4:30 pm : Stocks tumbled on Wednesday after a major retailer sharply reduced its full year earnings estimate and the Treasury said it was going to expand its emergency financial relief actions. In the end, the S&P 500 fell 5.2%, settling near session lows. The Nasdaq dropped 5.2% to its lowest closing level in five and a half years.
Treasury Secretary Paulson announced that the Treasury is dropping its original plan to buy troubled mortgage assets, as it no longer believes the plan is the most effective way to use the $700 billion financial relief package.
Instead, the Treasury will focus on three priorities for the remaining $410 billion in TARP funds. First, it will work to reinforce the stability of the financial system, which may include another round of direct equity investments. This time, however, the Treasury is also considering the needs of nonbanking companies.
Second, Paulson said the government will look at ways to support credit from outside the banking system, including the development of a liquidity facility for AAA asset-backed securities. The Treasury hopes the facility would increase consumer access to credit, as asset-backed securities typically encompass auto loans, student loans and credit cards.
Third, the Treasury is looking at ways to mitigate mortgage foreclosures.
Investors drove stocks lower on the news, recognizing that although funding markets have improved from five weeks ago, the notion that banks and nonbanks will still likely need more capital implies the stabilization period will be an extended one.
In corporate news, Best Buy (BBY 21.97, -1.91) said it is facing the most difficult climate it has ever seen. As a result, the company slashed its fiscal year 2009 (ends in February) earnings per share guidance $2.30 and $2.90 from its previous forecast of $3.25 to $3.40. This falls well below the consensus estimate of $3.02 per share and would mark a year-over-year decrease of between 28% and 9%.
Department store operator Macy's (M 8.37, -1.04) managed to post a smaller-than-expected third quarter loss and issue in-line full year guidance, but said it is increasingly concerned that it won't see the improvement in spring 2009 that it anticipated as recently as a month ago.
All ten of the economic sectors declined in broad-based weakness. The financial sector was a laggard, falling 6.9%. American Express (AXP 20.08, -2.32) fell 10.4%% on a Wall Street Journal report that the credit card company is requesting $3.5 billion from government aid.
The energy sector dropped 7.3% as crude prices plummeted 6.1% to $55.71 per barrel.
Defensive oriented sectors outperformed on a relative basis, but still posted steep declines. Utilities shed 2.8% and consumer staples dropped 3.8%.
Automakers were a pocket of strength. General Motors (GM 3.12, +0.20) and Ford (F 1.86, +0.06) gained on reports that the Rep. Barney Frank wants the Treasury to use some of its $700 billion to provide $25 billion in loans to GM, Ford and Chrysler.
Treasuries rose as risk averse investors sold stocks and commodities (-2.6%). The 10-year note fell 26 ticks to 3.64%, while the 3-month T-bill yield dropped 27 basis points to just 0.15%.
The S&P 500 is now only 1.5% above its Oct. 10 multi-year intraday low and is down 42.0% this year.DJ30 -411.30 NASDAQ -81.69 NQ100 -4.9% R2K -6.1% SP400 -5.5% SP500 -46.65 NASDAQ Adv/Vol/Dec 338/2.20 bln/2474 NYSE Adv/Vol/Dec 236/1.46 bln/2873
3:35 pm : Sellers continue to drive stocks lower, with the S&P 500 down more than 5%. Volume, however, is on the light side with just 980 million shares exchanging hands on the NYSE.
Goldman Sachs (GS 65.29, -9.30) is getting hit especially hard, down 12.5%.
The earnings calender after the close today and before the open tomorrow is relatively light, although close attention will be paid to results from Wal-Mart (WMT 52.47, -2.28) tomorrow morning. On the economic front, the weekly unemployment claims, trade balance, and monthly budget statements will be released on Thursday.DJ30 -359.37 NASDAQ -71.48 SP500 -41.23 NASDAQ Adv/Vol/Dec 362/1.67 bln/2428 NYSE Adv/Vol/Dec 267/980 mln/2833
3:00 pm : The Nasdaq falls to session lows, while the Dow and S&P 500 approach their worst levels.
Google (GOOG 289.69, -21.77) is one of the worst performing stocks within the Nasdaq, falling to its lowest level in three years. Several brokerage firms have cut their earnings estimates on Google, fearing that the global economic slowdown is impacting online ad sales.DJ30 -329.90 NASDAQ -69.98 SP500 -38.02 NASDAQ Adv/Vol/Dec 371/1.49 bln/2386 NYSE Adv/Vol/Dec 306/874 mln/2783
2:30 pm : Stocks fall to session lows and then pare some losses, but remain deep in the red.
The Dow, Nasdaq and S&P 500 are down 38.8%, 44.3% and 43.1%, respectively, this year. From their all-time highs, the Dow, Nasdaq and S&P 500 are down 40.7%, 70.3%, and 44.9%, respectively.DJ30 -282.91 NASDAQ -59.68 SP500 -32.88 NASDAQ Adv/Vol/Dec 424/1.34 bln/2314 NYSE Adv/Vol/Dec 340/794 mln/2738
2:00 pm : A fresh wave of selling pressure sends the S&P 500 and Nasdaq to session lows.
Financial (-5.4%) and tech stocks (-3.7%) are seeing the most selling interest. Within financials, industrial REITs (-31.6%) and retailer REITs (-10.1%) are down the most. Within tech, home entertainment software (-10.3%) and electronic manufacturing services (-6.2%) are down the most.DJ30 -300.43 NASDAQ -57.73 SP500 -35.12 NASDAQ Adv/Vol/Dec 435/1.19 bln/2281 NYSE Adv/Vol/Dec 339/708 mln/2732
1:30 pm : The bearish bias remains as stocks trade near session lows.
Within the S&P 500, 92% of stocks are posting a loss. By percent, the biggest losers are General Growth Properties (GGP 0.41, -0.96), -70.2%, and ProLogis (PLD 4.49, -2.39), -34.6%. The biggest gainers are General Motors (GM 3.12, +0.23), +7.9%, and Ford (F 1.91, +0.11), +6.1%.
CNBC reports that Rep. Frank said there will be a hearing next week on a bill to advance $25 billion in loans to the auto industry.DJ30 -271.44 NASDAQ -46.87 SP500 -29.72 NASDAQ Adv/Vol/Dec 468/1.08 bln/2218 NYSE Adv/Vol/Dec 369/652 mln/2691
1:00 pm : Stocks continue to chop along with sizable losses. Every economic sector is trading with a loss of nearly 2% or more, while 29 of the 30 companies making up the Dow are in the red.
General Motors (GM 3.16, +0.24) is the sole Dow component trading with a gain. The flagging automaker has caught a bid as investors assess the company's strategic options and whether the firm will receive government support. Concerns regarding its cash burn rate and liquidity sent shares to a 60-year low in recent sessions.DJ30 -206.29 NASDAQ -41.18 SP500 -23.45 NASDAQ Adv/Vol/Dec 464/981 mln/2206 NYSE Adv/Vol/Dec 399/594 mln/2644
12:30 pm : Stocks trade in a relatively tight range near session lows. Market breadth is bearish. Decliners outpace advancers by 8-to-1 on the NYSE and by 11-to-2 on the Nasdaq.
Federal Reserve Vice Chairman Kohn said there is need to consider whether additional steps are necessary to reopen credit and support the economy. He said that despite improvement, financial market function is still impaired.DJ30 -26.56 NASDAQ -46.14 SP500 -240.74 NASDAQ Adv/Vol/Dec 401/867 mln/2214 NYSE Adv/Vol/Dec 337/531 mln/2683
12:00 pm : Stocks are sharply lower at midday, with the S&P 500 down 3.2% in broad-based weakness. A dour holiday outlook from a major retailer and word that the Treasury feels it needs to take even more emergency actions are weighing on sentiment.
Stocks opened with a loss after Best Buy (BBY 22.13, -1.75) said that the changes in consumer behavior since mid-September have created the most difficult climate the retailer has ever seen. As a result, the company slashed its fiscal year 2009 (ends in February) earnings per share guidance to between $2.30 and $2.90 from its previous forecast of $3.25 to $3.40. This falls well below the consensus estimate of $3.02 per share. Best Buy earned $3.18 per share last year.
Treasury is dropping its original plan to buy troubled mortgage assets, as it no longer believes it is the most effective way to use the $700 billion in TARP funds, and laid out its alternative plans. Stocks fell to session lows on the news.
Treasury Secretary Paulson said there are three priorities for remaining TARP funds following the $250 billion in direct investments in U.S. banks and $40 billion in AIG. First, the Treasury will reinforce the stability of the financial system, which may include a second capital purchase program that will consider the needs of banks and nonbanking companies. Note that up to this point the Treasury only directly invested in banks.
Second, Paulson said the government will look at ways to support credit from outside the banking system, such as asset-backed securities (which give consumers greater access to credit, such as auto loans and credit cards). The government is exploring the development of a liquidity facility for AAA asset-backed securities.
Finally, the Treasury is looking at ways to mitigate mortgage foreclosures.
In earnings news, Macy's (M 8.92, -0.49) posted a smaller-than-expected third quarter loss and reaffirmed its guidance for its fiscal year 2009. Shares originally traded up on the news, but sold off as the broader market extended its decline and as the company started its conference call. Retailers are down 4.6% this session.
Thomson Reuters (TRI 22.01, +0.07) posted better-than-expected third quarter revenue and earnings, and reaffirmed its full year revenue guidance of growth between 6% and 8%.
All ten of the economic sectors are posting a loss, with selling interest spread out. The best-performing sector, healthcare, is down 2.3%, while the worst-performing sector, energy, is down 4.5%.
Commodities (-2.0%) are falling in conjunction with stocks, as oil prices decline 4.0% to $57.00 per barrel, marking the lowest level since March 2007.
Meanwhile, risk averse investors are buying Treasuries, with the 10-year note up 21 ticks, sending its yield down to 3.66%. DJ30 -272.80 NASDAQ -45.87 SP500 -29.17 NASDAQ Adv/Vol/Dec 455/765 mln/2137 NYSE Adv/Vol/Dec 360/475 mln/2630
11:35 am : Stocks recover some losses as Treasury Secretary Paulson completes his speech. Still, the S&P 500's decline remains steep.
Treasuries pick up some buying interest. The 10-year note is up 16 ticks, sending its yield down to 3.68%. The yield on the three-month T-bill is down 27 basis points to only 0.15%. In another sign of risk aversion, the TED Spread is up 23 basis points to 1.98%.
The Dow and S&P 500 are 7.3% and 4.0% above their respective Oct. 10 multi-year lows. The Nasdaq is 3.5% above its multi-year low reached on Oct. 24.DJ30 -249.70 NASDAQ -36.69 SP500 -25.95 NASDAQ Adv/Vol/Dec 576/673 mln/1982 NYSE Adv/Vol/Dec 480/419 mln/2500
11:05 am : Treasury Secretary Paulson is currently giving his prepared speech. The Treasury is dropping its original plan to buy troubled mortgage assets, as it no longer believes it is the most effective way to use the $700 billion in TARP funds.
In his speech, Paulson said that there are three priorities for remaining TARP funds following the $250 billion in direct investments in U.S. banks.
First, the Treasury will reinforce the stability of the financial system, which may include a second capital purchase program that will consider the needs of banks and nonbanking companies. Note that up to this point the Treasury only directly invested in banks.
Second, Paulson said the government will look at ways to support credit from outside the banking system, such as asset-backed securities (which give consumers greater access to credit, such as auto loans and credit cards). The government is exploring the development of a liquidity facility for AAA asset-backed securities.
Finally, the Treasury is looking at ways to mitigate mortgage foreclosures.
The stock market trades near its recently reached session low.DJ30 -291.96 NASDAQ -40.59 SP500 -29.45 NASDAQ Adv/Vol/Dec 463/540 mln/2040 NYSE Adv/Vol/Dec 388/339 mln/2550
10:35 am : The stock market his a fresh session low, extending its losses as comments from Treasury Secretary Paulson are released. All ten sectors are posting a loss, and are down more than 2%.
Paulson said in a prepared speech that the Treasury has abandoned the plan to buy troubled mortgage assets, which was originally going to be the main focus of the TARP.
Despite the drop 3.1% drop in crude prices, airlines (-9.6%) are getting hammered. There does not appear to be a specific news catalyst for the selling.DJ30 -258.14 NASDAQ -41.06 SP500 -25.84 NASDAQ Adv/Vol/Dec 477/384 mln/1925 NYSE Adv/Vol/Dec 405/246 mln/2460
10:05 am : Stocks recover some ground from opening lows, but remain in the red. All ten sectors are posting a loss. Materials (-2.3%) and industrials (-1.7%) are the main laggards. Telecom (-0.7%) is outperforming on a relative basis.
The Treasury, FDIC and Federal Reserve issued a joint statement aimed at banks. Regulators said banks should not tighten lending standards too much and should strengthen their capital position. They also want banks to work with mortgage borrowers to prevent foreclosures.
OPEC may decide to cut supplies further before its December meeting, according to OPEC's president, Reuters reports. OPEC already decided in October to cut output by 1.5 million barrels per day, which is about 5% of the cartel's output. The cut has not stemmed the sharp decline in oil prices -- oil is down 61% since July. This session, crude is down 2.6% to $57.75 per barrel.DJ30 -140.18 NASDAQ -22.93 SP500 -14.43 NASDAQ Adv/Vol/Dec 631/202 mln/1626 NYSE Adv/Vol/Dec 550/138 mln/2198
09:35 am : Stocks tumble at the open, with disappointing guidance from a major retailer weighing on sentiment.
Best Buy (BBY 21.37, -2.51) said that the changes in consumer behavior since mid-September have created the most difficult climate the retailer has ever seen. As a result, the company slashed its fiscal year 2009 (ends in February) earnings per share guidance to between $2.30 and $2.90 from its previous forecast of $3.25 to $3.40. This falls well below the consensus estimate of $3.02 per share. Best Buy earned $3.18 per share last year.
Retailers are down 3.9% this session.
Separately, Treasury Secretary Paulson will provide more information on the government's Troubled Asset Relief Program at 10:30 AM ET.DJ30 -158.90 NASDAQ -21.95 SP500 -15.83
09:15 am : S&P futures vs fair value: -20.60. Nasdaq futures vs fair value: -25.30.
08:57 am : S&P futures vs fair value: -14.10. Nasdaq futures vs fair value: -18.80. Futures extend their decline.
08:50 am :
08:29 am : S&P futures vs fair value: -8.00. Nasdaq futures vs fair value: -13.80. Futures trade near session lows. Best Buy (BBY) lowered its fiscal year 2009 earnings per share and revenue guidance below the consensus estimate, citing the uncertainty regarding future consumer spending. BBY is down 17% in premarket trading. Macy's (M) reported a smaller than expected third quarter loss, excluding nonrecurring items, that topped expectations.
08:00 am : S&P futures vs fair value: -9.50. Nasdaq futures vs fair value: -13.80. Futures suggest a lower open, with S&P 500 futures recently hitting session lows, on what has been a slows news morning. American Express (AXP), which recently received approval to convert into a bank holding company yesterday, is seeking $3.5 billion in government aid, The Wall Street Journal reported. Crude oil prices are down 1.9% to $58.20 per barrel. The weekly energy inventory report will be released tomorrow at 11:00 AM ET, one day later than usual due to Veterans Day.
06:34 am : S&P futures vs fair value: -0.20. Nasdaq futures vs fair value: -3.30.
06:34 am : Nikkei...8695.51...-113.80...-1.30%. Hang Seng...13939.09...-101.80...-0.70%.
06:34 am : FTSE...4286.96...+40.60...+0.90%. DAX...4778.88...+17.30...+0.40%. Take a FREE TRIAL of Briefing.com's complete Live market analysis of the U.S. stock and bond markets, technology stocks, economic releases, earnings reports, and day trading highlights
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