After The Close - Stocks had a difficult time of it today, as last night’s news that Apple’s (AAPL) mastermind Steve Jobs would be resigning as CEO and an uninspiring reading on initial unemployment claims weighed on sentiment. Word that investment magnate Warren Buffett is buying a stake in ailing Bank of America (BAC - Free BofA Stock Report) provided a lift for a time. But the growing sense that the Federal Reserve may not be able to offer strong policy initiatives when its Chairman, Ben Bernanke, speaks tomorrow in Jackson Hole, Wyoming kept a lid on spirits. Shares tumbled toward their session lows near the close of trading.
Overall, the Dow Jones Industrial Average slid 171 points, while the tech-heavy NASDAQ was off 48 points and the small-cap Russell 2000 dropped 18 points. Market breadth was decidedly negative, with decliners easily outnumbering advancing issues on both the Big Board and the NASDAQ. There were also more stocks making new 52-week lows than new highs, which has been the case during this correction.
The market’s tone was hurt, too, by a disappointing report after yesterday’s closing bell by semiconductor capital equipment maker Applied Materials (AMAT). That, and the news that Steve Jobs was stepping down at Apple, caused technology shares to be weaker in proportion to the Dow Industrials.
On the up side, the injection of capital into Bank of America lifted financial stocks, such as Citigroup (C) and Morgan Stanley (MS). Even there, though, the gains narrowed as the session wound down.
Elsewhere, trading in oil and bonds was relatively quiet, although gold prices notably found some footing in the mid-$1,700-an-ounce range after yesterday’s big selloff. Gold’s rebound lit a fire under shares of precious metals producers, such as Yamana Gold (AUY) and Agnico-Eagle Mines (AEM).
Today’s selling broke this week’s three-day winning streak. Tomorrow, in addition to Fed Chairman Bernanke’s pronouncements, the first revision to second quarter GDP is due out. The weak 1.3% previous reading is to ease further.
Another piece of data on tap is the University of Michigan consumer sentiment index, which is likely to show some deterioration from July to August. Earnings from sports and entertainment conglomerate Madison Square Garden (MSG) and retailer Tiffany (TIF) are also on the agenda. The good news is that the stock market still has a decent shot at ending this week on the positive side for the first time in a month. - Robert Mitkowski, Jr.
At the time of this article, the author did not have positions in any of the companies mentioned.
12:30 PM ET - The U.S. stock market has slipped sharply so far today, after a decent session yesterday. Traders probably were not too excited about the economic news released this morning. Specifically, initial Jobless claims for the week ended August 20th rose to 417,000, which was higher than many economists had anticipated. The figure is also over the 400,000 level, considered a key measure of economic health. While not much consolation, there was a slight dip in continuing jobless claims. Tomorrow traders will get a look at the second-quarter GDP estimate. Also, the University of Michigan’s final reading on consumer sentiment for August comes out. More important, Fed Chairman Bernanke will offer remarks at Jackson Hole, Wyoming. Many have speculated that the rally in the equity market earlier this week may have been based on the notion that the Fed will take additional measures.
In corporate news, shares of Bank of America (BAC - Free Bank of America Stock Report) are soaring about 14%, on reports that Warren Buffet’s Berkshire Hathaway will be making a $5 billion investment in the company. Elsewhere, shares of Apple (AAPL) are down about 1% on news of CEO Steve Jobs’ resignation. Applied Materials (AMAT) stock is slipping, as the company issued tepid guidance. Also, Diageo (DEO) stock is climbing on a favorable earnings report.
Overseas, the markets were mixed. In Asia, the markets bounced back from a sharp selloff yesterday. Shares of Japanese exporters may have gotten some help from a lower yen. But trading was less favorable in Europe. While the session started out on an up note, the major bourses began selling off at mid-day. Losses became severe on the German DAX, which ended down almost 2%, on rumors that the country could also be subject to a credit downgrade.
In the commodity markets, the price of oil is slipping today, with the October crude oil contract at $84.38 per barrel. The move may reflect the weaker stock market and global economic concerns. Gold is also pulling back a bit, possibly on profit taking.
As we pass the noon hour in New York, the major market averages are still near their session lows. The Dow Jones Industrial Average is now down 126 points (1.12%); the S&P 500 Index is off 13 points (1.08%); and the NASDAQ is lower by 30 points (1.20%). The market’s breadth is sharply negative, as decliners are well ahead of advancers on the NYSE and the NASDAQ. Moreover, all of the market sectors are in negative territory, with weakness in the energy and conglomerate names, highlighting the pullback
Some of the more heavily traded stocks that are headed higher today include: TiVo (TIVO), MGM (MGM), and Collective Brands (PSS). Stocks moving lower include: Brown Shoe (BWS), Urban Outfitters (URBN), and Atmel (ATML). - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
11:20 AM ET - The stock market, which had been up for two days in succession, in a rare occurrence so far this August, has turned down and rather sharply in the early going this morning. Indeed, after an initial bounce that had seen the 30-stock Dow Jones Industrial Average climb some 90 points, the sellers have swooped in and taken down the market rather sharply.
At the low point, several minutes ago, that same 30-stock average was in the minus column by some 170 points, for a negative 260-point swing in less than a 90-minute span. The losses have since been pared a bit, and the Dow is now off by 150 points.
Weakness has been mostly concentrated in the industrial and technology sector, countering gains in the beleaguered financials. The aforementioned weakness can be seen in the 36-point retreat in the NASDAQ, which works out to a loss of 1.54%. The market is likely to continue swinging wildly in both directions today, reflecting positioning ahead of tomorrow's anxiously awaited speech by Federal Reserve Chairman Ben. S. Bernanke in Jackson Hole, Wyoming. The market's two-day rally has been the result of the anticipation that the Fed Chairman will launch a new monetary stimulus initiative, such as he did a year ago when he addressed the same meeting. - Harvey S. Katz
Before The Opening Bell - Stocks put on a late buying spree yesterday to rise strongly for a second day in succession. All told, the Dow Jones Industrial Average, which had been up and down during the morning, put on the aforementioned late charge to close the session 144 points to the upside. That gave this 30-stock composite a cumulative gain of 465 points for the past two sessions. The NASDAQ, a 101-point gainer on Tuesday, added another 22 points, while the small-cap Russell 2000 rose 10 points. Gainers led losers on the Big Board by a better-than-two-to-one ratio, while advancers were ahead of decliners by almost two-to-one on the NASDAQ. Still, new lows again trumped new highs on both exchanges, reflecting the severe damage done to the market over the past month. At this point, and barring some bad news over the next 32 hours, or so, we should break the four-week-long hold on the stock market by the bears.
Helping sentiment yesterday was a better equity market showing in Europe, a solid overall increase in July durable goods orders at home, which served to slightly dampen recession fears over here, and continued hopes that Federal Reserve Chairman Ben S. Bernanke will embolden the bulls by offering encouraging comments at tomorrow's speech in Jackson Hole, Wyoming. It was a year ago, that the Fed Chairman unveiled his QE2 quantitative easing program that set into motion a six-month buying spree down on Wall Street. It is arguable that he will undertake a third such easing program, but the widespread expectation is that he will do something the markets like. We will see. In any event, sentiment, so dour just a few days ago, has strengthened notably over the past 48 hours, and indications are this morning that we may see an extension of the very recent rally, following an uneven start to the trading day.
One stock benefiting from the increase in optimism yesterday was the heretofore unloved Bank of America (BAC - Free B of A Stock Report). That Dow-30 component has been under intense pressure in recent weeks, as have other financial-related giants, such as Citigroup (C) and Wells Fargo (WFC). In Bank of America's case, there has been widespread speculation that it would need additional capital, hence added dilution, in an attempt to strengthen its balance sheet. However, some pundits now point out that they believe the bank is in materially better shape than it was at the time of the 2007-200p financial crisis.
As for the economy, yesterday's durable goods report was strikingly positive on the surface, as that metric gained a stellar 4.0% in July, twice the expected rise. However, much of the gain was attributable to a surge in orders for autos and automotive parts. And that increase can be ascribed to the unlocking of pent-up supply from Japan, as that struggling nation had earlier experienced a severe shortage of parts following its March earthquake and tsunami. Japan seems to now have caught up on the supply side and we could see a strong recovery in auto orders over the next few months. On the other hand, orders for capital goods fell by 1.5% last month. In the final analysis, that could be a more telling sign of the state of the domestic economy.
As for other news, we will be getting revised second-quarter GDP data tomorrow. In the initial look at that period's performance, growth had been estimated at 1.3%, after a nominal 0.4% rate of improvement in the first quarter. Expectations are that the second-quarter's growth estimate will be pared back to 1.0%. Then, just an hour or so later, we will get a look at consumer sentiment from the University of Michigan. A further decline in that index is likely.
Finally, after a mixed session overseas, our own futures seem headed for a so-so opening, with optimism still in the air following the two-day rally, but some concerns about the resignation of long-time Apple Inc. (AAPL) CEO Steve Jobs for health reasons. Apple shares are somewhat lower in the pre-market, in response. Finally, gold, which tumbled yesterday, is lower again this morning, trading just above $1,700 an ounce. Just two days ago, that metal was commanding more than $1,900 an ounce. It just goes to show how fickle investors can be.
At the time this article was written, the author did not have positions in any of the companies mentioned.