Market Update 081119 http://biz.yahoo.com/mu/update.html 4:25 pm : Wednesday marked an ugly session on Wall Street, with the S&P 500 and Nasdaq tumbling to their lowest levels in five years and the Dow dropping to a five-year closing low. Concerns over the fate of U.S. automakers, disappointing economic data, a dour outlook from the Fed and the market's inability to hold its lows fueled the selling interest.
The major indices ended the session at their worst levels, in above average volume. The Dow, Nasdaq and S&P 500 fell 5.1%, 6.5% and 6.1%, respectively.
October CPI fell by the largest amount on record, which is good news in terms of the inflation outlook, but also represents the weakness of the economy. Specifically, CPI fell 1.0% month-over-month as energy prices plummeted 8.6%. Prices also declined outside of energy, indicating weak demand -- core CPI fell 0.1% as used car prices dropped 2.4% and apparel prices fell 1.0%.
The latest new residential construction data fell to the lowest levels on record, and provide another weak point for fourth quarter GDP calculations. October housing starts declined 4.5% month-over-month to a seasonally adjusted annual rate of 791,000, which was slightly higher than the consensus estimate of 780,000. Building permits dropped 12% to a seasonally adjusted annual rate of 708,000, which was worse than the consensus estimate of 774,000.
The Federal Reserve's 2008 and 2009 projections, released today in the FOMC Oct. 29 meeting minutes, mirrored the latest economic data, with the Fed reducing forecasts for GDP growth and inflation. For 2008, the Fed expects the economy will grow between 0.0% and 0.3%, down sharply from its previous forecast of 1.0% to 1.6%. The 2009 forecast now calls for growth between -0.2% and 1.1%, down from the previous forecast of 2.0% to 2.8%. The Fed also raised its unemployment forecast.
The minutes hinted at the likelihood of further monetary easing, as some FOMC members saw potential for further rate cuts.
Although weakness was broad-based with losses posted by all ten sectors and 492 of the 500 components within the S&P 500, the financial sector got hit the hardest with a decline of 11.5%.
Citigroup (C 6.45, -1.91) tumbled 23% to its lowest level since 1995. Citi said it will buy the remaining $17.4 billion in structure investment vehicles it advised.
Automakers (-21.2%) got clipped as executives from General Motors (GM 2.77, -0.32), Ford (F 1.27, -0.41) and Chrysler, and the head of the UAW testified before the House Financial Services Committee in an attempt to secure a government loan. There were plenty of opponents in the House, which was similar to views that were expressed by Senate Banking Committee members yesterday. GM's CEO said on CNBC that the company is doing everything it can to avoid bankruptcy, as he sees a high risk that a Chapter 11 filing (restructuring) could turn into a Chapter 7 (liquidation). Reports that Toyota Motor (TM 59.64, -3.61) is going to cut North America production also weighed on automakers.
A risk aversion trade lifted Treasuries, with the 30-year bound rallying 3 points to yield 3.94% -- marking the lowest yield since the 30-year bond was introduced in 1977. The 10-year note rose 44 ticks to send its yield down to 3.36%.
In commodity trading, crude prices fell 2.4% to $53.10 per barrel. The government's weekly energy inventory showed a larger-than-expected build in crude and gasoline stockpiles, indicating decreased demand.DJ30 -427.47 NASDAQ -96.85 NQ100 -5.9% R2K -7.9% SP400 -7.4% SP500 -52.54 NASDAQ Adv/Vol/Dec 2519/2.36 bln/298 NYSE Adv/Vol/Dec 187/1.63 bln/2998
3:30 pm : The major indices fall to session lows as financials (-8.9%) get clipped.
The S&P 500, at 823.98, the Nasdaq at 1418.63, and the Dow at 8166.85, are poised to close at their lowest levels since 2003. The S&P 500 is only a few points above its 5-year intraday low of 818.69.
Citigroup (C 6.541, -1.86) is getting hammered, down 22.6% on the day and at its lowest level since 1995. Citi, which said earlier today it will buy $17.4 billion in SIV assets it advised, is one of the most heavily traded stocks this session.
Tomorrow, economic data will be in focus with initial unemployment claims set for release at 8:30 AM ET and the leading indicators and Philadelphia Fed reports both being released at 10:00 AM ET.DJ30 -268.70 NASDAQ -69.64 SP500 -35.14 NASDAQ Adv/Vol/Dec 415/1.84 bln/2375 NYSE Adv/Vol/Dec 249/1.10 bln/2916
3:00 pm : Stocks catch a decent bid from session lows, with the S&P 500 paring its loss by about one percentage point.
Defensive-oriented sectors are outperforming on a relative basis, including utilities (-0.6%), consumer staples (-1.0%) and healthcare (-1.7%).DJ30 -191.63 NASDAQ -49.25 SP500 -26.87 NASDAQ Adv/Vol/Dec 476/1.65 bln/2298 NYSE Adv/Vol/Dec 305/991 mln/2841
2:30 pm : Stocks trade at or near session lows in broad-based weakness.
Within the S&P 500, 484 stocks are posting a loss, with 152 falling to fresh 52-week lows. Ford (F 1.28, -0.40) is one of the largest percent losers with a decline of 24%DJ30 -226.12 NASDAQ -58.85 SP500 -31.80 NASDAQ Adv/Vol/Dec 416/1.46 bln/2349 NYSE Adv/Vol/Dec 260/875 mln/2881
2:05 pm : Stocks try to recover some losses, but are back on the decline after the Fed slashed its growth forecast.
The Fed just released its Oct. 29 meeting minutes. Some FOMC members saw potential for further rate cuts, with some predicting the economy will shrink through mid-2009.
The Fed does not expect normal growth until 2011. It expects the economy to grow from 0.0% to 0.3% in 2008, down sharply from its previous expectation of 1.0% to 1.6% growth. For 2009, the Fed forecast GDP growth will range from -0.2% to 1.1%, down from its previous guidance of 2.0% to 2.8%.
The Nasdaq composite, down 3.7%, fell to its lowest intraday level in since April 2003. The other major indices have yet to breach their multi-year lows. The Dow's low of 7882.51 was reached on Oct. 10 and the S&P 500's low of 818.69 was hit on Nov. 13.DJ30 -218.16 NASDAQ -55.35 SP500 -31.18 NASDAQ Adv/Vol/Dec 435/1.34 bln/2313 NYSE Adv/Vol/Dec 304/802 mln/2822
1:30 pm : Stocks prices remain depressed in broad-based weakness. Decliners outpace advancers by nearly 9-to-1 on the NYSE and on the Nasdaq by 16-to-3.
The FOMC will release the minutes for its Oct. 29 meeting in about thirty minutes. At the meeting, the FOMC cut the target fed funds rate by 50 basis points to 1.00%, noting increased economic risks and decreased inflation risks. Since the meeting, the effective fed funds rate has averaged 0.29% as the Fed pumped massive amounts of liquidity into the system to stave off a financial market collapse.DJ30 -194.74 NASDAQ -53.20 SP500 -27.63 NASDAQ Adv/Vol/Dec 429/1.18 bln/2293 NYSE Adv/Vol/Dec 314/705 mln/2789
1:00 pm : Stocks trade near recently reached session lows. Treasuries continue to rally. The 10-year note is up 38 ticks, sending its yield down to 3.39%. The 30-year bond is up more than two points, sending its yield to 3.99%.
Gold prices are up only 0.4% to $735.40 per ounce after trading with a gain of 4.4% at $764.80 per ounce earlier this session. Gains were pared as the dollar recovered to the unchanged mark from a loss of 1.4%.DJ30 -158.66 NASDAQ -50.31 SP500 -25.22 NASDAQ Adv/Vol/Dec 419/1.08 bln/2276 NYSE Adv/Vol/Dec 300/645 mln/2790
12:30 pm : The major indices extend their declines, with the S&P 500 down more than 3% in broad-based weakness.
Shares of Yahoo! (YHOO 10.11, -1.44) extended losses after Microsoft's (MSFT 18.92, -0.70) CEO said the company is no longer interested in acquiring Yahoo, but is open to looking into a possible search collaboration. Yahoo shares gained 8.2% yesterday on news that Yahoo CEO Jerry Yang was stepping down, raising speculation that MSFT may show renewed interest.DJ30 -207.80 NASDAQ -51.22 SP500 -28.84 NASDAQ Adv/Vol/Dec 426/956 mln/2228 NYSE Adv/Vol/Dec 300/579 mln/2785
12:05 pm : Stocks are down sharply at midday as economic worries and speculation over the fate of U.S. automakers keeps buyers on the sidelines.
October CPI fell the most on record, which is good news in terms of the inflation outlook, but also represents the weakness of the economy. Specifically, CPI fell 1.0% month-over-month as energy prices plummeted 8.6%. Prices also declined outside of energy, indicating weak demand, with core CPI falling 0.1% as used car prices dropped 2.4% and apparel prices fell 1.0%.
The latest new residential construction data fell to the lowest levels on record, and provide another weak point for GDP calculations. October Housing starts declined 4.5% month-over-month to a seasonally adjusted annual rate of 791,000, which was slightly higher than the consensus estimate of 780,000. Building permits dropped 12% to a seasonally adjusted rate of 708,000, which was worse than the consensus estimate of 774,000.
All ten of the economic sectors are posting a loss, ranging from consumer staples (-1.0%) to financials (-6.7%).
The financial sector fell to a fresh 52-week intraday low. Selling interest is broad-based, with 83 of its 84 components posting a loss.
Automakers (-19.4%) extended losses as executives from General Motors (GM 2.65, -0.43), Ford (F 1.38, -0.30) and Chrysler, and the head of the UAW testify before the House Financial Services Committee in an attempt to secure a government loan. Similar to views Senate Banking Committee members expressed yesterday, there are plenty of opponents in the House. Reports that Toyota Motor (TM 61.01, -2.24) plans to cut North America production is also weighing on automakers.
In commodity trading, oil prices ($53.90, -0.9%) reversed early gains after the government's weekly data showed larger-than-expected builds in crude oil and gasoline stockpiles.DJ30 -194.02 NASDAQ -45.86 SP500 -25.95 NASDAQ Adv/Vol/Dec 458/839 mln/2159 NYSE Adv/Vol/Dec 355/511 mln/2695
11:30 am : The S&P 500 extends its decline to nearly 3% as selling pressure picks up. The financial (-6.6%), material (-3.5%) sectors have both hit fresh 52-week lows. Retailers (-4.1%) have also fallen to a new 52-week low.
General Mills (GIS 65.12, -0.21) reaffirmed its fiscal year 2009 guidance of earnings between $3.81 and $3.85 per share, which is short of the $3.90 consensus estimate.
Automakers (-16.1%) continue to decline as the House Financial Services Committee testimony continues. Reports that Toyota Motor (TM 61.00, -2.25) is cutting North American production is also weighing on U.S. automakers.DJ30 -188.05 NASDAQ -35.94 SP500 -24.85 NASDAQ Adv/Vol/Dec 512/686 mln/2072 NYSE Adv/Vol/Dec 337/433 mln/2665
11:00 am : Oil prices ($53.97, -0.8%) reverse into the red after both crude oil and gasoline inventories rose by a larger than expected amount.
Stocks also go on the retreat. Selling interest is broad-based, with all ten sectors posting a decline.
The financial sector (-5.1%) remains under pressure, with Hartford Financial Services Group (HIG 7.37, -2.29) down 23.6%. The financial sector has hit a fresh multi-year intraday low.
As stocks slip, longer-term Treasuries rally as investors seek safety. The 10-year note is up 23 ticks and the 30-year bond is up 55 ticks.DJ30 -134.45 NASDAQ -26.78 SP500 -19.12 NASDAQ Adv/Vol/Dec 634/538 mln/1872 NYSE Adv/Vol/Dec 436/342 mln/2508
10:35 am : Stocks briefly recover into positive ground, but renewed selling interest sends the stock market back into the red.
Just hitting the wires, the Department of Energy said that crude inventories increased by 1.6 million barrels during the week ended November 14, which was more than the expected increase of 1 million barrels. Gasoline inventories rose by 539,000 barrels. Oil prices were up 1.2% to $55.05 per barrel just prior to the announcement.
Gold futures are in rally mode, climbing 3.6% to $758.80 per ounce. Gold is benefiting from a 1.2% drop in the dollar.
U.S. automakers are currently testifying before the House Financial Services Committee, which follows their appearance before the Senate Banking Committee yesterday. Both Ford (F 1.49, -0.19) and General Motors (GM 2.75, -0.34) have fallen to multi-decade lows this session as many lawmakers are showing resistance to giving the automakers aid.DJ30 -36.00 NASDAQ -2.46 SP500 -4.39 NASDAQ Adv/Vol/Dec 934/414 mln/1487 NYSE Adv/Vol/Dec 780/269 mln/2106
10:00 am : The major indices extend their opening decline, largely due to a 4.0% drop in the financial sector.
Citigroup (C 7.87, -0.51) is down 6.0%. The company said in order to wind-down Citi-advised structured investment vehicles, it has committed to acquire the remaining assets of the SIVs at their current fair value, which is estimate to be $17.4 billion, net of cash. Citi said it will be a nearly cashless transaction.
The utilities (+0.4%) and consumer staples (+0.3%) sectors stand alone in positive territory.DJ30 -51.53 NASDAQ -5.77 SP500 -6.54 NASDAQ Adv/Vol/Dec 914/205 mln/1332 NYSE Adv/Vol/Dec 736/152 mln/2046
09:35 am : The stock market opens with modest losses.
Consumer prices fell by the largest amount since at least 1947, fueled by a sharp drop in energy prices. Prices outside of energy also fell, reflecting the weak economy, and resulting in core CPI falling 0.1%.
Oil is up 1.2% to $55.05 per barrel as the dollar falls 1.0%. The government will release its weekly energy inventory data at 10:35 AM ET.DJ30 -32.90 NASDAQ -5.24 SP500 -3.03
09:14 am : S&P futures vs fair value: -5.10. Nasdaq futures vs fair value: -2.80. Futures recover from their worst levels, but still suggest a lower start. Oil futures are down 0.2% to $54.28 per barrel ahead of the government's weekly energy report at 10:35 AM ET.
09:01 am : S&P futures vs fair value: -11.10. Nasdaq futures vs fair value: -9.00. Stock futures fall to session lows. The Dow components that are trading in the premarket are all posting a loss, with General Motors (GM) down 6.2%. Dow futures are 103 points below fair value.
08:35 am : S&P futures vs fair value: -6.00. Nasdaq futures vs fair value: -3.30. Futures get a slight boost as two economic reports hit the wires. October CPI fell 1.0% month-over-month, which was a larger-than-expected decrease compared to consensus estimate of -0.8%. Core CPI, which excludes food and energy, fell 0.1%, versus the expected increase of 0.1%. On a year-over-year basis, CPI is up 3.7% and core CPI is up 2.2%. Separately, there were 791,000 housing starts in October on a seasonally adjusted annual basis, which was better than the expected reading of 780,000. There were 708,000 building permits, which fell well short of the consensus estimate of 774,000.
08:02 am : S&P futures vs fair value: -9.00. Nasdaq futures vs fair value: -7.30. Futures suggest a lower open and are approaching session lows ahead of the new residential construction and CPI reports at 8:30 AM ET. After the close yesterday, GM (GM), Ford (F) and Chrysler testified before the Senate Banking Committee in an attempt to secure government loans for the struggling automakers. On a related note, Toyota (TM) said it will cut output by by stopping all production at its North American factories for two days next month, according to Reuters. Boeing (BA) is adding as much as 10 weeks to its original delivery date for all jetliners in its backlog as it recovers from its machinists strike, according to the Wall Street Journal's sources. Citigroup (C) is liquidating a hedge fund, which managed $4.2 billion at its peak, after it lost 53% of its value, the Financial Times reports. Best Buy (BBY) had its credit rating downgraded to BBB- from BBB at Standard & Poor's, citing the its belief that Best Buy will be more challenged than previously expected due to the weak economic environment.
06:39 am : S&P futures vs fair value: -5.90. Nasdaq futures vs fair value: -3.50.
06:39 am : Nikkei...8273.22...-55.20...-0.70%. Hang Seng...12815.80...-100.10...-0.80%.
06:39 am : FTSE...4139.41...-69.10...-1.60%. DAX...4537.55...-41.90...-0.90%.
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