Market Update 080919 http://biz.yahoo.com/mu/update.html 4:30 pm : The Dow closed nearly 370 points higher Friday, marking the end of a volatile week. The Dow registered triple-digit swings during each of the week's trading sessions.
The weeklong ride took participants both high and low. Despite closing the week's final session with a 3.4% gain, the Dow still ended the week 0.3% lower.
Still, the outlook among participants has improved substantially.
Following the collapse of Lehman Brothers and the government's intervention into the AIG (AIG 3.85, +1.16) debacle earlier in the week, federal agencies stepped up to restore investor confidence.
Just one day ago central banks injected liquidity into global financial markets to help restore their functionality. Now, the Fed is looking to create an entity that will help financial firms shed their illiquid and distressed assets, many of which remain linked to risky subprime mortgages.
The Fed will also begin purchasing short-term debt issued by Fannie Mae (FNM 0.69, +0.20) and Freddie Mac (FRE 0.55, +0.22), which extends existing plans to buy mortgage-backed securities from the two.
To further enhance confidence among investors, the Fed is planning to sell insurance that covers money market mutual funds.
Some investors were encouraged by a ruling from the Securities Exchange Commission that put a temporary ban on short-selling certain financial stocks. Though the plan aims to protect certain securities and restore confidence, it has come under sharp criticism from market makers. Late in the session the SEC staff announced it wants to implement certain exemptions to the rule.
The announcements helped financial stocks most. The sector closed the session 11.1% higher, extending the prior session's 12% advance. The financial sector concluded the week with a 7.4% gain.
Investment banks and brokers (+20.8%) registered the largest gain in the sector. The group rebounded as Morgan Stanley (MS 27.21, +4.66) posted a 21% advance. Shares of MS hit a multiyear low yesterday amid ongoing fear of financial fallout and uncertainty surrounding the firm's future. From yesterday's low to Friday's close it surged 125%.
The firm continues to seek a strategic alliance to help it move forward. Reports continue to indicate its talks are most intimate with Wachovia Bank (WB 18.75, +4.25) and the state-run China Investment Corp.
Though the outlook among investors has improved, credit rating agency Moody's remains cautious of financial and market conditions. The firm placed bond insurers Ambac (ABK 3.80, -2.80) and MBIA (MBI 12.88, -1.12) on review for a downgrade.
Nine of the ten economic sectors posted an advance, all trailing the financial sector.
Only consumer staples (-0.4%) finished the session lower. The sector fell out of favor as participants rotated out of traditional safe havens and into riskier plays.
In other news outside the financial sector, Texas Instruments (TXN 23.60, +0.85), hiked its quarterly dividend by 10% to $0.11 per share. Oracle (ORCL 20.07, +1.32) offered up better-than-expected earnings per share results and had its shares upgraded.
Trading volume was heavy as contracts for stock index futures, stock index options, and stock options expired. Nearly 3 billion shares traded hands on the NYSE. That was the largest volume ever registered on the exchange. DJ30 +368.75 NASDAQ +74.80 NQ100 +2.8% R2K +4.2% SP400 +4.2% SP500 +48.57 NASDAQ Adv/Vol/Dec 1669/3.82 bln/682 NYSE Adv/Vol/Dec 2810/2.99 bln/372
3:30 pm : Crude has rallied to its highest point of the week, recently crossing above $105 per barrel. For the session, it is up roughly 6.4%. The advance has given it a 2.9% week-to-date gain.
The energy sector is up 6.1%. It trails only the financial sector (+7.8%).
Gains in energy can be traced back to the rise in oil prices, but also the widespread sense of optimism governing the session's action. DJ30 +313.31 NASDAQ +47.98 SP500 +37.98 NASDAQ Adv/Vol/Dec 1545/3.13 bln/777 NYSE Adv/Vol/Dec 2726/2.13 bln/457
3:00 pm : Dell (DELL 17.02, -0.24) is failing to participate in the session's advance, but Hewlett-Packard (HPQ 48.53, +1.39) is showing some strength. Both companies saw their estimates revised lower at Credit Suisse. Just days ago Dell stated that it its seeing business soften in the face of lower demand from end markets.
The tech sector is up 2.6%. It is now the second largest sector in the S&P 500. Financials moved into the first place ranking with the gains registered in the previous two sessions.
Financials are trading in the middle of their session range. The sector is currently up 8.7%.DJ30 +340.58 NASDAQ +53.96 SP500 +42.42 NASDAQ Adv/Vol/Dec 1562/2.89 bln/758 NYSE Adv/Vol/Dec 2762/2.01 bln/423
2:35 pm : The stock market posts a strong gain of more than 3%. From the week's trough to current levels, the S&P 500 is up 10.4% -- the largest since the week following Black Monday in 1987.
AIG (AIG 4.06, +1.37), up 52%, is one the largest S&P 500 percent gainers this session. It is also one of most actively traded stocks, with 318 million shares exchanging hands thus far. Major AIG shareholders are trying to avoid the government taking a 80% stake in the insurance giant, according to The Wall Street Journal.
The financial sector is up 8.6%, although not all financial stocks are posting gains. Bond insurers Ambac (ABK 4.97, -1.70) and MBIA (MBI 12.91, -1.09) are posting losses. Moody's placed the credit ratings of both companies on review for a downgrade. Real estate investment trusts are also not faring well, specialized REITs is down 6.0%, industrial REITs is down 4.9% and residential REITs is down 1.3%.DJ30 +373.80 NASDAQ +55.20 SP500 +44.61 NASDAQ Adv/Vol/Dec 1560/2.72 bln/737 NYSE Adv/Vol/Dec 2778/1.92 bln/392
2:05 pm : The major indices continue to trade with impressive gains as investors remain encouraged by the recent actions of the Fed, Treasury, and SEC. Advancing stocks on the NYSE outnumber decliners by nearly 7-to-1.
Investors will be further encouraged if the gains registered in the past two sessions hold.
Global stocks have also fared well. The Dow Jones World Index is up 5.4%. Excluding the U.S., the World Index is up 7.0%.DJ30 +363.14 NASDAQ +59.35 SP500 +43.58 NASDAQ Adv/Vol/Dec 1624/2.55 bln/673 NYSE Adv/Vol/Dec 2813/1.84 bln/365
1:30 pm : Consumer staples stocks (-0.2%) are still failing to participate in the session's rally. The sector, however, still boasts the best year-to-date performance, down just 2.2%. Meanwhile, the S&P 500 is down 14.3% this year.
Primary laggards included Colgate-Palmolive (CL 75.02, -1.86) and Procter & Gamble (PG 70.33, -0.98). Their names have garnered attention amid the turmoil in the stock market as investors looked for companies generating stable and dependable cash flow. They are now being replaced by riskier holdings as participants find encouragement by the developments of late.DJ30 +433.40 NASDAQ +72.93 SP500 +51.84 NASDAQ Adv/Vol/Dec 1678/2.40 bln/608 NYSE Adv/Vol/Dec 2852/1.76 bln/320
1:00 pm : The S&P 500 recently took out a new session high, but it has since trended lower. At its best level, the index was up 4.9%.
Despite impressive gains over the last two sessions, in which the S&P 500 has climbed 8.7%, it is still up just 0.4% week-to-date. The S&P 500 also remains in bear market territory since it is little more than 20% off its high. That high was registered in October 2007.
Session volatility is more moderate than in previous sessions. The Volatility Index, often referred to as the fear index, is down 5.5% to 31.3. It had hit 40 at one point in the previous session, which was a multiyear high.DJ30 +429.25 NASDAQ +75.10 SP500 +52.01 NASDAQ Adv/Vol/Dec 1684/2.28 bln/573 NYSE Adv/Vol/Dec 2841/1.70 bln/311
12:30 pm : Stocks made a dazzling start, but then drifted lower midmorning to pare gains. The major indices are now back on the upswing, though they are still off session highs.
The broad-based S&P 500 is posting the strongest gains. Just under 90% of its members are moving higher. Its leaders remain focused around large-cap financial firms. The S&P 500 financial sector is up 10.7%.
CNBC announces that General Electric (GE 27.52, +2.73) may likely be added to the list of companies ineligible for short selling under the SEC's new ruling.DJ30 +430.47 NASDAQ +77.33 SP500 +53.73 NASDAQ Adv/Vol/Dec 1693/2.1 bln/552 NYSE Adv/Vol/Dec 2836/1.60 bln/310
12:00 pm : Following yesterday's act by central banks to inject global financial markets with liquidity, additional steps are being taken to shore up confidence. The dramatic magnitude of such steps has given relief to stock investors and, in turn, fueled buying.
The major indices are currently off their best levels, but each is trading with a gain of more than 3.0%.
While details are still being hashed out and the approval of Congress is needed, an entity may be formed that allows financial institutions to take illiquid and distressed assets off balance sheets.
The Fed will begin purchasing short-term debt issued by Fannie Mae (FNM 0.70, +0.21) and Freddie Mac (FRE 0.55, +0.22). The plan augments existing government plans to buy mortgage-backed securities from the duo.
The Fed is also intends to sell insurance to investors holding money market mutual funds to quell concern that their assets will not erode below $1.00 per share, or effectively "break the buck."
The Securities Exchange Commission has issued a temporary ban on short-selling 799 financial stocks, effective immediately. The plan intends to protect the integrity and quality of the securities and restore confidence.
Contracts for stock index futures, stock index options, and stock options expire today, creating a triple witching. The expiration of all three has made for high trading volume, which was easily discernible in the financial sector early on.
Financial stocks have found strong favor and are leading the session's rally. After being pummeled in recent weeks, the sector is up 8.7%. That comes on top of the 12% advance posted in the prior session. Financials were up 12.6% in the early going.
Investment banking and brokers (+18.2%) are one of the best performing industries in the sector. It was an underperformer in the previous session.
Morgan Stanley (MS 28.11, +5.56) is up almost 25% this session. It has more than doubled since taking out a new 52-week low just yesterday. According to reports, Morgan Stanley continues to seek a strategic alliance in the form of an investment or a merger partner to help navigate ongoing turmoil and pressures. Wachovia Bank (WB 19.06, +4.56) has been at the center of such merger talks.
Nonfinancial companies performing well include Texas Instruments (TXN 24.19, +1.44), which hiked its quarterly dividend by 10% to $0.11 per share. Oracle (ORCL 20.62, +1.87) is up handsomely after posting better-than-expected earnings per share results and having its stock upgraded. DJ30 +388.78 NASDAQ +71.62 SP500 +47.69 NASDAQ Adv/Vol/Dec 1602/1.93 bln/630 NYSE Adv/Vol/Dec 2788/1.50 bln/353
11:35 am : Oil prices are up 1.7% to $99.50 per barrel. The commodity has rebounded in recent sessions. Earlier in the week prices were just above $90 per barrel. The commodity gained positive attention as participants sought safety.
Gold also benefitted from recent turmoil in the financial markets, but it has since fallen out of favor with the rise in stock prices. At its session high, gold was showing a 2.0% loss. However, its advances earlier in the week have it in position to finish the week 13.2% higher.DJ30 +337.73 NASDAQ +58.68 SP500 +38.95 NASDAQ Adv/Vol/Dec 1571/1.77 bln/641 NYSE Adv/Vol/Dec 2728/1.41 bln/404
11:05 am : Stocks continue to trade with impressive gains, but are off their morning highs. Posting the largest retreat is the Nasdaq, which pared a 5.4% advance to its current gain of nearly 2.0%.
One of the Nasdaq's leading movers is Oracle (ORCL 20.56, +1.81). Oracle's stock was upgraded after the company posted better-than-expected earnings per share results. Laggards in the index include mega-cap names like Microsoft (MSFT 24.98, -0.28).DJ30 +292.03 NASDAQ +42.97 SP500 +31.98 NASDAQ Adv/Vol/Dec 1508/1.53 bln/659 NYSE Adv/Vol/Dec 2646/1.29 bln/463
10:30 am : Treasury Secretary Paulson announces in a speech that further decisive action is needed to restore confidence in the financial system. A lack of confidence can undermine liquidity and choke economic growth. Efforts to restore confidence and liquidity need to be big enough to make a difference, which Paulson quantified to be in the hundreds of billions of dollars.
Details of plans will be hashed out over the weekend, according to Paulson. The plan is intended to protect taxpayers as much as possible.
Part of the plan will hinge on Fannie Mae (FNM 0.65, +0.16) and Freddie Mac (FRE 0.50, +0.17). The two will increase purchases of mortgage-backed securities, extending the plan announced earlier this month.
President Bush is scheduled to speak in regard to the economy shortly.DJ30 +329.51 NASDAQ +56.71 SP500 +35.14 NASDAQ Adv/Vol/Dec 1579/1.30 bln/495 NYSE Adv/Vol/Dec 2709/1.17 bln/387
10:00 am : All ten of the economic sectors are showing gains as the mood among investors improves and prompts buying.
September options are scheduled to expire this session, which can compound the session's trading volume. Volume on the NYSE in the prior session almost hit 2.5 billion shares.
Participants continue to await comments from the Treasury Department, which is holding a conference that is set to begin shortly.DJ30 +422.57 NASDAQ +79.99 SP500 +47.55 NASDAQ Adv/Vol/Dec 1564/987 mln/403 NYSE Adv/Vol/Dec 2698/981 mln/281
09:45 am : The major indices are off to a strong start, extending the prior session's advance. The Dow closed 3.9% higher Thursday and is currently up 3.3% this session. Week-to-date, the Dow is down 0.1%.
Financials are leading the market higher after announcements by the Fed, Treasury, and SEC have bolstered confidence in the sector. The measures taken by the trio represent dramatic overhauls after what has generally been patchwork efforts. The financial sector is up 11.5%. It gained roughly 12% yesterday.
A noticeable laggard amid the broad based rally is the consumer staples sector. The sector had found favor in recent sessions amid market turmoil, but is now up just 0.2%.DJ30 +376.41 NASDAQ +85.22 SP500 +50.81 NASDAQ Adv/Dec 1507/374 NYSE Adv/Dec 2105/197
09:16 am : S&P futures vs fair value: +59.20. Nasdaq futures vs fair value: +72.80. Stock futures indicate the major indices remain on track to extend yesterday's rally. Foreign exchanges are following suit. The DAX is up 5.7%. The FTSE is up 9.4%. The Nikkei is up 3.8%. The Hang Seng is up 9.6%.
09:00 am : S&P futures vs fair value: +58.60. Nasdaq futures vs fair value: +65.30. Stock futures continue to indicate the major indices will open with impressive gains. The renewed interest in stocks has pushed Treasuries substantially lower. The 10-year Note is currently indicated to be down by 65 ticks, pushing its yield up to 3.79%. That marks its highest yield in weeks. In light of the recent Fed and Treasury efforts, the overnight Libor rate has fallen to 3.25% from 3.84% Thursday.
08:33 am : S&P futures vs fair value: +49.90. Nasdaq futures vs fair value: +73.80. Stocks remain on track for a strong upward start. Just announced by CNBC, the Federal Reserve is announcing plans to help stabilize money market funds with loans to banks. The Fed will provide a liquidity facility to help provide backstops by purchasing notes from primary dealers. Cintas (CTAS) announced it earned $0.51 per share for its first fiscal quarter. Analysts were looking for $0.52 per share, on average. The shares were downgraded to Sell from Hold at Citigroup. Oracle (ORCL) surpassed analysts' consensus estimate by $0.02, bringing in $0.29 per share. The shares were upgraded to Buy from Neutral at Piper Jaffray. Palm (PALM) posted a first quarter adjusted loss of $0.12 per share, which is actually less severe than the $0.18 per share loss that was widely anticipated. Texas Instruments (TXN) announced it is giving its quarterly dividend a 10% increase to $0.11 per share.
08:00 am : S&P futures vs fair value: +40.20. Nasdaq futures vs fair value: +45.30. Stocks look to extend the prior session's rally as futures occupy a wide lead over fair value. Morgan Stanley (MS) is in talks to sell 49% of itself to state-run China Investment Corp, according to The Financial Times. Sources report HSBC (HBC) has abandoned purchasing the majority of Korea Exchange Bank from Lone Star Funds. Continuing with efforts to restore confidence in the financial system, the Securities Exchange Commission is temporarily banning short selling on certain financial stocks. Fed Chairman Bernanke and Treasury Secretary Paulson are meeting with the full congressional leadership. Announced on this morning on CNBC, the Treasury will unveil a $50 billion plan that guarantees money market funds. The Treasury will insure public money funds for a fee. The plan is intended to help restore confidence within the banking system.
06:30 am : S&P futures vs fair value: +38.00. Nasdaq futures vs fair value: +41.00.
06:30 am : Nikkei...11920.86...+431.60...+3.80%. Hang Seng...19327.73...+1695.30...+9.60%.
06:30 am : FTSE...5256.60...+376.60...+7.70%. DAX...6099.71...+236.40...+4.00%.
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