Market Update 080923 http://biz.yahoo.com/mu/update.html 4:15 pm : Stocks ended lower Tuesday in a volatile session that was dominated by testimony from key financial officials.
The S&P 500 settled with a loss of 1.6%, near session lows, following a late-session surge in broad-based selling interest. All ten of the economic sectors ended the day in negative territory. Volume was on the light side, with only 1.2 billion shares exchanging hands on the NYSE.
Fed Chairman Bernanke, Treasury Secretary Paulson, SEC Chairman Cox and OFHEO director Lockhart testified on the current financial turmoil to the Senate Banking Committee, which included prepared remarks and a question and answer session. The majority of focus was on Paulson and Bernanke regarding the Treasury's proposed plan to alleviate the credit market turmoil by buying up to $700 billion in illiquid assets from financial firms.
Bernanke said urgent action from Congress is required to stabilize the situation, or there may be "very serious consequences for our financial markets and for our economy." The Federal Reserve supports the Treasury's proposal.
There was a substantial amount of banking committee member contention regarding the plan, which sparked some volatility in the stock market on concerns the size of plan may be limited, or it will take longer-than-expected to pass.
The financial sector fell 1.5%.
Influential Oppenheimer analyst Meredith Whitney cut her earnings estimates on several financial firms, including Bank of America (BAC 33.58, -0.57), Citigroup (C 19.52, -0.49) and Wachovia (WB 14.79, -1.81). Whitney believes any government plan has "little hope of improving core fundamentals over the near and medium term."
The industrials sector (-2.5%) was a laggard. General Electric (GE 24.84, -1.31) was downgraded to Neutral from Buy at Merrill Lynch. The downgrade was prompted by Merrill's projection that GE Commercial Finance and GE Money will each see earnings fall 15% next year. As a result, GE's 2009 and 2010 earnings estimates were lowered at Merrill.
The energy (-2.9%) and materials (-3.2%) sectors also saw steep declines as oil and other commodities went on the decline.
Crude fell 2.3% to $106.83 per barrel this session, which followed yesterday's extremely volatile action. The Energy Information Administration confirmed that yesterday's rally in crude for October delivery, which saw prices spike as much as $25.45 to $130.00 per barrel, was due to short-covering or market manipulation.
Commodities as whole declined 1.6% as the dollar gained 0.5%.
Looking ahead, the Treasury's proposed $700 billion plan will once again be in focus Wednesday, with Treasury Secretary Paulson and Fed Chairman Bernanke appearing before the House Financial Services at 2:30 PM ET.DJ30 -161.52 NASDAQ -25.64 NQ100 -1.1% R2K -1.6% SP400 -1.2% SP500 -18.87 NASDAQ Adv/Vol/Dec 915/1.99 bln/1902 NYSE Adv/Vol/Dec 879/1.15 bln/2276
3:30 pm : The major indices extend their recovery efforts and then run into some modest resistance. The S&P 500 is trading with a slight loss.
Tomorrow, the market will digest August existing home sales data at 10:00 AM ET and the weekly energy inventory levels at 10:35 AM ET. There is not much on the earnings front, with only three companies confirmed to report earnings after the close or before Wednesday's open. The Treasury's proposed $700 billion plan will once again be in focus, with Treasury Secretary Paulson and Fed Chairman Bernanke appearing before the House Financial Services at 2:30 PM ET.DJ30 -13.22 NASDAQ +6.28 SP500 -0.71 NASDAQ Adv/Vol/Dec 1198/1.65 bln/1593 NYSE Adv/Vol/Dec 1224/857 mln/1917
3:00 pm : The S&P 500 recovers to the unchanged mark. At the same time, crude oil pares its loss to just 2.5% after being down us much as 4.9%. The dollar is now up only 0.4% after being up 0.9% at session highs.
The testimony before the Senate Banking Committee has concluded. Senator Dodd, Chairman of the banking committee, said the bailout draft written by the Treasury "is not acceptable" in current form, according to Reuters.DJ30 -1.11 NASDAQ +10.74 SP500 +0.66 NASDAQ Adv/Vol/Dec 1189/1.49 bln/1582 NYSE Adv/Vol/Dec 1201/778 mln/1928
2:30 pm : A broad based lift has pulled stocks off their session low. The Nasdaq has made its way into positive ground, thanks to large-cap tech.
The Nasdaq's advance is largely attributable to large-cap names, like Microsoft (MSFT 25.74, +0.34). Shares of MSFT are moving higher for the second straight session. The company announced just yesterday it has approved a $40 billion share repurchase plan.
The collective strength of other large-cap tech names has helped the Nasdaq 100 register a 0.5% advance. Meanwhile, the more broad based S&P 100 is down around 0.3%.DJ30 -29.63 NASDAQ +1.08 SP500 -4.16 NASDAQ Adv/Vol/Dec 1024/1.35 bln/1726 NYSE Adv/Vol/Dec 1050/716 mln/2085
2:00 pm : The major indices are trading near recently reached session lows. The question and answer session with Treasury Secretary Paulson, Fed Chairman Bernanke and SEC Chairman Cox is ongoing.
The Treasury's $700 billion plan is seeing some contention from the Senate Banking Commitee, which is raising concerns that the size of plan may be limited, or it will take longer to pass then expected.
The S&P 500 is 4.8% above its 52-week and multi-year low that was reached on September 18.
Buying interest in the dollar is picking up some steam, gaining 0.9% against a basket of world currencies. The dollar lost 2.0% in the previous session on concerns of the expansion in U.S. debt due to the intervention within the financial sector. Gold is down 2.2% to $884 per ounce.DJ30 -139.22 NASDAQ -21.13 SP500 -16.68 NASDAQ Adv/Vol/Dec 870/1.18 bln/1860 NYSE Adv/Vol/Dec 777/639 mln/2353
1:30 pm : The stock market extends its losses, now down more than 1%. The energy sector (-2.5%) is falling in conjunction with a tumble in crude oil prices.
Crude oil futures for November deliver are down 4.5% to $104.51 per barrel. The Energy Information Administration said that yesterday's massive 15% move in October crude was not due to fundamentals, but due to short-covering or market manipulations. That explains why November crude gained a much smaller amount of 6% in the previous session.
European markets ended their session with losses as market participants eyed the developments in the U.S. regarding the potential $700 billion financial sector plan. London's FTSE fell 1.9%, France's CAC declined 2.0%, and Germany's DAX slipped 0.6%.DJ30 -103.35 NASDAQ -13.02 SP500 -13.04 NASDAQ Adv/Vol/Dec 976/1.06 bln/1728 NYSE Adv/Vol/Dec 888/573 mln/2224
1:00 pm : The major indices fall to fresh session lows in broad-based weakness. The worst performing sectors are materials (-2.1%), industrials (-1.7%), energy (-1.7%) and financials (-1.1%).
The S&P 500 is now posting a modest loss. Market breadth is bearish. Decliners outpace advancers by roughly 2-to-1 on the NYSE and by 3-to-2 on the Nasdaq. Volume is light compared to the two previous weeks.DJ30 -42.13 NASDAQ -10.20 SP500 -10.24 NASDAQ Adv/Vol/Dec 1054/914 mln/1633 NYSE Adv/Vol/Dec 1051/498 mln/2032
12:30 pm : The S&P 500 falls to the unchanged mark.
The majority of questions from the Senate Banking Committee are being directed to Fed Chairman Bernanke and Treasury Secretary Paulson.
Paulson was asked if he could do his plan with less than $700 billion, such as $150 billion, and then Congress would then reevaluate. Paulson said this would be a grave mistake, as the plan needs to have the confidence and tools to do the jobs, even though the Treasury does plan on spreading the purchases out over time. Paulson added that the plan is not an expenditure, rather American taxpayers are receiving an asset that will be eventually sold.
Fed funds futures are indicating a higher chance of an October rate cut since the testimony started. Fed funds futures current suggest a 62% chance of a 25 basis point cut, compared to a 34% chance yesterday.DJ30 +21.51 NASDAQ +8.85 SP500 -0.04 NASDAQ Adv/Vol/Dec 1140/825 mln/1522 NYSE Adv/Vol/Dec 1154/454 mln/1909
12:00 pm : The stock market has seen volatility ahead of and during testimony from key financial officials before the Senate Banking Committee.
At midday, the stock market is posting a slight gain with six of the ten economic sectors in the green. Fed Chairman Bernanke, Treasury Secretary Paulson, SEC Chairman's Cox and OFHEO director Lockhart have finished giving prepared remarks on the current financial turmoil. They are currently taking questions from committee members.
Bernanke said that urgent action from Congress is required to stabilize the situation, or there may be "very serious consequences for our financial markets and for our economy." The Federal Reserve supports the Treasury's proposal to buy up to $700 billion in illiquid assets from financial firms.
Bernanke said that securities have two prices. The fire sale price is when an asset is sold today in a bad market. The hold-to-maturity price is the value when an asset is allowed to mature to proper value. Bernanke feels the Treasury's plan to have auctions for distressed securities will provide a proper hold-to-maturity price, improving liquidity and confidence.
The financial sector is down 0.2% after giving up an early 1.6% advance. Influential Oppenheimer analyst Meredith Whitney cut her earnings estimates on several financial firms this morning, including Bank of America (BAC 33.05, -1.10), Citigroup (C 19.25, -0.76) and Wachovia (WB 15.09, -1.51). Whitney believes any government plan has "little hope of improving core fundamentals over the near and medium term."
The industrials sector (-0.5%) is a laggard after General Electric (GE 25.32, -0.91) was downgraded to Neutral from Buy at Merrill Lynch. GE's downgrade was prompted by Merrill's projection that GE Commercial Finance and GE Money will each see earnings fall 15% next year, spurring lower 2009 and 2010 earnings estimates.
The tech sector (+1.5%) is outpeforming thanks to strength in large-cap names.
Commodities (-1.3%) are posting a loss following their steep 3.3% gain yesterday. Oil futures are trading at $106.30 per barrel after surging to $120.00 per barrel in the previous session. A large portion of the move higher in the previous session was due to short-covering ahead of yesterday's expiration of the October contract.
The energy (-1.2%) and materials (-1.5%) sectors are underperforming.
The dollar is up 0.6%.DJ30 +42.45 NASDAQ +11.34 SP500 +1.81 NASDAQ Adv/Vol/Dec 1236/719 mln/1408 NYSE Adv/Vol/Dec 1282/398 mln/1759
11:30 am : The stock market sees some volatile action, briefly falling into negative territory before rising to its current gain of 0.5%.
Fed Chairman Bernanke, Treasury Secretary Paulson, SEC Chairman Cox and OFHEO director Lockhart have given their prepared testimony. Bernanke is currently taking questions from the Senate Banking Committee.
Bernanke supports the Treasury's plan to purchase $700 billion in illiquid assets from financial institutions. He emphasized the plan will not cost the taxpayer $700 billion, rather the taxpayer is paying $700 billion for assets, which should eventually provide a return.
The energy sector (-0.6%) is posting a loss, as crude oil futures extend their decline to -1.4% at $107.90 per barrel.DJ30 +73.28 NASDAQ +19.31 SP500 +5.94 NASDAQ Adv/Vol/Dec 1298/623 mln/1322 NYSE Adv/Vol/Dec 1362/344 mln/1643
10:55 am : Stocks go on the defensive, due to broad-based selling interest. There has been a notable downturn in financial (-0.1%) and energy (-0.8%) stocks.
The S&P 500 is now only posting a slight gain.DJ30 +11.55 NASDAQ +10.32 SP500 +1.48 NASDAQ Adv/Vol/Dec 1147/462 mln/1366 NYSE Adv/Vol/Dec 1212/264 mln/1730
10:30 am : The stock market trades at its best level of the session in mostly broad-based buying interest. All three of the major indices are up more than 1%.
Large-cap tech (+2.1%) is performing especially well. Dell (DELL 17.26, +0.69) is up 4.2%, Oracle (ORCL 20.44, +0.69) is up 3.5% and Microsoft (MSFT 26.11, +0.71) is up 2.8%DJ30 +108.56 NASDAQ +30.61 SP500 +13.03 NASDAQ Adv/Vol/Dec 1324 mln/323 mln/1116 NYSE Adv/Vol/Dec 1576/196 mln/1327
10:00 am : The major indices extend their opening gains as the Senate Banking Committee hearing gets underway. Senate members are currently giving their opening remarks.
Eight of the ten economic sectors are posting a gain, led by financials (+1.0%) and tech (+1.4%). The industrials sector (-0.5%) is a laggard after General Electric (GE 25.41, -0.74) was downgraded to Neutral from Buy at Merrill Lynch.
GE's downgrade was prompted by Merrill's projection that GE Commercial Finance and GE Money will each see earnings fall 15% next year, spurring lower 2009 and 2010 earnings estimates.
In earnings news, homebuilder Lennar (LEN 13.85, +0.11) posted a third quarter loss of $0.56 per share, excluding nonrecurring items, which was $0.04 worse than the average analyst estimate. FactSet (FDS 54.14, +1.08) reported fiscal fourth quarter earnings per share of $0.68, excluding nonrecurring items, which topped Wall Street's forecast by $0.04 and marked a year-over-year gain of 17%.
Commodities (-0.4%) are posting modest losses following their steep gains yesterday. Oil futures are trading at $108.39 per barrel after surging to $120.00 per barrel in the previous session. A good deal of the move higher in the previous session was due to short-covering ahead of yesterday's expiration of the October contract.DJ30 +69.61 NASDAQ +17.70 SP500 +9.18 NASDAQ Adv/Vol/Dec 1176/180 mln/1146 NYSE Adv/Vol/Dec 1484/122 mln/1324
09:35 am : Stocks get off to a modestly higher start start as key financial officials prepare to give their testimony before the Senate Banking Committee. Fed Chairman Bernanke, Treasury Secretary Paulson and SEC Chairman Cox are scheduled to appear.
The current financial market turmoil will be addressed, including the proposed $700 billion plan to have the Treasury buy illiquid assets from financial institutions, and the government takeover of Fannie Mae (FNM 0.98, +0.19) and Freddie Mac (FRE 1.00, +0.15).DJ30 +36.72 NASDAQ +13.36 SP500 +4.45
09:14 am : S&P futures vs fair value: +1.60. Nasdaq futures vs fair value: +6.50.
09:02 am : S&P futures vs fair value: +0.90. Nasdaq futures vs fair value: +2.50. Nasdaq futures rebound near their session high, and now suggest a slightly higher start. Microsoft (MSFT) is up 1% in premarket trading and Qualcomm (QCOM) is up 1.2%.
08:29 am : S&P futures vs fair value: -1.50. Nasdaq futures vs fair value: -11.30. Futures slip to their session lows. In Fed Chairman Ben Bernanke's prepared statement to the Senate Banking Committee, Bernanke said "If financial conditions fail to improve for a protracted period, the implications for the broader economy could be quite adverse." Bernanke added that the Fed supports the Treasury's proposal to buy illiquid assets from financial institutions.
08:00 am : S&P futures vs fair value: -0.70. Nasdaq futures vs fair value: -8.50. S&P 500 futures suggest a flat start, while the Nasdaq is set to underperform, ahead of testimony before the Senate Banking Committee at 9:30 AM ET from Fed Chairman Bernanke, Treasury Secretary Paulson, and SEC Chairman's Cox. The financial officials will address the current financial market turmoil. Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), Wachovia (WB) and Wells Fargo (WFC) all had their earnings estimates cut at Oppenheimer. Bristol-Myers Squibb (BMY) increased its offer to acquire Imclone (IMCL) to $62 per share, or $4.7 billion, from $60 per share. BMY owns 16.6% of all outstanding shares of IMCL.
06:43 am : S&P futures vs fair value: -0.30. Nasdaq futures vs fair value: -0.20.
06:33 am : S&P futures vs fair value: -0.30. Nasdaq futures vs fair value: -0.20.
06:33 am : Nikkei...Holiday......... Hang Seng...18872.85...-759.40...-3.90%.
06:33 am : FTSE...5128.40...-107.90...-2.10%. DAX...6066.6...-41.20...-0.70%.
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