Market Update 080918 http://biz.yahoo.com/mu/update.html 4:45 pm : Stocks got off to a positive start Thursday as central banks attempted to calm concerns in the banking system by infusing billions of dollars into the global financial system. The advance was countered with selling pressure that turned an early 2% Dow advance into a 1.4% midday loss. However, the combined influence of an announcement prohibiting short selling in the U.K. and reports Treasury is considering a plan to create a Resolution Trust-like operation as a solution to the financial crisis stimulated huge buying interest late in the day. The Dow finished with a 3.9% gain, near its session high.
Trading opened with all ten of the economic sectors advancing as investors were encouraged by efforts from central banks to increase liquidity and ease credit concerns. The Fed boosted its dollar swap line by adding as much as $180 billion to the line.
Stocks began surrendering gains as participants became unsure of how to proceed without a clear-cut leader in the early going. The major indices took out new 52-week lows, pushing the Dow more than 22% off its October high.
That sent investors back into safe havens like gold and Treasuries. At its session high, gold was up almost 9%. Treasuries traded higher, but saw gains reverse when financial stocks emerged to lead a massive recovery effort.
Financials have been plagued by uncertainty in recent sessions. Reports continue to speculate over the future of Morgan Stanley (MS 22.55, +0.80) and Washington Mutual (WM 2.99, +0.98). Various reports indicate the two are looking for buyers.
Consolidation is also taking place overseas. U.K. banking giant Lloyds TSB Group (LYG 21.35, +2.24) announced it is acquiring struggling U.K. mortgage lender HBOS in an all-stock deal valued at roughly $22.2 billion. The U.K. government brokered the deal, and is overriding anti-monopoly regulations, according to reports.
The financial sector was able to garner favor as word that the Financial Services Authority, the United Kingdom's independent financial regulator, issued a temporary ban on short selling financial companies. Meanwhile, the New York Attorney General said he wants to freeze short-selling in financial stocks, according to Dow Jones.
The sector was helped even more after reports surfaced that Treasury Secretary Paulson is talking about a Resolution Trust Corporation-type solution that would help end the current crisis.
Financials were down 6.2% at their low, but closed with a gain of 11.7%. Still, the heavy losses incurred earlier in the week have the sector looking at a 5.7% week-to-date decline.
The wide swings and heavy buying made for high volatility and high volume. The Volatility Index, VIX, was at a multiyear high of 40 before settling back near 33.
NYSE volume was just under 2.5 billion shares.
The significance of the Fed's actions and developments from the financial sector caused participants to generally overlook most other happenings.
FedEx (FDX 91.13, +3.06) posted in-line earnings results, bringing in $1.23 per share for its latest quarter. The firm also issued upside guidance.
After coming under pressure from the threat of a credit downgrade, Constellation Energy (CEG 24.20, -0.57) announced it will be acquired by MidAmerican Energy Holdings Company, a unit of Warren Buffett's Berkshire Hathaway, for $26.50 per share in cash.
Lastly, initial jobless claims for the week ended Sept. 13 increased 10,000 to 455,000 while the four-week moving average bumped up to 445,000 from 440,000. The weekly figure was above the consensus estimate of 440,000.
The four-week moving average sits roughly where it did in mid-August, but still reflects a soft labor market. DJ30 +410.03 NASDAQ +100.25 NQ100 +4.0% R2K +7.0% SP400 +4.9% SP500 +50.12 NASDAQ Adv/Vol/Dec 2114/3.85 bln/755 NYSE Adv/Vol/Dec 2395/2.45 bln/797
3:30 pm : Stocks are extending their recent rally substantially higher. Each of the major indices are up more than 3% as stocks hit some of their best levels of the session.
In fact, every sector is at or near a new session high. Financials remain the best performing sector, now up 9.6%. Earlier in the session they were down 6.2%.
Small-cap stocks are faring extremely well. The Russell 2000 is up 5.2%.
Volume is heavy on both the NYSE and the Nasdaq.DJ30 +341.48 NASDAQ +77.46 SP500 +40.09 NASDAQ Adv/Vol/Dec 1964/3.15 bln/889 NYSE Adv/Vol/Dec 2069/1.75 blin/1106
3:05 pm : The stock market surges near session highs as a CNBC reporter says the government may be planning to solve the current financial turmoil using a method similar to the 1980s savings and loan crisis.
CNBC's Gasparino reports his Wall Street sources say that Treasury Secretary Paulson is talking about a Resolution Trust Corporation-type solution to the current crisis. The RTC was created during the savings and loan crisis of the 80s.
Financials as a whole are providing leadership with a 6.3% gain. Diversified banks (+10.4%) and thrifts & mortgage (+7.9%) stocks are rallying, although there is weakness in investment banks (-10.0%) and asset management (-13.8%) firms.
The consolidation of financial firms and government intervention is not happening just in the United States. U.K. banking giant Lloyds TSB Group (LYG 21.03, +1.92) announced this morning that it is acquiring struggling U.K. mortgage lender HBOS in an all-stock deal valued at 12.2 billion pounds ($22.2 billion). The U.K. government brokered the deal, and is overriding anti-monopoly regulations, according to reports.
Announced earlier today, Kraft (KFT 33.59, +0.94) will become a Dow component effective Monday, replacing AIG (AIG 2.26, +0.21). The move comes after AIG nearly collapsed, requiring an emergency $85 billion loan from the Fed. Shares of AIG have fallen 97% from their 52-week high.DJ30 +222.85 NASDAQ +33.89 SP500 +23.91 NASDAQ Adv/Vol/Dec 1646/2.68 bln/1188 NYSE Adv/Vol/Dec 1518/1.50 bln/1653
2:30 pm : The major indices have pared earlier gains and are now trading near the unchanged mark. The session marks another bout of volatile trade for the week.
The volatility index, VIX, is up 7.7% to 39. The VIX is at a multiyear high.
Following a ruling from the United Kingdom's FSA that will put a temporary halt to selling short financial stocks, the New York Attorney General is announcing a wide-ranging probe into short selling. According to Dow Jones, the office wants to freeze short selling of financial stocks.DJ30 +31.68 NASDAQ +7.93 SP500 +3.70 NASDAQ Adv/Vol/Dec 1592/2.44 bln/1240 NYSE Adv/Vol/Dec 1400/1.37 bln/1766
2:00 pm : Financials recently found their best level of the session, helping the broader market pull out of the red. The sector has climbed all the way to a 4.5% gain.
Still lagging, though, are investment banks and brokers. The industry group is down 4.6%. That is still quite an improvement from the 20% loss the group was showing at its session low.
Particular to the group, the giant California pension fund CALPERS is no longer lending out shares of Goldman Sachs (GS 106.45, -8.05) and Morgan Stanley (MS 17.25, -4.50), according to The Wall Street Journal. DJ30 +116.51 NASDAQ +14.22 SP500 +12.36 NASDAQ Adv/Vol/Dec 1648/2.19 bln/1180 NYSE Adv/Vol/Dec 1564/1.24 bln/1604
1:30 pm : After falling to a session low, stocks spiked upward to make their way back to the neutral line. The advance was led by the financial sector, which swung from a 6.2% loss to a 0.3% gain.
Financials were helped by word that the Financial Services Authority, the United Kingdom's independent financial regulator, has issued a temporary ban on short selling financial companies. Dow Jones reported the FSA will not allow the creation or increase of net short positions in publicly quoted financial companies from the 2300 GMT. The provisions will last until January 16.DJ30 +4.73 NASDAQ +0.02 SP500 -1.51 NASDAQ Adv/Vol/Dec 1513/1.93 bln/1296 NYSE Adv/Vol/Dec 1229/1.09 bln/1920
1:00 pm : Losses continue to extend in the stock market. The major indices are now at a session low.
The downturn has taken stocks to a new 52-week low. The S&P 500 is now almost 28% off its high, which was posted almost 11 months ago.
Treasuries have fared well during that time. The 10-year Note, the benchmark for Treasuries, has seen its yield fall from around 4.65% to its current 3.38% since the time stocks hit their high. Yields move inversely to prices.DJ30 -119.68 NASDAQ -24.98 SP500 -19.58 NASDAQ Adv/Vol/Dec 1260/1.66 bln/1526 NYSE Adv/Vol/Dec 989/935 mln/2160
12:35 pm : Stocks continue to trade with losses. The tone has soured noticeably since early on when all three of the major indices traded with gains of at least 2.0%.
The dollar is also trading lower this session, currently off 0.2% according to the dollar index. It is still up 1.6% year-to-date.
The greenback has found favor in recent weeks as international investors seek fertile investment ground amid concerns of a global slowdown. The short term outlook for the dollar remains a bit muddled, though. Foreign economies are hesitant to lower interest rates, while the Fed is cautious to hike them. The federal funds rate was recently left unchanged at 2.0%DJ30 -19.54 NASDAQ -9.58 SP500 -6.41 NASDAQ Adv/Vol/Dec 1440/1.47 bln/1332 NYSE Adv/Vol/Dec 1252/820 mln/1890
12:05 pm : Thursday began on a positive tone, but the gains registered early on proved unsustainable. After making its way 2.0% higher shortly after the opening bell, the Dow trended lower to find itself in negative ground. Early gains were broad based as buyers found interest in depressed names following the prior session's steep sell-off.
Financials (-2.8%) found some of the strongest interest. The sector fell almost 9% yesterday, but advanced 3.7% in the early going. One of the few weak spots in the sector was investment banking and brokers, which is currently down 9.3%.
Reports continue to suggest Morgan Stanley (MS 17.18, -4.57) is looking to merge with another firm as part of an effort to work through the current environment. Wachovia (WB 10.15, +1.03) has been reported as a likely partner in those discussions.
Meanwhile, Washington Mutual (WM 2.31, +0.30) is looking for a buyer, according to NY Times Dealbook.
In other deal news, Constellation Energy (CEG 24.94, +0.17) will be acquired by MidAmerican Energy Holdings Company, which is majority owned by Warren Buffett. The duo announced today they reached a tentative $4.7 billion agreement. Shares of CEG will be acquired for $26.50 per share in cash.
Energy was also up considerably this morning, but remains in positive territory. After advancing 4.0%, the sector is currently up 1.0%. Energy's advance has been helped along by oil prices, which were up more than 5% early on to trade above $100 per barrel. Crude prices have since reversed to trade closer to $97 per barrel.
Oil has gained ground along with other commodities in recent sessions as traders bail out of stocks and try to find less risky holdings. Before easing back, that effort also helped gold climb 5.5% to its session high. Gold is up more than 14% this week.
On the earnings front, ConAgra (CAG 19.49, +0.32) bested the consensus earnings per share estimate for its latest quarter by $0.27 per share. That is $0.03 more than the $0.24 per share that was widely expected.
FedEx (FDX 86.12, -1.95) posted in-line earnings results, bringing in $1.23 per share in its latest quarter. The global package delivery firm also issued upside guidance, but that did little to attract positive attention.
As for economic data, jobless claims for the week ending Sept. 13 were expected to come in at 440,000. Instead, they came in at 455,000, which is up 10,000 from the prior week. Continuing claims totaled 3.478 million, though economists forecast 3.525 million. Continuing claims totaled 3.533 million last week. Though continuing claims softened a bit, weekly trends continue to suggest weaker labor markets.DJ30 -14.49 NASDAQ -7.14 SP500 -3.28 NASDAQ Adv/Vol/Dec 1389/1.26 bln/1336 NYSE Adv/Vol/Dec 1361/717 mln/1762
11:30 am : The major indices dipped into negative territory as conviction behind early morning buying fades.
The financial sector had been up as much as 3.7% early on. It is now down 1.3%, trading just above its session low.
Consumer staples continue to hold gains. The sector has attracted safety seekers and is up 1.5%. At its session high it was up 2.2%.
Cereal and prepared food company Kellogg (K 56.79, +0.38) is acquiring a privately owned Australian cereal maker, Specialty Cereals. The terms of the deal were not disclosed, but the acquisition is not expected to have a material impact on Kellogg's 2008 operating profit.DJ30 +37.86 NASDAQ -0.71 SP500 +2.27 NASDAQ Adv/Vol/Dec 1493/1.02 bln/1181 NYSE Adv/Vol/Dec 1569/587 mln/1531
11:00 am : The upbeat tone governing early trading has tempered as stocks recede to their lowest point of the session. Still, gains remain healthy and widespread. Advancers on the NYSE outnumber decliners by roughly 2-to-1.
After extending yesterday's rebound, oil prices have moved lower. They now trade with a slight decline after being up as much as 5.2% earlier. Given the size of oil's downturn in previous sessions, the commodity is 4.0% lower week-to-date.DJ30 +61.15 NASDAQ +9.54 SP500 +8.52 NASDAQ Adv/Vol/Dec 1681/773 mln/954 NYSE Adv/Vol/Dec 1840/458 mln/1228
10:30 am : Still looking for direction, the financial sector is up 2.6% this session, though that pales in comparison to the prior session's 8.9% slump. One weak spot in the sector continues to be investment banking and brokers (-0.6%) as their future remains clouded.
Reuters reported that Morgan Stanley (MS 20.15, -1.50) is pursuing multiple tracks to endure the current crisis, including merger talks with Wachovia (WB 9.98, +0.86). Reuters also reported Morgan Stanley is approaching China Investment Corp regarding an increased stake in the American investment bank.
The fate of Morgan Stanley has been debated in recent sessions, following the failure of Bear Stearns, Lehman Brothers, and the merger between Merrill Lynch (MER 20.38, +1.02) and Bank of America (BAC 28.70, +1.50).DJ30 +164.80 NASDAQ +36.48 SP500 +21.89 NASDAQ Adv/Vol/Dec 1871/547 mln/705 NYSE Adv/Vol/Dec 2071/343 mln/955
10:00 am : A bit of selling pressure pared early gains, but a concerted buying effort has followed the latest batch of economic data. Stocks are now at some of their best levels of the morning.
Just hitting the wires, August leading indicators were down 0.5%. Economists were looking for a 0.2% decline following the unrevised 0.7% decline last month.
Separately, the Philadelphia Fed Survey, a regional manufacturing survey, came in at 3.8 for September. The consensus called for a reading of -10. The August reading was unrevised at -12.7.DJ30 +196.88 NASDAQ +41.80 SP500 +26.17 NASDAQ Adv/Vol/Dec 1838/339 mln/628 NYSE Adv/Vol/Dec 2051/227 mln/896
09:40 am : Stocks have opened the session with handsome gains. Their advance is broadbased with all ten of the economic sectors moving higher.
Small-cap and mid-cap stocks are also attracting attention. The Russell 2000 is up 2.5% fresh out of the gate, while teh S&P 400 is up 1.4%.
The renewed interest in equities has pushed Treasuries out of favor. The 10-year Note is off by 9 ticks in the early going, pushing its yield up to 3.45%DJ30 +143.63 NASDAQ +41.04 SP500 21.09 NASDAQ Adv/Dec 1824/479 NYSE Adv/Dec 1631/453
09:20 am : S&P futures vs fair value: +11.60. Nasdaq futures vs fair value: +15.50. Constellation Energy (CEG) and MidAmerican Energy Holdings have announced a tentative agreement in which CEG will be acquired for $26.50 per share. Constellation has been hit with credit concerns during recent sessions, sending its stock sharply lower.
09:01 am : S&P futures vs fair value: +14.90. Nasdaq futures vs fair value: +23.30. Stock futures maintain their lead over fair value. Crude has made its way back above $100 per barrel. It fell to roughly $91 per barrel on Tuesday, but has since made its way higher.
08:30 am : S&P futures vs fair value: +16.70. Nasdaq futures vs fair value: +21.30. Stock futures continue to suggest a positive start to trading Thursday. Jobless claims for the week ending September 13 were expected to come in at 440,000. Instead, they came in at 455,000, which is up 10,000 from the prior week. Continuing claims totaled 3.478 million, though economists forecast 3.525 million. Continuing claims totaled 3.533 million last week.
08:00 am : S&P futures vs fair value: +19.10. Nasdaq futures vs fair value: +24.80. Stock futures have a strong lead over fair value, indicating an upward start to the trading session. ConAgra (CAG) bested the consensus earnings per share estimate for its latest quarter, pulling in $0.27 per share. Analysts were looking for $0.24 per share. FedEx (FDX) posted in-line earnings results, bringing in $1.23. The firm offered upside guidance as a complement to the results. Following yesterday's trading action, sources indicated savings and loan outfit Washington Mutual (WM) is looking for a suitor, while investment bank Morgan Stanley (MS) may attempt to merge with another bank.
06:27 am : S&P futures vs fair value: +21.90. Nasdaq futures vs fair value: +21.00.
06:27 am : Nikkei...11489.30...-260.50...-2.20%. Hang Seng...17632.46...-4.70...0.00%.
06:27 am : FTSE...4993.40...+81.00...+1.70%. DAX...5914.04...+53.10...+0.90%.
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