Market Update 081124 http://biz.yahoo.com/mu/update.html 4:15 pm : Stocks and commodities soared Monday on news of a government rescue plan for Citigroup (C 5.85, +2.08) that includes a direct $20 billion investment and $306 billion in asset guarantees. The S&P 500 rose 6.4%, with gains exacerbated by short-covering and bargain hunting.
Shares of Citi plunged 60% last week, sparking the need for a bailout. The Treasury will buy $20 billion in Citigroup preferred stock using TARP funds, bringing the Treasury's total investment in Citi to $45 billion. In addition, the Treasury, Fed and FDIC will provide guarantees for up to $306 billion of troubled assets in exchange for $7 billion in preferred stock and warrants for 254 million shares of common stock at a strike price of $10.61. Citi will absorb the first $29 billion in losses on the troubled assets and then 10% on any remaining losses, while the government will cover the remaining 90% in losses.
Under the deal, Citi must get an executive compensation plan approved by the government and must not pay a quarterly dividend larger than $0.01 without government consent.
President-elect Obama unveiled his economic team, confirming that New York Fed President Tim Geithner is the Treasury Secretary nomination. Obama said that a "big" economic stimulus package is needed, but did not give any specific numbers. Obama did not say he would postpone raising taxes on the richest Americans as some had hoped for, but will listen to what his economic team says about letting the Bush tax cuts expire.
In economic news, existing home sales continue to show signs of stabilization at very depressed levels. October existing home sales fell 3.1% month-over-month on a seasonally adjusted annual basis to 4.98 million, which is close to the consensus estimate of 5.00 million. The median home price decline of 11.3% year-over-year to $183,300 is the largest on record.
All ten sectors posted a gain. The financial sector rose the most, spiking 18.5% -- the most in its 20 year history -- with Citi climbing 55%. Defensive sectors underperformed on a relative basis as utilities rose only 1.3% and Treasuries fell as investors showed an increased willingness to take on risk.
Meanwhile, commodities rallied 5.4% as oil prices spiked 9.1% to $54.48 per barrel and gold rose 4.0% to $823.70 per ounce. The strength in the stock market and a 2.4% decline in the dollar fueled the buying interest.
The S&P 500 is now up 14.9% from its more than 10-year low reached on November 21, but is still down 42.0% year-to-date.DJ30 +396.97 NASDAQ +87.67 NQ100 +6.3% R2K +7.4% SP400 +7.5% SP500 +51.78 NASDAQ Adv/Vol/Dec 2119/2.55 bln/651 NYSE Adv/Vol/Dec 2828/2.04 bln/362
3:30 pm : The major indices are trading at session highs going into the final half hour, with the S&P 500 nearly 7%.
After the close, 10 companies are confirmed to report their earnings. The biggest name is Hewlett-Packard (HPQ 34.04, -0.60), which already preannounced its earnings on November 18. Tomorrow, investors will digest the preliminary third quarter GDP report at 8:30 AM ET and November consumer confidence at 10:00 AM ET.DJ30 +423.41 NASDAQ +82.69 SP500 +54.54 NASDAQ Adv/Vol/Dec 2065/1.96 bln/701 NYSE Adv/Vol/Dec 2787/1.31 bln/379
3:05 pm : Stocks extend their gains in mostly broad-based strength. The financial sector, up 15.2%, is on pace for its largest one day percent gain since it was formed in 1989. DJ30 334.60 NASDAQ 68.43 SP500 44.29 NASDAQ Adv/Vol/Dec 2024/1.78 bln/727 NYSE Adv/Vol/Dec 2747/1.21 bln/421
2:35 pm : The major indices recently climb to session highs thanks to broad-based buying interest led by financials (+13.8%) and consumer discretionary (+6.7%) stocks.
Market breadth is bullish, with advancers outpacing decliners by 13-to-2 on the NYSE and by 14-to-5 on the Nasdaq. Volume is above average, but trails levels seen during the previous two sessions.DJ30 +311.50 NASDAQ +62.74 SP500 +41.33 NASDAQ Adv/Vol/Dec 2014/1.63 bln/710 NYSE Adv/Vol/Dec 2743/1.11 bln/421
2:00 pm : The stock market is attempting to climb back to session highs when it was up 5.3%.
Financials (+12.4%) are showing the most strength.
Retailers (+9.3%) are sporting healthy gains. Home improvement retailers Lowe's (LOW 18.99, +1.84) and Home Depot (HD 20.98, +1.69) are providing leadership.DJ30 +317.24 NASDAQ +60.37 SP500 +41.14 NASDAQ Adv/Vol/Dec 1979/1.45 bln/712 NYSE Adv/Vol/Dec 2733/1.00 bln/422
1:30 pm : Stocks post solid gains. Oil continues to advance, now up 9.5% to $54.60 per barrel. Despite today's gain, oil is still down 43% this year.
European markets rallied. London's FTSE gained 9.8%, France's CAC rose 10.1% and Germany's DAX advanced 10.3%DJ30 272.12 NASDAQ 53.88 SP500 +36.89 NASDAQ Adv/Vol/Dec 1933/1.34 bln/727 NYSE Adv/Vol/Dec 2694/935 mln/449
1:00 pm : Stocks come climbing back after retreating from earlier highs. Gains remain broad based with all 10 of the economic sectors trading in positive ground. However, the stock market has a way to go before reaching the 5.3% advance it traded with earlier.
The upbeat tone has been present since the start of the session.
With stocks trading higher, Treasuries are sagging. The 10-year Note is off by 32 ticks, raising its yield to 3.31%.DJ30 +271.04 NASDAQ +53.99 SP500 +35.81 NASDAQ Adv/Vol/Dec 1938/1.22 bln/705 NYSE Adv/Vol/Dec 2719/862 mln/426
12:30 pm : Confirming reports from last Friday, President-elect Obama nominated New York Fed President Tim Geithner as Treasury Secretary. Geithner has been a Fed president since 2003, and prior to that worked in various positions in the Treasury under three administrations, according to the New York Fed Web site.
Obama said the country needs a "big" stimulus package, but did not give a specific number.
Obama did not specifically say he will postpone raising taxes on the richest Americans. Obama did say, however, that he will listen to what his economic team says about letting the Bush tax cuts expire.
Obama is currently participating in a question and answer session.
Stocks give up some of their gains, but are still sporting healthy advances.DJ30 +197.29 NASDAQ +46.54 SP500 +28.03 NASDAQ Adv/Vol/Dec 1929/1.09 bln/709 NYSE Adv/Vol/Dec 2654/779 mln/480
11:55 am : Financials are leading a rally that is fueled on news that Citigroup (C 5.99, +2.22) is receiving government aid, including a capital injection and loan guarantees.
At midday, the S&P 500 is at its session high with a gain of more than 5%. All ten sectors are posting a gain, led by financials (+12.6%), telecom (+8.3%), and materials (+7.0%). Defensive-oriented utilities (+1.0%) are underperforming on a relative basis.
Following a 60% plunge in shares of Citi last week, the Treasury will buy $20 billion in preferred stock yielding 8%, which follows the $25 billion investment in Citi following the first round of TARP preferred stock purchases. The Treasury, Fed and FDIC will provide guarantees for up to $306 billion of troubled assets in exchange for $7 billion in preferred stock and warrants for 254 million shares of common stock at a strike price of $10.61. Citi will absorb the first $29 billion in losses on the troubled assets and then 10% on any remaining losses.
Under the deal, Citi must get an executive compensation plan approved and must not pay a quarterly dividend larger than $0.01 without government consent.
Shares of Citi are up 59%, with other financial names such as Morgan Stanley (MS 13.50, +3.45) and Merrill Lynch (MER 10.65, +2.31) also getting a nice boost.
In economic news, existing home sales continue to show signs of stabilization at very depressed levels. October existing home sales fell 3.1% month-over-month on a seasonally adjusted annual basis to 4.98 million, which is close to the consensus estimate of 5.00 million. The median home price decline of 11.3% year-over-year to $183,300 is the largest on record.
In earnings news, Campbell Soup (CPB 34.02, -2.25) reported fiscal fourth quarter earnings that topped estimates, although revenue fell short of expectations.
Commodities rally (+3.9%) in conjunction with stocks. Oil prices have spiked 8.7% to $54.28 per barrel and gold prices are up 4.6% to $828.50 per ounce. A 2.5% decline in the dollar is adding to the buying interest.
President-elect Obama will shortly hold a news conference with his economic team. He is expected to announce a fiscal stimulus plan, according to reports. DJ30 +345.27 NASDAQ +63.61 SP500 +41.04 NASDAQ Adv/Vol/Dec 1983/930 mln/626 NYSE Adv/Vol/Dec 2767/680 mln/354
11:30 am : The stock market takes out a new session high with a gain of more than 4.5%. At the same time, commodities (+3.6%) rally as the dollar (-2.2%) falls.
Oil prices have surged 7.6% to $53.73 per barrel and gold prices are up 4.2% $825.30 per ounce.
European markets are in rally mode, with notable strength in material and energy stocks. London's FTSE is up 8.4%, France's CAC is up 8.4% and Germany's DAX is up 9.2%.DJ30 +313.10 NASDAQ +58.28 SP500 +36.73 NASDAQ Adv/Vol/Dec 1961/800 mln/605 NYSE Adv/Vol/Dec 2745/598 mln/350
11:00 am : The major indices trade near session highs, benefiting from relief over the Citigroup (C 6.31, +2.54) bailout out and short-covering.
Financials are now up 11.5%. The biggest percent gainers within the sector are Citigroup, +67%; Morgan Stanley (MS 12.70, +2.65), +26.4%; Kimco Realty (KIM 14.07, +2.79), +24.7%; Merrill Lynch (MER 10.28, +1.94), +23.3%; and Janus Capital Group (JNS 7.88, +1.43), +22.2%.DJ30 +323.77 NASDAQ +57.91 SP500 +35.45 NASDAQ Adv/Vol/Dec 1946/647 mln/571 NYSE Adv/Vol/Dec 2666/499 mln/389
10:30 am : The major indices climb higher, with all ten sectors in positive territory. The S&P 500 has spiked 11.8% from its more than 10-year low reached on Friday.
Financial (+8.3%) are leading the way as Citigroup (C 5.99, +2.22) soars 59%. Telecom (+7.9%) is also catching a bid as AT&T (T 27.42, +2.23) and Verizon (VZ 30.22, +1.75) rally.
Homebuilders are up 8.5%, receiving a boost following the existing home sales data released at 10:00 AM ET.
Defensive-oriented utilities (+0.3%), healthcare (+1.6%) and consumer staples (+1.0%) are underperforming on a relative basis
Meanwhile, Treasuries are under selling pressure, although yields are still at very depressed rates. The 10-year note is down 27 ticks, sending its yield up to 3.30%DJ30 +270.76 NASDAQ +54.03 SP500 +30.86 NASDAQ Adv/Vol/Dec 1886/450 mln/558 NYSE Adv/Vol/Dec 2607/375 mln/397
10:05 am : The stock market trades in a choppy manner and then extends its gains as a housing report is released.
Just hitting the wires, October existing home sales fell 3.1% month-over-month on a seasonally adjusted annual basis to 4.98 million, which is close to the consensus estimate of 5.00 million. The median home price decline of 11.3% year-over-year to roughly $183,000 is the largest on record.
Dow Jones reports that President Bush will meet with Treasury Secretary Paulson this morning, and speak to reporters at 10:35 AM ET.
In earnings news, Campbell Soup (CPB 34.55, -1.72) is trading 4.7% lower after reporting lower-than-expected fiscal first quarter revenue, although earnings did top estimates.DJ30 +160.01 NASDAQ +32.88 SP500 +20.24 NASDAQ Adv/Vol/Dec 1558/226 mln/753 NYSE Adv/Vol/Dec 2121/233 mln/750
09:40 am : The stock market extends last Friday's rally, lifted by news that Citigroup (C 5.92, +2.15) is receiving government support. Financials are spiking 6.8%.
Following a a 60% plunge in shares of Citi last week, the Treasury will buy another $20 billion in preferred stock and with the FDIC will provide guarantees for up to $306 billion of troubled assets in exchange for $7 billion in preferred stock and warrants for 254 million shares of common stock at a strike price of $10.61. Under the deal, Citi will absorb the first $29 billion in losses on the troubled assets.
Meanwhile, President-elect Obama is going to lay out his economic plan, including a fiscal stimulus, according to reports.
Commodities are catching a bid, with oil up 2.7% to $51.28 per barrel and gold is up 2.7% to $813.50 per ounce. The dollar is down 1.8%.DJ30 +94.62 NASDAQ +24.17 SP500 +13.23
09:14 am : S&P futures vs fair value: +16.00. Nasdaq futures vs fair value: +28.00.
08:57 am : S&P futures vs fair value: +14.60. Nasdaq futures vs fair value: +27.80. Nasdaq futures approach session highs. Goldman Sachs cut its S&P 500 operating EPS for 2008 to $55 from $65, marking its fourth cut from $76 per share roughly three months ago, according to Dow Jones. Goldman cited the fast pace of economic deterioration.
08:29 am : S&P futures vs fair value: +13.20. Nasdaq futures vs fair value: +22.50.
08:05 am : S&P futures vs fair value: +13.60. Nasdaq futures vs fair value: +21.30. Futures suggest the stock market will extend Friday's rally. The big news this morning is that Citigroup (C) will be receiving government guarantees, liquidity access and capital. As part of the plan, Citi will get $20 billion in exchange for preferred stock and the Treasury and FDIC will guarantee against the possibility of unusually large losses up to $306 billion in troubled assets in exchange for $7 billion in Citi preferred stock. Citi had already received a $25 billion investment from the Treasury following the first round of TARP purchases. Citi is up 26% in premarket trading. Meanwhile, President-Elect Obama will lay out his economic plan, including a fiscal stimulus package, later today, according to reports. Separately, oil prices are up 3.6% to $51.71 per barrel as the dollar falls 1.5% against a basket of currencies.
06:39 am : S&P futures vs fair value: +15.60. Nasdaq futures vs fair value: +26.00.
06:37 am : Nikkei...Holiday......... Hang Seng...12457.94...-201.30...-1.60%.
06:37 am : FTSE...3947.30...+166.30...+4.40%. DAX...4276.20...+148.40...+3.60%.
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