After a month of wild gyrations and hefty losses, US markets (and, to some extent, world markets) seem to have finally found some level ground, or, as the case may be, some ground that seems to not be shifting radically from moment to moment.
Dow 8,852.22 -127.04; NASDAQ 1,711.29 -6.42; S&P 500 940.55 -5.88; NYSE Composite 5,948.80 -22.10
Even though the major indices ended Friday with across-the-board losses, thanks to the outsize gains on Monday, the Dow, S&P NASDAQ and NYSE Composite all had their first positive week in the last five, with gains between 2 and 4%.
These new ranges may be closer to reality for most of the stocks making up the various indices, especially in terms of dividend yield and price-to-earnings ratios. Of course, there are still high-fliers nestled in overvalue-land and a large number of companies whose earnings outstrip their share prices (bargains), but for the most part, the indices seem to have settled into a range, albeit a lower one, that is reflective of fair value.
Looking forward, the prognostications of a severe recession may actually not come to bear. Corporate earnings have thus far held up fairly well, the banking virus has not spread far beyond the financial sector, and there have been some pleasing side effects, notably lower prices for food and fuels, and that deflationary trend should continue well into next year.
While lower prices are an outstanding benefit for consumers, lower prices for finished goods are generally not seen as a harbinger of great things to come for corporations.
However, this time it may be different. Since the one bubble barely mentioned is the one which existed in base, or raw, materials, commonly known as commodities, those entities like sides of beef, bushels of corn, barrels of oil and tons of coal, it makes perfect sense that finished goods will be less costly to produce, meaning companies will be able to make significant savings at the bottom of the manufacturing regimen.
How these lower costs are passed through the rest of the economy remains to be seen, but, given sound management at the manufacturing level, an actual boost to corporate profits. In dynamic markets, such as the global one in which most listed companies now reside, cost and price adjustments need to be applied rapidly in order to maintain competitive edge.
In the market conditions of the recent past, companies had the luxury of maintaining high profit margins, as long as cash and credit were flowing, but now must be aware of lessened demand, and the need for price adjustment. In general, with lower (though not by much) margins, market share will take precedence over getting every last dime from cost-conscious consumers.
The widespread pain of the credit crisis, blared across TV screens, radio waves and computer screens, has not had any noticeable effect on consumers. With overall more money in their pockets due to reduced petrol prices, some may even consider saving some. Who knows? The next administration and congress might even see fit to lower taxes, modify banking and credit card interest regulations and keep their own books balanced. The end result would be more money in circulation and a much less stressed-out consumer.
I know that may appear a rosy scenario as compared to what been passing for news lately, but I urge you to take a look not only at your portfolio of investments, but the lives of others, many of whom either had no nest-egg in stocks, or a small one, or are young enough not to be distressed by something so common (they happen just about every ten years) as a stock market crash.
One only has to look at a long term chart of the Dow Jones Industrials to see that even at this level, stocks may be marginally overpriced and due for further adjustment. While I can't really make a case for further losses, one simply cannot rule out the possibility, as emotions often have more to do with markets and equity valuation than fundamentals. Besides, I called the bottom at 9450 on the Dow. Well, I was only off by about 1000 points, but who's counting? At least I saw the fallout coming at least a year ahead of most.
On the day, winners and losers finished in a virtual dead-heat, with 3180 advancers and 3161 decliners. New lows again led new highs, 344-49. That persistent metric, which has had new lows ahead of new highs every day except for a handful of days (5 or 6) since October 31 of last year, should slowly begin to show signs of moderation as stock pickers become more selective and a slow recovery develops.
Volume was just a bit on the high side, as expected, today being options expiration, which also explains some of the volatility.
NYSE Volume 1,740,610,000
NASDAQ Volume 2,761,572,000
Commodities continued their death spiral, though oil bucked the trend, gaining 1.87, to $72.13, a number with which most people can be happy. Gold fell another $16.80, to $787.70. Silver dropped another 30 cents, to $9.34 an ounce.
There are reports of an individual bombing a law office and the Goldman family attempting to obtain O.J. Simpson's Hall of Fame ring as part of a civil suit settlement. You see? The is some good news after all.
Friday, October 17, 2008
Thursday, October 16, 2008
Down and Up Wall Street
The roller coaster ride continues.
US stock indices evened things out on Thursday, heading higher after a huge Monday rally and two dizzying days of losses, but not before scaring the bejezus out of investors.
The Dow was up over 100 points early on, but then sunk to a loss of nearly 400 points, touching the lows of the day just after 11:00 am at 8197.67. At that point, some reasonably good news on the CPI (unchanged for September), corporate earnings and a continuing decline in the price of oil contributed to spirited buying enthusiasm, picking up stocks of all varieties - especially airlines and banks.
The Dow finished with a nice gain of over 400 points. Other major US indices sported similar upswings. Foreign markets in Europe and Asia were mostly lower on the day, reflecting the protracted volatility around the globe.
Dow 8,979.26 +401.35; NASDAQ 1,717.71 +89.38; S&P 500 946.43 +38.59; NYSE Composite 5,970.90 Up 210.94
Market internals were all over the map, just like the indices themselves. Advancing issues beat out losers, 4160-2244. New lows ranked up to 965 against only 51 new highs. Volume was impressive, at the highest levels of the week.
NYSE Volume 1,997,849,000
NASDAQ Volume 3,372,358,000
Commodities were once again showing the stresses of deflation. Oil fell $4.62, to $70.26, a price less than half of what it was just three months ago when crude hit an all-time high. Gold slipped $34.50, to $804.50 and silver fell 55 cents to $9.64, the first time silver has ended below $10.00 since August, 2007.
With general agreement that the entire planet is headed for recession, commodities are the first to show signs of strain. This is a continuing trend that should eventually spill over into finished products of all kinds, just in time for Christmas, though post-holiday sales should offer even better bargains.
US stock indices evened things out on Thursday, heading higher after a huge Monday rally and two dizzying days of losses, but not before scaring the bejezus out of investors.
The Dow was up over 100 points early on, but then sunk to a loss of nearly 400 points, touching the lows of the day just after 11:00 am at 8197.67. At that point, some reasonably good news on the CPI (unchanged for September), corporate earnings and a continuing decline in the price of oil contributed to spirited buying enthusiasm, picking up stocks of all varieties - especially airlines and banks.
The Dow finished with a nice gain of over 400 points. Other major US indices sported similar upswings. Foreign markets in Europe and Asia were mostly lower on the day, reflecting the protracted volatility around the globe.
Dow 8,979.26 +401.35; NASDAQ 1,717.71 +89.38; S&P 500 946.43 +38.59; NYSE Composite 5,970.90 Up 210.94
Market internals were all over the map, just like the indices themselves. Advancing issues beat out losers, 4160-2244. New lows ranked up to 965 against only 51 new highs. Volume was impressive, at the highest levels of the week.
NYSE Volume 1,997,849,000
NASDAQ Volume 3,372,358,000
Commodities were once again showing the stresses of deflation. Oil fell $4.62, to $70.26, a price less than half of what it was just three months ago when crude hit an all-time high. Gold slipped $34.50, to $804.50 and silver fell 55 cents to $9.64, the first time silver has ended below $10.00 since August, 2007.
With general agreement that the entire planet is headed for recession, commodities are the first to show signs of strain. This is a continuing trend that should eventually spill over into finished products of all kinds, just in time for Christmas, though post-holiday sales should offer even better bargains.
Tuesday, October 14, 2008
After Record Day, Some Give-Back
Following a day in which stocks rose by record amounts, Tuesday witnessed some profit-taking and a small sense of calm.
Stocks fell generally, but not by large amounts. The return to declines was, in a way, expected, and acceptable, as the Treasury announced it will purchase up to $250 billion in equity stakes of banks, including shares of Bank of America, Citigroup, JP Morgan Chase, Wells Fargo, Goldman Sachs and others.
Other government central banks around the world have already made similar investments in banks, to the tune of over $500 billion thus far.
While nobody is saying that the credit crisis is over, most analysts are in agreement that the worst may be behind us. What is still unclear, however, is how the credit freeze and subsequent government activity will affect the general economy. Consensus is clear that a worldwide recession is on the horizon - or already begun.
Dow 9,310.99 -76.62; NASDAQ 1,779.01 -65.24; S&P 500 998.01 -5.34; NYSE Composite 6,380.5298 -20.43
Market internals were mixed, but tended more toward normal than they have in the past three weeks. Declining issues edged out advancers, 3462-3049. New lows outstripped new highs, 291-74, though the number of new highs was the best showing since the last week of September.
Volume was heavy, a good sign that more investors feel confident trading in US equity markets.
NYSE Volume 1,877,556,000
NASDAQ Volume 2,936,985,000
Commodities continued to trade in mixed fashion though the tinge of deflation remains on the periphery. Oil futures lost another $2.73, with crude closing below $80 for the second time in three days, at $78.95. Gold lost $3.00, to $839.50, though silver gained 27 cents to $11.06. Silver has been buffeted about wildly of late and may be somewhat oversold.
A number of companies reported earnings during the day. Tech bellwether Intel (INTC) beat forecasts but issued some gloomy guidance. Beverage-maker PepsiCo (PEP) missed analyst estimates by 2 cents and announced planned layoffs of 3300 employees.
Dow component Johnson & Johnson (JNJ) reported a 30% rise in 3rd quarter profits over the same period of 2007. The company reported earnings of 1.17 per share, against analyst expectations of 1.11.
Stocks fell generally, but not by large amounts. The return to declines was, in a way, expected, and acceptable, as the Treasury announced it will purchase up to $250 billion in equity stakes of banks, including shares of Bank of America, Citigroup, JP Morgan Chase, Wells Fargo, Goldman Sachs and others.
Other government central banks around the world have already made similar investments in banks, to the tune of over $500 billion thus far.
While nobody is saying that the credit crisis is over, most analysts are in agreement that the worst may be behind us. What is still unclear, however, is how the credit freeze and subsequent government activity will affect the general economy. Consensus is clear that a worldwide recession is on the horizon - or already begun.
Dow 9,310.99 -76.62; NASDAQ 1,779.01 -65.24; S&P 500 998.01 -5.34; NYSE Composite 6,380.5298 -20.43
Market internals were mixed, but tended more toward normal than they have in the past three weeks. Declining issues edged out advancers, 3462-3049. New lows outstripped new highs, 291-74, though the number of new highs was the best showing since the last week of September.
Volume was heavy, a good sign that more investors feel confident trading in US equity markets.
NYSE Volume 1,877,556,000
NASDAQ Volume 2,936,985,000
Commodities continued to trade in mixed fashion though the tinge of deflation remains on the periphery. Oil futures lost another $2.73, with crude closing below $80 for the second time in three days, at $78.95. Gold lost $3.00, to $839.50, though silver gained 27 cents to $11.06. Silver has been buffeted about wildly of late and may be somewhat oversold.
A number of companies reported earnings during the day. Tech bellwether Intel (INTC) beat forecasts but issued some gloomy guidance. Beverage-maker PepsiCo (PEP) missed analyst estimates by 2 cents and announced planned layoffs of 3300 employees.
Dow component Johnson & Johnson (JNJ) reported a 30% rise in 3rd quarter profits over the same period of 2007. The company reported earnings of 1.17 per share, against analyst expectations of 1.11.
Monday, October 13, 2008
Stocks Roar Back in Huge Upside Session
If you sold during the past week, you're probably kicking yourself right about now, but there are still bargains aplenty in the market if today's massive gains are any indication.
Finally, after weeks of wrenching losses, all of the various moves and methods of governments around the globe seemed to have some effect. Indices worldwide racked up huge gains, with the US markets in line with other national indices. Stocks were up anywhere from 7 to 10% across Asia and Europe. Brazil's Bovespa Index scored a 14% gain.
The Dow, S&P 500 and NASDAQ all recorded record gains in excess of 11%, with the NYSE Composite the laggard, posting a 10.2% gain.
Dow 9,387.61 +936.42; NASDAQ 1,844.25 +194.74; S&P 500 1,003.35 +104.13; NYSE Composite 6,400.96 +590.98
European nations pledged $2.3 trillion for their ailing banks and the Bush administration plans to move ahead with the purchase of equity stakes in US financial institutions as part of the $700 billion plan approved by congress a little more than a week ago. With so much money being thrown the bankers' way, it's little wonder that everyone - from Main Street to Wall Street -breathed sighs of relief on Monday.
Market internals showed dramatic numbers with advancers beating decliners, 5890-634, though there were still 258 new lows as compared to only 4 new 52-week highs. Volume was solid, but by no means overextended, which is a positive sign.
NYSE Volume 2,164,607,000
NASDAQ Volume 2,636,781,000
While the day's gains were outsize and welcome, a sobering view of the markets still observes general malaise, with most major indices well off their highs and still down significantly for the year. With the holiday season coming, it will be interesting to note consumer spending and retail sales. Additionally, the US 3rd quarter earnings season gets into full swing this week and next.
Commodity markets were ambiguous from all the excitement in equities. Oil futures rose $3.69, to $81.68. Gold lost $16.50, closing at $842.50, while silver added 19 cents, to $10.79.
For now, it seems like the crippling credit crisis has been averted, or at least postponed. Americans are eager to get on with the November elections and replace many aspects of the federal government. What the coming months and years will bring is still unknown.
Finally, after weeks of wrenching losses, all of the various moves and methods of governments around the globe seemed to have some effect. Indices worldwide racked up huge gains, with the US markets in line with other national indices. Stocks were up anywhere from 7 to 10% across Asia and Europe. Brazil's Bovespa Index scored a 14% gain.
The Dow, S&P 500 and NASDAQ all recorded record gains in excess of 11%, with the NYSE Composite the laggard, posting a 10.2% gain.
Dow 9,387.61 +936.42; NASDAQ 1,844.25 +194.74; S&P 500 1,003.35 +104.13; NYSE Composite 6,400.96 +590.98
European nations pledged $2.3 trillion for their ailing banks and the Bush administration plans to move ahead with the purchase of equity stakes in US financial institutions as part of the $700 billion plan approved by congress a little more than a week ago. With so much money being thrown the bankers' way, it's little wonder that everyone - from Main Street to Wall Street -breathed sighs of relief on Monday.
Market internals showed dramatic numbers with advancers beating decliners, 5890-634, though there were still 258 new lows as compared to only 4 new 52-week highs. Volume was solid, but by no means overextended, which is a positive sign.
NYSE Volume 2,164,607,000
NASDAQ Volume 2,636,781,000
While the day's gains were outsize and welcome, a sobering view of the markets still observes general malaise, with most major indices well off their highs and still down significantly for the year. With the holiday season coming, it will be interesting to note consumer spending and retail sales. Additionally, the US 3rd quarter earnings season gets into full swing this week and next.
Commodity markets were ambiguous from all the excitement in equities. Oil futures rose $3.69, to $81.68. Gold lost $16.50, closing at $842.50, while silver added 19 cents, to $10.79.
For now, it seems like the crippling credit crisis has been averted, or at least postponed. Americans are eager to get on with the November elections and replace many aspects of the federal government. What the coming months and years will bring is still unknown.
Friday, October 10, 2008
US Markets Seen Stabilizing As Wild Week Ends
Global financial markets have taken steep discounts over the past week, in addition to falling values over the past year due to the unwinding of credit markets.
After weeks of hand-wringing and record declines on stock exchanges around the world, the US markets had the final say of the week and indications are encouraging that most of the selling may be over.
US markets were down sharply in the opening minutes of trading on Friday, with the Dow briefly falling below 8,000. But they quickly recovered and there was some stabilization, though the major US indices spent the majority of the day in negative territory. In fact, the Dow again touched the 8000 mark just before 2:00 pm.
In start contrast to recent days, however, the late-day trading was mostly buying rather than selling and the US averages finished with relatively minor losses. The NASDAQ, was, in fact, higher for the session.
Dow 8,451.19 -128.00; NASDAQ 1,649.51 +4.39; S&P 500 899.22 -10.70; NYSE Composite 5,704.00 -105.98
Asian and European markets finished with steeper losses, in the range of 5-9%. Traders are now routinely calling the selling "overdone" and "panicked" and some are actually advising clients to buy selected shares, though cautiously.
The Dow's final hour move was dramatic, gaining nearly 900 points by 3.40 pm before settling nearly 450 points below the day's high. Investors now seemed resigned to massive intra-day swings until there is some resolution to the crisis that has credit markets frozen, though there's somewhat of a consensus that the worst of the selling is behind.
On the day, internals were all over the map. Declining issues carried the day again, though by a much smaller margin over advancers, 3921-2659. The number of new lows was a shocker: 4341, roughly 2/3rds of all listed securities. Only 21 stocks attained new 52-week highs. Volume was extraordinarily strong, at the highest level of the past three weeks. We may have witnessed the final flushing out of weak hands and the initiation of some serious buying. There are bargains galore if one has the stomach for the extreme volatility.
NYSE Volume 2,929,366,000
NASDAQ Volume 4,203,839,000
Oil for December delivery took a massive hit, losing nearly 10%, down $8.63, to $77.99. That can only be seen as a huge positive for beleaguered motorists and homeowners who use oil for heat. Gold lost $27.50, settling at $859.00, while silver lost more than 10% in value, dropping $1.28, to $10.60. The losses in commodities are at one time reassuring, but also signaling deflation, which they have been doing since August.
With a meeting of G7 finance ministers over the weekend in Washington, any positive talk from that group could usher in a big Monday rally. Then again, market participants are still somewhat shaken and may not be ready to jump right back in straight away.
After weeks of hand-wringing and record declines on stock exchanges around the world, the US markets had the final say of the week and indications are encouraging that most of the selling may be over.
US markets were down sharply in the opening minutes of trading on Friday, with the Dow briefly falling below 8,000. But they quickly recovered and there was some stabilization, though the major US indices spent the majority of the day in negative territory. In fact, the Dow again touched the 8000 mark just before 2:00 pm.
In start contrast to recent days, however, the late-day trading was mostly buying rather than selling and the US averages finished with relatively minor losses. The NASDAQ, was, in fact, higher for the session.
Dow 8,451.19 -128.00; NASDAQ 1,649.51 +4.39; S&P 500 899.22 -10.70; NYSE Composite 5,704.00 -105.98
Asian and European markets finished with steeper losses, in the range of 5-9%. Traders are now routinely calling the selling "overdone" and "panicked" and some are actually advising clients to buy selected shares, though cautiously.
The Dow's final hour move was dramatic, gaining nearly 900 points by 3.40 pm before settling nearly 450 points below the day's high. Investors now seemed resigned to massive intra-day swings until there is some resolution to the crisis that has credit markets frozen, though there's somewhat of a consensus that the worst of the selling is behind.
On the day, internals were all over the map. Declining issues carried the day again, though by a much smaller margin over advancers, 3921-2659. The number of new lows was a shocker: 4341, roughly 2/3rds of all listed securities. Only 21 stocks attained new 52-week highs. Volume was extraordinarily strong, at the highest level of the past three weeks. We may have witnessed the final flushing out of weak hands and the initiation of some serious buying. There are bargains galore if one has the stomach for the extreme volatility.
NYSE Volume 2,929,366,000
NASDAQ Volume 4,203,839,000
Oil for December delivery took a massive hit, losing nearly 10%, down $8.63, to $77.99. That can only be seen as a huge positive for beleaguered motorists and homeowners who use oil for heat. Gold lost $27.50, settling at $859.00, while silver lost more than 10% in value, dropping $1.28, to $10.60. The losses in commodities are at one time reassuring, but also signaling deflation, which they have been doing since August.
With a meeting of G7 finance ministers over the weekend in Washington, any positive talk from that group could usher in a big Monday rally. Then again, market participants are still somewhat shaken and may not be ready to jump right back in straight away.
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