4:20 pm : The major averages were weak across the board as ongoing worries of slowing profit growth prompted broad-based consolidation, closing nine of ten economic sectors lower. For the first time this month, inflation fears weren't cited as a catalyst behind underlying market weakness. Instead, a huge decline in oil prices (-3.1%) actually alleviated some concern that rising energy prices will accelerate and potentially crimp consumer spending. Nonetheless, oil's drubbing incited sellers to lock in some of the profits that have lifted Energy to a sector-leading 11.5% gain, which continues to play into our Overweight rating on the sector. Thus, the absence of Energy's leadership, especially since the sector accounts for the bulk of earnings growth on the S&P, merely added to lingering worries about earnings deceleration and exacerbated the lack of enthusiasm on the part of buyers to get the market back on track.
Turning in the day's second worst performance was Materials, as gold futures plunged in sympathy with oil -- one of the catalysts behind the precious commodity's continued attractiveness as an inflation hedge. Profit-taking in steel as well as diversified metals & mining, two of the year's Top Ten best performing S&P industry groups, also weighed on the sector.
On a positive note, Walt Disney (DIS 26.66 +1.70), a suggested holding in our Active Portfolio, posted strong Q1 (Dec) earnings but was one of only 9 Dow components to finish higher. To that end, the stock's 7% surge was unable to single-handedly lift Consumer Discretionary. Weighing most heavily on the sector was a disappointing FY06 sales forecast from Toll Brothers (TOL 29.55 -1.65) amid softening demand in a number of housing markets. Confirmation that General Motors (GM 22.88 -0.46) agreed to slash its dividend by 50%, especially during a time when so many companies flush with cash are returning value to shareholders in the form of dividend increases -- a source of market support, also weighed on sentiment.
The incentive to lock in profits also pressured Financials, as some investors took money off the table in the brokerage group while others used rising borrowing costs as a reason to stay away from rate-sensitive bank stocks. The 10-yr note closed down 5 ticks to yield 4.56% following a poor 3-yr note auction, which had a poor 22% showing on indirect bidder participation, and a lack of any notable economic data to perhaps set a more positive tone in the Treasuries market.
Technology, however, eked out a small gain and was the day's only sector to finish in the plus column, as investors remained optimistic that Cisco Systems' (CSCO 18.09 +0.26) strong track record of consistency would carry over into Q2 results, which were scheduled for release after the close. Upbeat analyst comments on Motorola (MOT 21.04 +0.51), another suggested holding, and NCR Corp (NCR 38.86 +1.20), as well as a late-day turnaround in semiconductor, also helped offset weakness in software and hardware. BTK -0.7% DJ30 -48.51 DJTA -1.4% DJUA -0.8% DOT -0.5% NASDAQ -13.84 NQ100 -0.3% R2K -1.5% SOX +0.1% SP400 -1.3% SP500 -10.24 XOI -3.4% NASDAQ Dec/Adv/Vol 2070/967/2.13 bln NYSE Dec/Adv/Vol 2185/1072/1.78 bln
3:30 pm : Market showing no signs of improving going into the close as the broader market appears poised to finish near session lows. Separately, Dec. consumer credit, the day's only piece of economic news, recently checked in at $3.3 bln, a huge increase over November's -$0.6 bln but below the $5.0 bln consensus estimate. However, since the data are subject to massive revisions and because they are released well after every other consumer spending indicator, the market, per usual, has ignored the report. DJ30 -48.02 NASDAQ -15.30 SP500 -10.43 NASDAQ Dec/Adv/Vol 2110/921/1.84 bln NYSE Dec/Adv/Vol 2186/1039/1.52 bln
3:00 pm : More of the same for stocks as sellers remain in control of the action heading into the final hour of trading. On a positive note, the Tech sector recently inched above the flat line but almost as quickly slipped back into the red, as anticipation of a solid report from Cisco Systems (CSCO 18.16 +0.33) and an analyst upgrade on Motorola (MOT 21.17 +0.64), a suggested holding in our Active Portfolio, have not been enough to offset losses in 60 of the sector's remaining 84 components. DJ30 -50.91 NASDAQ -17.36 SP500 -10.97 NASDAQ Dec/Adv/Vol 2065/954/1.71 bln NYSE Dec/Adv/Vol 2159/1051/1.38 bln
2:30 pm : Equities remain on the defensive as the market continues to languish near its worst levels of the day. While Energy (-3.1%) continues to pace the way lower, as oil prices appear poised to close down 3% for the session, another commodity losing just as much ground has been gold. Coupled with consolidation in steel, the year's best performing industry group (+31%), gold futures posting their biggest one-day decline in 13 months has also weighed on Materials, the day's second worst performing sector (-2.3%).DJ30 -36.15 NASDAQ -14.52 SP500 -8.01 NASDAQ Dec/Adv/Vol 2061/930/1.58 bln NYSE Dec/Adv/Vol 2193/1013/1.26 bln
2:00 pm : Little changed in the last 30 minutes of trade as a widespread negative tone continues to weigh on equities. As reflected in the A/D line, decliners outpace advancers by a more than 2-to-1 margin on both the NYSE and the Nasdaq. A nearly 3-to-1 ratio of down to up volume, as the NYSE has also surpassed more than 1.0 bln shares, paints an even darker picture and lends some conviction behind today's broad-based move to the downside. DJ30 -40.12 NASDAQ -16.33 SP500 -8.48 NASDAQ Dec/Adv/Vol 2084/886/1.47 bln NYSE Dec/Adv/Vol 2192/988/1.16 bln
1:30 pm : Indices spike to fresh session lows as selling remains widespread across most areas. Even bonds, which at times catch a flight-to-quality bid when stocks plummet, are also trading near their worst levels of the day following a bond auction which had a poor 22% showing on indirect bidder participation. While nervousness had underpinned Treasuries heading into the auction, further deterioration in the 10-yr note (-06/32), which now yields 4.56%, has done anything but comfort investors holding rate-sensitive issues like banks and mortgage lenders; Financial is now off 0.5%.DJ30 -39.11 NASDAQ -16.47 SP500 -8.51 NASDAQ Dec/Adv/Vol 2104/862/1.32 bln NYSE Dec/Adv/Vol 2167/981/1.05 bln
1:00 pm : Not much changed since the last update as the Nasdaq continues to outpace its blue chip counterparts to the downside. While weakness in semiconductor, software, hardware, networking and Internet are the stand out industry groups weighing most heavily, the retail index (e.g. AEOS, BBBY and COST) recently hitting session lows has also contributed to the Composite's underperformance. ..RLX -1.0%.DJ30 -15.14 NASDAQ -11.90 SP500 -5.49 NASDAQ Dec/Adv/Vol 1940/977/1.21 bln NYSE Dec/Adv/Vol 2067/1062/940 mln
12:30 pm : No significant change to the market's underlying bearish bias as the afternoon session gets underway, but the Dow has made another push into the red. Notable blue chips turning negative since the last update include C, UTX and VZ. While such choppiness can typically be attributed to a lack of volume, as evidenced by yesterday marking the slowest trading day of the year, it should be worth noting that today's activity has come on above average volume. The Nasdaq has already surpassed 1.0 shares while nearly 850 mln shares have changed hands on the NYSE. DJ30 -22.05 NASDAQ -13.21 SP500 -6.22 NASDAQ Dec/Adv/Vol 1856/1042/1.09 bln NYSE Dec/Adv/Vol 1953/1149/846 mln
12:00 pm : Market remains mixed midday as investors continue to find little in the way of market moving catalysts to break the market out of its languor. The absence of industry leadership has been paced by consolidation across the energy complex, as a lack of buying support from the sector providing the largest contribution to profits on the S&P 500 merely exacerbates concern about expected earnings deceleration.
One bright spot has been Walt Disney (DIS 26.06 +1.10), a suggested holding in our Active Portfolio which turned in a solid quarter and accounts for the bulk of support on the Dow. However, the stock's 5% advance has been unable to single-handedly lift Consumer Discretionary, as a disappointing forecast from home builder Toll Brothers (TOL 30.24 -0.96) and confirmation that General Motors (GM 23.15 -0.19) agreed to slash its dividend by 50% continue to weigh on sentiment. Coca-Cola (KO 41.21 +0.27) also posted better than expected results but weakness in household products, grocers and drug retail have prevented Consumer Staples from trading higher.
Health Care, though, has shown relative strength, benefiting from rebounds in HMOs and medical equipment, while Technology clings to a small gain. Even though many technology reports (e.g. INTC, GOOG and AMZN) have disappointed investors of late, Cisco Systems (CSCO 18.15 +0.32), which reports after the bell, has a very strong track record of consistency which has so far made it less vulnerable. DJ30 +7.20 NASDAQ -6.38 SP500 -3.90 NASDAQ Dec/Adv/Vol 1724/1134/974 mln NYSE Dec/Adv/Vol 1878/1176/748 mln
11:30 am : Market improves its stance somewhat, as the Dow climbs back into positive territory, but the bulk of industry leadership remains negative. A 2.1% decline in Energy continues to weigh most heavily on the proceedings. A 1.2% decline in Materials, amid consolidation in Diversified Metals & Mining and Steel -- two of this year's best performing S&P industry groups, is also stalling the market's lackluster efforts to regain any of the upside momentum that kicked off 2006 on such an upbeat note. DJ30 +10.24 NASDAQ -3.37 SP500 -2.80 NASDAQ Dec/Adv/Vol 1693/1113/830 mln NYSE Dec/Adv/Vol 1861/1195/626 mln
11:00 am : Indices extend their reach into negative territory as modest leadership from the S&P 500's three most influential sectors -- Financial, Tech and Health Care, which had provided some support, has since disappeared. Adding to recent weakness in Financial has been a reversal in Treasuries. The absence of notable economic data has placed more emphasis than usual on this afternoon's $21bln 3-yr auction, as anticipation of weak demand has added some pressure to bonds, lifting the yield on the 10-yr note (-04/32) to 4.55%. DJ30 -20.15 NASDAQ -9.56 SP500 -5.32 NASDAQ Dec/Adv/Vol 1660/1052/674 mln NYSE Dec/Adv/Vol 1728/1232/504 mln
10:30 am : Stocks retrace earlier lows as further deterioration in oil prices continues to weigh heavily on Energy. The sector, which is now down 2.4% in sympathy with a 1.4% pullback in crude futures, remains one of the few sources of market support, albeit when trading in positive territory, since Energy accounts for the bulk of earnings growth on the S&P. DJ30 -9.02 NASDAQ -4.80 SP500 -4.45 XOI -2.3% NASDAQ Dec/Adv/Vol 1231/1391/488 mln NYSE Dec/Adv/Vol 1428/1437/354 mln
10:00 am : Major averages inch into positive territory but now trade in split fashion. Leading the recovery effort has been a turnaround in Technology, led by improvements in semiconductor and software, while rebounds in HMOs and medical equipment have provided a lift to Health Care. Energy, however, amid weakness across the energy complex, has more than erased the 1.5% advance that helped stocks yesterday offset weakness in Tech and Health Care to finish relatively flat. DJ30 +13.42 NASDAQ +1.24 SP500 -1.25 NASDAQ Dec/Adv/Vol 1246/1104/264 mln NYSE Dec/Adv/Vol 1539/948/190 mln
09:40 am : Market opens modestly lower as investors find few catalysts on the immediate horizon to get stocks back on track in February. Ongoing worries about earnings deceleration, led by Toll Brothers (TOL 30.12 -1.08) warning it won't build as many homes as previously forecasted, is acting as an early overhang. Also not helping market sentiment is confirmation that General Motors (GM 23.22 -0.12) agreed to slash its dividend by 50%, especially during a time when so many companies flush with cash are returning value to shareholders in the form of dividend increases -- news that has helped support the market. DJ30 -5.12 NASDAQ -3.91 SP500 -3.22 NASDAQ Vol 124 mln NYSE Vol 88 mln
09:15 am : S&P futures vs fair value: -3.1. Nasdaq futures vs fair value: -1.5.
09:00 am : S&P futures vs fair value: -3.0. Nasdaq futures vs fair value: -2.0. Stage remains set for the indices to open modestly lower as futures trade continues to languish below fair value. The absence of notable economic data to set a more definitive tone for trading and perhaps provide a catalyst to break the market out of its torpor further underscores early hesitation on the part of the buyers.
08:30 am : S&P futures vs fair value: -3.7. Nasdaq futures vs fair value: -3.0. Still shaping up to be a sluggish start for the cash market as futures indications still hold a negative slant. While reports that General Motors' (GM) Board agreed to slash GM's dividend by 50% will result in huge cost savings, the removal of shareholder value during a time when so many companies flush with cash are returning value to shareholders may also be hanging over the market.
08:00 am : S&P futures vs fair value: -3.6. Nasdaq futures vs fair value: -3.0. Futures market versus fair value suggests a modestly lower start for stocks amid ongoing concerns about slowing profit growth. Dow components Walt Disney (DIS) and Coca-Cola (KO) both beat Wall Street's expectations but Toll Brothers (TOL) cutting its 2006 home delivery estimates and uncertainty ahead of Cisco Systems' (CSCO) earnings after the close are underpinning an early sense of nervousness.
06:33 am : S&P futures vs fair value: -3.3. Nasdaq futures vs fair value: -2.5.
06:31 am : FTSE...5747.70...-24.30...-0.4%. DAX...5647.65...-19.14...-0.3%.
06:31 am : Nikkei...16720.99...-26.77...-0.2%. Hang Seng...15517.01...-31.05...-0.2%.
