Stocks swung in a 400-point range on the Dow, but ended with sizable losses once more, sending all the major indices to fresh lows.
The markets opened to the downside, after news that Japan's NIKKEI index had suffered another 6% decline, hitting a 26-year low. US stocks shook that off and headed higher in the first hour, but vacillated throughout the session, finally giving way for good late in the day.
Investors still seem concerned that the fallout from the banking and credit issues still hasn't been fully reflected in stocks and across the general economy. Fear continues to grip investors with few grabbing for bargains despite stocks being down significantly over the past month and year.
Among companies posting losses or missing 3rd quarter estimates were hardware and home repair chain Lowes (L, 25.65 -5.66), which took a loss for the period of 31 cents a share, compared to a 77¢ profit a year ago, and health care provider Humana (HUM, 30.80 -5.47), which saw profits shaved by 40% from the same period a year ago due to higher operating costs.
Verizon (VZ, 27.61 +2.53) reported earnings in line with estimates, bucking the trend on a slow earnings news day.
Dow 8,175.77 -203.18; NASDAQ 1,505.90 -46.13; S&P 500 848.92 -27.85; NYSE Composite 5,196.53 -231.01
Market internals matched the headline numbers, with losers beating gainers by a score of 4948-1351. New lows once more finished far ahead of new highs, 1329-9. Clearly, there is no appetite for speculation at this juncture. With the critical US elections now just one week away, investors are clutching their cash close, making no forays into a severely troubled market. Volume was moderate, reflecting the overall lack of buying interest.
NYSE Volume 1,338,367,000
NASDAQ Volume 2,273,988,000
Commodity prices remained subdued. Oil lost another 93 cents, closing at $63.22. Gold gained for the second straight session, up $12.60, to $742.90, still more than 25% off recent highs. Silver lost another 10 cents, to $9.20.
Considering the timing dynamics involved, especially those concerning the potential massive shift of power in Washington, the declining trend should remain in place until at least Tuesday, November 4, election day in the USA. After that, there should be some kind of sober reassessment of Wall Street risk and reward, though the generally poor economic conditions - which should prevail for at least another two or three quarters - will likely keep a secure lid on equity prices.
The other factor at play is that of falling commodity prices, which should begin to manifest itself across a broad spectrum of commercial activity. While the most obvious price relief is at the gas pumps and in home heating bills, price pressure should become more evident in mainstream goods and services at the very worst of time: the Christmas season. The fallout will likely be the shuttering of marginal stores in malls across America, more retail job losses and possibly a number of bankruptcies. The Fed doesn't bail out retailers, only banks and cheating financial institutions.
On that note, more bank failures are almost sure to occur before Christmas causing even further deterioration to the banking/finance sector.
Monday, October 27, 2008
Friday, October 24, 2008
Severe Losses Again in Global Markets
Major indices across Europe and Asia fell anywhere from 5 to 9 percent on Friday, as the fear of global recession continued to plague markets.
US indices were not spared as all reached new lows, surpassing the bottoms reached on October 10. Clearly, we are nowhere near a bottom.
Dow 8,378.95 -312.30; NASDAQ 1,552.03 -51.88; S&P 500 876.77 -31.34; NYSE Composite 5,427.54 -276.59
Recent closing highs for US indices:
Dow Jones Industrials: 14,164.53, October 9, 2007
NASDAQ: 2859.12, October 31, 2007
S&P 500: 1565.15, October 9, 2007
NYSE Composite: 10,301.49, October 12, 2007
Today's (October 24, 2008) closing prices (all fresh lows):
Dow Jones Industrials: 8,378.95
NASDAQ: 1,552.03
S&P 500: 876.77
NYSE Composite: 5,427.54
Once more, market internals told the story of distress as declining issues far outpaced advancers, 5071-1286 (a 4-1 margin). New lows continued to expand dramatically over new highs, 2005-21. Volume was moderate to slightly higher than normal.
NYSE Volume 1,585,743,000
NASDAQ Volume 2,674,463,000
In the good news department, new home sales improved year-over-year by more than 5% and gas prices are significantly lower from mid-summer highs. The price of an average gallon of gas in America is well below $3.00 now.
The price of crude oil continues to collapse along with all other commodities.
Oil fell $3.69, to $64.15, (a 16-month low)despite a call by OPEC for production cuts of 1.5 million barrels per day. Gold reversed its recent downward trend with a gain of $15.60, to close at $730.30. Silver fell 21 cents, to $9.30.
More good news will continue to issue as conditions change. Bear in mind, that as the global "crisis" deepens and expands around the globe, the United States, being the first country to enter into recession, will likely be the first to emerge from the depths of despair. Something to ponder for the weekend other than the fact that US stocks are now completely in the pits.
US indices were not spared as all reached new lows, surpassing the bottoms reached on October 10. Clearly, we are nowhere near a bottom.
Dow 8,378.95 -312.30; NASDAQ 1,552.03 -51.88; S&P 500 876.77 -31.34; NYSE Composite 5,427.54 -276.59
Recent closing highs for US indices:
Dow Jones Industrials: 14,164.53, October 9, 2007
NASDAQ: 2859.12, October 31, 2007
S&P 500: 1565.15, October 9, 2007
NYSE Composite: 10,301.49, October 12, 2007
Today's (October 24, 2008) closing prices (all fresh lows):
Dow Jones Industrials: 8,378.95
NASDAQ: 1,552.03
S&P 500: 876.77
NYSE Composite: 5,427.54
Once more, market internals told the story of distress as declining issues far outpaced advancers, 5071-1286 (a 4-1 margin). New lows continued to expand dramatically over new highs, 2005-21. Volume was moderate to slightly higher than normal.
NYSE Volume 1,585,743,000
NASDAQ Volume 2,674,463,000
In the good news department, new home sales improved year-over-year by more than 5% and gas prices are significantly lower from mid-summer highs. The price of an average gallon of gas in America is well below $3.00 now.
The price of crude oil continues to collapse along with all other commodities.
Oil fell $3.69, to $64.15, (a 16-month low)despite a call by OPEC for production cuts of 1.5 million barrels per day. Gold reversed its recent downward trend with a gain of $15.60, to close at $730.30. Silver fell 21 cents, to $9.30.
More good news will continue to issue as conditions change. Bear in mind, that as the global "crisis" deepens and expands around the globe, the United States, being the first country to enter into recession, will likely be the first to emerge from the depths of despair. Something to ponder for the weekend other than the fact that US stocks are now completely in the pits.
Thursday, October 23, 2008
Markets Still Jittery
A 400-point, last hour rally sent the Dow Jones Industrials to a healthy gain today, though the NASDAQ finished at new multi-year lows and the S&P 500 was modestly higher. Once again, a high level of volatility was evident, as trade was more jumpy than choppy.
Large positions are changing in this explosive environment. The markets are in the process of retesting previous lows. By today's standard, we survived, barely, for a day.
That's how life is now measured on Wall Street: by the day, or hour, or even minutes. As far as a bottom is concerned, I'm fairly convinced we haven't seen it yet. A true bottoming out in value could still be 3-4 months out, or as soon as mid-November. From all indications, however, the holiday season is almost certainly going to disappoint. How much the market has already discounted the 4th quarter is an open question. A good guess would be, "probably not much."
One gets the definite impression that there are more than a few high rollers with cash in hand, waiting to pounce on some asset, but that they're waiting until after US election day, November 4. On that day, we may be witness to a transformational change in the way our country is run and in the administration of policy. Or we may elect a candidate who wishes to go very much further along the path recently traveled, and that doesn't seem to be working well at all.
In any case, there's surely enough action to keep one's attention, though the overall effect of trading the last two weeks has been nearly a stalemate against the lows of October 9 and 10.
Dow 8,691.25 +172.04; NASDAQ 1,603.91 -11.84; S&P 500 908.11 +11.33; NYSE Composite 5,671.93 +41.46
Oil gained a bit, up $1.09, to $67.84. It still seems to have further to fall. Likewise, gold extended its losses another $20.50, to $714.70. Silver bucked the trend, gaining four cents to $9.50. Gold seems determined to test support in the $600-650 range, and fairly soon. Warning: the precious metals may be in a falling asset zone, a message that's been reiterated right on this blog for months now.
The internals told an entirely different story for the day's trading. Declining issues led advancers, 4185-2115. There were 1390 new lows to just 14 new highs. The level of new lows has now become alarming once again, signaling another fresh round of selling and devaluation. It would not be surprising in the least.
Volume was higher than normal, especially on the NASDAQ, the only major index to show a loss on the day, where it was heavy.
NYSE Volume 1,543,673,000
NASDAQ Volume 3,158,630,000
Large positions are changing in this explosive environment. The markets are in the process of retesting previous lows. By today's standard, we survived, barely, for a day.
That's how life is now measured on Wall Street: by the day, or hour, or even minutes. As far as a bottom is concerned, I'm fairly convinced we haven't seen it yet. A true bottoming out in value could still be 3-4 months out, or as soon as mid-November. From all indications, however, the holiday season is almost certainly going to disappoint. How much the market has already discounted the 4th quarter is an open question. A good guess would be, "probably not much."
One gets the definite impression that there are more than a few high rollers with cash in hand, waiting to pounce on some asset, but that they're waiting until after US election day, November 4. On that day, we may be witness to a transformational change in the way our country is run and in the administration of policy. Or we may elect a candidate who wishes to go very much further along the path recently traveled, and that doesn't seem to be working well at all.
In any case, there's surely enough action to keep one's attention, though the overall effect of trading the last two weeks has been nearly a stalemate against the lows of October 9 and 10.
Dow 8,691.25 +172.04; NASDAQ 1,603.91 -11.84; S&P 500 908.11 +11.33; NYSE Composite 5,671.93 +41.46
Oil gained a bit, up $1.09, to $67.84. It still seems to have further to fall. Likewise, gold extended its losses another $20.50, to $714.70. Silver bucked the trend, gaining four cents to $9.50. Gold seems determined to test support in the $600-650 range, and fairly soon. Warning: the precious metals may be in a falling asset zone, a message that's been reiterated right on this blog for months now.
The internals told an entirely different story for the day's trading. Declining issues led advancers, 4185-2115. There were 1390 new lows to just 14 new highs. The level of new lows has now become alarming once again, signaling another fresh round of selling and devaluation. It would not be surprising in the least.
Volume was higher than normal, especially on the NASDAQ, the only major index to show a loss on the day, where it was heavy.
NYSE Volume 1,543,673,000
NASDAQ Volume 3,158,630,000
Wednesday, October 22, 2008
Markets Worried; Second Shoe Dropping is Earnings
Third quarter earnings, especially among selected, poorly-managed internet companies like Yahoo and eBay, have been weaker than expected so far, though that's not surprising considering how top level executives of those companies have mangled their businesses.
Coupled with continuing (somewhat unfounded) fears of a global recession, investors got cold feet once more and sent stocks tumbling in a mid-week rout. Markets across Asia and Europe recorded large losses, confirmed by another round of selling in the US.
While it's apparent that there's little appetite for stocks at this juncture, much of the fear and softness in the market is due to the slow response from government, but also to widespread reports of coming job losses and tight employment conditions.
There is some anecdotal evidence that companies will be tightening their belts to a large degree in coming months, but the targets for layoffs are those usually hurt: retailers, recreation and consumer services. To a greater extent, multi-national companies in core industries outside of banking, discount retailers and business services companies will weather the storm without much disruption.
With third quarter earnings looking increasingly sad and a reallocation of priorities on the horizon, some analysts and the usually-wrong financial media are already forecasting a 4th quarter full of missed expectations, such as this Business Week article, The Coming Pink Slip Epidemic.
The headline is noisy, but there's little meat in the actual story other than citing already-known statistics and positing that economic conditions will worsen considerably over the next 90 days. In the meantime, however, companies will be making assessments and adjustments to ameliorate problems. Layoffs happen all the time, but how related they are to current credit conditions has yet to be established.
At the bottom of it all is how well the banking bailout is handled, and, of course, who wins the elections less than two weeks away.
The problem with throwing more money at banks which have already mowed through hundreds of billions of dollars via bad investments, is that they'll make more investments of equally-dubious quality. Bankers, by breed, are numbskulls who have never been very good at evaluating risk, but very good at overcharging and otherwise abusing customers. If any proof is needed, just listen to Henry Paulson speak, like he did on Charlie Rose last night, putting everyone to sleep a little early by saying, as he usually does, nothing of merit.
Giving bankers any taxpayer money at all is essentially a bad idea, but that horse has already left the barn and Americans are signed on - via our elected morons - to what is likely to be recorded in history books as one of the worst financial schemes of all time.
When one views the conditions of the world's economies, one need look no further than government and big business to find the culprits for the ongoing malaise. The longer banks and government continue handing out IOUs instead of creating real wealth through the creation of products, jobs and sensible tax policies, the longer Americans run the risk of seeing the American dream burst like all the bubbles before them. In some respects, death of the dream may already be written in stone, as much of the damage will take years and many laws to reverse.
But, we are in the midst of a slowdown, not a complete collapse. People still need to eat, work and carry on. 80% of the population will experience few negative effects through next year.
Dow 8,519.21 -514.45; NASDAQ 1,615.75 -80.93; S&P 500 896.78 -58.27; NYSE Composite 5,630.47 -420.87
For the session, volume was elevated but not at panic levels. Advancing issues were outdone by decliners in a big way, with just 958 winners to 5389 losers. The number of new lows expanded again, to 864, against just 11 new highs.
NYSE Volume 1,553,994,000
NASDAQ Volume 2,620,218,000
Commodities continued to reflect expected declining demand. Despite the near-certainty of production cuts by OPEC nations, oil fell by $5.43, to $66.75. The good news for drivers and bad news for wealthy oil barons is that the drop in the price of oil is showing no signs of finding a bottom. Gold also was hard hit, losing $32.80, to $735.20. Silver dropped another 62 cents, to $9.46. The metals, along with oil, are officially in bear markets. Deflation, people, deflation.
On the bright side, Amazon reported earning that beat expectations and were 46% better than the same period a year ago, though their outlook for the 4th quarter was dim.
Coupled with continuing (somewhat unfounded) fears of a global recession, investors got cold feet once more and sent stocks tumbling in a mid-week rout. Markets across Asia and Europe recorded large losses, confirmed by another round of selling in the US.
While it's apparent that there's little appetite for stocks at this juncture, much of the fear and softness in the market is due to the slow response from government, but also to widespread reports of coming job losses and tight employment conditions.
There is some anecdotal evidence that companies will be tightening their belts to a large degree in coming months, but the targets for layoffs are those usually hurt: retailers, recreation and consumer services. To a greater extent, multi-national companies in core industries outside of banking, discount retailers and business services companies will weather the storm without much disruption.
With third quarter earnings looking increasingly sad and a reallocation of priorities on the horizon, some analysts and the usually-wrong financial media are already forecasting a 4th quarter full of missed expectations, such as this Business Week article, The Coming Pink Slip Epidemic.
The headline is noisy, but there's little meat in the actual story other than citing already-known statistics and positing that economic conditions will worsen considerably over the next 90 days. In the meantime, however, companies will be making assessments and adjustments to ameliorate problems. Layoffs happen all the time, but how related they are to current credit conditions has yet to be established.
At the bottom of it all is how well the banking bailout is handled, and, of course, who wins the elections less than two weeks away.
The problem with throwing more money at banks which have already mowed through hundreds of billions of dollars via bad investments, is that they'll make more investments of equally-dubious quality. Bankers, by breed, are numbskulls who have never been very good at evaluating risk, but very good at overcharging and otherwise abusing customers. If any proof is needed, just listen to Henry Paulson speak, like he did on Charlie Rose last night, putting everyone to sleep a little early by saying, as he usually does, nothing of merit.
Giving bankers any taxpayer money at all is essentially a bad idea, but that horse has already left the barn and Americans are signed on - via our elected morons - to what is likely to be recorded in history books as one of the worst financial schemes of all time.
When one views the conditions of the world's economies, one need look no further than government and big business to find the culprits for the ongoing malaise. The longer banks and government continue handing out IOUs instead of creating real wealth through the creation of products, jobs and sensible tax policies, the longer Americans run the risk of seeing the American dream burst like all the bubbles before them. In some respects, death of the dream may already be written in stone, as much of the damage will take years and many laws to reverse.
But, we are in the midst of a slowdown, not a complete collapse. People still need to eat, work and carry on. 80% of the population will experience few negative effects through next year.
Dow 8,519.21 -514.45; NASDAQ 1,615.75 -80.93; S&P 500 896.78 -58.27; NYSE Composite 5,630.47 -420.87
For the session, volume was elevated but not at panic levels. Advancing issues were outdone by decliners in a big way, with just 958 winners to 5389 losers. The number of new lows expanded again, to 864, against just 11 new highs.
NYSE Volume 1,553,994,000
NASDAQ Volume 2,620,218,000
Commodities continued to reflect expected declining demand. Despite the near-certainty of production cuts by OPEC nations, oil fell by $5.43, to $66.75. The good news for drivers and bad news for wealthy oil barons is that the drop in the price of oil is showing no signs of finding a bottom. Gold also was hard hit, losing $32.80, to $735.20. Silver dropped another 62 cents, to $9.46. The metals, along with oil, are officially in bear markets. Deflation, people, deflation.
On the bright side, Amazon reported earning that beat expectations and were 46% better than the same period a year ago, though their outlook for the 4th quarter was dim.
Tuesday, October 21, 2008
Despite Late-Day Decline, Volatility Subsiding
Stocks ended lower on US exchanges, though the entire range of trade was much more compressed than recent, more volatile sessions, an indication that the credit crisis, which caused a severe decline in general stock value, may be subsiding.
Today's complete range on the Dow Jones industrial Index was 280 points - still somewhat jumpy, but nothing compared to the 500 to 1000-point swings which occurred during the height of the crisis.
Following yesterday's 400+ point gain, there was some sensibility to Tuesday's decline. After all, most market participants are still a bit shell-shocked by recent events, so short-term traders were taking profits and the end-of-day resettling seemed, by most comparisons, rather normal.
With little in the way of economic news to rattle or sooth traders' nerves, the focus was clearly on earnings. Most of the companies (roughly 65%) reported earnings either in line with estimates or beat expectations. That left a bulk of companies with earnings misses, and by the end of the day, investors had taken note along with taking money off the table.
Dow 9,033.66 -231.77; NASDAQ 1,696.68 -73.35; S&P 500 955.05 -30.35; NYSE Composite 6,051.34 -236.26
Along with the reduced volatility, trading volume trended lower for a second straight day. As the headline numbers suggest, decliners beat advancers, 4489-1845, and new lows posted higher numbers than new highs, 255-14.
NYSE Volume 1,161,591,000
NASDAQ Volume 2,144,611,000
The reduced volume and volatility are the result of extreme measures taken by governments around the world to un-freeze credit markets. Key interest rates, including the LIBOR, the rate at which banks lend to each other, have been falling, and today reached levels not seen since the collapse of Lehman Bros. in September.
Better liquidity in credit markets is key to the general health of the economy, and the recent movement is encouraging.
Corporate earnings, however, were another matter. While 3M (MMM), American Express (AXP), DuPont (DD) and Pfizer (PFE) reported profits in excess of estimates, a couple of larger firms, Caterpillar (CAT) and Texas Instruments (TXN) missed and were punished by investors. A spate of companies also issued 4th quarter and 2009 guidance that was not very rosy.
All of these elements contributed to the overall decline in stocks.
Commodity prices showed sympathy for the most part. Oil for December delivery traded at $72.30, down $2.09 from Monday's close. Gold continued its free-fall, losing another $22.00, to $768.00. Silver bucked the trend, trading 39 cents higher, to $10.08.
Today's complete range on the Dow Jones industrial Index was 280 points - still somewhat jumpy, but nothing compared to the 500 to 1000-point swings which occurred during the height of the crisis.
Following yesterday's 400+ point gain, there was some sensibility to Tuesday's decline. After all, most market participants are still a bit shell-shocked by recent events, so short-term traders were taking profits and the end-of-day resettling seemed, by most comparisons, rather normal.
With little in the way of economic news to rattle or sooth traders' nerves, the focus was clearly on earnings. Most of the companies (roughly 65%) reported earnings either in line with estimates or beat expectations. That left a bulk of companies with earnings misses, and by the end of the day, investors had taken note along with taking money off the table.
Dow 9,033.66 -231.77; NASDAQ 1,696.68 -73.35; S&P 500 955.05 -30.35; NYSE Composite 6,051.34 -236.26
Along with the reduced volatility, trading volume trended lower for a second straight day. As the headline numbers suggest, decliners beat advancers, 4489-1845, and new lows posted higher numbers than new highs, 255-14.
NYSE Volume 1,161,591,000
NASDAQ Volume 2,144,611,000
The reduced volume and volatility are the result of extreme measures taken by governments around the world to un-freeze credit markets. Key interest rates, including the LIBOR, the rate at which banks lend to each other, have been falling, and today reached levels not seen since the collapse of Lehman Bros. in September.
Better liquidity in credit markets is key to the general health of the economy, and the recent movement is encouraging.
Corporate earnings, however, were another matter. While 3M (MMM), American Express (AXP), DuPont (DD) and Pfizer (PFE) reported profits in excess of estimates, a couple of larger firms, Caterpillar (CAT) and Texas Instruments (TXN) missed and were punished by investors. A spate of companies also issued 4th quarter and 2009 guidance that was not very rosy.
All of these elements contributed to the overall decline in stocks.
Commodity prices showed sympathy for the most part. Oil for December delivery traded at $72.30, down $2.09 from Monday's close. Gold continued its free-fall, losing another $22.00, to $768.00. Silver bucked the trend, trading 39 cents higher, to $10.08.
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