Market Update 081118 http://biz.yahoo.com/mu/update.html 4:25 pm : Stocks rose 1.0% in a volatile session as traders digested testimony from the head of the Federal Reserve, Treasury and FDIC, upside earnings guidance from Hewlett-Packard and speculation regarding the future of U.S. automakers.
The S&P 500 climbed to a gain 1.8% at midday, dropped to a loss of 2.8% in the final hour of trade before a surge in buying interest sent the S&P 500 back into positive territory. Seven of the ten economic sectors posted a gain. Small- and mid-cap stocks underperformed, with the Russell 2000 (-0.8%) and S&P 400 (-0.3%) both declining.
Fed Chairman Bernanke, Treasury Secretary Paulson and FDIC Chairman Bair were called to testify about the $700 billion financial relief package before the House Financial Services committee. Bernanke said there are some signs that credit markets are improving, although they remain strained. Treasury Secretary Paulson defended scrapping the original plan to buy troubled assets, saying that direct capital injections were more effective given the sharp deterioration in financial markets. Paulson believes the economy will not recover as fast as anyone would like, but will recover at a quicker pace because of the relief package.
On a related note, the Treasury bought $33.6 billion in preferred stock from 21 banks, including $6.6 billion in US Bancorp (USB 25.73, -0.07) and $3.6 billion in Capital One Financial (COF 29.25, -0.62). This brings the totaled preferred stock purchases in banks up to $158.6 billion. The financial sector fell 0.8%.
In corporate news, Hewlett-Packard (HPQ 33.58, +4.24) announced preliminary fourth quarter earnings that topped estimates and issued fiscal year 2009 earnings guidance that was above expectations.
Yahoo! (YHOO 11.48, +0.85) gained after announcing that cofounder Jerry Yang will step down as CEO as soon as a replacement is found, raising speculation that Microsoft (MSFT 19.62, +0.43) may show renewed interest.
The 14.5% gain in HPQ and 8.0% increase in YHOO helped the tech sector (+1.9%) outperform. More than half of tech stocks posted a loss, however, as investors were aware that the upside HPQ guidance was largely a company specific story, and not indication of overall strength.
In earnings news, Saks (SKS 3.27, -0.58) tumbled after missing third quarter earnings expectations, while Home Depot (HD 20.71, +0.71) rose after topping estimates. Both retailers were cautions about the near-term outlook. Retailers a whole fell 0.2%.
Shares of General Motors (GM 3.09, -0.09) and Ford (F 1.68, -0.04) fell to multi-decade lows. The automakers, along with Chrysler and the United Auto Workers, testified before the Senate Banking Committee regarding possible aid for the struggling U.S. auto industry.
In economic news, domestic producer prices in October dropped by a larger-than-expected amount due to the sharp decline in energy prices. Specifically, October PPI dropped 2.8% month over month, compared to the expected decline of 1.9%. Core PPI, which excludes food and energy, rose 0.4%, which was larger than the expected increase of 0.1%. DJ30 +151.17 NASDAQ +1.22 NQ100 +0.3% R2K -0.8% SP400 -0.3% SP500 +8.37 NASDAQ Adv/Vol/Dec 1088/2.41 bln/1719 NYSE Adv/Vol/Dec 1153/1.60 bln/1975
3:30 pm : Stocks recover some losses, but remain in the red going into the final half hour of the session.
The Senate Banking Committee hearing on automakers is currently underway. Ford (F 1.61, -0.11) and GM (GM 2.84, -0.34) both fell to multi-decade lows this session.
General Electric (GE 15.61, -0.50) plans to cut $2 billion in costs from GE Capital in 2009 and reduce some of the unit's 75,000 positions, according to reports. DJ30 -38.15 NASDAQ -30.50 SP500 -11.52 NASDAQ Adv/Vol/Dec 652/1.85 bln/2135 NYSE Adv/Vol/Dec 663/1.04 bln/2461
3:00 pm : Stocks drop to fresh intraday lows as all ten sectors trade at their worst levels.
The financial sector (-5.0%) is leading the way lower, falling to its lowest intraday level since 1996. Financials are down 61.4% this year and down 70.3% from their all-time high reached in May 2007.
The small-cap Russell 2000 Index (-4.0%) falls to its lowest level since 2003. It is down 43.6% this year.DJ30 -136.28 NASDAQ -48.21 SP500 -21.60 NASDAQ Adv/Vol/Dec 560/1.61 bln/2218 NYSE Adv/Vol/Dec 471/910 mln/2652
2:30 pm : Stocks retest session lows and then pare some losses.
At the S&P 500's current level of 840.37, it is poised to close at its lowest level since March 2003, eclipsing the Oct. 27 low of 848.92. The index is still 2.9% above its multi-year intraday low reached on November 13.DJ30 -27.32 NASDAQ -29.13 SP500 -9.67 NASDAQ Adv/Vol/Dec 688/1.44 bln/2058 NYSE Adv/Vol/Dec 639/809 mln/2448
2:00 pm : Stocks extend their decline as all ten sectors fall into the red, but are currently attempting to recover. The S&P 500 was up as much as 1.8% earlier in the session and down 2.2% at recently reached session lows.
Financials (-2.8%), telecom (-3.0%) and consumer discretionary (-2.0%) are the worst performing sectors.
Small- and mid-cap stocks are underperforming, with the Russell 2000 down 2.8% and the S&P 400 down 2.4%.DJ30 -41.90 NASDAQ -36.65 SP500 -10.36 NASDAQ Adv/Vol/Dec 673/1.29 bln/2064 NYSE Adv/Vol/Dec 637/726 mln/2441
1:35 pm : The major indices fall to session lows. Selling interest is broad-based, although the financial sector has taken a notable downturn.
Longer-term Treasuries continue to gain, with the 10-year note climbing 32 ticks to send its yield down to 3.53%.
Within financials (-2.3%), life and health insurers (-7.1%) are under pressure, with MetLife (MET 18.16, -4.07) getting hammered on no apparent news item.DJ30 -26.84 NASDAQ -23.16 SP500 -8.46 NASDAQ Adv/Vol/Dec 835/1.16 bln/1864 NYSE Adv/Vol/Dec 765/654 mln/2309
12:55 pm : The S&P 500 falls into the red for the first time since around 10:00 AM ET as broad-based selling interest sinks stocks. Only the energy (+1.9%) and tech (+0.1%) sectors remain in the green.
The Nasdaq is showing the most weakness as semiconductor stocks (-2.1%) struggle.
On CNBC, Alabama Senator Shelby repeated his opposition for aid to U.S. automakers, saying they should file for Chapter 11 bankruptcy and reorganize.DJ30 +54.24 NASDAQ -12.53 SP500 -0.57 NASDAQ Adv/Vol/Dec 949/1.01 bln/1724 NYSE Adv/Vol/Dec 976/571 mln/1.01 bln
12:35 pm : Stocks are back on the retreat with the Nasdaq slipping into the red. The Dow and S&P 500 continue to post gains.
Treasuries are enjoying some buying interest, with the 10-year note down 19 ticks to yield 3.58%
Philip Morris International (PM 36.80, -1.55) said it expects earnings per share to be at the low end of its forecast of $3.32 to $3.38, compared to the $3.34 consensus estimate. The news sent the stock sharply lower.DJ30 +102.74 NASDAQ -1.73 SP500 +4.99 NASDAQ Adv/Vol/Dec 1159/898 mln/1474 NYSE Adv/Vol/Dec 1266/516 mln/1749
12:00 pm : The major indices are trading near session highs at midday in choppy trade as traders digest an upside earnings outlook from Hewlett-Packard (HPQ 33.05, +3.71) and testimonies from the head of the Federal Reserve, Treasury and FDIC.
Fed Chairman Bernanke, Treasury Secretary Paulson and FDIC Chairman Bair were called to testify about the $700 billion financial relief package before the House Financial Services committee.
Bernanke said there are some signs that credit markets are improving, although they remain strained. Treasury Secretary Paulson defended scrapping the plan to buy troubled assets, saying that direct capital injections were more effective given the sharp deterioration in financial markets. He believes the economy will not recover as fast as anyone would like, but will recover faster because of the relief package.
They are currently participating in a question and answer session with committee members.
In corporate news, Hewlett-Packard gave the market a lift after announcing preliminary fourth quarter earnings that topped expectation and issuing fiscal year 2009 earnings guidance that was ahead of analyst estimates.
Retailer Saks (SKS 2.95, -0.90) reported a larger-than-expected third quarter loss and gave a cautious outlook, sending shares tumbling.
Home Depot (HD 21.30, +1.30) reported a smaller-than-expected drop in third quarter earnings, although it did warn that sales may be down as much as 8% for the year.
Retailers are up 2.1% this session.
Yahoo! (YHOO 11.99, +1.36) is outperforming after announcing that cofounder Jerry Yang will step down as CEO as soon as a replacement is found, raising speculation that Microsoft (MSFT 19.45, +0.26) may show renewed interest.
Automakers remain in focus on word executives at General Motors (GM 2.95, -0.23), Ford (F 1.73, +0.01), Chrysler and the head of the United Auto Workers will testify at a Senate Banking Committee hearing at 3:00 PM ET regarding possible aid for the struggling automakers.
The Treasury bought $33.6 billion in preferred stock from 21 banks, including $6.6 billion in US Bancorp (USB 25.72, -0.08) and $3.6 billion in Capital One Financial (COF 29.57, -0.30). This brings the totaled preferred stock purchases in banks up to $158.6 billion. The financial sector is underperforming on a relative basis with a gain of 0.5%.
In economic news, prices that producers paid in October dropped by a larger-than-expected amount thanks to the sharp decline in energy prices. Specifically, October PPI dropped 2.8% month over month, compared to the expected decline of 1.9%. Core PPI, which excludes food and energy, rose 0.4%, which was larger than the expected increase of 0.1%. DJ30 +190.51 NASDAQ +13.08 SP500 +13.99 NASDAQ Adv/Vol/Dec 1400/796 mln/1221 NYSE Adv/Vol/Dec 1536/457 mln/1449
11:35 am : The Dow is outperforming, benefiting from strength in Hewlett-Packard (HPQ 32.68, +3.34) and Home Depot (HD 21.19, +1.19).
The Nasdaq is now posting a slight loss of 0.1%. Semiconductor companies (-1.4%) are underperforming. The World Semiconductor Trades Statistics industry group said it expects the global semiconductor market to shrink by 2.2% in 2009, compared to its May forecast that called for 5.8% growth, Reuters reported this morning.DJ30 +107.68 NASDAQ -1.10 SP500 +6.21 NASDAQ Adv/Vol/Dec 1169/676 mln/1391 NYSE Adv/Vol/Dec 1302/393 mln/1672
11:00 am : Stocks post solid gains, but have slipped from session highs. The Nasdaq, which was outperforming in early trade, is underperforming on a relative basis.
Google (GOOG 294.41, -5.71) is acting as a drag on the Nasdaq.
FDIC Chairman Bair is currently testifying before the House Financial Services Committee. She said there needs to an acceleration in the mortgage loan modification program to prevent foreclosures.DJ30 +91.27 NASDAQ +3.63 SP500 +5.71 NASDAQ Adv/Vol/Dec 1147/540 mln/1313 NYSE Adv/Vol/Dec 1342/321 mln/1553
10:30 am : The major indices trade at or near session highs as Fed Chairman Bernanke and Treasury Secretary Paulson address House Financial Services Committee member questions. All ten of the economic sectors are posting a gain.
On top of the testimony, there have been plenty of corporate items to keep investors busy this morning. Yahoo! (YHOO 12.11, +1.48) is trading higher on news that cofounder Jerry Yang will step down as CEO once a replacement is found, raising speculation that Microsoft (MSFT 19.35, +0.16) may show renewed interest. Yang came under fire earlier this year after rejecting a $47.5 billion, or $33 per share, buyout offer from Microsoft.
The Treasury bought $33.6 billion in preferred stock from 21 banks, including $6.6 billion in US Bancorp (USB 25.93, +0.13) and $3.6 billion in Capital One Financial (COF 30.31, +0.44). The financial sector is up 0.8%.
Corning (GLW 7.78, -1.23) withdrew its fourth quarter and fiscal 2009 guidance. The company now expects sales to be below its previous guidance of $1.1 billion to $1.2 billion and expects earnings per share to be at the low end or below its prior range of $0.20 to $0.28. Corning, which gets 48% of its revenue and 92% of its income from its LCD glass manufacturing, cited the weak retail environment and uncertain LCD supply chain.
Saks (SKS 3.71, -0.14) reported a 12% year-over-year drop in third quarter revenue, resulting in a third quarter loss of $0.13 per share, which was worse than the expected loss of $0.03. Like other retailers, Saks is cautious about next year.
Home Depot (HD 21.15, +1.15) posted a smaller-than-expected drop in third quarter earnings, but warned sales could be down as much as 8% for the year due to weak economic conditions and the soft housing market.DJ30 +130.22 NASDAQ +11.22 SP500 +12.49 NASDAQ Adv/Vol/Dec 1232/397 mln/1149 NYSE Adv/Vol/Dec 1474/243 mln/1391
10:00 am : Stocks extend early gains and then coming under selling pressure, sending the S&P 500 to the unchanged mark. Testimony before the House Financial Services Committee is ongoing.
Fed Chairman Bernanke said in prepared testimony that there are some signs that credit markets are improving, although they remain strained. He cited the decrease in interbank short-term funding rates and decrease in interest rates paid on higher rated bonds. However, Bernanke said risk spreads remain very elevated and there has been little or no bond issuance by lower-rated corporations or securitization of consumer loans in recent weeks.
Treasury Secretary Paulson said that because conditions worsened substantial the Treasury decided it would be more effective to directly inject capital into banks instead of buying troubled assets. He believes the economy will not recover as fast as anyone would like, but will recover faster because of the TARP.
Expect more from Washington this session, with U.S. automakers set to try to convince the Senate Banking Committee that they need $25 billion in emergency loans, according to reports. General Motors (GM 2.86, -0.32) and Ford (F 1.70, -0.02) shares are trading lower. Ford said earlier today that it will raise $540 million by reducing its stake in Mazda to 13% from 33%.DJ30 +23.41 NASDAQ +1.13 SP500 +0.80 NASDAQ Adv/Vol/Dec 1185/235 mln/1058 NYSE Adv/Vol/Dec 1340/151 mln/1425
09:40 am : The stock market trades with a slight gain, reversing early indications for sharp losses after Hewlett-Packard (HPQ 33.66, +4.32) issued upside fourth quarter and fiscal 2009 earnings guidance.
Specifically, Hewlett-Packard forecast fiscal year 2009 earnings of between $3.88 and $4.03, which topped the consensus estimate of $3.85. HP, however, forecast fiscal 2009 revenue of between $127.5 billion and $130.0 billion, which falls short of the $135.1 billion consensus estimate.
The House Financial Services Committee hearing regarding the recent actions by the Fed Treasury and FDIC has started. Treasury Secretary Paulson, Fed Chairman Bernanke and FDIC Chairman Bair are set to testify.DJ30 +7.58 NASDAQ +8.29 SP500 +1.07
09:14 am : S&P futures vs fair value: -4.30. Nasdaq futures vs fair value: +5.40.
08:58 am : S&P futures vs fair value: -4.70. Nasdaq futures vs fair value: +5.20. Nasdaq 100 futures climb to session highs and then dip a bit, and now point to a positive start. S&P 500 futures point to a slightly lower start. The Nasdaq is getting an indirect boost from Hewlett-Packard's (HPQ) upside earnings guidance -- Dell (DELL) is up 5.5% and Intel (INTC) is up 2.1%. Separately, Corning (GLW) withdrew its fourth quarter and 2009 guidance, saying it expects fourth quarter sales to be below its previous guidance of $1.1 to $1.2 billion and expects earnings per share to be at the low end or below its prior range of $0.20 to $0.28. The consensus estimate is $0.25 per share. The LCD glass manufacturer cited the weak retail environment and uncertain LCD supply chain. GLW is down 7.3% in premarket trading.
08:30 am : S&P futures vs fair value: -7.70. Nasdaq futures vs fair value: -1.60. Futures have a mostly muted response to a mixed inflation reading. October PPI fell 2.8% month-over-month, which was larger than the expected decline of 1.9%. Core PPI, which excludes food and energy costs, rose 0.4%, compared to the expected increase of 0.1%. This leaves PPI up 5.2% year-over-year and core PPI up 4.4% year-over-year.
08:10 am : S&P futures vs fair value: -8.70. Nasdaq futures vs fair value: -4.60. Futures point to a negative start, but pare some losses after Hewlett Packard (HPQ) gave upside fiscal year 2009 earnings guidance. The Treasury bought $33.6 billion in preferred stock of 21 banks. US Bancorp (USB) received $6.6 billion and Capital One Financial (COF) received $3.56 billion. Yahoo! (YHOO) cofounder Jerry Yang is stepping down once a replacement CEO is found following criticism of his rejection of Microsoft's (MSFT) $47.5 billion buyout offer earlier this year. Executives at General Motors (GM), Ford (F), Chrysler and the head of the United Auto Workers will testify at a Senate Banking Committee hearing regarding possible aid for the struggling automakers. Treasury Secretary Paulson, Fed Chairman Bernanke and FDIC Chairman Bair are set to testify about TARP before the House Financial Services Committee at 9:30 AM ET. In earnings news, Home Depot (HD) reported earnings of $0.45 per share, which was better than than consensus estimate of $0.38. Given the macro economic weakness and weak housing markets, Home Depot expects fiscal year 2008 sales could be down as much as 8%, which is larger than the expected decline of 6.5%. Hewlett-Packard (HPQ) forecast fiscal year 2009 earnings of between $3.88 and $4.03, which topped the consensus estimate of $3.85.
06:33 am : S&P futures vs fair value: -15.20. Nasdaq futures vs fair value: -18.30.
06:33 am : Nikkei...8328.41...-194.20...-2.30%. Hang Seng...12915.89...-613.60...-4.50%.
06:33 am : FTSE...4064.87...-67.30...-1.60%. DAX...4477.18...-80.10...-1.80%.
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