Market Update 080731 http://biz.yahoo.com/mu/update.html 4:30 pm : A late sell off knocked the stock market sharply lower before closing near its worst point of the session. The Dow and the S&P 500 finished 1.8% and 1.3% lower, respectively. The Nasdaq closed with a modest loss.
Thursday’s loss concluded what was an overall pessimistic session. The tone was set early on after disappointing economic data was unveiled.
According to the latest government data, the U.S. economy expanded 1.9% in the second quarter, missing the 2.3% gain economists were expecting. Though the top line of this number is a bit disappointing, its downside surprise is due to a negative impact from inventories. What is more, trends in consumer spending, business investment, exports, and government spending were generally better than forecast.
Many Wall Street pundits and economists believe U.S. economic growth will not return to its full potential until housing has successfully turned around. Former Fed Chairman Greenspan stated in an interview on CNBC that home prices are nowhere near a bottom. He also acknowledged there is still a 50-50 chance the U.S. will experience a recession.
On a similar note, The Wall Street Journal reported Treasury Secretary Paulson noted that housing is still correcting, but the fiscal stimulus has helped economic growth.
Adding to the dour mood among participants, jobless claims for the week ended July 26 climbed 44,000 to 448,000, marking the third time in the last five weeks claims have surpassed 400,000. Continuing claims rose 6.0% to 3.282 million, while the four-week moving average jumped to 393,000 from 382,000.
In the end, the disappointing economic data trumped relatively upbeat earnings data from several widely held companies and lower oil prices.
Altria (MO 20.35, -1.35), Disney (DIS 30.35, -1.32), MasterCard (MA 244.15, -26.58), Visa (V 73.06, -5.39), and Tyco (TYC 44.56, +2.05) all reported upside earnings results ahead of Thursday’s opening bell, but their performance during the session was mixed, given broader concerns.
In other corporate news, S&P lowered the ratings on Ford (F 4.80, -0.04) and General Motors (GM 11.07, -0.33) to B- from B and said it will not be changing their outlook on the pair within the next year.
Research In Motion (RIMM 122.82, +3.60) and ImClone (IMCL 63.93, +17.49) moved appreciably higher, helping the Nasdaq spend the majority of the session in positive ground. ImClone received a $60 per share bid from Bristol-Myers Squibb (BMY 21.12, -0.39).
Meanwhile, oil giant Exxon Mobil (XOM 80.43, -3.95) posted its largest quarterly profit in its history, thanks to record oil prices. Yet the results still fell short of the consensus earnings per share estimate. Its shares fell as a result, making it the primary laggard in both the S&P 500 and the Dow Jones Industrial Average.
Oil prices fell more than 2.0% to finish near $124 per barrel. The downturn, coupled with Exxon’s miss, made energy the worst performing economic sector this session. It finished 3.4% lower.
The decline in oil prices helped spur interest in inflationary-sensitive areas like U.S. Treasuries since softer inflationary threats make fixed income securities more attractive. The benchmark 10-year Note closed 24 ticks higher.DJ30 -205.67 NASDAQ -4.17 NQ100 -0.2% R2K -0.6% SP400 -1.4% SP500 -16.88 NASDAQ Adv/Vol/Dec 1291/2.39 bln/1518 NYSE Adv/Vol/Dec 1223/1.45 bln/1908
3:30 pm : Stocks are waning in the session's final hour of trading. The Dow is now down 1.0%.
Only the health care sector (+1.0%) is holding on to a sizeable gain as telecom (+0.3%) trails. The tech sector is fighting to stay in positive territory (unch).
Thursday's trading has been marked by a lack of leadership.
Separately, in an interview on CNBC former Fed Chairman Greenspan stated that home prices are nowhere near a bottom and that home prices are a critical factor in the economy's health. He also stated that there is still a 50-50 chance the U.S. will experience a recession.DJ30 -117.16 NASDAQ +8.34 SP500 -7.61 NASDAQ Adv/Vol/Dec 1339/1.87 bln/1444 NYSE Adv/Vol/Dec 1329/999 mln/1781
3:00 pm : The stock market slips after making an upward advance as gains in the financial sector (-0.1%) have been reversed. Now only four of the economic sectors are trading with gains. Healthcare is the leader of the bunch, currently up 1.0%.
Supporting the healthcare sector are shares of health insurance provider United Health Group (UNH 28.73, +1.45) and its smaller peer Aetna (AET 42.05, +1.73). Aetna announced earlier this morning earnings of $0.94 per share, besting the consensus earnings per share estimate of $0.93 per share.DJ30 -94.37 NASDAQ +16.12 SP500 -4.79 NASDAQ Adv/Vol/Dec 1389/1.68 bln/1379 NYSE Adv/Vol/Dec 1434/898 mln/1655
2:35 pm : The major indices are unable to extend their recovery efforts, with weakness in energy (-2.8%) and industrials (-1.2%) acting as a major drag.
Crude prices trade in a volatile manner, quickly falling to a 3.2% loss, before return to its previous level at a loss of 2%.
The financial sector is back at the unchanged mark as shares of Washington Mutual (WM 5.51, +0.72) soar. Reuters.com reports that Toscafund Asset Management, a British hedge fund, reported has taken a 6% stake in the struggling company.DJ30 -103.82 NASDAQ +13.90 SP500 -6.59 NASDAQ Adv/Vol/Dec 1350/1.55 bln/1408 NYSE Adv/Vol/Dec 1366/822 mln/1703
2:00 pm : The major indices continue their upward trend. Reduced oil prices are helping.
Oil is currently down 2.1% at $124.10 per barrel. It had been down as much as 2.6% after being up 0.9% in early action.
The decline in oil prices is helping spur interest in oil-sensitive areas like the consumer discretionary sector and retail stocks. The consumer discretionary sector is up 0.3%, while the S&P 500 Retail Index is up 0.7%
Treasuries have also garnered attention as lower oil prices reduce inflationary pressures. Also, the second quarter GDP Price Index showed a less-than-expected increase of 1.1%. Taken together, softer inflationary threats make fixed income securities more attractive.DJ30 -100.55 NASDAQ +14.97 SP500 -6.89 NASDAQ Adv/Vol/Dec 1343/1.41 bln/1377 NYSE Adv/Vol/Dec 1322/738 mln/1740
1:35 pm : Stocks continue to trade with mixed results. There has been no clear leader this session. Gains are most noticeable in the healthcare sector (+0.9%), and telecom (+1.0%).
Energy (-2.5%) remains the worst performer. Financials (-0.6%) are receiving little attention, trading in the middle of the pack.
In a speech, Treasury Secretary Paulson commented that the fiscal stimulus worked, referencing second quarter GDP results. Yet he noted that housing is still correcting, according to The Wall Street Journal.DJ30 -95.91 NASDAQ +14.04 SP500 -6.06 NASDAQ Adv/Vol/Dec 1300/1.32 bln/1375 NYSE Adv/Vol/Dec 1304/695 mln/1760
1:00 pm : The Dow and the S&P have pared losses, but continue to trade meaningfully lower. The Nasdaq remains an outperformer.
Providing leadership to the Nasdaq is Research In Motion (RIMM 124.32, +5.10). RIMM has advanced almost 9% since Tuesday as buyers pick up the name ahead of the release of its new products.
Also making an ascent in recent sessions, shares of First Solar (FSLR 291.95, +6.95) have found favor. The stock topped earnings per share and revenue estimates for its most recent quarter. The stock was also upgraded at several firms.DJ30 -121.40 NASDAQ +7.87 SP500 -9.41 NASDAQ Adv/Vol/Dec 1198/1.20 bln/1457 NYSE Adv/Vol/Dec 1187/630 mln/1850
12:30 pm : Stocks extend their losses, falling to a session low. Losses are most noticeable in the Dow and S&P 500.
Shares of automakers Ford (F 4.88, +0.04) and General Motors (GM 11.21, -0.19) have taken a downward turn after word has surfaced that their credit grades have been cut by rating agency S&P. S&P lowered the ratings on the pair to B- from B and removed the companies from CreditWatch with negative implications. The adjustment reflects the mounting cash losses at the companies and deteriorating conditions in the U.S. auto market. S&P does not expect to revise the outlook to stable or raise the ratings within the next year.DJ30 -140.21 NASDAQ +3.15 SP500 -11.20 NASDAQ Adv/Vol/Dec 1137/1.11 bln/1515 NYSE Adv/Vol/Dec 1136/576 mln/1897
12:05 pm : The tone on Wall Street has largely been pessimistic this session, thanks to a disappointing second quarter GDP figure and weekly jobless claims. The session’s downside, however, has been somewhat limited as several better-than-expected earnings announcements and a near 2% drop in oil prices are helping restrain selling efforts.
The U.S. economy expanded 1.9% in the second quarter, which is less than the expected 2.3% gain. The initial take on this number may be slightly disappointing, yet downside surprise was primarily due to a larger-than-expected negative impact from inventories. Meanwhile, trends in consumer spending, business investment, exports, and government spending were generally better than forecast.
Jobless claims also came in worse than expected. For the week ending July 26, jobless claims climbed 44,000 to 448,000. That marked the third time in the last five weeks claims have surpassed 400,000. Continuing claims rose 6.0% to 3.282 million, while the four-week moving average jumped to 393,000 from 382,000.
Despite the relatively disappointing second quarter economic data, several widely held companies successfully posted better-than-expected earnings results for the quarter.
CBS Corp (CBS 16.48, -0.40), Altria (MO 20.40, -1.30), Motorola (MOT 8.61, +0.93), Disney (DIS 30.39, -1.28), MasterCard (MA 246.61), Visa (V 74.88), and Tyco (TYC 45.02, +2.51) all reported upside earnings results ahead of the opening bell. Their performance this session has been mixed, however, as larger concerns loom.
Earnings news was not entirely positive. Energy giant Exxon Mobil (XOM 81.74, -2.64) posted its largest quarterly profit in its history, but the results still fell short of the consensus earnings per share estimate. The earnings growth was primarily attributable to record oil prices.
Today’s decline in oil prices has offset part of yesterday’s healthy advance. The downturn is certainly a catalyst for stock investors as it reduces operating costs on companies and limits broader inflationary pressures that can weaken consumer spending power.
Exxon’s weight is pulling down the energy sector (-2.2%), which is underperforming the other major economic sectors.DJ30 -102.35 NASDAQ +10.39 SP500 -7.45 NASDAQ Adv/Vol/Dec 1208/991 mln/1407 NYSE Adv/Vol/Dec 1238/516 mln/1764
11:30 am : The Dow and the S&P 500 are making moves lower amid broad-based declines. There is no immediate catalyst for the move. The Nasdaq, however, continues to outperform.
Nasdaq component and Internet search giant Google (GOOG 478.10, -4.60) is underperforming fellow components. The firm announced it is planning to add a venture capital arm to its portfolio of businesses. The news has done little to induce buying in its shares.
After hitting a 52-week low earlier this month, shares of Nasdaq holding Starbucks (SBUX 15.04, +0.37) are trading noticeably higher this session. The company announced after yesterday's close it earned $0.16 per share, excluding items, which is below the $0.18 per share that was widely expected. Starbucks also rehashed plans for store closures in the U.S. and international expansion.DJ30 -89.89 NASDAQ +11.11 SP500 -6.36 NASDAQ Adv/Vol/Dec 1229/847 mln/1351 NYSE Adv/Vol/Dec 1283/444 mln/1687
11:00 am : Stocks continue to trade in mixed fashion. Little more than half the S&P 500 components are trading with a gain.
The energy sector (-2.5%) is underperforming the other major economic sectors. Lower crude prices are weighing on its performance as is heavyweight Exxon Mobil (XOM 81.54, -2.84). Exxon announced earlier today its largest quarterly profit in history, $11.68 billion, or $2.27 per share, but Wall Street was looking for $2.52 per share.
On the other hand, Murphy Oil (MUR 80.25, +1.16) surpassed analysts' consensus estimate of $2.19 per share with relative ease. Murphy generated $2.92 per share on the back of nearly $8.4 billion in revenue.DJ30 -23.86 NASDAQ +21.99 SP500 +0.67 NASDAQ Adv/Vol/Dec 1373/709 mln/1119 NYSE Adv/Vol/Dec 1536/373 mln/1402
10:35 am : The Nasdaq is now up almost 1.0% while the S&P 500 trades near the unchanged mark. The Dow continues to trade with a loss.
Early action started with a pessimistic tone. However, sentiment has improved considerably.
In the face of data suggesting slower economic growth, namely lower-than-expected second quarter GDP and larger-than-expected jobless claims, oil prices have fallen below $125 per barrel. The commodity is down 1.8% after climbing as much as 4.2% in yesterday's action.DJ30 -28.17 NASDAQ +22.49 SP500 -0.38 NASDAQ Adv/Vol/Dec 1338/540 mln/1090 NYSE Adv/Vol/Dec 1411/282 mln/1424
10:05 am : The Nasdaq is outperforming the Dow Jones Industrial Average and the S&P 500. It currently trades with a healthy gain, while its counterparts remain in negative ground.
The Nasdaq is benefitting from strength in biotech and drug company ImClone Systems (IMCL 64.23, +17.79). ImClone has received an offer from Bristol-Myers Squibb (BMY 21.20, -0.31) to purchase the remaining shares of IMCL for $4.5 billion, or $60 per share. Bristol-Myers already owns a large piece of ImClone.
The offer extends an ongoing trend of biotech and pharma acquisitions. Companies competing for new drug development and talented research staffs are bidding for peers and competitors.
Separately, the Chicago Purchasing Manager's Index climbed to 50.8 in July from 49.6 in June, indicating moderate expansion. The report is indicative of business conditions in the Chicago area, but carries considerably less importance than the morning's previous economic data.DJ30 -63.02 NASDAQ +7.62 SP500 -4.90 NASDAQ Adv/Vol/Dec 1024/316 mln/1257 NYSE Adv/Vol/Dec 1030/173 mln/1727
09:50 am : The major indices have opened appreciably lower after disappointing GDP and jobless claims data reversed early morning sentiment from positive to negative. However, the Nasdaq is quickly improving its position.
A bevy of better-than-expected quarterly results came from several industry groups, but their importance was quickly relegated to a lower status upon word the economy expanded at a rate of 1.9% when economists were projecting a growth rate of 2.3%.
Jobless claims were also worse than estimated. For the week ending July 26, jobless claims climbed 44,000 to 448,000. That marked the third time in the last five weeks the rate has surpassed 400,000 claims. DJ30 -88.10 NASDAQ -0.95 SP500 -6.75 NASDAQ Adv/Vol/Dec 918/181 mln/1278 NYSE Adv/Vol/Dec 835/106 mln/1850
09:15 am : S&P futures vs fair value: -11.9. Nasdaq futures vs fair value: -24.5. Premarket sentiment is negative ahead of the opening bell. Futures initially indicated an upward start to trading Thursday, but disappointing GDP and jobless claims data pushed participants into a pessimistic mood.
09:00 am : S&P futures vs fair value: -9.0. Nasdaq futures vs fair value: -14.8. Stock futures continue to indicate a markedly lower start. Oil prices have erased their early losses and now trade with a slight gain. Exxon Mobil (XOM) missed the consensus earnings per share forecast of $2.52 per share, generating just $2.27 per share during the second quarter.
08:35 am : S&P futures vs fair value: -5.7. Nasdaq futures vs fair value: -9.2. Futures have taken a turn for the worse. The preliminary reading for second quarter GDP indicates the economy grew at an annualized rate of 1.9%, which is below the widely expected second quarter growth rate of 2.3%, but up from the downwardly revised 0.9% growth rate registered in the first quarter. Personal consumption climbed at a 1.5% rate for the second quarter, missing the 1.7% rate economists forecast as well as the downwardly revised 0.9% posted in the first quarter. Core PCE climbed 2.1% in the face of a 2.0% consensus forecast, but was still below the 2.3% advance in the first quarter. The GDP Price Index climbed 1.1%, although economists projected a 2.4% advance. Separately, initial jobless claims for the week ending July 26 totaled 448,000, which is above the 393,000 that was widely expected. The prior week's claims were revised slighly downward to 404,000.
08:00 am : S&P futures vs fair value: +3.0. Nasdaq futures vs fair value: +3.8. Stocks are on track for a positive start following better-than-expected quarterly earnings per share results from Disney (DIS), Express Scripts (ESRX), Visa (V), Murphy Oil (MUR), Aetna (AET), Tyco (TYC), Altria (MO), and CBS Corp (CBS).
06:13 am : S&P futures vs fair value: -2.2. Nasdaq futures vs fair value: -5.0.
06:13 am : FTSE...5407.40...-13.30...-0.3%. DAX...6457.00...-3.12...-0.1%.
06:13 am : Nikkei...13376.81...+9.02...+0.1%. Hang Seng...22731.10...+40.50...+0.2%.
My posting is for my own entertainment, do your own DD before pushing your buy/call button
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