 5.3%, which is more than the consensus estimate that called for a decline of 4.0%. Excluding transportation, orders fell 1.6%, compared to the expected decline of 1.4%. In corporate news, Fannie Mae (FNM) reported a larger than expected loss, although it is not clear if it is comparable to the consensus estimate.
08:00 am : S&P futures vs fair value: -4.2. Nasdaq futures vs fair value: -6.2. Futures indicate a modest pullback, which is understandable after three straight sessions of healthy gains that have sent the stock market into positive territory for the month of February. Market participants are awaiting Fed Chairman Bernanke’s testimony on the economy and monetary policy at 10:00 ET. In corporate news, the European Union has fined Microsoft (MSFT) $1.35 billion dollars, the largest EU fine ever, according to reports. The dollar continues to slide as the euro crosses the 1.5 mark for the first time. This is spurring some buying interest in gold (+14.30, 963.20), which hit an all-time non inflation adjusted high of $967.70 per ounce earlier this morning.
06:19 am : S&P futures vs fair value: -2.5. Nasdaq futures vs fair value: -5.0.
06:19 am : FTSE...6041.90...-45.50...-0.8%. DAX...6960.26...-25.71...-0.4%.
06:19 am : Nikkei...14031.30...+206.58...+1.5%. Hang Seng...24483.84...+769.09...+3.2%.
Market Data 
Markets 
AI
