Market Update 080902 http://biz.yahoo.com/mu/update.html 4:15 pm : Tuesday was a disappointing session for stock market bulls. Stocks ran out of steam, giving up strong opening gains to finish the day with a loss.
Shortly after the opening bell, the Dow, Nasdaq and S&P 500 rallied 2.1%, 1.9% and 1.6%, respectively, benefiting from a sharp sell-off in commodities and a relief trade after Hurricane Gustav did not cause any major structural damage. But stocks steadily declined throughout the afternoon, with the Dow, Nasdaq and S&P 500 finishing the day with a loss of 0.2%, 0.8% and 0.4%, respectively.
There was no apparent catalyst for the change in sentiment, although the retreat may have been compounded after traders were disappointed that stocks were unable to maintain their opening gains.
With regard to commodities, the CRB Index fell 3.4% after the damage caused by Hurricane Gustav was less than expected. Crude prices were down 8.7% in overnight trading, but recovered some losses to finish with a decline of 4.5% at $110.30 per barrel.
The drop in commodity prices sparked selling interest within commodity producing stocks. The energy sector declined 4.6% and the materials sector fell 2.5%, acting as a major drag on the broader market.
Conversely, commodity-cost sensitive stocks got a boost, although they gave up much of their intraday advance by the end of the session, and were unable to offset the steep declines in the energy and materials sectors. The consumer discretionary sector rose 1.8%, with retailers climbing 3.0%. Airlines advanced 6.6% and automakers gained 3.1%.
The financial sector outperformed with a 1.8% gain. Bank of America (BAC 32.62, +1.48) provided leadership after Goldman Sachs assumed coverage of BofA with a Buy, citing earnings growth potential, according to the AP. Lehman Brothers (LEH 16.06, -0.03) gave up an early gain to finish near the unchanged mark, despite reports that Korea Development Bank confirmed that it is in talks to invest in Lehman Brothers.
In other corporate news, Merck (MRK 34.83, -0.84) and Schering-Plough (SGP 19.08, -0.32) came under selling pressure due to uncertainty regarding cancer risks of the cholesterol drug Vytorin. The healthcare sector still managed to gain 0.1%.
In economic news, the August ISM Index, a national manufacturing survey, indicated a very slight contraction in the manufacturing sector, although it is still indicative of growth in the overall economy. Specifically, the index slipped 0.1 to 49.9, which was nearly in-line with the expected reading of 50.0. A reading below 50 reflects contraction in manufacturing. On a positive note, the prices paid index declined to 77.0 from 88.5, suggesting an easing in inflationary pressures.
Separately, July construction spending showed a continued poor trend. Housing remains the weakest area in the economy, although Briefing.com expects a leveling off in the months ahead. Specifically, construction spending fell a larger-than-expected 0.6%, versus the expected 0.4% decline. However, the current level of spending is actually above estimates after the June change was revised sharply higher to +0.3% from -0.4%. DJ30 -26.63 NASDAQ -18.28 NQ100 -1.2% R2K -0.1% SP400 -1.0% SP500 -5.25 NASDAQ Adv/Vol/Dec 1367/1.95 bln/1510 NYSE Adv/Vol/Dec 1521/967 mln/1450
3:30 pm : The major indices are in the red going into the final half-hour of the trading session. Six of the ten economic sectors are posting a loss, led by weakness in energy stocks (-4.3%). Currently, the major indices have stabilized modestly above session lows.
Meanwhile, the sectors that are managing to hold a gain are well below their session highs.DJ30 -44.94 NASDAQ -22.60 SP500 -8.08 NASDAQ Adv/Vol/Dec 1334/1.50 bln/1512 NYSE Adv/Vol/Dec 1578/745 mln/1376
3:00 pm : The Dow joins the Nasdaq and S&P 500 in negative territory. All three of the major indices have hit a fresh session low. There is no clear reason for the market's decline, which may be a technical-based move.
Crude prices are down 4.6% to $110.21 per barrel. The decline is steep, although prices have made a substantial recovery from the overnight low of $105.46 per barrel.DJ30 -62.69 NASDAQ -28.46 SP500 -10.16 NASDAQ Adv/Vol/Dec 1334/1.50 bln/1512 NYSE Adv/Vol/Dec 1578/745 mln/1376
2:30 pm : The Dow briefly touches negative ground before recovering to a slight gain. The S&P 500 and Nasdaq are in negative territory. The Nasdaq is underperforming, with notable weakness in tech stocks (-1.1%).
There does not seem to be a specific catalyst that caused the reversal in the tech sector, although Apple (AAPL 166.33, -3.20) is down 1.9% after being up as much as 2.3%.DJ30 +13.11 NASDAQ -17.07 SP500 -4.51 NASDAQ Adv/Vol/Dec 1405/1.36 bln/1418 NYSE Adv/Vol/Dec 1670/677 mln/1258
2:00 pm : Broad-based declines have pulled the Nasdaq and the S&P 500 into negative territory. After the early rally faded the major indices have been trending downward, recently dropping to their lowest level of the session.
Making an influential decline is the tech sector, which is the largest sector in the S&P 500. After trending sideways with modest gains it has fallen to a 1% loss.
One of the primary laggards in the Nasdaq is Gilead Sciences (GILD 50.45, -2.23). The biotech and drug company was downgraded at Bank of America to Neutral from Buy.DJ30 +33.22 NASDAQ -14.12 SP500 -3.11 NASDAQ Adv/Vol/Dec 1582/1.18 bln/1211 NYSE Adv/Vol/Dec 1859/619 mln/1064
1:30 pm : Stocks continue to trade at lower levels. The Dow, however, remains more than 1% higher as 25 of its 30 components trade higher.
The Dow components showing the most weakness are those involved in energy or other commodities. The largest percentage downturn is currently being incurred by Alcoa (AA 30.82, -1.31). Exxon-Mobil (XOM 78.34, -1.67) and Chevron (CVX 84.22, -2.10) are also being hit as oil prices remain depressed.
Though the Dow is up more than 1%, it is still off its 2.1% advance from earlier.DJ30 +115.30 NASDAQ +6.14 SP500 +4.28 NASDAQ Adv/Vol/Dec 1537/10.6 bln/1144 NYSE Adv/Vol/Dec 1826/572 mln/1235
1:00 pm : The S&P 500 is only posting a slight gain of 0.3%, after being up as much as 1.6% in early trade. Seven of the ten sectors are posting a gain, but are being partially offset by the steep 4.2% drop in the energy sector.
Crude prices continue to post a steep decline, down 5.8% to $108.87 per barrel. Boone Pickens said on CNBC that he does not think crude will go below $100 and that OPEC will cut production to defend oil prices at the cartel's Sept. 9 meeting.DJ30 +109.51 NASDAQ +8.45 SP500 +3.91 NASDAQ Adv/Vol/Dec 1539/1.02 bln/1155 NYSE Adv/Vol/Dec 1822/557 mln/1236
12:30 pm : The stock market goes on a sharp retreat. The pullback is broad-based, although energy stocks (-4.4%) are facing the most selling interest. The Nasdaq and S&P 500 are posting modest gains, while the price-weighted Dow is still up more than 1%.
There does not appear to be a specific catalyst for the recent dip. Treasuries are rallying, with the 10-year note up 18 ticks and the 30-year bond advancing 30 ticks.
Market breadth is positive, with advancers outpacing decliners by 7-to-4 on the NYSE and by 10-to-7 on the Nasdaq. Volume is not extremely heavy, but is much higher than recent sessions -- the NYSE's current volume level is 48% more than last Friday at this time.DJ30 +122.62 NASDAQ +8.33 SP500 +4.73 NASDAQ Adv/Vol/Dec 1572/895 mln/1085 NYSE Adv/Vol/Dec 1939/500 mln/1109
12:00 pm : Stocks are posting solid gains at midday after Hurricane Gustav did not cause any major structural damage, sparking a relief rally. Commodities, especially energy, are posting sharp declines, which is helping to ease inflation worries.
The CRB Index, which contains a basket of 19 commodities, is down 3.8%, with crude prices plummeting 5.9% to $108.65 per barrel. Other commodities posting steep declines include natural gas (-8.8%), silver (-5.9%), and gasoline (-5.6%). The CRB Index is down 20.5% from its all-time high on July 3, and oil is down 36% from its all-time high on July 11. Still, the CRB Index is up 5.0% year-to-date and oil is up 13.3% year-to-date.
Commodity-cost sensitive stocks are rallying, while commodity producers are posting steep declines.
The consumer discretionary sector is up 3.2%, with retailers climbing 4.1% as traders speculate lower commodity prices will give consumers more discretionary income. On a related note, airlines are up 9.9% and automakers have advanced 5.9%.
Meanwhile, the energy and material sectors are down 3.7% and 1.6%, respectively. The ten worst-performing industry groups are commodity related. Some of the hardest hit areas include coal & consumable fuel (-11.0%) and diversified metal and mining (-7.0%) companies.
No notable companies released their quarterly earnings results today, so corporate news has been relatively light.
Lehman Brothers (LEH 16.59, +0.50) garnered the market's attention after Korea Development Bank confirmed that it is in talks to invest in Lehman Brothers , according to reports.
Google (GOOG 477.47, +14.18) plans to release a Web browser later today, in an attempt to capture market share from leader Microsoft (MSFT 27.58, +0.29).
In economic news, the August ISM Index, a national manufacturing survey, indicated a very slight contraction in the manufacturing sector, although it is still indicative of growth in the overall economy. Specifically, the index slipped 0.1 to 49.9, which was nearly in-line with the expected reading of 50.0. A reading below 50 reflects contraction in manufacturing. On a positive note, the prices paid index declined to 77.0 from 88.5, suggesting an easing in inflationary pressures.
Separately, July construction spending showed a continued poor trend in construction. Housing remains the weakest area in the economy, although Briefing.com expects a leveling off in the months ahead. Specifically, construction spending fell a larger-than-expected 0.6%, versus the expected 0.4% decline. However, the current level of spending is actually above estimates after the June change was revised sharply higher to +0.3% from -0.4%.DJ30 +176.60 NASDAQ +19.87 SP500 +10.86 NASDAQ Adv/Vol/Dec 1615/813 mln/1001 NYSE Adv/Vol/Dec 2001/461 mln/1025
11:30 am : Stocks trade in a relatively tight range modestly above session lows, although gains remain substantial. The utilities sector (-0.4%) has joined materials (-1.5%) and energy (-3.5%) in the red.
The dollar climbs 0.5%, benefiting from the drop in commodity prices. Since most commodities are dollar denominated and the U.S. is a major consumer, cheaper commodities mean less dollars going overseas, which typically strengthens the currency. The Dollar Index is now up 1.8% year-to-date, and is at its highest level since last October.DJ30 +183.19 NASDAQ +22.44 SP500 +12.11 NASDAQ Adv/Vol/Dec 1604/720 mln/979 NYSE Adv/Vol/Dec 1998/414 mln/997
11:00 am : The stock market goes on the defensive and then stabilizes near session lows. The S&P 500 is up 0.8%, which is half of its early-morning advance. The energy sector is down 3.5%, which is taking six points from the S&P 500.
Google (GOOG 477.62, +14.33) is outperforming with a 3.1% gain. The search engine giant will release a Web browser later today. The browser stands to take some of the majority market share away from Microsoft's (MSFT 27.59, +0.30) Internet Explorer. Presumably, Google's browser will help increase the company's search engine traffic. GOOG was also upgraded to Buy from Hold at Stanford, noting broadening market share gains and valuations near lows.DJ30 +162.77 NASDAQ +19.58 SP500 +10.99 NASDAQ Adv/Vol/Dec 1577/586 mln/967 NYSE Adv/Vol/Dec 1967/346 mln/989
10:30 am : Stocks post solid gains, but have dipped from their best levels. At the same time, Treasuries pare their losses, with the 10-year note flat after being down 12 ticks in earlier trade.
Crude prices post a steep loss of 5.9% to $108.54 per barrel, although they are well off their session low of -8.7%.
The drop in energy prices are giving a solid boost to the consumer discretionary sector (+3.0%), with retailers up 3.5% as traders speculate that lower energy costs will lead to more discretionary money for consumers. In addition, Airlines spike 8.6% and transports as a whole gain 1.9%.
The financial sector is outperforming with a gain of 2.2%, but is down from its session high when it was up 3.7%. Freddie Mac (FRE 4.88, +0.37) and Fannie Mae (FNM 7.15, +0.31) had their preferred stock credit ratings cut, with Fannie cut to BBB- from A+ and Freddie cut to BBB- from A. Their preferred stock remains on Rating Watch negative, although both firms had their AAA long-term issuer default ratings affirmed.DJ30 +194.43 NASDAQ +29.18 SP500 +14.22 NASDAQ Adv/Vol/Dec 1672/463 mln/824 NYSE Adv/Vol/Dec 2077/279 mln/826
10:05 am : Just released, the August ISM Manufacturing Index, a national survey, was nearly flat month-over-month with a reading of 49.9 (50.0 consensus), with prices paid falling 13% to 77.0 (consensus 82.0). A reading below 50 is intended to to reflect contraction in the manufacturing sector.
Separately, July construction spending fell 0.6% (-0.4% consensus) from the upwardly revised gain of 0.3% in June. This report is volatile and subject to large revisions, so it typically has a limited market impact.
The major indices extend their gains and then have a mostly muted response to the economic reports.
Corporate news has been on the light side, with no major earnings reports. Korea Development Bank confirmed that it is in talks to invest in Lehman Brothers (LEH 16.57, +0.48), according to reports.DJ30 +219.75 NASDAQ +39.93 SP500 +18.07 NASDAQ Adv/Vol/Dec 1816/241 mln/566 NYSE Adv/Vol/Dec 2126/171 mln/684
09:35 am : The stock market gets off to a strong start in a relief rally after Hurricane Gustav failed to cause serious structural damage.
Commodities are down 3.9% as a whole, with notable weakness in energy. Crude prices plummet 6.4% and natural gas prices retreat 6.1%. Meanwhile, gold prices are down 4.5% to $793.40 per ounce. Gold is now down 5.3% year-to-date, and is down 31% from its March 17 all-time noninflation adjusted high of $1033.90.
Eight of the ten S&P 500 economic sectors are posting a gain, led by the financial sector (+3.2%). The energy (-3.0%) and materials (-1.2%) sectors face selling pressure in light of the steep pullback in commodities.DJ30 +187.10 NASDAQ +33.78 SP500 +16.61
09:17 am : S&P futures vs fair value: +13.8. Nasdaq futures vs fair value: +33.0. Futures recently set an intraday high as commodity prices retreat. Crude prices are down 7.7% to $106.67 per barrel, approaching their intraday low of $105.46. Crude is now down 28% from its July 11 all-time high of $147.27 per barrel. Nasdaq 100 futures are outperforming, largely due to its lack of energy stocks, compared to the S&P 500's 13.8% energy sector weighting.
08:58 am : S&P futures vs fair value: +11.6. Nasdaq futures vs fair value: +26.0.
08:30 am : S&P futures vs fair value: +12.1. Nasdaq futures vs fair value: +30.5. Futures climb to their best levels of the morning. Crude prices extend their decline, now down 7.0% to $107.34 per barrel.
08:00 am : S&P futures vs fair value: +10.2. Nasdaq futures vs fair value: +21.3. Stock futures suggest a sharply higher open as commodities plummet after Hurricane Gustav caused less damage than expected. Crude oil prices are down 6.0% to $108.57. Gasoline (-6.6%), natural gas (-6.6%), corn (-4.7%) and gold (-3.1%) are also posting steep declines. In corporate news, Korea Development Bank confirmed that it is in talks to invest in Lehman Brothers (LEH), which follows weeks of speculation that the two firms were in discussions, according to reports. No major companies are reporting earnings this morning. On the economic front, the construction spending and ISM Index reports are set for release at 10:00 ET.
06:18 am : S&P futures vs fair value: +10.5. Nasdaq futures vs fair value: +21.3.
06:18 am : FTSE...5620.70...+17.90...+0.3%. DAX...6508.37...+86.57...+1.4%.
06:18 am : Nikkei...12609.47...-224.71...-1.8%. Hang Seng...21042.46...+136.15...+0.7%.
My posting is for my own entertainment, do your own DD before pushing your buy/call button
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