Market Update 080804 http://biz.yahoo.com/mu/update.html 4:20 pm : The stock market posted a steep decline on Monday as plunging crude oil and commodity prices caused a steep sell off in energy and material names, but did not translate into large gains in the broader market. Selling interest was also fueled by continued concerns regarding financials and a June personal income and spending report that showed higher-than-expected inflation.
Crude prices plunged 3.0% to $121.30 per barrel and commodities as a whole tumbled 3.4%. There was no specific news item to account for the retreat, although there was speculation that a large hedge fund had to liquidate its positions.
The energy sector (4.9%) fell on the retreat in crude prices. Likewise, material stocks slipped 4.2%, with Freeport-McMoRan (FCX 80.44, -10.87) getting hit especially hard.
Lately, the stock market as a whole has rallied when the price of crude oil declined. This session, however, only saw modest buying interest on the drop in crude. Surprisingly, even the transportation sector (-0.8%) was unable to muster a gain. As a result, weakness in the materials and energy sectors offset the benefit that the rest of the stock market saw due to the drop in crude and commodity prices.
Only three sectors posted a gain -- consumer discretionary (+0.5%), consumer staples (+1.2%) and health care (+1.3%). The health care sector got a boost after Humana (HUM 46.75, +2.11) posted better-than-expected second quarter earnings and gave a full-year earnings outlook that topped Wall Street's forecast.
The drop in crude prices helped the financial sector recover from its session low when it was down 2.9%, although the sector still underperformed with a loss of 1.3%.
Oppenheimer analyst Meredith Whitney -- who is widely followed after she correctly predicted last autumn that Citigroup (C 18.90, +0.04) would cut its dividend -- told Fortune magazine that the financial market turmoil is far from over. On CNBC, Whitney said that home prices will fall much more than people expect.
In addition, London-based bank HSBC (HBC 81.49, -1.51) saw first-half 2008 profits fall 29%, largely due to losses related to the U.S. mortgage market.
In terms of economic news, the June personal income and spending report was mixed, with investors showing disappointment regarding the report's inflation component. Month-over-month, personal income rose 0.1% (-0.2% consensus), personal spending increased 0.6% (+0.4% consensus) and core PCE, the Fed's preferred inflation measure, rose 0.3% (+0.2% consensus).
The PCE price index is up 0.8% month-over-month. As a result, real spending and income actually fell in June.
Separately, the latest factory orders report showed that the manufacturing sector is much healthier than is widely recognized. June total factory orders were up 1.7%, which is much stronger than the expected gain of 0.7%. Excluding transportation, orders rose 2.3%.
Tuesday brings the widely anticipated FOMC announcement. The fed funds rate is expected to remain unchanged at 2.00%, so the wording of the Fed's directive will be the main trading catalyst.DJ30 -42.17 NASDAQ -25.40 NQ100 -1.2% R2K -1.7% SP400 -1.9% SP500 -11.30 NASDAQ Adv/Vol/Dec 928/1.99 bln/1878 NYSE Adv/Vol/Dec 1049/1.23 bln/2065
3:30 pm : The stock market goes on the retreat as energy (-5.3%) and material (-4.7%) stocks continue to plummet. The decline in both sectors is the largest since March 19, when oil plunged 4.5% and gold tumbled 6.5%.
The S&P 500 is now trading modestly above its session low.
The main trading catalyst tomorrow will be the FOMC rate decision at 2:15 ET. The fed funds rate is expected to be left unchanged at 2.00%.DJ30 -17.59 NASDAQ -19.81 SP500 -8.80 NASDAQ Adv/Vol/Dec 1054/1.60 bln/1749 NYSE Adv/Vol/Dec 1149/928 mln/1956
3:00 pm : The S&P 500 climbs to the unchanged mark and then runs into some modest resistance. It is trading with a slight loss of 0.1% after being down as much as 1.0%.
The recent recovery has been mostly broad-based, with six of the ten economic sectors now in positive territory.
The Amex Airline Index (+5.3%) is catching a nice bid, as is typically the case when crude prices (-3.1% at $121.23) retreat.DJ30 +40.47 NASDAQ -10.56 SP500 -1.55 NASDAQ Adv/Vol/Dec 1183/1.44 bln/1604 NYSE Adv/Vol/Dec 1280/833 mln/1815
2:30 pm : The stock market is in recovery mode, led by buying interest in consumer staples (+1.4%) and health care (+1.5%). Meanwhile, the Dow has bounced into positive territory.
Within the Dow, 16 of the 30 components are posting a gain. Procter & Gamble (PG 66.03, +1.08), IBM (IBM 127.97, +1.33) and Johnson & Johnson (JNJ 69.15, +1.05) are providing leadership. Energy giants Exxon Mobil (XOM 77.60, -2.12) and Chevron (CVX 83.39, -0.92) are the main laggards.DJ30 +15.88 NASDAQ -13.74 SP500 -3.51 NASDAQ Adv/Vol/Dec 1043/1.30 bln/1730 NYSE Adv/Vol/Dec 1157/752 mln/1908
2:00 pm : Stocks continue to chop along in negative territory. The relatively defensive health care sector remains one of the best performing econmic sectors, up 1.4%.
Managed health care providers continue to perform well, led by WellPoint (WLP 53.68, +2.11). Shares of WLP are trading higher in conjunction with an upbeat second quarter announcement from Humana (HUM 47.07, +2.43). The Managed Health Care Index is up 4.0%.DJ30 -9.36 NASDAQ -18.81 SP500 -6.61 NASDAQ Adv/Vol/Dec 952/1.19 bln/1823 NYSE Adv/Vol/Dec 1055/691 mln/1995
1:30 pm : The stock market continues to post a loss as the recovery effort fades. The enthusiam over the drop in crude (-3.5%) and commodity (-3.3%) prices is partially offset by steep drops in the energy (-4.1%) and materials (-3.8%) sectors.DJ30 -18.81 NASDAQ -21.81 SP500 -8.25 NASDAQ Adv/Vol/Dec 827/1.09 bln/1915 NYSE Adv/Vol/Dec 973/633 mln/2075
1:00 pm : The stock market is back on the decline. Crude prices (-3.0%) have remained relatively stable since the previous update, but that has not stopped the energy sector (-4.2%) from extending its losses.
All 39 components within the sector are posting a loss, with notable weakness in Exxon Mobil (XOM 77.43, -2.29), Schlumberger (SLB 95.47, -4.73) and Occidental Petroleum (OXY 75.51, -3.80)
Commodities (-3.1%) remain under selling pressure. There is some speculation that a large fund has been forced to liquidate its commodity position.DJ30 -21.93 NASDAQ -20.01 SP500 -7.97 NASDAQ Adv/Vol/Dec 861/989 mln/1860 NYSE Adv/Vol/Dec 973/577 mln/2056
12:30 pm : The stock market is trading with a modest loss as a steep decline in energy stocks (-3.7%) act as the main drag. The financial sector (-0.4%) makes it back to the unchanged mark and then runs into some modest resistance.
Crude oil (-3.2% at $121.12) continues to trade with a steep loss. Commodities as a whole are under selling pressure, as all 19 components within the CRB Index (-3.1%) are posting a loss. The session's worst performing commodities include cocoa (-7.6%), natural gas (-6.7%), soybeans (-5.1%) and corn (-5.0%).DJ30 +1.10 NASDAQ -14.03 SP500 -4.63 NASDAQ Adv/Vol/Dec 871/895 mln/1826 NYSE Adv/Vol/Dec 996/519 mln/1993
12:05 pm : The stock market is posting a loss at midday, with a mixed personal income and spending report acting as the main selling catalyst. However, the stock market cut its losses in half as crude prices plummet on no specific news item.
Specifically, the stock market is down about 0.5% after being down as much as 0.9%. The S&P 500 pared its losses, and the Dow briefly climbed into positive territory, as crude prices plunged 4.5% to $119.50 per barrel after being up as much as 1.0%. Crude is currently trading with a loss of 3.4% at $120.88 per barrel.
As a result, the energy sector is the main laggard, falling 3.1% in conjunction with the drop in crude prices. The materials sector is down 2.5%, as Freeport-McMoRan (FCX 84.02, -7.29) plummets 8% in the face of declining copper prices (-3.3%)
The financial sector (-1.3%) rebounded from its session low of -2.9% as crude prices dropped, but the sector is still a laggard. Oppenheimer analyst Meredith Whitney -- who is widely followed after she correctly predicted last autumn that Citigroup (C 18.49, -0.38) would cut its dividend -- told Fortune magazine that the financial market turmoil is far from over. On CNBC, Whitney said that home prices will fall much more than people expect.
In addition, London-based bank HSBC (HBC 81.28, -1.72) saw first-half 2008 profits fall 29%, largely due to losses related to the U.S. mortgage market.
Defensive-oriented investments are outperforming, which is helping to limit the market's losses. Of the five sectors trading higher, consumer staples (+1.0%), and health care (+1.2%) are posting the largest gains. The health care sector is getting an added boost after Humana (HUM 46.93, +2.28) posted better-than-expected second quarter earnings and gave a full-year earnings outlook that topped Wall Street's forecast.
In terms of economic news, the June personal income and spending report was mixed, with investors showing disappointment regarding its inflation component. Month-over-month, personal income rose 0.1% (-0.2% consensus), personal spending increased 0.6% (+0.4% consensus) and core PCE, the Fed's preferred inflation measure, rose 0.3% (+0.2% consensus).
Total PCE is up 0.8% month-over-month. As a result, real spending and income actually fell in June.
Separately, the latest factory orders report showed that the manufacturing sector is much healthier than is widely recognized. June total factory orders were up 1.7%, which is much stronger than the expected gain of 0.7%. Excluding transportation, orders rose 2.3%.
Tuesday brings the widely anticipated FOMC announcement. The fed funds rate is expected to remain unchanged at 2.00%, so the wording of the Fed's directive will be the main trading catalyst.DJ30 -15.79 NASDAQ -15.93 SP500 -5.99 NASDAQ Adv/Vol/Dec 868/799 mln/1807 NYSE Adv/Vol/Dec 979/455 mln/2003
11:30 am : The stock market remains under pressure, as buyers remain on the sidelines. The Nasdaq composite is underperforming the S&P 500, largerly due to weakness in small-cap names.
The small-cap Russell 2000 Index is down 2.0% this session and the mid-cap S&P 400 is down 1.8%. For comparision, the large-cap S&P 500 is down 0.9%. However, both the Russell 2000 and S&P 400 are outperforming this year, with declines of 8.4% and 8.3% respectively, compared to the S&P 500's decline of 14.9%.DJ30 -71.97 NASDAQ -24.75 SP500 -10.82 NASDAQ Adv/Vol/Dec 676/633 mln/1967 NYSE Adv/Vol/Dec 735/358 mln/2226
11:00 am : The major indices extend their losses in a mostly broad-based decline. The energy sector (-1.9%) is underperforming the broader market as crude prices fall 0.9% to $123.92 per barrel.
Crude has traded in a volatile manner throughout the session as traders watch a tropical storm in the Gulf of Mexico. Prices were up as much as 1% and were down as much as 1.4%.
The healthcare sector (+0.6%) is bucking the negative trend. Shares of health insurer Humana (HUM 46.47, +1.83) rise 4.1% after the company posted better-than-expected second quarter earnings and gave a full year earnings outlook that topped Wall Street's forecast. Still, HUM is down nearly 40% year-to-date as rising medical costs and competition weigh on the company's bottom line -- earnings per share were down 3% from the prior year.
The managed healthcare group is up 3% this session.DJ30 -95.75 NASDAQ -26.69 SP500 -10.93 NASDAQ Adv/Vol/Dec 654/513 mln/1926 NYSE Adv/Vol/Dec 720/283 mln/2188
10:30 am : The major indices fall to session lows. The financial sector is the main laggard (-2.6%), although materials (-1.6%) and telecom (-1.5%) are also posting steep declines.
Shares of Motorola (MOT 9.62, +0.81) are getting a nice 9% boost on news that the struggling communication equipment company appointed Dr. Sanjay Jha as co-CEO of Motorola and CEO of Motorola Mobile Devices. Jha was previously COO and president of Qualcomm CDMA Technologies.
Separately, ImClone (IMCL 64.61, -0.73) formed a committee to study the all-cash $60 per share, or $4.5 billion, buyout offer from Bristol-Myers Squibb (BMY 21.27, +0.16). ImClone gave a preliminary view that the offer, which represented a 29% premium, "substantially undervalues" IMCL. The market expected ImClone to respond in this manner, as shares of IMCL had already rose well above the buyout bid.DJ30 -69.53 NASDAQ -19.41 SP500 -7.35 NASDAQ Adv/Vol/Dec 687/366 mln/1795 NYSE Adv/Vol/Dec 778/204 mln/2058
10:00 am : The major indices extend their opening losses as the financial sector (-1.8%) comes under selling pressure. The only two sectors posting a gain are defensive-oriented healthcare (+0.6%) and consumer staples (+0.4%).
Oppenheimer analyst Meredith Whitney -- who is widely followed after she correctly predicted last autumn that Citigroup (C 18.30, -0.57) would cut its dividend -- told Fortune magazine that the financial market turmoil is far from over. On CNBC, Whitney said that home prices will fall much more than people expect.
Citigroup is a notable laggard this morning, falling 3.0%. Citi plans to close its $400 million Tribeca hedge fund after investors redeemed their funds, according to Bloomberg.com.
Economic news is just hitting the wires. June factory orders rose 1.7%, which is better than the expected 0.7% rise. Excluding tranportaion, orders rose 2.3%. The stock market has a muted response to the data.DJ30 -43.80 NASDAQ -13.23 SP500 -5.88 NASDAQ Adv/Vol/Dec 775/191 mln/1556 NYSE Adv/Vol/Dec 828/120 mln/1883
09:35 am : The stock market kicks off the week on a slightly lower note, as the futures market suggested. The Nasdaq is underperforming in the early-going.
The big item this morning was the July personal income and spending report. Spending and income both posted slightly better-than-expected gains, although this was offset by a slightly higher-than-expected core PCE reading -- the Fed's preferred inflation measure.
Corporate news has been on the light side, and the market is leaning toward a wait-and-see mode ahead of the Fed's rate decision tomorrow at 2:15 ET. The feds fund rate is widely expected to be left unchanged at 2.00%, so the wording of the Fed's directive will act as the main trading catalyst.DJ30 -17.10 NASDAQ -13.14 SP500 -3.30
09:14 am : S&P futures vs fair value: -2.1. Nasdaq futures vs fair value: -5.5.
08:59 am : S&P futures vs fair value: -3.3. Nasdaq futures vs fair value: -7.0. Futures continue to suggest a lower start to the session, and are trading near their recently reached session lows. Topping corporate headlines this morning is a Wall Street Journal report that Time Warner (TWX) may soon announce that it has completed steps to separate itself from AOL, a Reuters report that Verizon (VZ) and two unions continued talks after a labor contract covering 65,000 workers expired and a Bloomberg.com report that Citigroup (C) will shut down the rest of its Tribeca hedge fund.
08:30 am : S&P futures vs fair value: -2.8. Nasdaq futures vs fair value: -7.0. Futures have a muted response upon the release of a mixed June personal income and spending report. Month-over-month, personal income rose 0.1% (-0.2% consensus), personal spending increased 0.6% (+0.4% consensus) and core PCE rose 0.3% -- the Fed's preferred inflation measure -- (+0.2% consensus).
08:00 am : S&P futures vs fair value: -2.3. Nasdaq futures vs fair value: -7.0. Futures suggest a slightly lower open ahead of the personal income and spending report at 8:30 ET. In corporate news, HSBC (HBC) reported first half 2008 net income slipped 29% to $7.7 billion, which topped the consensus estimate of $7.3 billion. The London-based bank also added $1.01 billion to its loan-loss reserve, noting an outlook that is "highly challenging with significant uncertainty." Humana (HUM) reported a modest drop in earnings, although the results topped expectations.
06:14 am : S&P futures vs fair value: -2.8. Nasdaq futures vs fair value: -4.0.
06:13 am : FTSE...5364.70...+10.00...+0.2%. DAX...6351.71...-44.75...-0.7%.
06:13 am : Nikkei...12933.18...-161.41...-1.2%. Hang Seng...22514.92...-347.68...-1.5%.
My posting is for my own entertainment, do your own DD before pushing your buy/call button
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