Market Update 080414 http://biz.yahoo.com/mu/update.html 4:30 pm : The stock market started the new week on a losing note as a weak showing from the financial sector, which dropped 2.4%, weighed heavily on the broader market.
North Carolina-based Wachovia Corp. (WB 25.31, -2.50) was the focal point in the financial sector today. Its stock declined 9.0% after the company reported a first quarter loss of $0.14 per share. Analysts had expected Wachovia to post a profit of $0.40.
The real punch for Wachovia's shareholders, though, was the added announcement that the bank cut its dividend sharply to preserve capital and announced concurrent common and convertible preferred stock offerings that raised $7 billion in aggregate. The common stock portion was priced at $24 per share, which was a 14% discount to Friday's closing price.
Wachovia's situation created a sense of angst that the bottom for the financial sector may not be as close at hand as many pundits were claiming just a few weeks ago. Further insight on that notion should be provided throughout the week as a number of financial firms, including JPMorgan Chase (JPM 41.50, -1.03), Wells Fargo (WFC 27.20, -0.77), Merrill Lynch (MER 42.88, -0.80) and Citigroup (C 22.51, -0.85), report their quarterly results.
Strikingly, the financial sector has fallen five straight sessions, suffering a decline of 7.9% over that period.
Although the weakness in the financial sector played a key role behind today's negative performance, strength in the energy sector, which gained 1.8%, acted as an offset that kept the broader market's losses in check.
Reports that Brazilian company Petrobras may be sitting on an oil field with as much as 33 billion barrels of recoverable crude oil and a 1.5% jump in oil prices that pushed them back toward record highs were among the factors that helped thrust the sector into a leadership position in Monday's trading.
Relative strength in the retail sector, which followed reports Blockbuster (BBI 2.841, -0.32) was looking to acquire Circuit City (CC 4.97, +1.07) for at least $6 per share and a better than expected retail sales report for March, also provided a measure of support.
Before the open, the Department of Commerce reported that retail sales rose 0.2% in March and 0.1%, excluding autos. That was fairly close to expectations, but the realization that gasoline station sales were a key driver behind the uptick tempered investors' enthusiasm.
Overall, Monday's session had a lackluster tone to it as evidenced by the modest volume at the NYSE, which approximated 1.2 billion shares. DJ30 -23.36 NASDAQ -14.42 NQ100 -0.4% R2K -0.3% SP400 -0.2% SP500 -4.51 NASDAQ Dec/Adv/Vol 1845/1076/1.61 bln NYSE Dec/Adv/Vol 1850/1247/1.18 bln
3:30 pm : The major indices take out fresh lows following a fresh wave of selling pressure. Only the energy sector (1.4%) is posting a decent sized gain. The financial sector (-2.6%) is trading at its worst level of the session
Fed Governor Warsh said that quick financial market recovery is unlikely, according to Dow Jones. He also said banks should not hesitate to cut dividends.
Tuesday is poised to be an interesting day of trade. Briefing.com has confirmed a total of 16 companies are set to report earnings, including Johnson & Johnson (JNJ 66.16, +0.16), State Street (STT 77.35, -1.98) and US Bancorp (USB 31.82, -0.80). In addition, the market will get the latest read on inflation with the release of March's Producer Price Index (PPI).DJ30 -41.11 NASDAQ -15.06 SP500 -5.92 NASDAQ Dec/Adv/Vol 1801/1075/1.33 bln NYSE Dec/Adv/Vol 1899/1191/880 mln
3:00 pm : The major indices are trading with modest losses. The stock market has been unable to break out of its tight range this session.
Crude oil settled at $111.76, which marks an all-time closing high. Crude is up 17% in 2008, and is up 76% compared to one year ago. DJ30 -18.72 NASDAQ -10.51 SP500 -4.42 NASDAQ Dec/Adv/Vol 1680/1177/1.19 bln NYSE Dec/Adv/Vol 1770/1303/786 mln
2:30 pm : The major indices are trading with slight losses as selling pressure eases.
The S&P 500 is nearly split down the middle, with 241 of the 500 stocks posting a gain. Energy companies Exxon Mobil (XOM 89.44, +0.82) and Hess (HES 101.83, +9.07) are leading the way as crude climbs 1.4%. Eight of the ten main laggards are financials. Wachovia (WB 25.09, -2.72) and Bank of America (BAC 35.79, -1.15) are the worst performing names.DJ30 -13.19 NASDAQ -5.91 SP500 -3.22 NASDAQ Dec/Adv/Vol 1588/1251/1.08 bln NYSE Dec/Adv/Vol 1660/1412/715 mln
2:00 pm : The major indices fall back into the red, but losses are modest. The small-cap Russell 2000 Index is managing to hold onto a modest 0.3% gain.
The dollar has seen some swings this session. The Dollar Index is currently down a slight 0.04%, but was up as much as 0.82% and down as much as 0.44%.DJ30 -8.14 NASDAQ -4.75 SP500 -2.61 NASDAQ Dec/Adv/Vol 1556/1267/984 mln NYSE Dec/Adv/Vol 1609/1435/647 mln
1:30 pm : The major indices retreat to the unchanged mark. Market breadth is split down the middle, with advancers and decliners coming in at roughly 1-to-1 on both the Nasdaq and NYSE.
A quick glance at a chart of the S&P 500's movement this session is somewhat misleading, as it makes it seem that it has been extremely choppy. It is important to keep in mind the session's range has been tight, and therefore moves seem more dramatic.DJ30 +7.66 NASDAQ +0.30 SP500 -0.65 NASDAQ Dec/Adv/Vol 1486/1313/903 mln NYSE Dec/Adv/Vol 1526/1524/595 mln
1:00 pm : The stock market rebounds into positive territory as it trades at its best level of the session. Buying interest has been mostly broad-based, although energy (+2.0%) and telecom (+0.8%) have made some notable gains. There is no specific news item that would account for the recent spike.
DJ30 +37.70 NASDAQ +5.13 SP500 +2.20 NASDAQ Dec/Adv/Vol 1360/1407/811 mln NYSE Dec/Adv/Vol 1448/1589/539 mln
12:30 pm : The S&P 500 and Nasdaq are trading with modest losses. The Dow is outperforming on a relative basis, as it posts a slight gain.
Within the Dow, 15 of the 30 stocks are posting a gain. IBM (IBM 117.45, +1.45) is posting the largest gain. Citigroup (C 22.33, -1.03) is showing the most weakness.DJ30 +8.38 NASDAQ -4.30 SP500 -1.40 NASDAQ Dec/Adv/Vol 1604/1134/711 mln NYSE Dec/Adv/Vol 1656/1361/478 mln
12:00 pm : There has been a decent amount of headlines on Monday, however the stock market has traded in a very tight range. At midday, the stock market is posting a modest loss. Topping headlines is news that a major bank unexpectedly reported a quarterly loss.
Wachovia (WB 25.01, -2.80) reported a first quarter loss of $0.14 per share ex-items. Analysts expected earnings per share of $0.40. In an effort to shore up its balance sheet, Wachovia is cutting its dividend by roughly 40% and is raising $7 billion in a common and convertible preferred stock offering. The common stock offering will be priced at $24 per share, and the preferred offer will pay 7.5% and be converted to at roughly $31.20 per share.
Traders have not been pleased with Wachovia’s results, sending the stock down roughly 10%. The company’s shares are down 56% from their 52-week high, compared to the diversified banks group’s 34% slide.
The financial sector (-2.1%) has fallen in conjunction with Wachovia, and is the main drag on the S&P 500. The sector has fallen 7.6% during the last five sessions, reducing its gain from its March 17 52-week low to 9.0%.
Seven of the ten sectors are posting a loss. However, selling pressure has been mostly limited to financials as none of the other sectors are posting a loss in excess of 0.4%. Energy stocks (+1.4%) are providing leadership as crude oil gains 1.0%.
There are two merger and acquisition items of note. Blockbuster (BBI 2.77, -0.36) said it offered between $6 and $8 per share in cash to acquire Circuit City (CC 5.01, +1.11) on Feb. 17. Both companies have seen their stock values dwindle the last few years due to increased competition.
Wisconsin-based Manitowoc (MTW 36.69, -0.83) is going to acquire food product equipment maker Enodis (LSE: ENO) for $2.1 billion. Manitowoc also reaffirmed its full year 2008 earnings guidance.
In economic news, March retail sales rose 0.2%, which bested the consensus estimate that called for a flat reading. This report is somewhat misleading, as sales were flat when excluding gasoline. As a result, the report did not give stocks much of a boost.
February business inventories rose 0.6%, matching the consensus estimate. This follows the 0.9% gain in January. DJ30 -8.14 NASDAQ -7.99 SP500 -3.08 NASDAQ Dec/Adv/Vol 1618/1088/634 mln NYSE Dec/Adv/Vol 1658/1329/425 mln
11:30 am : The major indices fall to fresh session lows after some broad-based selling pressure. Losses remain modest.
In overseas trading, Europeans markets came under selling pressure after Wachovia (WB 24.99, -2.82) announced its disappointing results. England's FTSE is down 0.9% and Germany's Dax is down 0.6%.
Asian markets posted steep losses following General Electric's (GE 32.11, +0.06) large earnings miss last Friday. Japan's Nikkei fell 3.1% and Hong Kong's Hang Seng shed 3.5%.DJ30 -24.75 NASDAQ -10.32 SP500 -4.85 NASDAQ Dec/Adv/Vol 1592/1092/536 mln NYSE Dec/Adv/Vol 1688/1267/361 mln
11:00 am : The major indices climb off their worst levels, as they clutch the unchanged mark. Crude (+1.1% to $111.37) recently took out fresh session highs, which is lending support to the energy sector (+1.4%). Crude oil is up 17.7% in 2008.
Despite the gains in crude, the Amex Airline Index is up 3.7%. The gains are largely due to a Wall Street Journal article that indicates Delta Air Lines (DAL 10.83, +0.37) and Northwest Airlines (NWA 11.23, +0.27) may unveil a merger announcement as early as Tuesday.DJ30 +9.77 NASDAQ -1.23 SP500 -0.18 NASDAQ Dec/Adv/Vol 1484/1098/424 mln NYSE Dec/Adv/Vol 1508/1399/299 mln
10:30 am : The major indices are now posting modest losses as the financial sector (-2.1%) falls deeper in the red. The sector will likely see volatility this week with the earnings reports coming from US Bancorp (USB 32.38, -0.24), JPMorgan Chase (JPM 41.99, -0.54), Wells Fargo (WFC 27.40, -0.57), Merrill Lynch (MER 42.73, -0.95) and Citigroup (C 22.40, -0.96) to name a few.
Despite the recent dip, the stock market's range in the early-going has been limited. It was up 0.1% at its peak, and down 0.3% at its recently reached trough.DJ30 -11.05 NASDAQ -7.55 SP500 -3.06 NASDAQ Dec/Adv/Vol 1502/1009/299 mln NYSE Dec/Adv/Vol 1607/1235/222 mln
10:05 am : Just hitting the wires, February business inventories rose 0.6%, matching the consensus estimate. Inventories rose 0.9% in January.
The stock market is trading with a slight gain after geting a modest boost from the economic data. Seven of the ten sectors are in positive territory, with most of the selling pressure isolated to financial stocks. Energy stocks are up 1.0% which is helping to offset some of the financial sector's 1.5% drop.
Within the financial sector, the diversified banks (-3.7%), regional banks (-3.0%) and thrifts & mortgages groups (-2.1%) are facing the most selling pressure due to the disappointing results from Wachovia (WB 25.01, -2.80).
DJ30 +30.46 NASDAQ -2.92 SP500 +0.92 NASDAQ Dec/Adv/Vol 1371/975/169 mln NYSE Dec/Adv/Vol 1544/1192/139 mln
09:40 am : The major indices are trading near the unchanged mark as selling pressure has been mostly contained to the financial sector after a major U.S. bank unexpectedly reported a loss and a dividend cut.
Wachovia (WB) is driving the negative sentiment within the financial sector (-0.7%) after reporting a loss of $0.14 per share, falling well short of the expected earnings of $0.40 per share. In order to shore up its balance sheet, Wachovia is raising $7 billion in capital and is cutting its dividend by 40%.
There are two merger and acquisition items of note. Blockbuster (BBI) said it offered between $6 and $8 per share in cash to acquire Circuit City (CC) on Feb. 17. Both companies have seen their stock values dwindle the last few years due to increased competition. Separately, Wisconsin-based Manitowoc (MTW) is going to acquire food product equipment maker Endodis for $2.1 billion.
In economic news, March retail sales were modestly better than expected. However, much of the gains were due to increased gasoline sales.DJ30 +4.42 NASDAQ -5.08 SP500 -0.71
09:16 am : S&P futures vs fair value: -1.9. Nasdaq futures vs fair value: -6.0.
09:00 am : S&P futures vs fair value: -3.0. Nasdaq futures vs fair value: -6.2. Futures have climbed off their worst levels, but continue to point to a negative start. Announced earlier this morning, Wisconsin-based Manitowoc (MTW) is going to acquire food product equipment maker Endodis for $2.1 billion. Manitowoc reaffirmed its previous full year earnings guidance of $3.20 to $3.40 per share.
08:30 am : S&P futures vs fair value: -5.5. Nasdaq futures vs fair value: -12.2. After falling to to their worst levels of the morning, futures get a slight boost immediately following a better than expected economic release. Just reported, March retail sales rose 0.2%. Economists expected sales to be unchanged, after falling 0.4% in February. Excluding autos, sales rose 0.1%, which is in-line with expectations.
08:00 am : S&P futures vs fair value: -7.0. Nasdaq futures vs fair value: -9.2. Futures point to a lower open after a major U.S. bank unexpectedly reported a quarterly loss. Wachovia (WB) reported a first quarter loss of $0.14 per share ex-items. Analysts expected earnings per share of $0.40. In an effort to shore up its balance sheet, Wachovia is cutting its dividend by roughly 40% and is raising $7 billion in a common and preferred stock offering. Separately, Blockbuster (BBI) announced it offered to acquire Circuit City (CC) on Feb. 17 for $6.00 to $8.00 per share in cash, which marks a 54% to 105% premium over Friday's closing price. In economic news, March retail sales is set for release at 8:30 ET and February Business inventories will be released at 10:00 ET.
06:21 am : S&P futures vs fair value: -2.3. Nasdaq futures vs fair value: -4.0.
06:20 am : FTSE...5855.00...-40.50...-0.7%. DAX...6548.50...-55.07...-0.8%.
06:20 am : Nikkei...12917.51...-406.22...-3.0%. Hang Seng...23811.20...-856.59...-3.5%.
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