Tuesday, October 26, 2010

US Market Commentary (After Market Close): Flat Finish

Strength in the dollar overshadowed another batch of better-than-expected earnings this morning. While that left stocks to start the session in the red, the broader market was able to recover to the neutral line, where it was mired amid resistance.

The dollar rebounded solidly from its loss in the prior session, such that the Dollar Index settled 0.7% higher today. That move came in the face of a stronger British pound, which was helped by news that the United Kingdom's economic output for the third quarter hit a stronger-than-expected clip of 0.8%. Moreover, Standard & Poor's affirmed the UK's AAA credit rating.

With the dollar a primary catalyst for trade, the broader market was uninspired by the latest round of quarterly reports. The most recent lot included upside earnings surprises from Amgen (AMGN 57.26, -0.69), Biogen Idec (BIIB 59.99, +0.09), Bristol-Myers Squibb (BMY 26.86, -0.30), Johnson Controls (JCI 34.49, -0.25), and Texas Instruments (TXN 28.88, -0.10). Coach (COH 49.78, +5.30), National-Oilwell Varco (NOV 52.03, +4.06), and Ford Motor (F 14.36, +0.21) each posted better-than-expected earnings, too, but their shares set fresh 52-week highs.

IBM (IBM 140.67, +0.83) already reported its results for the latest quarter, but managed to attract support with its announcement that its board has authorized $10.0 billion for share repurchases.

Though moderate, a broadly positive response followed the midmorning release of the Consumer Confidence Index for October. It improved to 50.2 from 48.5, but had only been expected to improve to 49.0, according to economists polled by Briefing.com.

Despite positive data and generally upbeat corporate reports, the stock market never successfully staged an advance. Sellers kept the S&P 500 out of positive territory by standing ready at the neutral line.

Treasuries also had an unimpressive session. The benchmark 10-year Note fell 21 ticks so that its yield climbed to 2.64%. The 30-year Bond fell more than a full point so that its yield returned to the 4.00% mark.

Similar to the prior session, Treasuries extended their losses in the wake of the latest Note auction. Today's auction featured $35 billion of 2-year Notes that drew a bid-to-cover ratio of 3.43 on dollar demand of $120.1 billion and an indirect bidder participation rate of 40.0%. The 2-year Note ended the day down a couple of ticks so that its yield was last quoted at 0.39%.

Advancing Sectors: Consumer Discretionary (+0.4%), Energy (+0.3%), Tech (+0.1%), Telecom (+0.1%), Financials (+0.1%), Declining Sectors: Consumer Staples (-0.4%), Health Care (-0.3%), Industrials (-0.3%), Materials (-0.2%), Utilities (-0.2%)

Tuesday, August 17, 2010

US Market Commentary (After Market Close): Tone Turns Positive, but Resistance Looms

Broad buying in light volume gave stocks strong gains, but the effort failed to take stocks through a key resistance level.

Stocks sported robust gains for the entire session. Though they finished with their best percentage gain in two weeks, strength actually faded into the close. The late drift came after the S&P 500 failed to penetrate the 1100 line. It did manage to close firmly above its 50-day moving average of 1088, however.

The advance was helped along by news that BHP Billiton (BHP 70.21, -1.73) proposed to acquire Potash (POT 143.17, +31.02) for $130 per share. Potash refused the offer, but news of such a large-scale takeover attempt provided participants with a tacit sign of improved sentiment and prospects across the corporate landscape, especially in the agricultural and basic materials space. In turn, materials stocks led the broader market for the entire session and finished a 2.3% gain.

Retailers were also strong. As a group retailers climbed 1.8%. Discount retail giant and Dow component Wal-Mart (WMT 51.02, +0.61) was a solid performer on the back of in-line earnings and an improved forecast.

Home improvement retailer and fellow Dow component Home Depot (HD 28.31, +0.93) had a more positive influence over retailers. It posted better-than-expected earnings for the latest quarter, but issued a rather mixed forecast. A smaller-than-expected increase in housing starts during July didn’t do anything to derail the stock this session.

Housing starts for July increased 1.7% month-over-month to an annualized rate of 546,000 units, which is less than the rate of 555,000 units that had been widely anticipated. Building permits for July fell 3.1% month-over-month to an annualized rate of 565,000, which is below the rate of 573,000 that had been expected.

As for other data, the Producer Price Index for July increased 0.2%, as expected. Excluding food and energy, producer prices for July increased 0.3% month-over-month, but a 0.1% increase had been expected.

Lastly, industrial production increased 1.0% in July. It had been to rise by 0.6%.

Though there was plenty of important data for participants to digest this session, it did not have much of a meaningful impact on trade. That contrasts sharply with action of previous weeks, when data had been a primary catalyst behind trade and corporate announcements, including earnings, were of secondary concern.

Consistent with recent weeks, trading volume remains unimpressive. More directly, share volume on the NYSE failed to break 1 billion shares for the third straight session, keeping with the 15-session average of just 984 million shares.

Advancing Sectors: Materials (+2.3%), Industrials (+1.8%), Energy (+1.5%), Consumer Discretionary (+1.5%), Health Care (+1.3%), Telecom (+1.2%), Tech (+1.1%), Utilities (+0.9%), Consumer Staples (+0.8%), Financials (+0.7%)Declining Sectors: (None)

Friday, July 16, 2010

US Market Commentary (After Market Close): Stocks drop on weak economic data

Stocks saw selling pressure on the open, and weakness throughout the session as tepid economic data sent investors from riskier assets into safety. The Dow closed down 261 points to finish lower for only the second time in the past eight sessions. Goldman Sachs (GS 146.28, +1.06) and Charles Schwab (SCHW 15.15, +0.60) were the only financials to close the day in positive territory. Shares of Goldman benefited from the firm's $550 million settlement with the Securities and Exchange Commission due to expectations of a larger settlement. Schwab advanced as a result of a better-than-expected earnings report. Other financials were not as lucky. Bank of America (BAC 13.99, -1.40) and Citigroup (C 3.90, -0.26) both beat consensus earnings per share estimates, but failed to top revenues forecasts. Economic bellwether General Electric (GE 14.55, -0.70) suffered a similar fate by beating the consensus' earnings per share estimate, but failed to impress on revenues. Its earnings were lifted by an improvement in its GE Capital segment. Technology giant Google (GOOG 459.73, -34.29) missed analyst expectations on earnings per share, and announced in-line revenues. Shares in Apple (AAPL 249.95, -1.50) spent some time in positive territory following the conference to announce a fix for the new iPhone 4, but finished the day in negative territory. The VIX rose for the fourth consecutive session, reaching 26.49, its highest level since July 7th. Before the opening bell on Monday, look for Delta Airlines (DAL 11.73, -0.28), Haliburton (HAL 27.54, -0.56), and Hasbro (HAS 38.51, -2.58) to release their second quarter earnings. Following Monday's close, IBM (IBM 128.08, -2.64) and Texas Instruments (TXI 28.59, -1.16) release their numbers.

Saturday, March 27, 2010

US Market Commentary (After Market Close): Flat Close To A Choppy Week

Today's flat session capped off a choppy week, with the end result being a weekly gain of +0.6% in S&P 500. Stocks had continued their bullish trend during the first part of the week, but a sharp intraday reversal yesterday, and another intraday pullback today, pared a good portion of the week's gains. Although yesterday's weakness followed Greece headlines and a disappointing bond auction, and today's pullback took place amid escalating geopolitical concerns after a South Korean naval ship sunk, neither intraday pullback was directly triggered by a specific fundamental catalyst, making the moves more technically driven. After starting today on a positive note, equities gave up their early gains in a sharp late-morning pullback. 

Headlines stoking the idea of increased tensions between South and North Korea circulated, and most likely contributed to some risk-par ing, but it is still not clear if North Korea was involved in the sinking of the a South Korean naval ship and naval skirmishes between the two countries are not uncommon. 
Other than headlines on the Korean situation, intraday newsflow was relatively light and volume was below average. Before the open, revisions to Q4 GDP were slightly worse than expected, but didn't impact the pre-market trading picture. A better-than-expected revision to the March University of Michigan Confidence reading helped boost equities at 9:55 ET, but the move was short-lived and no follow-through materialized. Today's action followed mixed trading overseas, with strength in Asia being offset by modestly weaker performance in major European markets. Notably, Greece's ASE Index rose 5.6% on the EU debt backstop. While the S&P 500 is slightly higher on the week, market volatility picked up a bit on the late-week pullbacks. The CBOE Volatility Index (VIX) rose above 18 today, up ~2 points from last we ek's 22-month low near 16. The rise in the VIX indicates increased expectations for near-term volatility. This modest rise in the VIX also comes ahead of next week's full slate of economic data, which could cause greater fluctuations in the market. Interestingly, the big economic event of next week -- Friday's (4/2) March employment report -- will take place on a day when the stock market is closed for the Good Friday holiday. The bond market will be open however, and the current expectation is for a +190K increase in Nonfarm Payrolls. 
Prior to the week-end employment report, data on Personal Income and Spending (Monday), Consumer Confidence (Tuesday), ADP Employment Change (Wednesday) and Weekly Jobless Claims and ISM (Thursday), will all be released earlier in the week. In addition to an abundance of economic data, there are a few earnings of interest next week, with bigger names including fertilizer company Mosaic (MOS) and Blackberry maker Research In Motion (RIMM), whic h are both due out Wednesday after the close.

Saturday, March 13, 2010

US Market Commentary (After Market Close): Stocks Drift After Sentiment Survey Disappoints

Stocks set a fractionally improved 52-week high in the early going, but then spent the rest of the session stuck in a choppy sideways trade as a disappointing consumer sentiment survey weighed on the mood of participants.

Momentum from four straight gains helped position stocks for a positive start this morning. A weaker dollar also helped -- it traded with a marked loss for the entire session as the euro and British pound garnered support amid news that industrial production in Europe spiked a sharper-than-expected 1.7% in January. A recommendation from analysts at Goldman Sachs to buy the euro also helped the currency. The dollar closed down 0.6%.

The positive mood in early action was further supported by a 0.3% increase in retail sales and a 0.8% increase in sales less autos during February, according to the latest Advance Retail Sales Report. Economists had expected a decline of 0.2% for total retail sales and a 0.1% increase in sales less autos for February.

However, the tone of trade was subdued by the University of Michigan's preliminary Consumer Sentiment Survey for March. It came in at 72.5, which was below the 74.0 that had been expected. Disappointment over the survey led participants to ignore a flat business inventory reading for January.

Corporate headlines did little to spur interest in the broader market. Among blue chips, Pfizer (PFE 17.08, -0.21) announced that two of its drugs failed to meet their endpoints in a study and that it has ended a late-stage trial for another drug. Pfizer weighed on the Dow for the entire session.

Fellow Dow component United Technologies (UTX 71.53, -0.51) reaffirmed its fiscal 2010 earnings outlook, which failed to provide much of a cushion relative to Wall Street's consensus forecast.

National Semiconductor (NSM 14.38, +0.04) served up better-than-expected earnings and an upside forecast, but that did little for the overall semiconductor space, which finished with a collective loss of 0.5%.

On the other hand, retailers gained 0.6% as Aeropostale (ARO 28.18, +1.13) provided leadership after the apparel retailer reported better-than-expected earnings and issued a strong forecast of its own.

Commodities saw mixed interest this session. In turn, the CRB Commodity Index finished flat. However, oil prices fell a considerable 1.1% to $81.24 per barrel. Oil prices had actually eclipsed $83 per barrel in the early going as news circulated that the International Energy Agency (IEA) expects oil demand to rise this year.

The flat finish among both commodities and stocks marked an anticlimactic close to this week's trade, though action in previous sessions combined for a considerable weekly move. The CRB Commodity Index fell 1.3% this week, while stocks settled with a 1.0% weekly gain.

Wednesday, March 10, 2010

US Market Commentary (After Market Close): Stocks Settle with Varied Gains

In the absence of any broader market catalysts, financials and tech issues led the major indices to varied gains in the face of choppy trade.

This morning's mood was generally subdued, but stocks were able to stage an early advance as financials garnered support in the face of news that some Senate Democrats will propose to expand the Volker Rule with new limits on proprietary trading by banks and nonbank financial firms.

Citigroup (C 3.96, +0.14) was a strong performer amid news that it has issued a $2 billion trust preferred offering. Renowned analyst Dick Bove also issued positive comments on the stock. Meanwhile, widely-followed financial analyst Meredith Whitney gave positive grades to Visa (V 91.52, +1.37) and MasterCard (MA 249.60).

Banks were among the best overall performers in the sector as regional banks scored a 2.9% gain and diversified banks climbed 1.8%. The KBW Bank Index closed 2.2% higher.

Tech stocks also displayed relative strength, which helped take the Nasdaq Composite to a fresh 52-week high. The Nasdaq has advanced in eight of the past nine sessions, outperforming its counterparts in each of the past three sessions.

The S&P 500 has also advanced in eight of its last sessions, but it ran into resistance when it came within striking distance of its 52-week high, which was set in mid-January. Failure to push through resistance left stocks to roll over and surrender gains.

Buyers stepped in to help stocks recover from their slide, but the broad-based S&P 500 remains roughly five points shy of its high.

In the week's first dose of data, wholesale inventories for January slipped 0.2% when a 0.2% increase had been expected. Though the decline can undermine GDP, some suggested that it could be indicative of stronger-than-expected demand.

The Treasury's budget statement for February showed a deficit of $220.9 billion, which was essentially in step with the $222.0 billion consensus, but deeper than the $193.9 billion deficit that was recorded for January.

Neither the Treasury statement nor the wholesale inventory data did anything for stocks.

In a widely-watched $21 billion auction of 10-year Notes, bidders showed up in strong numbers, such that the bid -to-cover ratio was just shy of 3.5, which is well above recent averages. The indirect bid was relatively modest, though; it came in at 35.1%. The benchmark 10-year Note settled slightly lower, but that kept its yield a few basis points above 3.70%.

A mixed finish for commodities gave the CRB Commodity Index a fractional loss. Gold was a primary source of weakness -- it settled 1.3% lower at $1108.20 per ounce. Oil prices gained 0.7% to close pit trade at $82.09 per barrel. Oil prices had traded around $83 per barrel, which marked a multiweek high, in the wake of a smaller-than-expected inventory build of 1.43 billion barrels.

Trading volume on the NYSE hit its highest level in nearly two weeks by totaling 1.14 billion shares. That also put it above its 50-day moving average of 1.09 billion shares.

Advancing Sectors: Financials (+1.1%), Tech (+0.8%), Energy (+0.6%), Industrials (+0.4%), Consumer Discretionary (+0.3%), Health Care (+0.1%), Utilities (+0.1%)Declining Sectors: Consumer Staples (-0.2%), Telecom (-0.1%), Materials (-0.1%)

Wednesday, March 3, 2010

US Market Commentary (After Market Close): Stocks Fail to Make it Four in a Row

Greece's long-awaited austerity plan wasn't enough for participants to forget about the fiscal troubles that still face the likes of Spain and Portugal. That left the stock market unable to sustain solid, broad-based gains.

Led by the materials sector, stocks made their way to fresh one-month highs. The materials sector had been up as much as 2.0% before it saw that gain cut in half. Still, materials saw the best gain of any major sector as a combination of momentum and a weaker dollar provided it with support.

Weakness in the greenback came as the euro and British pound rebounded from recent losses, which were frequently attributed to the fiscal woes that face the likes of Greece, Portugal, and Spain.

Greece attempted to quell concern over its fiscal health with the release of a new austerity plan that includes civil service salary cuts and a sales tax increase. Despite such plans, problems persist for Portugal and Spain. That reality caused Europe's major bourses to show little initial reaction to Greece's plans, but the continent's major averages gradually pushed higher to log strong gains.

U.S. equities were unable to mimic the move. The Dow, Nasdaq Composite, and S&P 500 each added modestly to the previous session's gains, but eventually rolled over. That ended the stock market's streak of gains at three.

The afternoon slide left the S&P 500 below the 1125 line, which many traders believe could act as a springboard for further gains if the stock market closes above it.

Economic data received little attention this session. That's essentially because participants remain cautious ahead of the official nonfarm payrolls number on Friday. Cautious trade also led to light trading volume, which failed to surpass 1 billion shares on the NYSE.

A glimpse into the payrolls report was given with the February ADP Employment Change Report, which indicated that 20,000 private payrolls were shed last month. The number was in-line with expectations and the smallest decline in one year.

Meanwhile, the ISM Services Index for February came in at 53.0, which was above the reading of 51.0 that had been widely expected and marked the highest reading since October 2007.

The Fed's Beige Book, which is largely full of anecdotal economic news, came with little surprise. It indicated that nine of the 12 Fed districts reported modest improvement in economic activity during February, while consumer spending improved slightly in many districts.

Commodities had a strong session that pushed the CRB Commodity Index back above its 50-day moving average. Oil futures prices closed 1.5% higher at $80.87 per barrel, despite a larger-than-expected weekly inventory build of 4.03 million barrels. Silver had another strong session and closed with a 1.6% gain at $17.33 per ounce.

Thursday, February 11, 2010

Stocks to watch: Ho Hup, Green Packet, MAS, Petra Perdana

KUALA LUMPUR: Stocks on Bursa Malaysia are expected to start off on a firmer note on Friday, Feb 12 after a pledge by European leaders to help debt-stricken Greece encouraged investors back in to equity markets. Wall Street gained as much as 1.4 percent, also supported by a dip in weekly jobless claim, with the Nasdaq leading the gains.

The Dow Jones industrial average rose 105.81 points, or 1.05 percent, to 10,144.19. The Standard & Poor's 500 Index gained 10.34 points, or 0.97 percent, to 1,078.47. The Nasdaq Composite Index added 29.54 points, or 1.38 percent, at 2,177.41.

Stocks to watch on Friday are Ho Hup CONSTRUCTION [] Company Bhd, GREEN PACKET BHD [], MALAYSIAN AIRLINE SYSTEM BHD [] and PETRA PERDANA BHD []. However, trading is expected to be light in view of the holidays ahead next week.

Meanwhile, the fight for control of Ho Hup has resumed following a week-long lull.

Ho Hup's second-largest shareholder, Datuk Low Tuck Choy who holds 23.11 million shares representing a 22.66% stake in the company, has called for another EGM to remove the present board of directors after the first one was called off owing to a technicality.

The first EGM, which was scheduled for Feb 4, was cancelled after the company's largest shareholder, Extreme System Sdn Bhd, obtained a restraining order from the High Court here.

Green Packet Bhd posted net loss of RM94.54 million in its fourth quarter ended Dec 31, 2009, compared with RM37.22 million in losses a year ago as it made additional provisions for impairment of long term investments, investments in associates and inventories of about RM26 million.

MAS's share price and the entitlement to the rights shares, which fell sharply on Thursday, should stabilise today. Analysts said the heavy trading in the entitlement to the rights shares was "churned" by traders and viewed the selling as overdone.

MAS chief financial officer Mohd Azha Abdul Jalil tells the Edge FinancialDaily that MAS's rights issue has the support of Khazanah Nasional and Penerbangan Malaysia Berhad who have undertaken to subscribe for their entitlements which amounts to 69.33% of the rights issue.

"Further, Khazanah has undertaken to apply for excess rights amounting to 1.96% of the rights issue. The remaining open portion of the rights issue has been underwritten by Maybank Investment Bank Bhd, CIMB Investment Bank Bhd and RHB Investment Bank Bhd which has provided MAS with a high degree of certainty in this equity fund raising exercise," he said.

In Petra Perdana Bhd, its new board of directors has yet to decide on whether to retain or dispose of its remaining 29.59% stake in PETRA ENERGY BHD [], said its executive director Shamsul Saad.

EON CAPITAL BHD [] (EONCap), in a strong capital position, is in no hurry to find a merger partner or be taken over, said EON Bank Bhd group CEO Michael Lor.

Market Commentary (After Market Close): Dollar's Downward Drift Broadly Lifts Stocks

Participants continue to take their cues from the dollar, which surrendered a strong gain against a basket of foreign currencies to give both stocks and commodities a broad-based lift.

Stocks actually started the session on weak footing as the Dollar Index made its way from a moderate loss to a healthy gain. The move led many to dismiss a relatively pleasing weekly jobless claims report, which featured larger-than-expected decline in initial jobless claims to 440,000 and a continuing claims tally of 4.54 million -- a one-year low.

Participants also shrugged off China's softer-than-expected January consumer inflation reading, which helped Hong Kong's Hang Seng spike 1.9% (Japan's Nikkei was closed). The news wasn't cheered as much in mainland China, where the Shanghai Composite tacked on an unimpressive 0.1%.

Leaders from the European Union finally stepped forward to officially announce that financial assistance will be made available to Greece. No specific plan was provided, though, so many continue to speculate how much money will be involved and whether aid will extend to other countries that currently face fiscal challenges. Unlike earlier this week, the notion of such support failed to bolster the euro, which in turn gave the greenback room to run.

The Dollar Index was up as much as 0.6% this session. That put it back in touch with its weekly high, which was set Monday. However, the greenback eventually gave up its gain and finished flat.

The reversal represented an impetus for stocks to make a broad push higher. Natural resource plays made the best gains as both the materials sector and the energy sector advanced 1.6%, more than any other major sector. More impressive was that they outperformed the broader market for the entire session, even in the face of a firmer dollar during the early going.

Large-cap tech also exhibited considerable strength this session. That helped the Nasdaq book a better gain than either of its counterparts.

Financials had outperformed in the previous session, but lagged this time around. The sector mustered a mere 0.2% gain amid a pair of daunting headlines. The first was a feature from Financial Times that Gordon Brown, of the United Kingdom, indicated that leading economies are close to agreeing on a global bank tax. News that Senators Warner and Corker continue to work to put financial regulation back on track followed. Still, diversified bank stocks were able to trim collective losses of more than 1% to a more moderate 0.4% into the close.

Commodities also had a strong session, such that the CRB Commodity Index closed with a 1.3% gain at its weekly high. Precious metals were especially strong as they closed 2.3% higher, collectively.

Participants showed little taste for Treasuries this session. Part of that was owed to strength among stocks, while some stemmed from disappointing demand at a $16 billion auction of 30-year Bonds. The auction attracted a bid-to-cover ratio of 2.36 and an indirect bid of 28.5%. Its yield came in at 4.72%, which is above the 4.69% that had been expected by analysts.

Tuesday, February 9, 2010

US Market Commentary (After Market Close): Participants Positive on Greece Bailout Speculation

Stocks pushed higher in broad-based fashion as participants took their cues this session from the dollar, which was weakened despite conflicting reports about whether Germany will lead a bailout for Greece.

Concern for the fiscal health of Greece had sent many global participants to seek safety in the U.S. dollar during recent sessions, such that the dollar hit a multimonth high against competing currencies last week. However, speculation today that Greece could receive help from Germany gave the euro strength, which dropped the Dollar Index for a near 0.7% loss this session.

There hasn't been any official statement regarding whether Germany will support Greece or if any plan would offer support to other troubled European countries, like Portugal and Spain. Notably, any such plan would likely weigh on Germany's fiscal health, but the market still treated the notion of any such effort as a positive.

Given the greenback's weakness this session, natural resource plays made the strongest moves. As such, materials stocks advanced a collective 2.5%. An upgrade of Monsanto (MON 75.72, +1.51) from analysts at Bank of America's Merrill Lynch helped shares of the seed company show leadership.

Morgan Stanley's upgrade of Caterpillar (CAT 53.53, +2.75) helped shares of the industrial outfit log their best session in nearly one month. The stock was a primary leader in the Dow, which had been up more than 200 points at its session high.

Fellow Dow component Coca-Cola (KO 54.01, +1.36) also provided leadership to blue-chips, even though it missed Wall Street's consensus earnings estimate for the latest quarter.

Energy stocks were broadly strong as all 39 of the components in the S&P 500 Energy Sector advanced this session. Their collective 2.0% gain came with help from the broader market and a 2.6% rise in oil prices to $73.75 per barrel.

This session's broad-based advanced helped financial stocks recoup some of their losses from the prior session. It had been whipsawed from an early gain of more than 1% to a modest loss before it settled with a 1.1% gain. Bank of America (BAC 14.47, -0.01) and Citigroup (C 3.18, +0.03) saw mixed interest amid news that Standard & Poor's lowered its outlook on the pair to Negative from Stable.

A weak session for Treasuries sent the benchmark 10-year Note down 19 ticks. A 2.83 bid-to-cover ratio and an indirect bidder take of 51.2% in this afternoon's $40 billion auction of 3-year Treasuries failed to offer support. The benchmark Note will be back in focus tomorrow, when a widely-watched auction of 10-year Treasury Notes will take place at 1:00 PM ET. An auction of 30-year Bonds will follow on Thursday at 1:00 PM ET.
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