Market Update 080520 http://biz.yahoo.com/mu/update.html 4:15 pm : On Tuesday, the stock market posted a substantial loss, with market participants concerned that the stock market's rally from its March lows may have been overdone. The S&P 500 settled the day with a 0.9% loss, with seven of the ten economic sectors in negative territory.
Prompting traders to take some money off the table was bearish news on financial stocks, a major retailer's earnings report, and a higher-than-expected core inflation reading. Crude prices set another record high, which did not help matters either.
The financial sector -- which comprises 16.5% of the S&P 500 -- acted as the biggest drag with a 2.2% loss. Oppenheimer analyst Meredith Whitney believes the credit crisis will extend well into 2009, and may go on even longer. Whitney's calls typically move the market, as she has correctly predicted several aspects of the credit crisis, including the Citigroup (C 22.11, -0.88) dividend cut. Meanwhile, Goldman Sachs (GS 182.43, -1.97) and Morgan Stanley (MS 44.80, -1.40) had their second quarter earnings estimates cut at Lehman Brothers. AIG (AIG 38.12, -0.83) was also under selling pressure after the company said it will raise a total of $20 billion, up from its previous plan to raise $12.5 billion, according to reports.
The S&P 500 Retailing Index had a 2.0% decline, which weighed on the consumer discretionary sector (-1.6%). Home Depot (HD 27.37, -1.50) was the worst performing name with a decline of 5.2%. Traders were disappointed with the home improvement retailer's 66% drop in net income -- although the results were good enough to top Wall Street's low expectations. Meanwhile, AutoZone (AZO 126.99, -0.81) and Target (TGT 54.29, -0.69) reported earnings that beat estimates, while Staples (SPLS 23.61, +0.04) met expectations.
A mixed inflation reading also weighed on the broader market. The April Producer Price Index rose 0.2%, while core-PPI, which excludes food and energy costs, rose 0.4%. Economists expected the opposite, forecasting a 0.4% rise in PPI and a 0.2% rise in core-PPI. The difference in total PPI and core-PPI is largely due to a 0.2% drop in energy costs on a seasonally adjusted basis. On a nonadjusted basis, energy prices are up 2.9%.
There were some pockets of strength. The energy sector (+0.8%) climbed to a lifetime high, as crude oil shattered another intraday high, hitting $129.60 per barrel, before settling with a gain of 1.6% at $129.07 per barrel.
A 0.87% drop in the Dollar Index helped lift crude, and the Commodity Index (+1.0%) as a whole.
Despite the retreat, the stock market is still up 12.4% from its March 17 low.DJ30 -199.48 NASDAQ -23.83 NQ100 -0.8% R2K -0.4% SP400 -0.2% SP500 -13.23 NASDAQ Dec/Adv/Vol 1733/1133/2.01 bln NYSE Dec/Adv/Vol 2032/1104/1.24 bln
3:30 pm : Stocks have recovered from their worst levels, although losses remain substantial. Treasuries are seeing some buying interest, with the 10-year note up 14 ticks, sending its yield down to 3.78%.
Tomorrow, traders will be focusing on the weekly energy inventory report and the April 30 FOMC meeting minutes. Earnings reports will be on the light side, with only 20 companies confirmed to report. The biggest of the companies, Hewlett-Packard (HPQ 46.80, +0.09), has already preannounced its results.DJ30 -192.12 NASDAQ -25.71 SP500 -13.23 NASDAQ Dec/Adv/Vol 1888/976/1.67 bln NYSE Dec/Adv/Vol 2107/991/909 mln
2:55 pm : The market attempts to stage a recovery, but is met with selling resistance. The dollar (-0.8%) continues to post a loss, while commodities are up 0.8%
Crude oil settled the session with a gain of $1.75 at $128.88 per barrel, marking an all-time closing high. The contract for June delivery has now expired, and will be replaced by the July contract tomorrow.DJ30 -212.43 NASDAQ -29.39 SP500 -14.93 NASDAQ Dec/Adv/Vol 1938/926/1.51 bln NYSE Dec/Adv/Vol 2162/943/914 mln
2:30 pm : The major indices continue to drift lower in broad-based weakness. Eight of the ten sectors are posting a loss, with five of them down more than 1%. The Dow is down more than 1.8%, its largest loss since its 2.0% decline on April 11 when the market was stunned by General Electric's (GE 31.82, -0.58) lower than expected earnings.
The Volatility Index is up 7.6% this session. Its current level indicates that traders expect a 5.3% up or down movement in the S&P 500 during the next 30 days.DJ30 -237.58 NASDAQ -34.83 SP500 -17.17 NASDAQ Dec/Adv/Vol 1967/865/1.41 bln NYSE Dec/Adv/Vol 2216/870/755 mln
2:00 pm : A fresh wave of selling pressure sends the major indices to session lows. Energy has taken a notable dip, retreating from a 1.1% gain to its current advance of 0.4%. Meanwhile, financials (-2.3%), consumer staples (-0.8%), healthcare (-0.2%) and telecom (-2.6%) are all trading at their respective session lows.DJ30 -231.23 NASDAQ -29.93 SP500 -15.37 NASDAQ Dec/Adv/Vol 1797/1016/1.29 bln NYSE Dec/Adv/Vol 2109/953/689 mln
1:30 pm : The stock market remains well into negative territory after some unsuccessful attempts to reclaim session losses. Only energy (+1.0%) and the defensive-oriented utilities sector (+0.5%) are trading with noticeable gains.
The Dow Jones Utility Average (+0.6%) is the only major Dow Jones index trading with a gain. The Dow Jones Industrials Average is showing a loss near 1.4%, while the Dow Jones Transportation Average is down 0.6% and the Dow Jones Wilshire is down 0.7%.DJ30 -187.67 NASDAQ -22.84 SP500 -11.15 NASDAQ Dec/Adv/Vol 1686/1095/1.17 bln NYSE Dec/Adv/Vol 1980/1066/624 mln
1:00 pm : Buying interest fades as the major indices retreat toward their session lows. There has been a bearish bias throughout the session.
Within the S&P 500, 73% of stocks are trending lower. AT&T (T 39.50, -1.01) and Microsoft (MSFT 28.76, -0.70) are the worst-performing names. ConocoPhllips (COP 93.84, +1.14) and Occidental Petroleum (OXY 97.11, +1.65) are the best-performing components.DJ30 -201.11 NASDAQ -25.99 SP500 -12.74 NASDAQ Dec/Adv/Vol 1715/1066/1.07 bln NYSE Dec/Adv/Vol 2034/983/566 mln
12:30 pm : The major indices are attempting to recover, with relative strength seen in energy (+0.7%), materials (-0.1%), and tech (-1.4%). However, losses are still substantial, with the S&P down about 0.7%.
Small-cap and mid-cap names are outperforming on a relative basis this session, with the Russell 2000 Index down 0.3% and the S&P 400 down 0.2%. The S&P 400 is getting a boost from oil and gas company Southwestern Energy (SWN 47.84, +1.97), while the Russell is getting a boost from oil company Whitling Petroleum (WLL 94.90, +5.83)DJ30 -176.19 NASDAQ -23.26 SP500 -10.74 NASDAQ Dec/Adv/Vol 1671/1070/975 mln NYSE Dec/Adv/Vol 1983/1034/514 mln
12:00 pm : Market sentiment has been negative throughout the session on Tuesday. A mixed inflation reading, negative items out of the financial sector and a negative response to a major retailer's earnings report are the underlying factors behind the selling interest. At midday, the stock market is trading at its session low, with a substantial loss of nearly 1%.
The financial sector (-2.1%) -- the most heavily weighted within the S&P 500 -- has been a laggard throughout the session. Several items are contributing to weakness within the sector. Oppenheimer noted it believes the credit crisis will extend well into 2009. Meanwhile, AIG (AIG 38.14, -0.81) said it plans to raise a total of $20 billion in capital, according to reports. Finally, Lehman Brothers cut its earnings estimates on Goldman Sachs (GS 128.15, -2.25) and Morgan Stanley (MS 44.76, -1.44).
The S&P 500 Retailing Index is posting a steep 2.1% decline, which is weighing on the consumer discretionary sector (-1.6%). Home Depot (HD 27.29, -1.58) is acting as the largest drag with a decline of 5.5% -- the largest one-day loss in more than five years. Traders are disappointed with the home improvement retailer's 66% drop in net income -- although the results were good enough to top analysts' low expectations. Meanwhile, AutoZone (AZO 128.32, +0.52) and Target (TGT 54.53, -0.39) reported earnings that beat estimates, while Staples (SPLS 23.66, +0.09) met expectations.
Only three sectors are in positive territory at midday. Energy (+0.4%) is showing relative strength after crude rallied to an all-time high of $129.58 per barrel. Healthcare (+0.1%) is also outperforming, thanks to better-than-expected earnings at medical equipment company Medtronic (MDT 49.27, +1.39).
In economic news, the April Producer Price Index rose 0.2%, while core-PPI, which excludes food and energy costs, rose 0.4%. Economists expected the opposite, forecasting a 0.4% rise in PPI and a 0.2% rise in core-PPI. The difference in total PPI and core-PPI is largely due to a 0.2% drop in energy costs on a seasonally adjusted basis. On a nonadjusted basis, energy prices are up 2.9%. The report had a negative impact on stock prices.DJ30 -200.70 NASDAQ -32.24 SP500 -13.62 NASDAQ Dec/Adv/Vol 1818/909/863 mln NYSE Dec/Adv/Vol 2118/879/459 mln
11:30 am : The major indices continue to face selling pressure, with both the Dow and Nasdaq down more than 1%. Meanwhile, the S&P 500 is posting a smaller loss of 0.8%, which follows its four day winning streak.
Standard & Poor's has lowered its credit ratings on 24 of AIG's (AIG 38.11, -0.84) guaranteed investment contract-backed issues to AA- from AA. AIG's ratings were also placed on CreditWatch with negative implications. AIG's stock has already been on the trading radar this session due to earlier reports that the insurance giant is going to raise a total of $20 billion, which is up from its previous plan to raise $12.5 billion.DJ30 -176.84 NASDAQ -27.57 SP500 -11.50 NASDAQ Dec/Adv/Vol 1663/1015/734 mln NYSE Dec/Adv/Vol 1984/984/390 mln
11:00 am : The major indices are languishing near their session lows as investor sentiment remains bearish. Seven of the ten economic sectors are posting a loss, with four of them down more than 1%. Meanwhile, commodities are up 0.7% as crude spikes 1.7% and gold gains 0.9%. The dollar is under some selling pressure, falling 0.7% against a basket of world currencies.
European markets are seeing even more selling pressure, with London's FTSE down 2.4% and Germany's DAX down 1.6%. Mining stocks are showing weakness, with Rio Tinto (RTP 523.37, -23.23) down 4.3%.DJ30 -160.81 NASDAQ -23.12 SP500 -9.32 NASDAQ Dec/Adv/Vol 1637/969/581 mln NYSE Dec/Adv/Vol 1989/940/309 mln
10:25 am : The major indices extend their losses, with notable weakness in financials (-1.6%). Several items are contributing to weakness within the sector. Oppenheimer noted it believes the credit crisis will extend well into 2009. Meanwhile, AIG (AIG 38.05, -0.90) said it plans to raise a total of $20 billion in capital, according to reports. Finally, Lehman Brothers cut its earnings estimates on Goldman Sachs (GS 183.35, -1.05) and Morgan Stanley (MS 45.10, -1.10).
Financials are the worst performing sector this year with a loss of 12.3%, compared to the S&P 500's 3.5% decline. The sector, however, has rebounded 14% from its March low when it was down 27%DJ30 -145.01 NASDAQ -23.52 SP500 -9.25 NASDAQ Dec/Adv/Vol 1607/922/423 mln NYSE Dec/Adv/Vol 1941/921/221 mln
10:00 am : The major indices are in negative territory, with the Dow underperforming, largely due to weakness in home improvement retailer Home Depot (HD 27.96, -0.91). Home Depot reported earnings that topped analyst expectations, but traders are still driving the stock 3.1% lower.
As a result, the S&P 500 Retailer Index (-1.4%) is under some selling pressure, despite better-than-expected earnings at Target (TGT 55.23, +0.31).
Seven of the ten economic sectors are posting a loss in early trade, with notable declines in materials (-1.3%), tech (-1.1%) and financials (-1.2%). The defensive utilities sector (-0.4%) is outperforming.DJ30 -119.83 NASDAQ -19.72 SP500 -9.46 NASDAQ Dec/Adv/Vol 1488/870/223 mln NYSE Dec/Adv/Vol 1902/824/125 mln
09:40 am : The major indices open on a low note as a mixed inflation reading weighs on sentiment.
The April Producer Price Index rose 0.2%, while core-PPI, which excludes food and energy costs rose 0.4%. Economists expected the opposite, forecasting a 0.4% rise in PPI and a 0.2% rise in core-PPI. The difference in total PPI and core-PPI is largely due to a 0.2% drop in energy costs on a seasonally adjusted basis. On a nonadjusted basis, energy prices are up 2.9%.
Meanwhile, crude oil has rallied to a fresh all-time high of $129.31 per barrel as the dollar falls 0.75%.DJ30 -106.58 NASDAQ -19.56 SP500 -8.52 NASDAQ Dec/Adv/Vol 1445/708/70 mln NYSE Dec/Adv/Vol 1626/585/45 mln
09:16 am : S&P futures vs fair value: -8.7. Nasdaq futures vs fair value: -10.5. Crude oil has spiked to an all-time high of $128.40 per barrel. Earlier this morning, oilman Boone Pickens said on CNBC he expects oil will reach $150 per barrel this year.
08:55 am : S&P futures vs fair value: -9.0. Nasdaq futures vs fair value: -8.2. Futures have a delayed reaction to the PPI data, eventually falling to fresh session lows. Crude continues its record run, gaining 0.3% to $127.45 per barrel.
08:30 am : S&P futures vs fair value: -4.3. Nasdaq futures vs fair value: -4.0. Futures have a muted reaction as mixed inflation data hits the wires. April PPI rose 0.2%, compared to the expected increase of 0.4%. Core-PPI, which excludes food and energy costs, rose 0.4% versus the consensus estimate that called for growth of 0.2% In earnings news, Target reported earnings of $0.74 per share, topping expectations by three cents.
08:00 am : S&P futures vs fair value: -4.1. Nasdaq futures vs fair value: -4.0. Futures suggest a lower open for stocks as market participants await the PPI report (8:30 AM ET). AIG (AIG) plans to raise a total of $20 billion in capital, according to CNBC. Meanwhile, Oppenheimer believes the credit crisis will extend well into 2009. In earnings news, Home Depot (HD) reported a drop in net income, but the decline was less than analysts had expected. Staples (SPLS) reported earnings that were in-line with expectations.
06:19 am : S&P futures vs fair value: -4.2. Nasdaq futures vs fair value: -3.3.
06:17 am : FTSE...6301.10...-75.40...-1.2%. DAX...7162.60...-62.59...-0.9%.
06:17 am : Nikkei...14160.09...-109.52...-0.8%. Hang Seng...25169.46...-572.77...-2.2%.
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