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Fed pumps US$47.25b into US banking system. Is this consider a good news ?
Market Overview
| Market Diaries |
 |
| Issues: |
NYSE |
Nasdaq |
|
|
| Advancing |
718 |
831 |
|
|
| Declining |
2,556 |
2,134 |
|
|
| Unchanged |
76 |
134 |
|
|
| Total: |
3,350 |
3,099 |
|
|
| Issues at: |
|
|
| 52-Week High |
16 |
17 |
|
|
| 52-Week Low |
107 |
143 |
|
|
| Volume: |
|
|
| Advancing |
279,951,000 |
596,634,000 |
|
|
| Declining |
1,173,503,000 |
1,718,298,000 |
|
|
| Unchanged |
18,867,000 |
-168,778,000 |
|
|
| Total: |
1,472,321,000 |
2,146,154,000 |
|
|
11/15/2007 7:38:00 PM |
|
|
|
|
U.S. stocks sank, their sixth drop in the past seven sessions, on worry that credit losses from mortgage defaults and slumping home prices would grow worse, hurting the economy and corporate profits. Investors demonstrated a powerful aversion to risk and dumped equities in favor of the perceived safety of government bonds. U.S. Treasuries surged, sending bond yields to their lowest in more than two years.
U.S. crude for December delivery settled down 66 cents, or 0.7 percent, at $93.43 a barrel on the New York Mercantile Exchange. The catalyst for the drop in oil prices was data showing a surprising increase in U.S. crude inventories in the latest week.
The Dow Jones industrial average slid 120.96 points, or 0.91 percent, to finish at 13,110.05. The Standard & Poor's 500 Index dropped 19.43 points, or 1.32 percent, to close at 1,451.15. The Nasdaq Composite Index fell 25.81 points, or 0.98 percent, to 2,618.51.
Tough day on Wall Street
Stocks tumble in late-session selloff as investors bail out of banks, techs and commodity shares. Oil prices dip on strong inventory report.
Stocks tumbled Thursday, with financial, commodity and technology shares leading the charge lower as investors continued to worry about the credit market crisis and the strength of the consumer.
The Dow Jones industrial average (Charts) lost 0.9 percent. The S&P 500 (Charts) index lost 1.3 percent. The Nasdaq composite (Charts) declined 1 percent.
Small caps were hit harder with the Russell 2000 (Charts) index falling 1.4 percent.
Treasury prices rallied, lowering the corresponding yields. The dollar recovered a bit against the euro but fell versus the yen. Oil and gold prices slipped.
Stocks were mixed throughout the morning as investors mulled steady consumer inflation, stronger readings on manufacturing and the latest credit market troubles - amid a decline in oil prices.
But the market began deteriorating heading into the afternoon, reflecting the recent pattern of gyrating throughout the session and then making a decisive move near the close.
And more selling may be on tap, said Joseph Saluzzi, co-head of equity trading at Themis Trading.
He said that with the exception of Tuesday's blockbuster rally, Wall Street's been pretty negative of late and that could continue leading into the Thanksgiving holiday next week.
Friday brings readings on industrial production and capacity utilization, as well as a speech from Federal Reserve Governor Randall Kroszner, a voting member of the central bank's policy committee.
The Consumer Price Index (CPI)
rose 0.3 percent in October, matching September's rise and meeting forecasts. So-called "core" CPI, which excludes food and energy, rose 0.2 percent, also matching September and also in line with forecasts.
Investors have been looking for signs that pricing pressures are remaining mild, even with lower interest rates and higher oil and gas prices threatening to drive up inflation.
The weekly jobless claims report showed a surprisingly large
jump in new claims last week.
The fact that the CPI came in as expected was probably positive, although it shows inflation pressures remain a risk, said Douglas Roberts, chief investment strategist at Channel Capital Research.
He said the rise in jobless claims was worrisome in that if the trend continues to higher levels of unemployment - at the same time that pricing pressures remain steady - that will pressure the already taxed consumer. Consumer spending fuels around two-thirds of the economy.
"But crude inventories came out kind of confirming that the pressures from oil are dipping in the short term," Roberts said.
U.S. light crude
oil for December delivery fell 66 cents to settle at $93.43 a barrel on the New York Mercantile Exchange after the weekly oil inventories report showed a surprise gain in crude supplies last week. (
Full story)
Two more banks were in focus, amid ongoing questions about the fallout from the credit market crisis.
Barclays Capital, a unit of
Barclays Group PLC (
Charts), said it took
$2.7 billion in writedowns related to the credit market. The figure was smaller than what some analysts were calling for a week ago. Additionally, the U.K.-based bank said that 2007 profits are running ahead of last year's performance.
Additionally, Swiss financial behemoth
UBS (
Charts) could take up to
$7.1 billion in writedowns, related to the deteriorating mortgage market, according to a
Wall Street Journal article Thursday.
Also reflecting the credit market turmoil, General Electric confirmed reports that a short-term bond fund it manages has suffered big
losses in mortgage-backed securities and that as a result, outside investors have dumped their holdings. However, the conglomerate said that the impact won't be felt in current quarter or full-year earnings.
GE (
Charts,
Fortune 500) shares lost 1.8 percent.
A variety of bank stocks retreated, including
JP Morgan (
Charts,
Fortune 500),
Citigroup (
Charts,
Fortune 500),
Morgan Stanley (
Charts,
Fortune 500) and
Merrill Lynch (
Charts,
Fortune 500).
J.C. Penney (
Charts,
Fortune 500) said that third-quarter earnings fell from a year ago and warned that full-year profits will miss forecasts as well. (
Full story).
In other news,
Kraft Foods (
Charts) said it will sell its two dozen Post cereals to
Ralcorp Holdings (
Charts) in a stock deal worth $1.7 billion, plus the assumption of debt.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by almost 4 to 1 on volume of 1.47 billion shares. On the Nasdaq, decliners topped advancers by 7 to 3 on volume of 2.34 billion shares.
In addition to CPI and jobless claims, two regional manufacturing reports were released Thursday.
The Philadelphia Fed index rose to 8.2 from 6.8 in November, topping forecasts for a dip to 5.0. Earlier, the NY Empire State index fell to 27.4 in November from 28.8 in October, versus forecasts for a steeper drop to 18.0.
Treasury
prices rose, lowering the yield on the 10-year note to 4.15 percent from 4.25 percent late Wednesday. Treasury prices and yields move in opposite directions.
In
currency trading, the dollar rebounded a bit against the euro and declined versus the yen.
COMEX
gold for December delivery fell $27.40 to $787.30 an ounce.
Credit, housing sink Wall St; Starbucks dives
U.S. stocks sank on Thursday, their sixth drop in the past seven sessions, on worry that credit losses from mortgage defaults and slumping home prices would grow worse, hurting the economy and corporate profits.
Investors demonstrated a powerful aversion to risk and dumped equities in favor of the perceived safety of government bonds. U.S. Treasuries surged, sending bond yields to their lowest in more than two years.
Financial stocks took the brunt of the selling, giving back nearly all of the ground regained in Tuesday's big rally. The worst decliners among the banks included Citigroup Inc (C.N:
Quote,
Profile,
Research), whose stock fell more than 4 percent, and JPMorgan Chase & Co (JPM.N:
Quote,
Profile,
Research).
Shares of home funding providers Fannie Mae (FNM.N:
Quote,
Profile,
Research) and Freddie Mac (FRE.N:
Quote,
Profile,
Research) also plummeted. Chief Executive John Stumpf of Wells Fargo & Co (WFC.N:
Quote,
Profile,
Research), the No. 2 U.S. mortgage lender, told a conference that the U.S. housing slump was far from over and was the worst since the Great Depression.
Elsewhere, shares of energy companies such as Exxon Mobil Corp (XOM.N:
Quote,
Profile,
Research) dropped in sync with crude oil prices, which fell for the third day in four sessions.
Even technology shares weren't spared.
"There's just too much fear in the financials," said John O'Brien, senior vice president at MKM Partners LLC in Cleveland, Ohio. "The fear is back again that the writedowns are kind of a mystery and no one really knows what the bottom is or what the outcome is going to be."
The Dow Jones industrial average (.DJI:
Quote,
Profile,
Research) slid 120.96 points, or 0.91 percent, to finish at 13,110.05. The Standard & Poor's 500 Index (.SPX:
Quote,
Profile,
Research) dropped 19.43 points, or 1.32 percent, to close at 1,451.15. The Nasdaq Composite Index (.IXIC:
Quote,
Profile,
Research) fell 25.81 points, or 0.98 percent, to 2,618.51.
AIG, CITI AND FANNIE MAE FALL
Shares of American International Group Inc (AIG.N:
Quote,
Profile,
Research) led the Dow's decliners with a 4.2 percent drop to $56.95 after a brokerage cut its price target on the insurer's stock, citing the impact of the credit turmoil.
Up until the last hour of trading, major indexes had been stuck in a narrow range, erratically seesawing from negative to little changed for much of the session.
But losses quickly mounted heading toward the close as shares of financial services companies tacked on to their declines.
Shares of Citigroup, the No. 1 U.S. bank, dropped 4.1 percent to $34.58 on the New York Stock Exchange, while shares of JPMorgan, the third-largest U.S. bank, fell 3.6 percent to close at $43.53.
Shares of Bank of America, the No. 2 U.S. bank, closed down 3.6 percent at 44.08. The S&P financial index (.GSPF:
Quote,
Profile,
Research) declined 3.1 percent.
Among the major U.S. home mortgage lenders, Wells Fargo shares dropped 3.9 percent to $31.97.
Shares of Fannie Mae, the largest U.S. home funding source, tumbled 10 percent to $43.04 on the NYSE. while shares of Freddie Mac (FRE.N:
Quote,
Profile,
Research), the No. 2 U.S. home funding company, shed 5.3 percent to $41.86.
Energy shares also weighed on the broader market as they dropped in sync with crude oil prices. Shares of Exxon Mobil ended down 2.1 percent at $84.49 on the NYSE.
U.S. crude for December delivery (CLZ7:
Quote,
Profile,
Research) settled down 66 cents, or 0.7 percent, at $93.43 a barrel on the New York Mercantile Exchange. The catalyst for the drop in oil prices was data showing a surprising increase in U.S. crude inventories in the latest week.
RIM DROPS AND STARBUCKS TANKS
On the Nasdaq, investors again sold shares of the tech sector's recent darlings, including BlackBerry maker Research In Motion Ltd (RIM.TO:
Quote,
Profile,
Research)(RIMM.O:
Quote,
Profile,
Research), whose stock fell 6.3 percent to end at $103.01. RIM was the biggest drag on the Nasdaq, followed by shares of iPod maker Apple Inc (AAPL.O:
Quote,
Profile,
Research), down 1.1 percent at $164.30.
After the bell, Starbucks Corp (SBUX.O:
Quote,
Profile,
Research) forecast 2008 earnings below many Wall Street estimates due to weak consumer spending, triggering a 7 percent slide to $22.42 in after-hours trading. Starbucks ended the regular session at $24.10, down 0.6 percent on Nasdaq.
On the economic front, investors grappled with mixed news, including some that pointed to increased worry about the housing slump.
Before the opening, economic reports showed a rise in core U.S. consumer prices in line with expectations, while new applications for U.S. jobless aid rose more than expected.
A report by the Federal Reserve Bank of Philadelphia showing an unexpected surge in its November index of U.S. Mid-Atlantic business conditions briefly lifted the blue-chip Dow average at midday.
But the Dow quickly gave up those gains and headed south again as components of the Philly Fed index also showed employment fell and companies' forecasts for the future dimmed.
Volume was below average on the New York Stock Exchange, with about 1.47 billion shares changing hands, below last year's estimated daily average of 1.84 billion. On Nasdaq, about 2.34 billion shares traded, ahead of last year's daily average of 2.02 billion.
Declining stocks outnumbered advancing ones by a ratio of more than 3 to 1 on the NYSE and by more than 2 to 1 on Nasdaq.
Market declines as credit woes persist
Stocks were set to open lower on Thursday after cautious outlooks from J.C. Penney Co. Inc. (JCP.N:
Quote,
Profile,
Research) and Applied Materials Inc (AMAT.O:
Quote,
Profile,
Research) added to fears about the profit picture, while nervousness about the credit market persisted.
Shares of General Electric Co (GE.N:
Quote,
Profile,
Research) fell about 1 percent to $38.65 before the bell after it said its short-term bond fund ran into trouble amid losses on asset-backed securities and that all its outside investors have liquidated their holdings.
However, UBS (UBSN.VX:
Quote,
Profile,
Research) has advised some analysts this week that the Swiss bank does not expect to make a huge fourth-quarter writedown on its subprime-related exposures.
Retailer J.C. Penney shares tumbled 4.6 percent to $44.60 before the bell after the retailer slashed its fourth-quarter profit outlook by at least 25 percent.
S&P 500 futures fell 9.70 points and were below fair value, a formula to evaluate pricing taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures declined 65 points, and Nasdaq 100 futures were down 14.50 points.
Stock futures briefly pared losses after data showing a rise in core U.S. consumer prices was in line with expectations, while new applications for U.S. jobless aid rose more than expected.
"As long as inflation stays within consensus, I think that it's a net positive for the market, but the real focus is going to shift to retail, earnings and what happens to the consumer," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco.
After Wednesday's closing bell, shares of Applied Materials sank as the top supplier of tools for making microchips posted a lower quarterly profit and forecast fiscal first-quarter profit below Wall Street's estimates.
| Market Indices |
Current |
Change |
% Change |
Date |
| DJ INDU AVERAGE |
13,195.65 |
-35.36  |
-0.27% |
|
15-11-2007 |
| NAS/NMS COMPSITE |
2,643.80 |
-0.52 |
-0.02% |
|
15-11-2007 |
| S&P/TSX COMP IDX |
13,670.08 |
-104.46 |
-0.76% |
|
15-11-2007 |
Market opens lower on profit outlooks
Stocks opened lower on Thursday after sentiment soured on cautious financial outlooks from J.C. Penney Co. Inc. (JCP.N:
Quote,
Profile,
Research) and Applied Materials Inc (AMAT.O:
Quote,
Profile,
Research), while nervousness about the credit market persisted.
The Dow Jones industrial average (.DJI:
Quote,
Profile,
Research) was down 25.53 points, or 0.19 percent, at 13,205.48. The Standard & Poor's 500 Index (.SPX:
Quote,
Profile,
Research) was down 2.54 points, or 0.17 percent, at 1,468.04. The Nasdaq Composite Index (.IXIC:
Quote,
Profile,
Research) was down 8.05 points, or 0.30 percent, at 2,636.27.
Crazy Dow. So much fluctuations.
October CPI rose 0.3 percent as expected
Consumer prices rose a brisk 0.3 percent in October, which was in line with expectations and driven by the sharpest rise in energy costs in five months, the government reported on Thursday.
The Consumer Price Index, the most broadly used gauge of inflation, rose at the same rate as in September, which was the steepest rise since a 0.7 jump in May, according to the Labor Department report.
But core prices, which strip out volatile energy and food costs, rose a more modest 0.2 percent in October, also in line with expectations.
Consumer prices were 3.5 percent higher than a year ago, the biggest 12-month increase since August 2006, when they rose 3.8 percent, a Labor Department official said. Core prices were up 2.2 percent on a year-on-year basis.
So far this year, prices have climbed by a seasonally adjusted annual rate of 3.6 percent, driven by higher food and energy costs. That compares with a 2.5 percent gain in all of 2006.
Energy costs have surged at a 12.3 percent annual rate this year, more than four times higher than the 2.9 percent gain in all of last year. Food prices increased at a 5.5 percent annual rate in 2007, compared with a 2.1 percent rise in 2006.
Stocks poised for rocky start
Futures decline as investors weigh latest credit woes and warning of a tech slowdown.
Stocks could have trouble Thursday as investors struggle to shake off concerns about credit markets, oil prices and a warning about a slowdown in the tech sector.
Stock futures fell in early trading, suggesting U.S. stocks will follow overseas markets lower at the open.
Major Asian markets closed lower across the region Thursday, while European stocks tumbled in midday trade.
"It's going to be an interesting day. It's clear that volatility is here for a while, and a lot of it is due to what is going on in the energy and credit markets," said Art Hogan, chief market analyst at Jefferies & Co. "Until we get a firmer footing there, it's going to be difficult to sustain a rally."
Tech earnings have generally been strong in the most recent period. But after the close Wednesday, tech bellwether Applied Materials (Charts, Fortune 500), which makes equipment used by chipmakers, warned that it sees a "challenging" outlook for its business in the next two quarters and cuts its revenue and earnings guidance. Shares fell 4.3 percent in after-hours trading.
As for the spreading problems in credit markets, the Wall Street Journal reported Thursday that GMAC's home lending unit, ResCap, is in danger of violating terms of loan agreements due to declines in the value of its loan portfolio. The paper said that could lead lenders to demand immediate payment of its loans and even force the unit into bankruptcy protection. GMAC is 49 percent owned by General Motors (Charts, Fortune 500), which last week reported a much bigger than forecast operating loss due greatly to problems at ResCap, and 51 percent owned by private equity firm Cerberus Capital Management, which took another hit from credit market woes Wednesday.
Minutes before the market close Wednesday, United Rentals (Charts) confirmed earlier reports that Cerberus had pulled out of its planned $4 billion purchase of the company. Shares of United Rental plunged 31 percent in trading Thursday, though they rebounded 2.6 percent in after-hours trading.
The credit crunch also keeps hitting banks. British bank Barclays (Charts) said Thursday it would take a $2.7 billion writedown, although shares were little changed in early London trading as investors were apparently relieved the hit wasn't larger.
Shares of Swiss banking giant UBS (Charts) were down about 2.4 percent in Zurich trading after the Journal reported it may have to take a $7.1 billion charge due to risky debt holdings.
Oil prices edged lower early Thursday, losing 32 cents to $93.77. Prices have been exceptionally volatile this week and there could be another big swing with the release of the government's weekly report on fuel inventories. The report is due at 10:30 a.m. ET, delayed for a day this week by the Veteran's Day federal holiday on Monday.
The major economic report on tap is the Consumer Price Index, the government's key inflation reading. Economists surveyed by Briefing.com forecast CPI rose 0.3 percent in October, the same rise reported in September. The more closely watched core CPI, which strips out food and energy prices, is seen rising 0.2 percent, which would also match the September reading.
The report comes a day after the government reported tame inflation at the wholesale level for the month of October
In earnings news, retailers JC Penney (Charts, Fortune 500) and Kohl's are both set to report earnings Thursday, and analysts are forecasting profit declines for both.
Futures slip as financial worries persist
Stock futures fell on Thursday as worries persisted about further losses in the financial sector and Applied Materials Inc (AMAT.O:
Quote,
Profile,
Research) reported a lower quarterly profit and below-forecast outlook.
General Electric Co (GE.N:
Quote,
Profile,
Research) said late on Wednesday its short-term bond fund ran into trouble amid losses on asset-backed securities and that all its outside investors have liquidated their holdings.
Barclays Plc (BARC.L:
Quote,
Profile,
Research), Britain's third-biggest bank, unveiled a 1.3 billion pound ($2.7 billion) write-down on its exposure to credit market problems on Thursday. But the write-down was less than was feared.
Investors also were cautious before data on consumer prices and weekly jobless claims.
After the closing bell, shares of Applied Materials sank as the top supplier of tools for making microchips posted a lower quarterly profit and forecast fiscal first-quarter profit below Wall Street's estimates.
"The market is like a runner just stumbling to the finish line at the end of the year and trying to avoid falling down," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City.
"The part of the market that has been an odd twist is the financials, which have been forced to disclose a lot of the bad news."
S&P 500 futures fell 8 points and were slightly below fair value, a formula to evaluate pricing taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures declined 61 points, and Nasdaq 100 futures were down 19.50 points.
In after-hours trading, Applied Materials dropped 4.8 percent to $17.91. The stock had ended regular Nasdaq trading up 1.1 percent at $18.81 before the company's earnings announcement.
Consumer price data, due at 8:30 a.m., is expected to show a 0.3 percent rise in October after a similar 0.3 percent rise in September, according to a poll of economists by Reuters. Data on initial weekly jobless claims is due at the same time.
On Wednesday, U.S. stocks fell after an attempt to extend the previous session's huge rally faltered in the face of persistent worry that more fallout from the housing downturn and credit crunch lies ahead.
The Dow Jones industrial average (.DJI:
Quote,
Profile,
Research) dropped 76.08 points, or 0.57 percent, to end at 13,231.01. The Standard & Poor's 500 Index (.SPX:
Quote,
Profile,
Research) fell 10.47 points, or 0.71 percent, to close at 1,470.58. The Nasdaq Composite Index (.IXIC:
Quote,
Profile,
Research) slid 29.33 points, or 1.10 percent, to finish at 2,644.32.
Stocks poised for rocky start
Futures decline as investors brace for reading on consumer inflation, weekly crude inventories.
Will close even lower
DJ likely to open lower today.
- US Futures & Markets Indicators
-
 |
| S&P 500 |
-4.10 |
1474.00 |
11/15 4:06am |
 |
| Fair Value |
|
NA |
11/15 4:14am |
| Difference* |
|
N/A |
|
|
| NASDAQ |
-15.25 |
2042.25 |
11/15 4:00am |
 |
| Fair Value |
|
NA |
11/15 4:14am |
| Difference* |
|
N/A |
|
|
| Dow Jones |
-25.00 |
13250.00 |
11/15 4:06am |
 |
|
U.S. stocks fell after an attempt to extend the previous session's huge rally faltered in the face of persistent worry that more fallout from the housing downturn and credit crunch lies ahead. The Nasdaq fell the hardest as investors pulled back from the stocks that carried the index to its biggest gain in more than four years the day before.
NYMEX December crude rose $2.92, or 3.2 percent, to settle at $94.09 per barrel in New York on forecasts that U.S. inventory data on Thursday will show a decline in supply in the latest week. The release of the data was delayed by one day because federal government offices were closed on Monday for the Veterans Day holiday.
The Dow Jones industrial average dropped 76.08 points, or 0.57 percent, to end at 13,231.01. The Standard & Poor's 500 Index fell 10.47 points, or 0.71 percent, to close at 1,470.58. The Nasdaq Composite Index slid 29.33 points, or 1.10 percent, to finish at 2,644.32.
Retail sales and producer prices subdued
U.S. retail sales rose by a sluggish 0.2 percent in October and producer prices edged up only slightly, according to data on Wednesday that may give the Federal Reserve more leeway to prop up a slowing economy.
The modest retail sales gain reported by the Commerce Department matched economists' expectations, as a housing downturn and steep oil prices constrained consumer spending.
Separately, the Labor Department said the producer price index, a gauge of prices paid at the farm and factory gate, rose 0.1 percent in October, while core prices -- which strip out volatile food and energy costs -- were unchanged.
Stocks dipped on Wednesday amid concerns about whether the U.S. economy could withstand the triple threat of housing, high oil prices and tightening credit.
The Dow Jones industrial average closed down 0.62 percent at 13,223. Economic growth concerns also weighed on the dollar, while bond prices rose slightly.
Economists and the Fed expect the economy to slow after a surprisingly robust third quarter. But high oil and food costs have raised concerns that the central bank may be reluctant to cut interest rates further for fear of stoking inflation.
Wednesday's data "leaves the door more open for the Fed to do more (interest-rate) cutting," said Robert Macintosh, chief economist at Eaton Vance Corp. in Boston. "Inflation's not an issue and consumers continue to pull back on their activity."
"If the consumer really pulls back, then you are talking about a recession," he added.
Yet some analysts said the tame inflation reading may prove fleeting as the data did not fully reflect a steep oil price rally in late October. Oil futures flirted with the psychologically significant $100 per barrel mark last week.
The inflation report also may have been skewed by automakers' shift to a new model year, which has a tendency to throw off calculations, and perhaps understates inflation.
"The October data on retail sales showed modest growth, not an implosion. Nonetheless, there is softness in core retail sales, which points to weak consumption growth in the fourth quarter," said Michael Darda, chief economist at MKM Partners.
"Overall inflation should be strong in the fourth quarter, however, creating a whiff of stagflation," he added.
Investors on Thursday will get a look at how inflationary pressures are affecting consumers when the Labor Department releases its Consumer Price Index for October. Economists are looking for a 0.3 percent increase.
In a separate report on Wednesday, the Commerce Department said business inventories rose 0.4 percent in September, which may also point to slower growth ahead as businesses work to pare bloated stocks.
SILVER LINING
The central bank has said it expects fourth-quarter economic growth to slow from the surprisingly strong annual rate of 3.9 percent posted in the third quarter, and it will watch the data closely for signs of further deterioration.
Economists polled by Reuters had widely expected retail sales growth to slow from September's pace as consumer confidence sank under the weight of the housing slide, rising oil prices and tougher credit conditions.
Investors are watching retail sales data closely for signs that consumers are caving, which would deal a severe blow to the already shaky U.S. economy. Consumer spending accounts for more than two-thirds of U.S. economic activity.
"The silver lining to the slowdown in consumption spending is a reduction in the rate of growth of imports, a prospective rise in the savings rate and downward pressure on core inflation," said Global Insight U.S. economist Brian Bethune. "This should alleviate the inflation risks that were recently flagged by the Federal Reserve."
Sales at home furnishing stores declined 0.9 percent last month as the housing slump took its toll, while gasoline stations posted a 0.8 percent increase.
Excluding autos, October sales rose 0.2 percent, a shade below economists' forecast for an increase of 0.3 percent.
On the inflation front, the PPI data showed energy prices fell 0.8 percent in October after a 4.1 percent rise in September. Prices for light trucks, which include slow-selling sport utility vehicles and pickup trucks, fell 2.7 percent.
Core prices excluding cars and light trucks rose 0.2 percent in October.
Market Overview
| Market Diaries |
|
| Issues: |
NYSE |
Nasdaq |
|
|
| Advancing |
1,240 |
1,200 |
|
|
| Declining |
2,033 |
1,785 |
|
|
| Unchanged |
83 |
118 |
|
|
| Total: |
3,356 |
3,103 |
|
|
| Issues at: |
|
|
| 52-Week High |
15 |
23 |
|
|
| 52-Week Low |
52 |
93 |
|
|
| Volume: |
|
|
| Advancing |
515,983,000 |
809,350,000 |
|
|
| Declining |
956,813,000 |
1,646,454,000 |
|
|
| Unchanged |
14,219,000 |
-2,431,265,000 |
|
|
| Total: |
1,487,015,000 |
24,539,000 |
|
|
11/14/2007 7:15:00 PM |
|
|
|
|
Credit woes and tech trip Wall St day after rally
U.S. stocks fell on Wednesday after an attempt to extend the previous session's huge rally faltered in the face of persistent worry that more fallout from the housing downturn and credit crunch lies ahead.
The Nasdaq fell the hardest as investors pulled back from the stocks that carried the index to its biggest gain in more than four years the day before. Decliners included Apple Inc (AAPL.O:
Quote,
Profile,
Research), Google Inc (GOOG.O:
Quote,
Profile,
Research) and Research In Motion Ltd (RIM.TO:
Quote,
Profile,
Research)(RIMM.O:
Quote,
Profile,
Research).
After the closing bell, shares of Applied Materials Inc (AMAT.O:
Quote,
Profile,
Research) sank more than 4 percent as the top supplier of tools for making microchips posted a lower quarterly profit and forecast fiscal first-quarter profit below Wall Street's estimates.
In after-hours trading, Applied Materials dropped 4.8 percent to $17.91. The stock had ended regular Nasdaq trading up 1.1 percent at $18.81 before the company's earnings announcement.
Trading in the regular session was volatile, with major indexes surging at the opening bell as oil companies' shares surged in sync with a rebound in oil prices and financial stocks rose after Bear Stearns Cos Inc (BSC.N:
Quote,
Profile,
Research) forecast additional credit losses that were not as steep as some had feared. Bear Stearns shares finished up 2.4 percent.
The Dow Jones industrial average (.DJI:
Quote,
Profile,
Research) dropped 76.08 points, or 0.57 percent, to end at 13,231.01. The Standard & Poor's 500 Index (.SPX:
Quote,
Profile,
Research) fell 10.47 points, or 0.71 percent, to close at 1,470.58. The Nasdaq Composite Index (.IXIC:
Quote,
Profile,
Research) slid 29.33 points, or 1.10 percent, to finish at 2,644.32.
"Yesterday was just a reflex rally. We're back to the good old wait-and-see posture, waiting for tomorrow's CPI announcement," said Frederic Dickson, senior vice president and market strategist at D.A. Davidson & Co in Lake Oswego, Oregon.
"I think a lot of traders realize that the overall situation hasn't changed a whole lot, with yesterday's rally notwithstanding. There are more mortgage-rate resets on the horizon."
TROUBLING REPORT ON GE FUND
In news that could further shake investors' confidence when the market opens on Thursday, a report published by Barron's online edition said a General Electric Asset Management bond fund is offering investors the option to redeem holdings at 96 cents on the dollar.
The Barron's report was published online late in the afternoon, but awareness of it spread after the close.
GE Asset Management was said to have told Barron's it has ceased taking new investments in the affected fund and that it expects liquidity concerns and value dislocations to continue for the foreseeable future.
Barron's also reported that GE Asset Management cited "extreme conditions in credit markets" for an expected loss.
During the regular session, GE's stock fell 0.5 percent to $39.01 on the New York Stock Exchange.
Merrill Lynch's stock rose almost 2 percent on reports that the brokerage would hire NYSE Chief Executive John Thain as its next chief executive. Merrill confirmed the appointment after the closing bell.
In the broader market, the gains quickly gave way to profit taking, particularly in the tech sector.
A dampened sales outlook from department store operator Macy's Inc (M.N:
Quote,
Profile,
Research) soured initial optimism surrounding a relatively healthy reading of retail sales and sparked a drop in chain store operators' shares.
Investors were also cautious before the U.S. Consumer Price Index for October is released on Thursday. Economists polled by Reuters expect overall CPI to have increased 0.3 percent in October, while they see core CPI, excluding volatile food and energy prices, up 0.2 percent.
LEFT AT THE ALTAR
United Rentals Inc's (URI.N:
Quote,
Profile,
Research) announcement about 15 minutes before the market's close that buyout firm Cerberus is not prepared to proceed with the purchase of the equipment rental company fueled more downside pressure and the selling accelerated.
United Rentals shares plunged 30.3 percent to end at $23.70 and topped the list of biggest percentage losers on the New York Stock Exchange. Investors have been worried that the fallout from the credit crisis may snag takeovers proposed before the onset of the market's turmoil.
On the Nasdaq, shares of Apple, the maker of the iPhone and the iPod, closed down 2.3 percent at $166.11, while shares of Google, the Web search company, fell 2.9 percent to $641.68.
Shares of BlackBerry devices maker Research In Motion ended down 2.3 percent at $109.95, while software maker Microsoft Corp's (MSFT.O:
Quote,
Profile,
Research) stock dropped 1.5 percent to $33.93.
Shares of International Business Machines Corp (IBM.N:
Quote,
Profile,
Research),
the technology services company, lost 1.7 percent to $103.44 on the New York Stock Exchange, making the stock the biggest drag on the Dow.
Shares of big manufacturers also fell during regular trading as oil prices rose, with shares of Caterpillar Inc (CAT.N:
Quote,
Profile,
Research), the heavy equipment maker, finishing down 1.5 percent at $70.03.
NYMEX December crude (CLc1:
Quote,
Profile,
Research) rose $2.92, or 3.2 percent, to settle at $94.09 per barrel in New York on forecasts that U.S. inventory data on Thursday will show a decline in supply in the latest week. The release of the data was delayed by one day because federal government offices were closed on Monday for the Veterans Day holiday.
Shares of Macy's slid 7.1 percent to close at $28.47 after the retailer cut its sales forecast for the current quarter and full year. An S&P index of retailers' shares (.RLX:
Quote,
Profile,
Research) fell 2.5 percent.
Even so, Bear Stearns shares climbed 2.4 percent to $103.27 after the investment bank said it expects to write down $1.2 billion of assets linked to mortgages in the fourth quarter, soothing investors who had feared multibillion-dollar write-offs.
Merrill Lynch & Co (MER.N:
Quote,
Profile,
Research) shares ended up 1.8 percent at $57.98 on the NYSE.
Volume was below average on the New York Stock Exchange, with about 1.59 billion shares changing hands, below last year's estimated daily average of 1.84 billion. On Nasdaq, about 2.51 billion shares traded, ahead of last year's daily average of 2.02 billion.
Declining stocks outnumbered advancing ones by a ratio of about 5 to 3 on the NYSE and by 3 to 2 on Nasdaq.
the momentum not there...thus.. profit-taking in late afternoon pushes below the mark.. guess sti today will suffer similar fate..
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