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US STOCKS-S&P, Dow set to start higher on BHP bid
The S&P 500 and Dow were headed for a modest bounce at the open on Thursday, with shares of natural resources companies set to lead gains after BHP Billiton's bid for rival miner Rio Tinto.
A report suggesting strength in the U.S. labor market should also lend support, while the Nasdaq index was heading for a flat to slightly lower start.
The BHP (BHP.AX:
Quote,
Profile,
Research)(BLT.L:
Quote,
Profile,
Research) bid news came a day after Wall Street's suffered its worst slide in three months.
While Rio (RIO.L:
Quote,
Profile,
Research) (RIO.AX:
Quote,
Profile,
Research) rejected the offer as too low, the deal news appeared to have mitigated unease about credit losses at banks.
Still, trading will be cautious before Federal Reserve Chairman Ben Bernanke's congressional testimony on Thursday on the economic outlook. Bernanke was scheduled to appear before the Joint Economic Committee at 10 a.m. (1500 GMT).
"There's still so much uncertainty about the effect the financial crisis is going to have," said Alan Lancz, president of Alan B. Lancz & Associates Inc., an investment advisory firm based in Toledo, Ohio.
"A lot of time we've seen modest relief rallies, but where's the follow-through? It's a matter of being in the right area as far as commodity-related issues are concerned."
S&P 500 futures (SPc1:
Quote,
Profile,
Research) rose 2.9 points and were above 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 (DJc1:
Quote,
Profile,
Research) rose 28 points, while Nasdaq 100 (NDc1:
Quote,
Profile,
Research) futures were down 8.5 points.
Comments from Cisco Systems Inc (CSCO.O:
Quote,
Profile,
Research) that the credit crisis was hurting the technology sector was likely to weigh on the technology sector.
As I mentioned in yesterday posting, it's a blessing in disguise that we have a holiday today.
We had shielded ourselves from the full impact of the DJ bloodshed yesterday.
US STOCKS-S&P, Dow futures up on BHP bid, Alcoa higher
S&P 500 and Dow stock futures rose on Thursday as shares of natural resources companies, including Alcoa Inc (AA.N:
Quote,
Profile,
Research), gained after BHP Billiton (BLT.L:
Quote,
Profile,
Research)(BHP.AX:
Quote,
Profile,
Research) disclosed it had made a bid for rival miner Rio Tinto (RIO.L:
Quote,
Profile,
Research) (RIO.AX:
Quote,
Profile,
Research).
The BHP bid news, coming a day after Wall Street's suffered its worst slide in three months, helped mitigate investors' unease about credit losses at financial services companies. For details, see [ID:nL082782]. Comments from Cisco Systems Inc (CSCO.O:
Quote,
Profile,
Research) that the credit crisis was hurting the technology sector also added to worry. [ID:nN07565401].
"We had a minor capitulation yesterday, which should lead to an early bounce in the first couple hours of trading today," said Matt McCall, president of Penn Financial Group in Denver, Colorado.
He said BHP's willingness to pay a premium for Rio and a rise in BHP's stock were bullish signals that demand for commodities was strong.
S&P 500 futures (SPc1:
Quote,
Profile,
Research) rose 2.7 points and were above 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 (DJc1:
Quote,
Profile,
Research) rose 41 points, while Nasdaq 100 (NDc1:
Quote,
Profile,
Research) futures were down 5.75 points.
Among materials companies helped by news of the offer for Rio Tinto were Alcoa, a Dow component, which rose 4.1 percent to $53.30, and U.S. Steel Corp (X.N:
Quote,
Profile,
Research), up 3.2 percent to $102.
In addition, shares of Freeport-McMoRan Copper & Gold (FCX.N:
Quote,
Profile,
Research) jumped 4.8 percent to $113.30 before the opening bell.
Investors also got a boost from an October sales report from warehouse club operator Costco Wholesale Corp (COST.O:
Quote,
Profile,
Research), which posted a 9 percent rise in stores open at least a year, beating forecasts. [ID:nN08615208
BHP Billiton's move could create a $350 billion-plus mining giant, but Rio Tinto on Thursday rejected the all-share proposal as too low.
High on Thursday's economic agenda is Federal Reserve Chairman Ben Bernanke's testimony before the congressional Joint Economic Committee at 10 a.m. (1500 GMT).
His assessment of the likely risks posed by the credit turmoil, surge in crude oil prices and a slide in the dollar will be closely watched for clues about the likely direction of interest rates.
U.S. stocks tumbled on Wednesday and the Nasdaq posted its biggest drop since February amid concerns about the fallout from the credit crisis. The drop wiped out gains since the Fed's Sept. 18 50-basis points interest rate cut.
Latest...
"Ford shares rose 5 percent in premarket trading...."
Time to short.
DOW has drop 2.64%, at what percentage points drop, then it is consider a CRASH?
DOW looks like it's heading for a CRASH SOON!!!!!!!!!!!!!!
SJ forumers, any opinion??????
I have a gut feeling one day the US market is going to suffer an even bigger crash then this one.
HSI is also showing island reversal. Looks like the mad bull in Hong Kong has just received
a deadly iron palm blow directly on the nose by the bear...
Market Overview
| Market Diaries |
 |
| Issues: |
NYSE |
Nasdaq |
|
|
| Advancing |
301 |
587 |
|
|
| Declining |
2,995 |
2,444 |
|
|
| Unchanged |
51 |
101 |
|
|
| Total: |
3,347 |
3,132 |
|
|
| Issues at: |
|
|
| 52-Week High |
25 |
19 |
|
|
| 52-Week Low |
270 |
298 |
|
|
| Volume: |
|
|
| Advancing |
97,048,000 |
352,515,000 |
|
|
| Declining |
1,554,496,000 |
2,168,234,000 |
|
|
| Unchanged |
6,432,000 |
-2,495,604,000 |
|
|
| Total: |
1,657,976,000 |
25,145,000 |
|
|
11/7/2007 6:50:00 PM |
|
|
|
|
lower high and lower low. bad bad news. tomolo will have more panic selling for those US eod trader. 33% US market heading up, 66% heading down tomolo
god bless sti on fri and the week ahead
Looking at the
3-Month Dow Chart (click), it may be forming a base for further rise....
Stocks drop at open after steep GM loss
NEW YORK (Reuters) - Stocks opened sharply lower on Wednesday after General Motors Corp (GM.N:
Quote,
Profile,
Research) posted its biggest ever quarterly loss, oil moved closer to $100 and the dollar tumbled, casting doubt on the U.S. economic outlook and prospects for corporate profits.
The Dow Jones industrial average (.DJI:
Quote,
Profile,
Research) was down 128.03 points, or 0.94 percent, at 13,532.91. The Standard & Poor's 500 Index (.SPX:
Quote,
Profile,
Research) was down 13.40 points, or 0.88 percent, at 1,506.87. The Nasdaq Composite Index (.IXIC:
Quote,
Profile,
Research) was down 25.54 points, or 0.90 percent, at 2,799.64.
Dollar slides to historic lows
The dollar fell on Wednesday to historic lows of $1.47 per euro and $2.10 to the pound on expectations of further U.S. interest rate cuts to limit damage from an ailing housing market.
The dollar slid further after comments from senior Chinese officials stirred concerns about its central bank shifting reserves away from the U.S. currency.
"The China story is simply an excuse (to sell the dollar)," says Derek Halpenny, senior currency economist at BTM-UFJ. "Really it's the bias of the Fed to continue easing."
The euro surged versus the dollar, on track for its biggest one-day percentage gain this year and sending European stocks down nearly 1 percent.
A Chinese central bank official said the dollar was losing its status as the major global currency.
"The case for the dollar is a very weak one. Comments from China, despite some backtracking, were perhaps enough to start the rot," said Steve Barrow, currency strategist at Bear Stearns. "The euro in a sense has been a beneficiary of that."
One-month implied euro/dollar volatility reached its highest since the peak of credit problems in August, indicating that the dollar's slide may be approaching disorderly territory.
The euro rose to an all-time high of $1.4703 according to Reuters data, beating equivalent record highs set in deutschemark/dollar, before easing to $1.4679 by 6:51 a.m. EST, still up 0.9 percent on the day.
EURO AT $1.50 NEXT?
Market participants will look for comment on exchange rates from European Central Bank Jean-Claude Trichet at his post-interest rate meeting news conference on Thursday.
"Failure from Trichet to show any displeasure with the euro/dollar rally at tomorrow's press conference would most likely be the trigger for a move to $1.50," ING said in a research note.
Analysts said any further weakness in the dollar would prompt growing speculation that central banks may step into the market.
The dollar index, which measures the dollar's value against a basket of major currencies touched a record low of 75.210 (.DXY:
Quote,
Profile,
Research), down around 10 percent since the start of 2007.
The dollar also fell 1.26 percent to 113.27 yen, around two-month lows.
Sterling rose to a fresh 26-year high at $2.1053, and steadied about the $2.10 mark.
The currencies of natural resource-rich countries such as Australia and Canada were the biggest gainers from a rally in commodities that pushed gold to a 28-year high above $840 an ounce and U.S. crude oil futures to a record high (CLc1:
Quote,
Profile,
Research) on Wednesday, closing in on $100 a barrel.
The Australian dollar hit a 23-year high after the Reserve Bank of Australia raised rates by 25 basis points to an 11-year high of 6.75 percent and left the door open for more tightening.
The Canadian dollar rose to its modern-day high against the U.S. dollar of 90.61 Canadian cents.
"We believe ... that the market has taken refuge in these currencies given the general desire for credible stores of value at a time of great uncertainty," said Bank of New York Mellon in a note to clients.
The euro was also supported by lingering market expectations for the U.S. Federal Reserve to cut interest rates in December, and for the ECB to keep euro zone rates steady for a while.
U.S. federal funds futures pricing on Tuesday implied a roughly 65 percent chance of a Fed rate cut in December.
The Bank of England and the ECB, both of which will make policy decisions on Thursday, are expected to hold interest rates steady at 5.75 percent and 4.0 percent respectively.
GM's $39B loss a record
No. 1 U.S. automaker posts much bigger operating loss than forecast as huge charge weighs on company.
General Motors reported a record net loss Wednesday due to a $39 billion charge, along with a large operating loss that was far worse than Wall Street expectations.
The nation's No. 1 automaker, which was hit with a soft auto market and a two-day strike by the United Auto Workers union during the quarter, lost $1.6 billion, or $2.80 a share, excluding special items.
That compares to the forecast of a 25- cent-a-share loss from analysts surveyed by earnings tracker Thomson First Call and earnings per share of $497 million, or 88 cents on that basis in the year-earlier period.
In addition, the company took a huge charge in the quarter, which was related to the writedown of tax credits for losses over the last three years. That caused it to post a net loss of $39 billion, or $68.85 a share, for the third quarter of 2007, compared with the net loss of $147 million, or 26 cents a share, in the year-earlier period.
To put the size of the charge in context, the total value of all GM shares outstanding was only $20.4 billion at the close of trading Tuesday.
The charge and losses are not the largest in corporate history. Time Warner (Charts, Fortune 500), then known by the name AOL Time Warner, lost $98.7 billion in 2002, driven largely by charges related to the writedown in value of the company after a 2001 merger. CNNMoney.com is a unit of Time Warner.
Telecom equipment maker JDS Uniphase (Charts) lost $56.1 billion, driven mostly by special charges. But the GM loss in the third quarter puts it in position for one of the largest losses in U.S. corporate history.
The previous company record loss at GM came in 1992, when a $20.8 billion charge resulted in a $23.5 billion loss for the year. Ironically, that earlier charge was related to the company's accounting for the future cost of retiree health care at that time.
Those health care costs, which have since grown to more than $50 billion, are in the process of being shifted to a union-controlled trust fund which was agreed to in a break-through labor agreement reached in the last week of this most recent quarter.
The latest charge, announced late Tuesday, raised concerns among investors that the automaker wouldn't be able to earn enough money going forward, despite winning a new cost-saving labor deal from the UAW, to fully utilize the tax credits it built up from losses the last three years.
That signal on future results was a disappointment. GM saw record global automotive sales in the quarter, and it reached a new labor agreement with the United Auto Workers, after a two-day strike at its U.S. plants, that should save the company billions of dollars going forward and make it more competitive with nonunion rivals.
The company's statement about the charge said that it "does not reflect a change in the company's view of its long-term automotive financial outlook." But it also cautioned "the company faces more challenging near-term automotive market conditions in the U.S. and Germany."
But in a television interview early Wednesday, GM Chairman and CEO Rick Wagoner said he is confident the company is in better position to earn money going forward and utilize the tax credits. He said it needed to take the writedown at this point to comply with strict accounting rules.
"I wouldn't read anything into it (the charge) for the prospects for the company," he told CNBC.
As to the company's statement mentioning challenging near-term market conditions, Wagoner said that was not different from what had already been reported in sales numbers.
"What we're talking about it is what we've already seen," he said in his television interview. "It's not a disaster, but to be honest, it's not at all robust."
Still, shares of Dow component
GM (
Charts,
Fortune 500) were down about 5 percent in pre-market U.S. trading following the report.
GM results showed that worldwide, its automotive operations earned $122 million from continuing operations, excluding special items, in the quarter. That was an improvement from the loss of $455 million on that basis in the year-earlier period.
But those auto earnings were from the company's overseas auto operations. Its core North American auto unit still lost $247 million in the quarter, excluding special items. That's an improvement from the $660 million it lost on that basis a year earlier.
Revenue from auto sales rose to $43.1 billion from $39.6 billion a year earlier. That topped First Call's revenue forecast of $40.3 billion. The automaker sold a record 2.39 million cars and trucks worldwide in the quarter, enough to edge back in front of Toyota Motor in the race to be the world's largest automaker in terms of vehicle sold.
Earlier Wednesday, GM rival
Toyota Motor (
Charts), which had been hit by sluggish sales in its two most important markets, Japan and the United States, nevertheless reported profit rose 11 percent and raised its earnings forecast for the full year.
Ford Motor (
Charts,
Fortune 500), which lost its long-held title of No. 2 U.S. automaker to Toyota this year, is due to report results Thursday. It is also forecast to report an operating loss.
Wall St. faces oil, GM woes
U.S. stocks expected to open lower Wednesday as crude gets closer to $100 mark, automaker takes huge charge.
Oil's push toward the $100-a-barrel mark and a huge quarterly loss by General Motors set a negative tone going into the start of Wednesday's U.S. stock trading.
At 7:45 a.m. ET, Nasdaq and S&P futures were both sharply lower, signaling a bad start to the U.S. trading day.
Oil soared to $98.22 a barrel, up $1.52, although that was off of the high of $98.62 that was hit in overnight trading, as the market awaits the weekly inventory report from the U.S. government. The report is forecast to show a decline in fuel supplies for the third straight week.
Also a storm in the North Sea caused the evacuation of some oil platforms and raised supply concerns.
The price of dollar-denominated oil was also being driven higher by a further decline in the dollar, which once again hit a record low versus the euro. The dollar was also lower versus the yen.
GM (Charts, Fortune 500) shares were down more than 6 percent in European trading after the nation's leading automaker on Wednesday reported a large operating loss that was far worse than Wall Street expectations.
The nation's No. 1 automaker, which was hit with a soft auto market and a two-day strike by the United Auto Workers union during the quarter, lost $1.6 billion, or $2.80 a share, excluding special items. That compares to the forecast of a 25 cent a share loss from analysts surveyed by earnings tracker Thomson First Call
Late Tuesday, GM announced that it would take a $39 billion noncash charge to meet federal accounting rules.
While the charge, related to the writedown of tax credits for losses over the last three years, will not hit GM's cash reserves, it raised questions for investors about whether the automaker will make enough money in the coming years to take advantage of those previously-booked credits.
GM rival Toyota Motor (Charts), which had been hit by sluggish sales in its two most important markets, Japan and the United States, nevertheless reported profit rose 11 percent and it raised its earnings forecast for the full year.
Time Warner (Charts, Fortune 500), the world's largest media company, reported improved revenue that beat forecasts as it reaffirmed its 2007 outlook. It also announced that its America Online unit was making an acquisition. Time Warner is the owner of CNNMoney.com.
Among the other stocks in the news Wednesday Microsoft (Charts, Fortune 500) signed a deal with China's No. 2 personal computer maker to pre-install Microsoft's Windows operating system in PCs in an effort combat widespread Chinese software piracy. The software maker also fired its chief information officer for violating company policies although it declined to provide details.
The Wall Street Journal reported that Delta Air Lines (Charts, Fortune 500) is set to announced a 10-year, $1 billion contract with a major supplier of jet-engine parts that will help the airline expand the types of engines it can maintain itself.
writeoff low @<50b cum, still a long way to go to cum 200b min.
$39 billion is a very big figure. Will this be worst than the sub-prime issue? I hope Singapore's shares not too badly hit.
General motor Reports $39 Billion Loss on Deferred Tax Charge.
Its gonna be a bloody nite and day tmr.
Stock futures down
Stock index futures fell around 1 percent before Wall Street's opening on Wednesday, putting U.S. shares on course to reverse the previous session's gains, with eyes on tech bellwether Cisco and economic data.
"The rally we saw yesterday was just a fake," said Heino Ruland, analyst at FrankfurtFinanz. The falling dollar and the rising oil price did not justify an ongoing rally, he said.
At 5:40 a.m. EST, the Dow Jones future was down 1 percent, the S&P 500 future was 1.1 percent lower and the Nasdaq future was 0.9 percent in the red.
The indicative Dow Jones index (.DJII:
Quote,
Profile,
Research), which tracks the Dow stocks as these are traded in Frankfurt, was 0.5 percent lower.
"We may yet see a more protracted reaction in the S&P 500 towards 1,470/50 before the uptrend continues," Morgan Stanley said in a global market trading strategy note, pinpointing 1,700 points as a realistic, medium-term target for the S&P 500 (.SPX:
Quote,
Profile,
Research) benchmark, which closed at 1,520.27 points on Tuesday.
"We would not be surprised if the so-called Wall of Worry began to fall, allowing liquidity to flow from bond markets into equities," Morgan Stanley added.
In addition to Cisco Systems (CSCO.O:
Quote,
Profile,
Research), a dozen S&P 500 companies are scheduled to report quarterly results, among those General Motors (GM.N:
Quote,
Profile,
Research), Sara Lee (SLE.N:
Quote,
Profile,
Research), Time Warner (TWX.N:
Quote,
Profile,
Research) and News Corp (NWS.N:
Quote,
Profile,
Research).
"Cisco and News Corp are strong enough to set a trend, either way," Ruland said.
"But the focus today will be on productivity and unit labor costs. Both are a decent indication of inflation," he added.
The Labor department will release preliminary third-quarter productivity and unit labor costs data at 1330 GMT.
Economists polled by Reuter expect a productivity rise of 3.0 percent and a 1.0 percent increase in unit labor stocks.
FED FOCUS
The data will be watched for clues about Federal Reserve monetary policy.
"If the U.S. economy loses momentum, it will see lower productivity gains and so unit labor costs will rise more sharply," Commerzbank said in a note.
"The trend in productivity growth is now pointing downward and the days of large productivity gains seem to be over."
"In combination with high prices for energy and food and a weak dollar, this is a scenario that causes inflation expectations to rise...it is also a scenario that makes the Fed proceed with more caution," the German bank added.
Five senior Fed officials are due to give speeches on Wednesday; Federal Reserve Bank of Richmond President Jeffrey Lacker at 1345 GMT, Federal Reserve Board Governor Frederic Mishkin at 1400 GMT, Federal Reserve Board Governor Kevin Warsh at 1700 GMT, Federal Reserve Bank of Atlanta President Dennis Lockhart at 1810 GMT and Federal Reserve Bank of St. Louis President William Poole at 1815 GMT.
A Fed survey published on Monday showed that large banks, many of which have been hit by write-downs on U.S. subprime mortgages, have tightened their lending standards. That could restrict companies' access to credit financing and contribute to slower economic growth, HSBC Trinkaus Burkhardt said in a note.
"Rumors about who has to write down how much will continue until someone has written down all the losses, at least those which are directly linked to the subprime market. This might last until U.S. brokers release fourth-quarter results in mid-December," UniCredit said.
On Tuesday, U.S. stocks rose as the high oil price lifted shares of Exxon Mobil (XOM.N:
Quote,
Profile,
Research) and other energy producers, while optimism a day ahead of Cisco's earnings drove a rally in technology shares.
The Dow Jones industrial average (.DJI:
Quote,
Profile,
Research) rose 0.9 percent, the S&P 500 gained 1.2 percent and the Nasdaq Composite (.IXIC:
Quote,
Profile,
Research) advanced 1.1 percent.
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