Market Update 080303 http://biz.yahoo.com/mu/update.html 4:25 pm : In the wake of Friday's material sell-off, the stock market eked out a slight gain on Monday. To be sure, the performance was much better than many participants had feared and certainly much better than what had been seen in foreign markets.
Asian indices led the foreign retreat as they reacted to Friday's action on Wall Street. The Nikkei Average in Japan fell 4.5% while India's Sensex Index dropped 5.1%. European bourses fared better on a comparative basis, yet the majority of them still ended Monday's session down more than 1.0%.
Trading activity in the U.S. was choppy on Monday, but ended on a relatively upbeat note with the major indices bouncing back from larger declines in the final half-hour.
The resilience was noteworthy as both the financial and technology sectors underperformed the market with declines of 1.2% and 0.6%, respectively. Granted they participated in the late-day recovery, yet they still ended the day with losses and were the only two sectors to finish with a loss.
Concerns about the earnings prospects for the investment banks, along with the specter of additional losses related to subprime and dislocations in the credit market, were the main drags on the financial sector. Thornburg Mortgage (TMA 4.32, -4.58) was a poster child for many of the concerns as it got clobbered following an announcement that it had not yet met the majority of recent margin calls that totaled approximately $270 million.
Losses among influential large-cap technology stocks like Google (GOOG 457.02, -14.16), Research In Motion (RIMM 100.15, -3.65), Microsoft (MSFT 26.99, -0.21) and Apple (AAPL 121.73, -3.29), meanwhile, acted as the drag on the technology sector.
The rest of the market fared reasonably well, underpinned by the outperformance of the remaining sectors. Materials, up 1.6%, led the winning pack as it drafted off yet another big gain in the commodity arena.
The CRB Index jumped 1.0% with most agricultural, precious metal, and oil prices moving higher. Gold closed at another non-inflation adjusted high of $984.20 per ounce while oil prices hit a new non-inflation adjusted peak of $103.95 per barrel before finishing the day up 0.6% at $102.46 per barrel.
The increase in oil prices failed to derail the transports, which gained 0.8% and comprised one of the market's best-performing areas on Monday.
Today's economic data included the ISM Index for February and Construction Spending for January. The latter, driven by a decline in residential construction, fell 1.7% versus the market's expectation for a drop of just 0.7%. The ISM Index, a survey of national manufacturing activity, checked in at 48.3 versus the consensus estimate of 48.0 and the prior month's reading of 50.7.
A number below 50 for the ISM Index is meant to signal contraction, yet the market traded up immediately following its release, presumably on a sense of relief the number wasn't any worse given the weak readings seen in a number of regional manufacturing reports.
The ISM boost didn't last long, though, as the persistent weakness in the financial stocks took its toll.
At their lows for the day, the Dow, Nasdaq and S&P were down 105, 31 and 10 points, respectively.DJ30 -7.49 NASDAQ -12.88 NQ100 -0.7% R2K -0.3% SP400 +0.2% SP500 +0.71 NASDAQ Dec/Adv/Vol 1890/1095/2.58 bln NYSE Dec/Adv/Vol 1694/1449/1.52 bln
3:30 pm : The stock market is making a recovery effort, but still remains in negative territory.
The defensive-oriented utility sector (+0.9%) has been a relative leader in afternoon trade. The sector has been helped by Exelon's (EXC 77.24, +2.39) outperformance. The utility giant has been a leader in the S&P 500 this session.
Materials (+0.6%) have also held up amid today's selling pressure. Members Monsanto (MON 117.53, +1.85) and Alcoa (AA 37.83, +0.69) are providing leadership to materials.DJ30 -60.49 NASDAQ -22.85 SP500 -5.34 NASDAQ Dec/Adv/Vol 2025/916/1.80 bln NYSE Dec/Adv/Vol 1957/1149/1.24 bln
3:05 pm : The major indices have taken out fresh lows as Energy has relinquished its leadership position. The sector is down 0.5% after being up 1.9% earlier.
Sentiment has turned negative as utilities (+0.4%) and materials (+0.1%) are the only sectors to trade noticeably higher this session. Consumer staples are flat.
Sellers now outpace buyers by 2-to-1 on the NYSE.
Pessimism is broad based. The Dow Jones World Index, excluding the U.S., is trading 1.8% lower.DJ30 -93.78 NASDAQ -27.39 SP500 -9.19 NASDAQ Dec/Adv/Vol 2103/826/1.65 bln NYSE Dec/Adv/Vol 2107/1005/1.14 bln
2:30 pm : Stocks continue to push lower into negative territory, no longer supported by the energy sector (flat). Energy had been a leader in today's trading, but has surrendered its gains and is trading near the unchanged mark. The energy sector was up 1.9% at its peak.
Energy has come off its peak as crude prices have pulled back from earlier levels. The commodity is trading near the unchanged mark, $101.90 per barrel.DJ30 -58.62 NASDAQ -19.74 SP500 -5.07 NASDAQ Dec/Adv/Vol 2028/869/1.47 bln NYSE Dec/Adv/Vol 1965/1125/1.01 bln
2:00 pm : The broader market has stuck its head into the red. The session remains choppy.
Ford (F 6.24, -0.29) announced North American February sales decreased 7% year-over-year, which is less subdued than the 14% downturn that was widely anticipated. General Motors (GM 23.04, -0.24) announced North American February sales declined 13%. Analysts were expecting a 14% decline.
Total seasonally adjusted annual domestic vehicle sales totaled 11.9 million units, up from 11.7 million units. That marks the lowest level since 2005.DJ30 -0.33 NASDAQ -0.51 SP500 -0.14 NASDAQ Dec/Adv/Vol 1812/1055/1.31 bln NYSE Dec/Adv/Vol 1670/1417/900 mln
1:30 pm : The S&P 500 is trading near the unchanged mark as it has for most of the afternoon.
The Nasdaq 100 (-0.6%) is underperforming due to weakness in large cap tech names. Apple (AAPL 120.57, -4.455), Qualcom (QCOM 41.10, -1.29) and Google (GOOG 458.67, -12.51) are the main laggards. Apple and Google have struggled in 2008, down 39% and 34%, respectively. Qualcom has outperformed its peers and is posting a slight gain year-to-date.DJ30 -31.59 NASDAQ -8.00 SP500 -0.45 NASDAQ Dec/Adv/Vol 1739/1101/1.19 bln NYSE Dec/Adv/Vol 1616/1447/824 mln
1:00 pm : Stocks have come off their intraday peak and broken back into negative territory. The financial sector (-0.9%) remains a drag on the broader market's performance, though up from its session low.
Financials, healthcare (-0.1%), and technology (-0.5%) are the only sectors to trade in negative territory this session. All ten major economic sectors have posted losses year-to-date.
Buying interest on the NYSE remains evenly distributed between buyers and sellers.DJ30 -32.16 NASDAQ -8.74 SP500 -1.19 NASDAQ Dec/Adv/Vol 1768/1063/1.09 bln NYSE Dec/Adv/Vol 1659/1392/752 mln
12:30 pm : The S&P 500 is in positive territory after dipping momentarily into negative territory. Its recent push has sent it to its highest level of the session.
Additional gains in crude prices continue to bolster the energy sector (+1.4%) this session. As of midday, crude was trading $1.68 higher at $103.52 per barrel.
Financial stocks remain out of favor. The sector is down 0.6%, dragged lower by underperformers such as Citigroup (C 23.18, -0.53), Bank of America (BAC 39.31, -0.43), and JP Morgan Chase (JPM 40.10 -0.55).DJ30 +3.75 NASDAQ -0.55 SP500 +3.40 NASDAQ Dec/Adv/Vol 1626/1185/982 mln NYSE Dec/Adv/Vol 1550/1490/681 mln
12:00 pm : The stock market kicked off the month of March on a low note, extending last Friday's steep declines. There was not a specific item for the negative sentiment, but rather a continuation of concerns from last week, particularly regarding the financial sector. At midday, the major indices have made a recovery, and are trading in mixed fashion near the unchanged mark. Seven of the ten sectors are trending higher.
Bond insurer Ambac (ABK 10.13, -1.01) is down 9% after the company announced plans to strengthen the company and support its ratings. Ambac is cutting its quarterly dividend to $0.01 from $0.07, suspending all new structured financial business for the next six months and will be discontinuing business in a number of sectors in the global structured finance market.
Continued concerns over additional write-downs due to the subprime fallout are weighing on the financial sector (-0.7%), which is the main laggard in today's trade, although it is well off its lows. Warren Buffett said it is a "certainty" that the insurance industry will see a decrease in profit margins in 2008, which is also weighing on sentiment.
In other corporate news, shares of Boeing (BA 79.87, -2.92) are under pressure on news that it lost out to Northrop Grumman (NOC 82.12, +3.51) to provide special aerial refueling tankers for the Air Force. Reports indicate the deal could be worth up to $40 billion.
In merger and acquisition news, Diebold (DBD 38.97, +14.85) is up more than 60% in its largest daily move ever, after United Technologies (UTX 69.15, -1.37) offered to pay $2.6 billion for the ATM and voting machine maker. The offer represents a 65% premium over Diebold's closing price last week. Diebold's board had already rejected the offer before it was made public.
Tech (-0.3%) is underperforming. Apple (AAPL 121.37, -3.65) is the main laggard after having its price target cut at RBC and BofA. There is also a Reuters report that indicates China Mobile is not officially in talks with Apple.
In economic news the February ISM Index fell to 48.3 from 50.7. Economists expected a reading of 48.0. Because the reading is below 50, it reflects a contraction in manufacturing in the United States. The major indices traded in choppy fashion following the slightly better than expected report.
In a separate report, January construction spending fell 1.7% month-over-month. This was a larger slide than the expected decline of 0.7%.
After making its largest monthly percent gain since the 1970s in February, the CRB Commodity Index is again hitting all-time highs. The index's 1.4% advance is being fueled by gains in oil (+$1.81 to $103.65) and gold (+1.2% to $986.30), both of which hit all-time non-inflation adjusted highs.
The gains in commodities is giving a lift to the Energy (+1.3%) and materials (+1.5%) sectors.DJ30 -0.81 NASDAQ -2.13 SP500 +2.52 NASDAQ Dec/Adv/Vol 1633/1141/883 mln NYSE Dec/Adv/Vol 1555/1481/612 mln
11:35 am : The major indices slide near their lows and then regain some ground in quick fashion. Fannie Mae (FNM 26.65, -1.00) and Freddie Mac (FRE 23.99, -1.19) have reached an agreement with the New York Attorney General regarding home appraisals. The NY Attorney office has terminated its investigation.
Property and casualty insurers (-1.1%) are one of the day's laggards. Value investor and Berkshire Hathaway (BRK.A 136,200, -3,800) CEO Warren Buffett said in his letter to his shareholders that he expects insurance profit margins to decline in 2008.DJ30 -32.32 NASDAQ -8.77 SP500 -0.80 NASDAQ Dec/Adv/Vol 1739/1007/771 mln NYSE Dec/Adv/Vol 1669/1315/531 mln
11:00 am : The major indices retreat back into the red, but remain well off their worst levels that were reached shortly after the opening bell.
In merger and acquisition news, Diebold (DBD 39.17, +15.05) is up more than 60% after United Technologies (UTX 68.90, -1.61) offered to pay $2.6 billion for the ATM and voting machine maker. The offer represents a 65% premium over Diebold's closing price last week. Diebold's board had already rejected the offer before it was made public.DJ30 -62.77 NASDAQ -11.38 SP500 -4.08 NASDAQ Dec/Adv/Vol 1709/1002/630 mln NYSE Dec/Adv/Vol 1718/1239/438 mln
10:30 am : The Nasdaq and S&P 500 make it back into the green, buoyed by the slightly better than expected ISM Index reading.
Six of the ten sectors are trading higher. The financial sector (-1.1%) is the main laggard, but is well off its worst level. Energy (+1.6%) and Materials (+1.2%) are providing leadership, lifted by strong gains in commodities as the Dollar Index (-0.5%) falls to lifetime lows.
The CRB Commodity Index is back on the rise after making an 11.7% advance in February, its largest monthly percent gain since the 1970s. It is currenlty sporting a healthy 1.1% gain as gold and oil climb to all-time intraday highs. Crude oil hit an all-time non inflation adjusted high of $103.95 per barrel. Gold hit $991.00 per ounce, its all-time intraday high when not adjusted for inflation.
Other notable commodity gains include wheat with a 3.7% advance, and silver, up 2.6%. DJ30 -8.55 NASDAQ +2.19 SP500 +2.56 NASDAQ Dec/Adv/Vol 1407/1182/445 mln NYSE Dec/Adv/Vol 1385/1503/312 mln
10:05 am : The major indices extend their losses due to weakness in financials (-1.8%) and then rebound on the release of a national manufacturing survey. Currently, the stock market is trading with a slight loss.
The February ISM Index fell to 48.3, compared to the expected reading of 48.0. Because the reading is below 50, it reflects a contraction in manufacturing in the United States.
In a separate report, January construction spending fell 1.7% month over month. This was a larger slide than the expected decline of 0.7%.DJ30 -56.42 NASDAQ -3.86 SP500 -3.31 NASDAQ Dec/Adv/Vol 1605/851/227 mln NYSE Dec/Adv/Vol 1818/960/164 mln
09:40 am : The major indices open modestly lower, but are faring much better than overseas markets. Japan's Nikkei dropped 4.5% and Hong Kong's Hang Seng fell 3.1% in response to the S&P 500's steep declines on Friday. European markets are currently down at least 1%.
Shares of Boeing (BA) are getting clipped on news that it lost out to Northrop Grumman (NOC) to provide special aerial refueling tankers for the Air Force. Reports indicate the deal could be worth up to $40 billion. As a result, shares of Northrop Grumman are getting their biggest one day lift since July 2003.
The ISM Index, a national manufacturing survey, is slated for release at 10:00 ET. Economists expect the reading to drop to 48.0 from 50.7. If economists are correct, it will mark the ISM's lowest reading since 2003.DJ30 -49.88 NASDAQ -4.90 SP500 -3.97
09:16 am : S&P futures vs fair value: -0.5. Nasdaq futures vs fair value: -1.0.
08:55 am : S&P futures vs fair value: -1.0. Nasdaq futures vs fair value: -1.0. Futures point to a slightly lower start, and are well off their worst levels. Crude oil is trading up 0.6% to $102.50.
08:30 am : S&P futures vs fair value: -0.5. Nasdaq futures vs fair value: -3.5. The current indication suggests a modestly lower start. There is continued speculation regarding the state of the Ambac (ABK) bailout. A CNBC commentator said talks are ongoing, but a deal has not been reached.
08:03 am : S&P futures vs fair value: -3.6. Nasdaq futures vs fair value: -3.5. Futures indicate a modestly lower start. In corporate news, United Technologies (UTX) made a $2.6 billion bid for Diebold (DBD) and Ambac (ABK) announced it is cuttings its dividend. Meanwhile, Gold climbed to a fresh non inflation adjusted higher. It is currently up 1% to $984.60 per ounce. Asian markets saw steep losses. The Nikkei shed 4.5% and the Hang Seng fell 3.1%. European bourses are trading lower. The FTSE is down 1.6% and the Dax is down 1.6%.
06:20 am : S&P futures vs fair value: -4.7. Nasdaq futures vs fair value: -4.8.
06:19 am : FTSE...5801.10...-83.20...-1.4%. DAX...6641.76...-106.37...-1.6%.
06:19 am : Nikkei...12992.18...-610.84...-4.5%. Hang Seng...23584.97...-746.70...-3.1%.
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