The post-election selling spree that began on Wednesday continued uninterrupted on Thursday, as investors took short-lived gains across the board in advance of Friday's expected blockbuster Nonfarm Payroll report, due out prior to the market open, at 8:30 am ET.
Retracing the massive gains made in the six sessions leading up to and including election day (Oct. 27 - Nov. 4), the Dow has lopped off nearly 1000 points in just the last two days as it wends it's way inexorably towards a retest of the low at 8175.
Dow 8,695.79 -443.48; NASDAQ 1,608.70 -72.94; S&P 500 904.88 -47.89; NYSE Composite 5,667.40 -344.77
Despite claims by some woefully misinformed political analysts who believe the market's performance is somehow a Wall Street referendum on the election of Barack Obama as the nation's 44th President, more astute analysis insists that investors are quickly taking profits before they are completely wiped away with the fallout from the very scary jobs report which may show US employers shedding as many as 200,000 positions in October.
Adding to the malaise on Thursday were the somewhat expected poor showing by retailers, many of which posted declines in same-store sales from the October period a year ago. That retailers would suffer in the midst of a recession is rather old news and hardly worth a check mark on the short list. The two-day pounding taken by oil prices is much more interesting and actually a bright spot for strapped consumers. More on that below.
Market internals continued to confirm the headline numbers. Advancing issues were overwhelmed again by decliners, 5133-1230. New lows expanded the gap over new highs, 357-13. Not only have new lows exceeded new highs every day except five or six for over a year now, but the number of new highs has shrunk to levels not seen in many years. It is indicative of an economic tsunami that is battering every sector and sparing all but a few stocks. Just about any individual share price is down by at least 20% from a year ago, with many off by 50-70% or more.
Volume was higher today than yesterday, indicating another flushing out of weak-kneed profit-takers.
NYSE Volume 1,525,795,000
NASDAQ Volume 2,510,131,000
As mentioned earlier, oil took another major hit, despite announced cuts by OPEC. Crude for December delivery lost $4.53, hitting $60.77, a 20-month low. Gold declined another $10.20, to $732.20, with some analysts expecting a bottom in the $650 range. It could go lower even than that. Silver fell 40 cents to $10.06, remaining the most skittish of the metals. Since silver has some industrial demand as well as intrinsic value, holders and dealers have not been quite able to grasp a price range for long. The price continues to yo-yo wildly.
Tomorrow's Nonfarms Payroll report from the Labor Department will come on top of today's revelation that the number of Americans drawing unemployment is now the highest in 25 years. Should the Dow spiral down below the 8175 mark, investors should brace for more selling in weeks and months ahead.
Despite the inordinately positive news of Obama's presidency, there are still 2 1/2 months until he officially takes the reins of power. While David Letterman and others wish he could get started sooner, the world - or what's left of it - must wait until January 20, 2009. It is upon that date and in the 30-60 days immediately following, that will determine our economic fates for years to come.
Plans are no doubt already afoot for another stimulus package aimed this time at taxpayers instead of bankers, but it will take much more than government hand-outs to repair what's broken in America's financial markets. The high of 14,250 on the Dow was just a year ago, but it seems so much further away than that now.
Thursday, November 6, 2008
Wednesday, November 5, 2008
Too Far, Too Fast: Stocks Pull Back
Less than a day after Americans election their first African-American president, Barack Obama, investors took a cautious approach, taking recent profits and heading for the hills.
This day was by no means a referendum on Barack Obama. Stocks were stretched thin. As of Tuesday's close, the Dow was up a full 1450 points off the October 27 lows, just 6 short sessions ago. That's an 18% gain, hardly sustainable. A retest of the 8175 low must occur and will likely happen within the next three weeks. Stocks may actually take another hit in December, especially if retail sales slump at the start of the holiday shopping season.
Tax-related selling may also be an issue, though one cannot imagine much selling to lock in what are most assuredly losses at this juncture.
Wednesday's loss of 5.1% was the largest percentage drop on the day after a presidential election in Dow history. On Nov. 8, 1932, the day after FDR defeated Herbert Hoover for the presidency, the Dow fell 4.5%.
Dow 9,139.27 -486.01; NASDAQ 1,681.64 -98.48; S&P 500 952.77 -52.98; NYSE Composite 6,012.17 -332.92
Market internals struck a rather somber tone, with losers beating out gainers, 5037-1286. New lows were achieved by some 154 issues. Only 7 posted new highs. Volume was moderate.
NYSE Volume 5,524,001,000
NASDAQ Volume 2,201,961,000
Oil took another nose dive, losing $5.23, to $65.30. Gold lost $14.90, to $742.40, while silver gained 33 cents to $10.46.
One should refrain from reading too much into the figures over the next few days, as they are likely to be dreadful. More and more firms continue to release earnings reports and forward-looking guidance that is spooking some investors. Still others are in the process of announcing or executing job cuts. Preliminary reports say that Friday's Nonfarm Payrolls report could be a stunner, showing a massive 200,000 jobs lost in October.
Beware. We are still in a falling stock zone. 8000 could easily be shattered on the downside in coming days and weeks.
This day was by no means a referendum on Barack Obama. Stocks were stretched thin. As of Tuesday's close, the Dow was up a full 1450 points off the October 27 lows, just 6 short sessions ago. That's an 18% gain, hardly sustainable. A retest of the 8175 low must occur and will likely happen within the next three weeks. Stocks may actually take another hit in December, especially if retail sales slump at the start of the holiday shopping season.
Tax-related selling may also be an issue, though one cannot imagine much selling to lock in what are most assuredly losses at this juncture.
Wednesday's loss of 5.1% was the largest percentage drop on the day after a presidential election in Dow history. On Nov. 8, 1932, the day after FDR defeated Herbert Hoover for the presidency, the Dow fell 4.5%.
Dow 9,139.27 -486.01; NASDAQ 1,681.64 -98.48; S&P 500 952.77 -52.98; NYSE Composite 6,012.17 -332.92
Market internals struck a rather somber tone, with losers beating out gainers, 5037-1286. New lows were achieved by some 154 issues. Only 7 posted new highs. Volume was moderate.
NYSE Volume 5,524,001,000
NASDAQ Volume 2,201,961,000
Oil took another nose dive, losing $5.23, to $65.30. Gold lost $14.90, to $742.40, while silver gained 33 cents to $10.46.
One should refrain from reading too much into the figures over the next few days, as they are likely to be dreadful. More and more firms continue to release earnings reports and forward-looking guidance that is spooking some investors. Still others are in the process of announcing or executing job cuts. Preliminary reports say that Friday's Nonfarm Payrolls report could be a stunner, showing a massive 200,000 jobs lost in October.
Beware. We are still in a falling stock zone. 8000 could easily be shattered on the downside in coming days and weeks.
Tuesday, November 4, 2008
Good, Bad and Ugly: Stocks Soar, Oil Up 10%, McCain Thinks He's a Winner
As Americans went to the polls in record numbers on this Election Day 2008, investors on Wall Street sent the Dow Jones Industrials to a 4-week high. Who knows why? Economic news isn't that good (in fact, it's all been bad lately), corporate earnings have been spotty, Circuit City is closing 155 stores and oil popped big time on Saudi production cuts.
Today's rally is probably a canard, or, at best, an indication that big money thinks any kind of change in Washington will be a good one. The heavy money's on a big Obama win, and with that, sweeping Democrats into a very strong majority in both houses of the congress.
In any case, Wall Street seemed a different place than it had been the past two months. Of course, we're down about 15% since the beginning of September and a bunch more from this time last year.
Dow 9,625.28 +305.45; NASDAQ 1,780.12 +53.79; S&P 500 1,005.75 +39.45; NYSE Composite 6,345.09 +290.11
Advancers led decliners, 4621-1773, while the gap between new lows and new highs remained in favor of the bottom feeders, 144-20. Volume was considerable, considering the focus on elections rather than money for a day, though most of the action was on the NASDAQ, bringing up a rather curious circumstance: Are investors looking more to small caps and technology rather than blue chip stocks in a potential Obama administration?
NYSE Volume 1,308,074,000
NASDAQ Volume 2,333,323,000
Oil jumped $6.62, to $70.53, on OPEC production cuts, though the figure is probably not sustainable despite the coming holidays and colder weather. Demand is slack, and output cuts aren't going to change the dynamic of conservation and penny-pinching at the pump. Gold was up $30.50, to $757.30, and silver gained 38 cents, to $10.13, reversing the predominant trend. The gains in the metals is another curiosity. Are gold-bugs preparing for trouble, like a long night of vote-counting, possible violence over rigged results, or are we reading into the figures too much?
We will know, soon, hopefully within hours. For election stories, check out our Live Blogging of the Election.
Today's rally is probably a canard, or, at best, an indication that big money thinks any kind of change in Washington will be a good one. The heavy money's on a big Obama win, and with that, sweeping Democrats into a very strong majority in both houses of the congress.
In any case, Wall Street seemed a different place than it had been the past two months. Of course, we're down about 15% since the beginning of September and a bunch more from this time last year.
Dow 9,625.28 +305.45; NASDAQ 1,780.12 +53.79; S&P 500 1,005.75 +39.45; NYSE Composite 6,345.09 +290.11
Advancers led decliners, 4621-1773, while the gap between new lows and new highs remained in favor of the bottom feeders, 144-20. Volume was considerable, considering the focus on elections rather than money for a day, though most of the action was on the NASDAQ, bringing up a rather curious circumstance: Are investors looking more to small caps and technology rather than blue chip stocks in a potential Obama administration?
NYSE Volume 1,308,074,000
NASDAQ Volume 2,333,323,000
Oil jumped $6.62, to $70.53, on OPEC production cuts, though the figure is probably not sustainable despite the coming holidays and colder weather. Demand is slack, and output cuts aren't going to change the dynamic of conservation and penny-pinching at the pump. Gold was up $30.50, to $757.30, and silver gained 38 cents, to $10.13, reversing the predominant trend. The gains in the metals is another curiosity. Are gold-bugs preparing for trouble, like a long night of vote-counting, possible violence over rigged results, or are we reading into the figures too much?
We will know, soon, hopefully within hours. For election stories, check out our Live Blogging of the Election.
Monday, November 3, 2008
Wall Street Takes a Break as Elections Loom
Investors were in a laid-back mood the day before America's critical presidential and congressional elections on Tuesday. With Barack Obama leading all of the major polls, there doesn't seem to be any sign of an exodus from stocks, as more than a few right-leaning pundits have suggested.
Rather, Wall Street spent most of Monday trading in a narrow range, sporting a wait-and-see attitude. Since election results won't be known until well after the close of trading on Tuesday, Election Day may turn look somewhat similar, with volume weak, the indices largely unchanged and trading limited to rounding out positions.
Dow 9,319.83 -5.18; NASDAQ 1,726.33 +5.38; S&P 500 966.30 -2.45; NYSE Composite 6,054.98 -6.11
Advancing issues beat decliners, 3563-2778. The gap between new lows and new highs continued to compress, down to 132 new lows to 21 new highs.
In economic news, which continues to be depressing, the ISM Manufacturing Index fell more than expected, to 38.9 in October, from 44.5 in September. This is really nothing new. The manufacturing sector hasn't been the beneficiary of good news in well over two years.
Much in the same vein, the three major US automakers - General Motors, Chrysler and Ford - saw their sales for October drop 45, 35 and 30%, respectively. They were not alone, however, as foreign automakers also saw sales slump. Toyota's sales fell 23%; Nissan's sales were down 33%. Honda was off 25%.
Normally, that kind of news would have sent stocks into a tailspin, but this was no ordinary day wrapped within an extraordinary two months on Wall Street. Bad news is now already discounted, and, to a large degree, ignored. Stocks are already at levels not seen in years, though a retesting of the lows will likely occur within weeks once the election passes by.
Oil for December delivery lighted up by $3.90, sending the price for a barrel of crude to $63.91. Gold gained $8.60, to $726.60, while silver added 2 cents to $9.75 per ounce.
Volume was very light, as expected.
NYSE Volume 1,017,059,000
NASDAQ Volume 1,808,486,000
Rather, Wall Street spent most of Monday trading in a narrow range, sporting a wait-and-see attitude. Since election results won't be known until well after the close of trading on Tuesday, Election Day may turn look somewhat similar, with volume weak, the indices largely unchanged and trading limited to rounding out positions.
Dow 9,319.83 -5.18; NASDAQ 1,726.33 +5.38; S&P 500 966.30 -2.45; NYSE Composite 6,054.98 -6.11
Advancing issues beat decliners, 3563-2778. The gap between new lows and new highs continued to compress, down to 132 new lows to 21 new highs.
In economic news, which continues to be depressing, the ISM Manufacturing Index fell more than expected, to 38.9 in October, from 44.5 in September. This is really nothing new. The manufacturing sector hasn't been the beneficiary of good news in well over two years.
Much in the same vein, the three major US automakers - General Motors, Chrysler and Ford - saw their sales for October drop 45, 35 and 30%, respectively. They were not alone, however, as foreign automakers also saw sales slump. Toyota's sales fell 23%; Nissan's sales were down 33%. Honda was off 25%.
Normally, that kind of news would have sent stocks into a tailspin, but this was no ordinary day wrapped within an extraordinary two months on Wall Street. Bad news is now already discounted, and, to a large degree, ignored. Stocks are already at levels not seen in years, though a retesting of the lows will likely occur within weeks once the election passes by.
Oil for December delivery lighted up by $3.90, sending the price for a barrel of crude to $63.91. Gold gained $8.60, to $726.60, while silver added 2 cents to $9.75 per ounce.
Volume was very light, as expected.
NYSE Volume 1,017,059,000
NASDAQ Volume 1,808,486,000
Friday, October 31, 2008
Markets Finish Stellar Week With Solid Gains
Wasn't it just a week or two ago that the world was about to end? Our global financial system was supposed to fall into some Keynesian Black Hole unless governments printed massive amounts of money and handed it over - pronto.
Well, that's what happened, kind of, and it worked, if you believe the whole story, from the blowup of Bear Stearns to the credit squeeze of September, to the "emergency" measures taken by the Fed, Treasury and the congress, whose members had that "deer in the headlights" blank stare throughout the whole process.
And glory be! Here we are with stocks around the world sporting gains like we cured the common cold, landed men on Mars and won the Triple Crown all in the same week.
The gains of the last week of October were nearly as robust as the losses earlier in the month, For the week just ended, the Dow Jones Industrials picked up 947 points; the NASDAQ ratcheted up 169 points; the S&P 500 got a 92-point boost and the NYSE Composite gained 674 points. Not bad, considering we were supposed to be facing down imminent economic collapse. Obviously, some people aren't buying the narrative.
Dow 9,325.01 +144.32; NASDAQ 1,720.95 +22.43; S&P 500 968.75 +14.66; NYSE Composite 6,061.09 +86.06
There are two dominant schools of thought at present. Both assume that the core of the crisis was a toxic combination of subprime mortgage loans, repackaged and sold as CDOs (collateralized debt obligations), plus bets against them in the form of credit default swaps and insurance on the bets (which is what AIG was holding when it blew up in their hands).
One school thinks the entire affair was above board and that the various government actions, including rate cuts, cash injections of billions of dollars, francs, yen and pounds into banks in developed countries, and a smattering of other "credit easing" measures were necessary and useful.
The more conspiratorial school believes the whole thing was cooked up by the banks and to varying extents, the governments involved, and that all the measures taken were just part of a high stakes con game in which Wall Street bankers stole billions.
How involved the two major political parties in America were involved is a matter of conjecture. Truth is that both were probably more deeply involved than we will ever know, but the end result is another free pass for the Bush thugs as they walk away with billions, and the ushering in of the Democratic party with full control and a somewhat busted budget.
If the crisis did anything, it assured the election of Barack Obama, which should have occurred any way, but also will help put a hard Democratic party majority in congress, to pass whatever legislation they see as suitable.
Whoever said, "fundamentals don't matter," hit it right on the nose for September and October of 2008. There was nothing fundamentally trackable throughout this entire episode. It was all political. Don't kid yourself.
On the day, the real fundamentals that mattered were very positive. Gainers outraced losers by a healthy margin, 4735-1640. New lows were once again far ahead of new lows, 205-18, though the number of both and the gap between them has stabilized into a range for now. Volume was moderate.
NYSE Volume 1,563,234,000
NASDAQ Volume 2,479,693,000
Commodities traded all over the board, but in the end, oil was up $1.85, to $67.81, gold lost another $20.30, to $718.20. Silver fell 6 cents to $9.73.
So, where are we now, and what's ahead? I thought you'd never ask. We have the federal funds rate at 1%, the Dow at 9300 and change and a recession that's probably already a year old. Oil is down, gold is moderating and $12 trillion dollars of wealth has just been whisked away, most of it into the ether. It's 2003 all over again! Time to start a war and buy some houses! And stocks are cheap, too! Break out the band, and have them play "Happy Days Are Here Again" until the horn section runs out of breath.
But wait, there are two big events next week. On Tuesday, we elect a new president, a whole new House of Representatives and a slew of Senators. On Friday, we get the Labor Department report on Nonfarm Payrolls from October. There will be a rally on Wednesday, for sure, and some give back on Friday, in all probability. But, not to worry, we're fine, just fine.
Have a pleasant weekend. Vote early and often.
Well, that's what happened, kind of, and it worked, if you believe the whole story, from the blowup of Bear Stearns to the credit squeeze of September, to the "emergency" measures taken by the Fed, Treasury and the congress, whose members had that "deer in the headlights" blank stare throughout the whole process.
And glory be! Here we are with stocks around the world sporting gains like we cured the common cold, landed men on Mars and won the Triple Crown all in the same week.
The gains of the last week of October were nearly as robust as the losses earlier in the month, For the week just ended, the Dow Jones Industrials picked up 947 points; the NASDAQ ratcheted up 169 points; the S&P 500 got a 92-point boost and the NYSE Composite gained 674 points. Not bad, considering we were supposed to be facing down imminent economic collapse. Obviously, some people aren't buying the narrative.
Dow 9,325.01 +144.32; NASDAQ 1,720.95 +22.43; S&P 500 968.75 +14.66; NYSE Composite 6,061.09 +86.06
There are two dominant schools of thought at present. Both assume that the core of the crisis was a toxic combination of subprime mortgage loans, repackaged and sold as CDOs (collateralized debt obligations), plus bets against them in the form of credit default swaps and insurance on the bets (which is what AIG was holding when it blew up in their hands).
One school thinks the entire affair was above board and that the various government actions, including rate cuts, cash injections of billions of dollars, francs, yen and pounds into banks in developed countries, and a smattering of other "credit easing" measures were necessary and useful.
The more conspiratorial school believes the whole thing was cooked up by the banks and to varying extents, the governments involved, and that all the measures taken were just part of a high stakes con game in which Wall Street bankers stole billions.
How involved the two major political parties in America were involved is a matter of conjecture. Truth is that both were probably more deeply involved than we will ever know, but the end result is another free pass for the Bush thugs as they walk away with billions, and the ushering in of the Democratic party with full control and a somewhat busted budget.
If the crisis did anything, it assured the election of Barack Obama, which should have occurred any way, but also will help put a hard Democratic party majority in congress, to pass whatever legislation they see as suitable.
Whoever said, "fundamentals don't matter," hit it right on the nose for September and October of 2008. There was nothing fundamentally trackable throughout this entire episode. It was all political. Don't kid yourself.
On the day, the real fundamentals that mattered were very positive. Gainers outraced losers by a healthy margin, 4735-1640. New lows were once again far ahead of new lows, 205-18, though the number of both and the gap between them has stabilized into a range for now. Volume was moderate.
NYSE Volume 1,563,234,000
NASDAQ Volume 2,479,693,000
Commodities traded all over the board, but in the end, oil was up $1.85, to $67.81, gold lost another $20.30, to $718.20. Silver fell 6 cents to $9.73.
So, where are we now, and what's ahead? I thought you'd never ask. We have the federal funds rate at 1%, the Dow at 9300 and change and a recession that's probably already a year old. Oil is down, gold is moderating and $12 trillion dollars of wealth has just been whisked away, most of it into the ether. It's 2003 all over again! Time to start a war and buy some houses! And stocks are cheap, too! Break out the band, and have them play "Happy Days Are Here Again" until the horn section runs out of breath.
But wait, there are two big events next week. On Tuesday, we elect a new president, a whole new House of Representatives and a slew of Senators. On Friday, we get the Labor Department report on Nonfarm Payrolls from October. There will be a rally on Wednesday, for sure, and some give back on Friday, in all probability. But, not to worry, we're fine, just fine.
Have a pleasant weekend. Vote early and often.
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