Market Update 080604 http://biz.yahoo.com/mu/update.html 4:15 pm : The stock market traded in a volatile manner Wednesday, with the S&P 500 trading in a wide range, from up 0.8% at its peak to down 0.4% at its trough. The stock market eventually settled on the unchanged mark as strength in tech offset weakness in financial and energy.
The financial sector (-0.8%) posted a solid gain of 1.1% in early trade, but tumbled on word that Moody's put bond insurers Ambac (ABK 2.50, -0.50) and MBIA (MBI 5.67, -1.02) on review for a possible credit rating downgrade. Both Ambac and MBIA defended their capital position, but the market took little solace in the remarks.
The market dipped noticeably in midafternoon trading after the news wires ran headlines from a speech on inflation that was given by Fed Chairman Bernanke at Harvard. The chairman noted the Fed's concerns about inflation and inflation expectations. In brief, it was largely an academic discussion.
If Bernanke wanted to make a real splash with inflation commentary, he would have done it in Tuesday's speech to the International Monetary Conference and not to a group of seniors (students we mean, not citizens) at Harvard. The inflation headlines were simply an excuse to apply some added selling pressure to a market that was already showing signs of weakness.
The volatile day ended split down the middle, with five of the ten economic sectors posting a gain. Technology (+1.0%) provided leadership, with significant strength in large-cap names. As a result, the tech-heavy Nasdaq handily outperformed the broader market with a gain of 0.9%.
The energy sector (-1.2%) posted the largest loss, as crude prices fell 1.8% to $122.04 per barrel. The weakness in crude followed the government's weekly energy report. An increase in gasoline and distillates inventories offset an unexpected decrease in crude stockpiles.
Telecom (-0.8%) was also a laggard, with Verizon (VZ 36.99, -0.37) falling after CNBC reported it may buy Alltel for $27 billion.
The session's three economic reports were not especially strong, but they were all better than expected. Importantly, the data are reflective of an economy that is not in a recession.
Private nonfarm employment rose by 40,000 in May, according to employment services firm ADP. This came out ahead of the expected drop of 30,000. However, this report has been spotty compared to the government's jobs report, which includes both public and private nonfarm payrolls and is set for release Friday morning.
First quarter nonfarm productivity was revised to a gain of 2.6% from 2.2% (consensus +2.5%).
May ISM services -- a survey of nonmanufacturing purchasing managers -- was nearly unchanged at 51.7 compared to 52.0 in April. Economists forecast a reading of 51.0. Because the reading is above 50, it indicates growth in the services sector. DJ30 -12.37 NASDAQ +22.66 NQ100 +1.2% R2K +0.6% SP400 +0.3% SP500 -0.45 NASDAQ Dec/Adv/Vol 1211/1633/2.19 bln NYSE Dec/Adv/Vol 1699/1408/1.29 bln
3:30 pm : The stock market recovers a bit, but remains in negative territory. Treasuries are on the retreat, with the 10-year note falling 22 ticks, sending its yield up to 3.98%.
The telecom sector (-1.3%) remains under selling pressure. Verizon (VZ 36.71, -0.65) is down nearly 2% after CNBC reported it is in talks to buy Alltel for $27 billion.DJ30 -32.16 NASDAQ +19.39 SP500 -2.19 NASDAQ Dec/Adv/Vol 1222/1594/1.85 bln NYSE Dec/Adv/Vol 1645/1439/1.01 bln
3:00 pm : The stock market falls to session lows on the release of Fed Chairman Bernanke's prepared text for his Harvard speech.
Bernanke said inflation is "significantly higher" than the Fed wants, and that price stability is "a top priority" of the Fed. He noted that there is no sign of the 1970s-type price wage spiral. Bernanke added, "If people expect an increase in inflation to be temporary and do not build it into their longer-term plans for setting wages and prices, then the inflation created by a shock to oil prices will tend to fade relatively quickly."
Note that Bernanke already talked about inflation pressures yesterday, and this speech is for Harvard's "Class Day."
The S&P 500 has joined the Dow in negative territory. Only four economic sectors remain in positive territory.DJ30 -45.92 NASDAQ +13.88 SP500 -4.09 NASDAQ Dec/Adv/Vol 1268/1544/1.68 bln NYSE Dec/Adv/Vol 1717/1312/898 mln
2:30 pm : A sharp drop in financial stocks (-1.1%) sends the S&P 500 to the unchanged mark and the Dow into negative territory. The Nasdaq is holding on to a substantial gain of 0.8%, but has given up roughly half of its earlier advance.
Weakness is broad-based within financials. The larger-cap names are under signficant selling pressure, with weakness in Bank of America (BAC 31.88, -0.79), Citigroup (C 21.00, -0.42) and Merrill Lynch (MER 40.76, -1.13). Bond insurers Ambac (ABK 2.45, -0.55) and MBIA (MBI 5.59, -1.10) continue to get hammered on the possibly of being downgraded at Moody's.DJ30 -12.53 NASDAQ +21.50 SP500 +0.77 NASDAQ Dec/Adv/Vol 1173/1638/1.49 bln NYSE Dec/Adv/Vol 1564/1487/801 mln
2:05 pm : The market continues to make up lost ground as strength in tech (+1.3%) and materials (+1.1%) is offsetting continued weakness in financials (-0.3%). The S&P 500 is up roughly 0.5%, compared to its session high of 0.8%. DJ30 +52.11 NASDAQ +33.66 SP500 +7.57 NASDAQ Dec/Adv/Vol 1024/1765/1.35 bln NYSE Dec/Adv/Vol 1314/1742/724 mln
1:35 pm : The major indices are back on the rise as the financial sector (-0.1%) recovers a large portion of the losses spurred by Moody's decision to review MBIA's (MBI 5.91, -0.78) and Ambac's (ABK 2.49, -0.51) credit ratings. MBIA responded that it disagreed with Moody's decision, noting it has had "no material adverse changes in the environment, and we believe our capital position has improved" since Moody's reaffirmed its rating in February.
Market breadth leans positive, with advancers outpacing decliners by 6-to-5 on the NYSE and by 8-to-5 on the Nasdaq.DJ30 +47.15 NASDAQ +31.73 SP500 +7.00 NASDAQ Dec/Adv/Vol 1056/1734/1.25 bln NYSE Dec/Adv/Vol 1304/1732/671 mln
1:00 pm : The major indices remain in positive territory but have seen their gains pared in the last half-hour.
Strikingly, the financial sector (-0.6%) has retreated to negative territory after being up as much as 1.1% earlier in the session. On a related note, Lehman Bros. (LEH 31.30, +0.69) has slipped 5.4% from its session high while Ambac Financial (ABK 2.53, -0.47) has dropped 13% from its best level of the day.
A short time ago, headlines crossed the wires that Moody's has placed Ambac's Aaa insurance financial strength rating on review for a possible downgrade. This news has contributed to the renewed weakness in the financial sector, which is weighing on the broader market.DJ30 +23.86 NASDAQ +27.59 SP500 +4.15 NASDAQ Dec/Adv/Vol 1018/1762/1.11 bln NYSE Dec/Adv/Vol 1235/1767/588 mln
12:35 pm : The major indices climb to fresh session highs thanks to strength in tech (+1.4%), utilities (+1.1%), materials (+1.3%) and consumer discretionary (+1.2%) stocks.
European markets underperformed U.S. stocks. London's FTSE fell 1.5%, France's CAC dropped 1.4% and Germany's DAX slid 0.8%.DJ30 +72.63 NASDAQ +36.57 SP500 +9.55 NASDAQ Dec/Adv/Vol 953/1801/1.02 bln NYSE Dec/Adv/Vol 1169/1850/545 mln
12:05 pm : The stock market is posting a decent-sized gain at the midday point after getting off to a slow start. The market is benefiting from several better-than-expected economic reports, a drop in crude prices, and strength in large-cap tech.
Tech is leading the market with a gain of 1.2%, as large-cap lifts the Nasdaq 100 up 1.5%. Research In Motion (RIMM 135.81, +2.30) is a standout, on reports that the stock was initiated as a Buy at Goldman Sachs.
Meanwhile crude oil prices are down 1.1% to $122.88 per barrel in response to the government's weekly inventory report. Increasing gasoline and distillates inventories offset an unexpected decrease in crude stockpiles.
The drop in crude prices has weighed on the energy sector (-0.3%). Conversely, the dip has lifted the Amex Airline Index (+3.9%), although oil costs are still wreaking havoc on the airline industry. The rising jet fuel costs spurred UAL Corp (UAUA 9.27, +0.74), parent company of United Airlines, to cut its aircraft fleet by 70 more planes, bringing its total cuts to 100.
In other corporate news, J. M. Smucker Company (SJM 54.48, +0.73) has signed a definitive agreement to merge Procter & Gamble's (PG 66.11, +0.70) Folgers coffee business into Smucker. Smucker will make the purchase in an all-stock reverse Morris Trust transaction -- which allows a tax free transfer -- valued at approximately $3.3 billion, including the assumption of $350 million in Folgers debt.
This session's three economic reports were not especially strong, but they were all better than expected. Importantly, the data are reflective of an economy that is not in a recession.
Private nonfarm employment rose by 40,000 in May, according to employment services firm ADP. This came out ahead of the expected drop of 30,000. However, this report has been spotty compared to the government's jobs report, which includes both public and private nonfarm payrolls and is set for release Friday morning.
First quarter nonfarm productivity was revised to a gain of 2.6% from 2.2% (consensus +2.5%).
May ISM services -- a survey of nonmanufacturing purchasing managers -- was nearly unchanged at 51.7 compared to 52.0 in April. Economists forecast a reading of 51.0. Because the reading is above 50, it indicates the services sector is expanding. DJ30 +57.24 NASDAQ +29.40 SP500 +6.69 NASDAQ Dec/Adv/Vol 1028/1666/890 mln NYSE Dec/Adv/Vol 1278/1708/489 mln
11:30 am : The major indices extend their gains in mostly broad-based strength. Financials (+1.1%) have edged higher on news that Lehman Brothers (LEH 32.76, +2.13) was upgraded to Buy from Underperform at Merrill Lynch.
In corporate news, it was announced this morning that J.M. Smucker (SJM 54.85, +1.10) has signed a definite agreement to merge Procter & Gamble's (PG 66.13, +0.72) Folgers coffee business into Smucker in a deal worth roughly $3.3 billion.DJ30 +91.76 NASDAQ +35.52 SP500 +9.26 NASDAQ Dec/Adv/Vol 970/1708/751 mln NYSE Dec/Adv/Vol 1194/1744/418 mln
11:00 am : Oil prices slip below the $123 mark as traders digest the weekly energy inventory report. Crude is down 1.3% to $122.52 per barrel, which is weighing on the energy sector (-0.3%).
The rest of the economic sectors are faring better, with the exception of telecom (-0.4%). Tech is leading the way, with notable strength in large-cap names such as Intel (INTC 22.53, +0.59) and Cisco (CSCO 26.79, +0.45). Consumer discretionary stocks are also seeing some buying interest with Walt Disney (DIS 34.29, +1.11) up 3.4%.
Financials have rebounded from a loss 0.7% to a gain of 0.7%. At the same time, Lehman Brothers (LEH 31.55, +0.94) has spiked from a loss of 3% to a gain of 3%.
The major indices are trading at session highs. The tech-heavy Nasdaq 100 is substantially outperforming with a 1.3% gain versus the broader market's advance of 0.4%.DJ30 +67.91 NASDAQ +27.27 SP500 +6.97 NASDAQ Dec/Adv/Vol 1085/1541/584 mln NYSE Dec/Adv/Vol 1353/1542/332 mln
10:35 am : The major indices are trading at session highs with modest gains. Large-cap tech is leading the way as the Nasdaq 100 gains 0.7%. BlackBerry manufacturer Research In Motion (RIMM 135.19. +1.68) is outperforming after Goldman Sachs initiated the name with a Buy, according to reports.
The Department of Energy just announced that crude inventories for the week ended May 30 fell 4.8 million barrels, compared to the expected increase of 400,000 barrels. Crude was trading down 0.4% to $123.83 per barrel just prior to the release.DJ30 +20.77 NASDAQ +11.02 SP500 +1.47 NASDAQ Dec/Adv/Vol 1326/1247/440 mln NYSE Dec/Adv/Vol 1587/1247/251 mln
10:05 am : The stock market recovers into the green and then has a mostly muted reaction to a modestly better-than-expected services sector report.
Just hitting the wires, the May ISM services -- a survey of nonmanufacturing purchasing managers -- was nearly unchanged at 51.7 compared to 52.0 in April. Economists forecast a reading of 51.0. Because the reading is above 50, it indicates the services sector is expanding and does not reflect an economy that is in a recession.DJ30 +3.67 NASDAQ +2.27 SP500 +0.77 NASDAQ Dec/Adv/Vol 1167/1190/244 mln NYSE Dec/Adv/Vol 1523/1196/149 mln
09:40 am : The major indices open with slight losses, as a better-than-expected private employment reading and an upward revision to first quarter productivity was not enough to lift investor sentiment in the early going.
Private nonfarm employment rose by 40,000 in May, according to employment services firm ADP. This came out ahead of the expected drop of 30,000. However, this report has been spotty compared to the government's jobs report, which includes both public and private nonfarm payrolls and is set for release Friday morning.
Separately, first quarter nonfarm productivity was revised to a gain of 2.6% from 2.2% (consensus +2.5%).
In corporate news, Lehman Brothers (LEH 29.68, -0.93) is again under selling pressure for the fourth consecutive session after The Wall Street Journal reported that Lehman is seeking capital from overseas, and said the firm bought back its own shares yesterday, citing sources. Lehman has traded lower in 13 of the last 16 sessions.DJ30 -3.09 NASDAQ -3.32 SP500 -1.87
09:16 am : S&P futures vs fair value: -5.0. Nasdaq futures vs fair value: -12.0.
09:00 am : S&P futures vs fair value: -4.7. Nasdaq futures vs fair value: -11.3.
08:30 am : S&P futures vs fair value: -3.2. Nasdaq futures vs fair value: -7.9. Futures quickly give the small boost they received from the better than expected ADP employment report, and then recover some lost ground on a better-than-expected productivity reading. Just hitting the wires, first quarter nonfarm productivity was revised to a gain of 2.6% from 2.2% (consensus +2.5%).
08:15 am : S&P futures vs fair value: -3.4. Nasdaq futures vs fair value: -4.5. Futures get a modest boost on a report that May private payrolls unexpectedly rose. Just reported, ADP reported that nonfarm private employment grew by 40,000 in May. Economists forecast a 30,000 drop in payrolls. This report has been somewhat spotty compared to the government's jobs report, which includes both public and private nonfarm payrolls and is set for release on Friday. In other news, J.M. Smucker (SJM) is buying buying Folgers from Procter & Gamble (PG) for roughly $3.3 billion in stock.
08:00 am : S&P futures vs fair value: -6.0. Nasdaq futures vs fair value: -8.5. Futures indicate a lower start ahead of a batch of economic data, including May ADP private employment payrolls (8:15 ET), revised first quarter productivity (8:30 ET) and ISM Services (10:00 ET). In addition, the government's weekly energy inventory report is set for release at 10:30 ET. Meanwhile, Lehman Brothers (LEH) is once again in the spotlight. The Wall Street Journal reports Lehman is looking overseas for capital, and rumors that the firm was buying back its own shares yesterday were true, citing souces.
06:20 am : S&P futures vs fair value: -4.5. Nasdaq futures vs fair value: -7.5.
06:19 am : FTSE...5960.50...-97.20...-1.6%. DAX...6927.75...-91.38...-1.3%.
06:19 am : Nikkei...14435.57...+226.40...+1.6%. Hang Seng...24123.25...-252.51...-1.0%.
My posting is for my own entertainment, do your own DD before pushing your buy/call button
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