Market Update 081204 http://biz.yahoo.com/mu/update.html 4:30 pm : A sell-off in the final hour of trading sent stocks tumbling Thursday. Late, sharp moves have become the norm during recent sessions, feeding volatility.
This was the fourth session this week that the stock market swung by more than 2.5% in either direction.
Such wide and unpredictable swings have had investors pursuing the safety of government securities. That has pushed the yield on the 3-month Bill to just 0.01%. The yield on the 10-year Note fell as low as 2.54% during the session, while the yield on the 30-Year Bond fell to 3.07%. Treasuries haven't seen such low yields in decades.
Stocks were shunned almost entirely across the board.
Helped by retailers (+1.5%), only the consumer discretionary sector finished in higher ground (+0.3%). Retailers showed strength despite flagging November same-store sales results. Target (TGT 34.04, -0.44) reported a 10% drop in comparables, Macy's (M 7.83, +0.44) saw a 13% slump in same-store sales, and Kohl's (KSS 34.32, +0.95) experienced a near 18% drop in comparables. On the other hand, Wal-Mart (WMT 55.11, +0.73) posted an enviable 3% increase in comparables.
Energy suffered the steepest decline among the major economic sectors. It dropped 6.2% as oil also fell as much as 7.3% to trade as low as $43.36 per barrel. It has been nearly four years since oil futures traded so low. The commodity is now 70% off its all-time high.
Oil's retreat has been driven by reduced demand, reflecting slower economic growth. Slower growth also has many widely held companies issuing disappointing outlooks.
More specifically, Dow component Merck (MRK 25.00, -1.46) issued downside guidance for 2009, overshadowing an in-line estimate for the current fiscal year.
Likewise, fellow Dow component DuPont (DD 23.69, +0.08) forecast a fourth quarter loss and issued downside guidance for fiscal 2009. The company also plans to cut around 2,500 jobs and trim capital spending in 2009. AT&T (T 28.17, -0.91), another Dow component, announced plans to cut 12,000 employees, and will also trim capital expenditures.
The planned job cuts reflect the weak labor market. Initial claims for the week ended Nov. 29 declined 21,000 to 509,000. Though that was better than the consensus estimate of 540,000 claims, continuing claims jumped 89,000 to 4.09 million. The four-week moving average for initial claims jumped slightly to 524,500, while the four-week moving average for continuing claims increased to 4.00 million from 3.94 million.
As a side note, the Department of Labor will issue official November unemployment data ahead of tomorrow's opening bell.
Automakers are back in front of Congress to continue making their case for government financing. Ford (F 2.66, -0.19), General Motors (GM 4.11, -0.79), and Chrysler are all testifying, providing plans for the use of the proposed funds, and also attempting to convey the implications of a failed government-led bailout.
With global economic conditions weakening, the Bank of England cut its target lending rate by 100 basis points to 2.00%. The European Central Bank cut its interest rate target by 75 basis points to 2.50%. The cuts come as central banks abroad continue working to stimulate economic growth. The dramatic size of the cuts, however, comes as a reminder that foreign central banks have been behind the curve.DJ30 -215.45 NASDAQ -46.82 NQ100 -3.3% R2K -3.1% SP400 -3.5% SP500 -25.52 NASDAQ Adv/Vol/Dec 770/2.07 bln/2003 NYSE Adv/Vol/Dec 814/1.47 bln/2302
3:30 pm : Stocks have run into a concerted selling effort. The major indices have fallen sharply to new session lows. The recent drop puts the stock market at a 6.3% decline for the week.
All 10 of the major economic sectors are now in the red.
The drop in stocks has been countered by a rise in Treasuries. The benchmark 10-year Note continues to trade at record lows. The Note is currently up 33 ticks and yielding just 2.55%. It has been several decades since the yield on the 10-year Note has been so low.DJ30 -275.18 NASDAQ -58.79 SP500 -32.08 NASDAQ Adv/Vol/Dec 768/1.58 bln/1959 NYSE Adv/Vol/Dec 766/992 mln/2346
3:00 pm : Action remains choppy. A lack of clear-cut leadership has failed to provide market participants with direction.
Financials (+1.5%) are outperforming on a relative basis, but many of the other major economic sectors have failed to follow financials into higher ground. The consumer discretionary sector (+1.9%) is the exception.
This session the stock market has traded with a gain of as much as 0.6%, and a loss of as much as 1.7%.DJ30 -83.55 NASDAQ -18.73 SP500 -10.32 NASDAQ Adv/Vol/Dec 1188/1.36 bln/1507 NYSE Adv/Vol/Dec 1215/861 mln/1882
2:30 pm : Small-cap stocks are outperforming on a relative basis. Only recently did the Russell 2000 dip below the unchanged mark. One of the better performing small-cap names is Talbots (TLB 1.93, +0.74). Shares of the women's apparel retailer are surging after taking out a new 52-week low in the previous session.
Meanwhile, the major indices continue to trade with significant losses. Losses are largest among large-cap tech companies; the Nasdaq 100 is off by 1.5%.DJ30 -33.45 NASDAQ -15.19 SP500 -7.51 NASDAQ Adv/Vol/Dec 1220/1.23 bln/1461 NYSE Adv/Vol/Dec 1273/774 mln/1824
2:05 pm : After falling to session lows, stocks are back on the rise. The S&P 500 is down 0.5% after trading with a loss of as much as 1.7%.
Financials (+2.8%), consumer discretionary (+2.8%) and retailers (+4.3%) are showing strength.
The automaker testimony is ongoing.DJ30 -21.42 NASDAQ -11.82 SP500 -4.50 NASDAQ Adv/Vol/Dec 1260/1.14 bln/1404 NYSE Adv/Vol/Dec 1341/714 mln/1738
1:30 pm : The S&P 500 recently fell to its worst point of the session. Its counterparts, however, have thus far resisted taking out fresh session lows.
A wide range of performances is being logged by the major economic sectors.
Energy is down 5.3%. Materials (-1.3%), telecom (-1.6%), utilities (-3.5%), and technology (-2.6%) are each down 1% or more. On the other end of things, financials (+1.0%) and consumer discretionary stocks (+2.2%) are showing strong gains in excess of 1%.
Within the discretionary sector, retailers, as a group, are up a hefty 3.6%. Their advance comes despite lackluster same-store sales results from the likes of Target (TGT 34.36, -0.12), Kohl's (KSS 34.39, +1.02), Macy's (M 7.80, +0.41), and Nordstrom (JWN 12.23, +1.33). Wal-Mart (WMT 54.94, +0.56) posted a solid increase in comparables, however.DJ30 -116.52 NASDAQ -23.27 SP500 -14.64 NASDAQ Adv/Vol/Dec 1199/1.04 bln/1449 NYSE Adv/Vol/Dec 1135/644 mln/1918
1:05 pm : The stock market continues to chop along without clear direction.
Distress and uncertainty in financial markets has pushed investors toward the relative safety of government securities. The 10-year Note has been spiking during recent sessions; it is currently up 15 ticks. Demand for the 10-year Note has pushed its yield down to 2.61%. The Note has not traded with a yield at such low levels in more than a decade.DJ30 -79.17 NASDAQ -13.66 SP500 -8.22 NASDAQ Adv/Vol/Dec 1282/952 mln/1350 NYSE Adv/Vol/Dec 1267/590 mln/1773
12:30 pm : Stocks recently went on the slide, but have pulled up a bit since. Still, the only sectors still trading with gains include the consumer discretionary sector (+2.2%) and the financial sector (+1.0%).
Oil futures are still down substantially. Oil is now down 5% to $44.44 per barrel. That marks crude's lowest intraday level in nearly four years.
With oil prices moving lower, energy has also gone on the retreat. The sector is down 4.1%, currently more than any other economic sector. The energy sector is still 16% above its 52-week low, though.DJ30 -76.94 NASDAQ -12.20 SP500 -7.81 NASDAQ Adv/Vol/Dec 1271/861 mln/1327 NYSE Adv/Vol/Dec 1267/529 mln/1774
12:05 pm : Stocks have been tracking along a rocky course. Still, the major indices remain well off their lows, which were reached shortly after the session's opening bell.
The S&P 500 was down as much as 1.4% early on. Losses were induced by data suggesting continued weakness in job markets, as well as ongoing concerns surrounding economic conditions.
Initial claims for the week ended Nov. 29 declined 21,000 to 509,000. Though that was better than the consensus estimate of 540,000 claims, continuing claims jumped 89,000 to 4.09 million. The four-week moving average for initial claims jumped slightly to 524,500, while the four-week moving average for continuing claims increased to 4.00 million from 3.94 million.
Amid persistent economic headwinds Dow components AT&T (T 28.51, -0.57) and DuPont (DD 23.76, +0.15) both announced plans to cut employees. AT&T will slash some 12,000 jobs, while DuPont will cut around 2,500 jobs. The two companies also indicated that they plan to trim capital spending in 2009. DuPont went on to forecast a fourth quarter loss, and issue downside guidance for fiscal 2009.
Merck (MRK 25.63, -0.84), which is another Dow component, also disappointed investors by issuing downside guidance for 2009. The pharmaceutical giant's downside outlook trumped an in-line estimate for the current fiscal year.
Credit Suisse (CS 24.84, +1.39) is planning a round of its own job cuts. The Wall Street Journal reported the company will cut 5,300 jobs as it contends with a $2.5 billion loss through the first two months of the current quarter. Credit Suisse's relative strength is helping the financial sector (+1.5%) outperform on a relative basis.
Slower economic growth prompted mobile phone giant Nokia (NOK 13.95, +0.65) to lower its outlook for global industry volume for the second time. Nokia noted that the downturn in industry volume has occurred more quickly than it anticipated. Apple (AAPL 92.96, -2.94) and Research In Motion (RIMM 38.42, -0.54), makers of high-end smartphones iPhone and BlackBerry, respectively, are both under pressure.
With global economic conditions weakening, the Bank of England cut its target lending rate by 100 basis points to 2.00%. The European Central Bank cut its interest rate target by 75 basis points to 2.50%. The cuts come as central banks abroad continue working to stimulate economic growth. The dramatic size of the cuts, however, comes as a reminder that foreign central banks have been behind the curve, previously choosing to stand pat on interest rate levels while the U.S. was cutting its target rate.
With unemployment at high levels and economic headwinds stiff, consumers simply aren't spending like they did previously. Target (TGT 34.59, +0.11) reported comparable sales dropped 10.4% in November. Macy's (M 7.79, +0.40) reported a 13.3% drop in comparables. Kohl's (KSS 34.72, +1.35) reported a 17.5% slump in comparables. However, Wal-Mart (WMT 55.07, +0.69) reported a 3.4% increase in comparables, reflecting consumers' interest in chasing discounts.
Weak consumer spending is also starkly apparent in the automotive industry. That has automakers pleading for federal funds before Congress. Executives from Ford (F 2.87, +0.02), General Motors (GM 4.53, -0.37), and Chrysler are all in attendance. Bloomberg.com reported earlier this morning that a source indicated GM and Chrysler would consider bankruptcy as a last resort if it helped secure government funding.DJ30 -63.32 NASDAQ -8.45 SP500 -5.81 NASDAQ Adv/Vol/Dec 1348/779 mln/1218 NYSE Adv/Vol/Dec 1341/475 mln/1640
11:30 am : The stock market continues to chop along, unable to hold earlier gains.
In a speech, Fed Chairman Bernanke urges strong action to stem foreclosures; he estimates that 15% to 20% of mortgages may be under water. It is presummed that stemming foreclosures will help put a floor under the sinking housing industry.
Homebuilders are faring well this session. The group is up more than 13% currently. Shares of residential homebuilder Toll Brothers (TOL 21.33, +2.10) are also up handsomely, despite the fact that the company posted a larger-than-expected loss for its fiscal fourth quarter.DJ30 +11.07 NASDAQ +4.63 SP500 +1.85 NASDAQ Adv/Vol/Dec 1465/648 mln/1054 NYSE Adv/Vol/Dec 1546/400 mln/1393
11:00 am : Stocks recently advanced to their best level of the session. Seven of the 10 economic setors are now trading in the green.
Consumer discretionary stocks (+3.5%) are sporting the largest gains, while energy (-1.4%) is lagging.
Oil futures are currently trading roughly 1.8% lower to below $46 per barrel. That marks marking the fourth consecutive decline in crude futres, and a near 70% drop from crude's all-time high. The drop in crude oil prices follows the drop in global economic growth estimates.
Chicago Fed President Evans stated that the U.S. economy is contracting markedly and that it is hard to judge how long and deep the current recession will be. Fed Chairman Bernanke is scheduled to speak in regard to housing and housing finance at 11:15 AM ET.DJ30 +27.16 NASDAQ +7.34 SP500 +3.80 NASDAQ Adv/Vol/Dec 1515/526 mln/940 NYSE Adv/Vol/Dec 1634/327 mln/1249
10:30 am : Stocks continue to trade in choppy fashion.
A hearing for automakers is under way. Executives from Ford (F 2.92, +0.07), General Motors (GM 4.76, -0.14), and Chrysler are expected to state their cases for a government-funded bailout. Bloomberg.com reported earlier this morning that a source indicated GM and Chrysler would consider bankruptcy as a last resort if it helped secure government funding.
Standard & Poor's has cut GM's corporate credit rating to CC from CCC+. Analysts at Credit Suisse cut their target price on shares of GM to $2 from $5.
Automakers, as a group, are up 0.8%.DJ30 -47.39 NASDAQ -8.59 SP500 -4.94 NASDAQ Adv/Vol/Dec 1342/377 mln/1033 NYSE Adv/Vol/Dec 1353/238 mln/1486
10:00 am : Stocks are off to a bit of a rocky start, but are attempting to recover into positive ground. The recovery effort has been stymied by a sudden increase in selling pressure, however.
Still, determining whether stocks will finish the session with gains or losses is a mere guessing game, though, especially amid such volatility. In the prior session, the Dow opened with a loss of more than 180 points, but finished the session more than 170 points higher. The Dow opened roughly 100 points lower this session.
Factory orders for October fell 5.1%, which is worse than the 4.5% decline that was widely expected. The prior month's reading was revised lower to reflect a 3.1% decline.DJ30 -29.55 NASDAQ -6.31 SP500 -3.53 NASDAQ Adv/Vol/Dec 1285/206 mln/927 NYSE Adv/Vol/Dec 1337/141 mln/1373
09:45 am : The major indices opened sharply lower, but have improved their position. Losses remain widespread, however.
Shortly ahead of the opening bell Advanced Micro Devices (AMD 2.12, -0.08) announced it expects revenue to drop roughly 25% sequentially. That equates to roughly $1.18 billion, which is below the consensus forecast of $1.54 billion. AMD stated the decrease is due to weaker-than-expected demand across all geographies and businesses, particularly in the consumer market.
AMD's lowered outlook comes after Marvell Technology (MRVL 5.88, -0.25) stated there is limited visibility into the near term. That limited visibility, which stems from softer demand amid slower global economic conditions, has weighed heavily on semiconductor companies. AMD is down more than 70% this year, while MRVL has been more than halved year-to-date. Intel (INTC 13.35, -0.31) is down 50% year-to-date. Broadcom (BRCM 15.08, -0.43) is off by more than 40% this year. DJ30 -16.81 NASDAQ -8.26 SP500 -2.48 NASDAQ Adv/Dec 905/1193 NYSE Adv/Dec 864/1766
09:15 am : S&P futures vs fair value: -12.90. Nasdaq futures vs fair value: -27.30. A downward start is indicated by stock futures. Retailers' November same-store sales results have been rather paltry, with few exceptions. Target (TGT) reported comparable sales dropped 10.4%. Macy's (M) reported a 13.3% drop in comparables. Nordstrom (JWN) saw same-store sales slide 15.9%. Kohl's (KSS) reported a 17.5% slump in comparables. JC Penney (JCP) posted a drop of 11.9% for same-store sales. TJX Companies (TJX) reported a 12.0% drop in same-store sales. Meanwhile, BJ's Wholesale (BJ) saw same-store sales increase 6.2%. Wal-Mart (WMT) reported a 3.4% increase in comparables.
09:00 am : S&P futures vs fair value: -14.90. Nasdaq futures vs fair value: -30.00. Stock futures suggest a downward start to Thursday's trading. The weakness is also ocurring overseas, where markets are showing losses. In Asia, Hong Kong's Hang Seng shed 1.0%, while Japan's Nikkei fell 1.9%. In Europe, France's CAC is down 1.2%, while Germany's DAX is down 0.8%. London's FTSE is off by 1.2%. The Bank of England cut its target lending rate by 100 basis points to 2.00%. The European Central Bank cut its interest rate target by 75 basis points to 2.50%. Meanwhile, Sweden's Central Bank slashed its target rate by 175 basis points to 2.00%. The decisions to cut interest rate targets come as central banks abroad continue working to stimulate economic growth. Slower economic growth has Finnish mobile phone giant Nokia (NOK) lowering its outlook for global industry volume for the fourth quarter of 2008. This marks the second time Nokia has lowered its forecast for industry volume.
08:30 am : S&P futures vs fair value: -15.60. Nasdaq futures vs fair value: -29.30. Stock futures continue to lag fair value. Initial jobless claims for the week ended November 29 totaled 509,000, which was less than the 540,000 claims that were expected. Initial claims for the prior week were revised higher to 530,000. Continuing claims totaled 4.09 million, which exceeded the consensus estimate of 4.03 million claims. Continuing claims were up from 4.00 million in the prior week. The jobless data continue to indicate a weak labor market. Jobless claims are expected to remain elevated as companies battle economic headwinds and work to cut costs. Dow component AT&T (T) announced it plans to cut some 12,000 jobs, or about 4%, from its workforce. AT&T also plans to reduce 2009 capital expenditures from 2008 levels; AT&T spent more than $14 billion in capital expenditures through the first three quarters of 2008. Fellow Dow component DuPont (DD) also indicated this morning it will reduce capital spending by 10% to 20% in 2009. The company is forecasting a fourth quarter loss between $0.20 and $0.30 per share, but expects fiscal 2009 earnings to range from $2.25 to $2.75 per share. The consensus 2009 estimate calls for $2.80 per share.
08:00 am : S&P futures vs fair value: -6.60. Nasdaq futures vs fair value: -14.50. Stock futures are currently indicating a downward start to the trading session. The Wall Street Journal reported Credit Suisse (CS) posted a loss of roughly $2.5 billion during the first two months of the current quarter. The report also indicated Credit Suisse is cutting some 5,300 jobs. Bloomberg.com reported that a source indicated General Motors (GM) and Chrysler may consider a prearranged bankruptcy filing as a last resort to winning a government-funded bailout. Capital One (COF) will acquire Maryland-based Chevy Chase Bank for $520 million in cash and stock. Merck (MRK) reaffirmed its earnings per share outlook for 2008; Merck sees earnings ranging from $3.28 to $3.32 per share, which brackets the consensus of $3.29 per share for the year. However, Merck expects fiscal 2009 earnings to range from $3.15 to $3.30 per share, which is below the consenus estimate of $3.52 per share. Adobe Systems (ADBE) increased its earnings per share guidance above the fourth quarter consensus estimate, but the company also lowered its fourth quarter revenue outlook below the consensus forecast. Adobe also issued downside revenue guidance for the first quarter of its upcoming fiscal year. Residential home builder Toll Brothers (TOL) posted for its fourth fiscal quarter a larger-than-expected loss on slumping revenue.
06:33 am : S&P futures vs fair value: +2.60. Nasdaq futures vs fair value: -6.30.
06:33 am : Nikkei...7924.24...-79.90...-1.00%. Hang Seng...13509.78...-78.90...-0.60%.
06:33 am : FTSE...4227.73...+57.80...+1.40%. DAX...4698.81...+131.50...+2.90%.
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