23 Oct 2012
Market Summary
Made a mistake on my economic calendar...
What an expected wash out...The index futures were down more than 100 points before the market open. Subsequently, the market went down by as much as 260 points after market open and closed at -243 points. That feels like subprime. What a reminiscence. We've got 2 days of drop that is more than 100 points each, on Friday and Tuesday. And that totally reflects the market sentiments now. With the Tech companies releasing lousy earnings, it's going to be a heavy drag on the market. Surprisingly, the Financials were doing quite well... Largely due to the injection of cash into the Financials.
There are major central bank data coming out today from US and EUR.
Moving the Market
Moody's downgrade of 5 Spanish region
Market Internals
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Without a doubt, it's a clear down day.
Leaders and Laggards
The materials and the energy were the heaviest laggards yesterday.
Technical Updates
On the technical note, both SPX and DOW broke the neckline on the double top pattern, while NASDAQ gotten flat yesterday, largely due to the fact that Apple is releasing it's Ipad mini.
Commentaries
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| Stock Market Update |
16:20 ET Dow -243.31 at 13102.58, Nasdaq -26.50 at 2990.46, S&P -20.71 at 1413.1 : [BRIEFING.COM] Equities began the session with an opening sell-off as disappointing earnings combined with Moody's downgrade of five Spanish regions fueled the bearish sentiment. Stocks reached session lows during the first hour before attempting to rebound. The tech-heavy Nasdaq showed intraday resilience, but the attempt to reclaim its early losses was cut short when late-day selling sent the index back near the middle of its range. As a result the Nasdaq ended lower by 0.9% while S&P 500 lost 1.4%.
Stocks in the materials space saw the biggest weakness. Among steel producers, AK Steel (AKS 5.19, -0.32) fell 5.8% despite beating on earnings and reporting revenues in-line with Capital IQ consensus. However, based on current conditions, the company expects to incur a net loss during the fourth quarter. This includes an anticipated non-cash tax expense resulting from an expected change in the company's tax valuation allowance. Other steel producers also traded lower.ArcelorMittal (MT 15.64, -0.92) slid 5.6%, while Cliffs Natural Resources (CLF 43.55, -1.44), Nucor (NUE 40.37, -0.75), and United States Steel (X 21.90, -1.01) all lost between 1.8% and 4.4%.
Chemical producer DuPont (DD 45.25, -4.51) plunged 9.1% after missing earnings and revenue expectations. In addition, the company lowered its full-year 2012 earnings guidance, and announced restructuring plans which aim to cut about 1,500 positions globally. The weak results weighed on other chemical producers. Dow Chemical (DOW 28.55, -1.19) settled lower by 4.0%, while Monsanto (MON 86.93, -1.94) and Mosaic (MOS 53.07, -1.16) both lost near 2.2%.
The technology sector outperformed the broader market. The group's biggest component, Apple (AAPL 613.35, -20.67) dipped 3.3% after unveiling a smaller version of the iPad tablet with a $329 price tag. The company also announced a fourth generation iPad and a new desktop computer.
Looking at technology earnings, Western Digital (WDC 34.43, -0.85) slipped 2.4% despite beating on earnings and revenues. The management remained upbeat about future prospects and said, "While the macroeconomic environment is dampening near term demand, we remain confident in the continued long-term growth in the creation, storage and management of digital content." Peer Seagate (STX 27.80, -0.51) shed 1.8% in sympathy.
Texas Instruments (TXN 27.84, +0.05) tacked on 0.2% after reporting third quarter earnings of $0.52 on revenue of $3.39 billion. While the quarterly results beat expectations, it should be noted that the company issued downside fourth quarter earnings and revenue guidance. The management commented on the outlook by saying "TI revenue grew sequentially and operations were well executed even though the economy and semiconductor market remained weak and likely will get weaker in the fourth quarter."
Xerox (XRX 6.67, -0.36) ended lower by 5.1% after announcing mixed earnings. The business equipment provider reported earnings of $0.25, which was in-line with Capital IQ consensus estimates. However, the revenue of $5.42 billion was short of the $5.5 billion forecast by the Capital IQ consensus. The management commented on the future outlook by saying, "We remain cautious, and we are focused on reducing costs to absorb the impact and improve margins while investing in key areas of growth and delivering strong cash flow."
Elsewhere, Yahoo! (YHOO 16.67, +0.90) advanced 5.7% after its third quarter earnings of $0.35 exceeded Capital IQ consensus estimates by $0.09. The revenues, meanwhile, were reported in-line with Capital IQ analyst expectations. Following the earnings release, Susquehanna upgraded the stock to ‘positive' from ‘neutral.' Note that today's buying has lifted the stock to levels not seen since October of last year.
The Dow Jones Transportation Average outperformed the remaining industrials, and added 0.9%. The strength within the bellwether complex was a result of positive reaction to earnings from a handful of names. Ryder System (R 45.82, +2.39) rose by 5.5% after announcing mixed earnings. The truck lessor reported earnings of $1.28 which was $0.10 better than the Capital IQ consensus estimate. However, the company's revenue of $1.57 billion was below the $1.62 billion Capital IQ forecast. Peer CH Robinson (CHRW 60.98, +1.13) added 1.9%.
United Parcel Service (UPS 73.73, +2.17) advanced 3.0% after reporting mixed earnings. The economic bellwether announced third quarter earnings of $1.06, which was in-line with the Capital IQ consensus. Meanwhile, the company's revenue of $13.07 billion fell short of the $13.31 billion expected by the Capital IQ consensus. In addition, the company issued in-line guidance. Peers FedEx (FDX 91.79, +0.31) andExpeditors International (EXPD 36.28, +0.95) registered gains of 0.3% and 2.7%, respectively.
Luxury retailer Coach (COH 58.15, +3.98) surged 7.4% after beating on earnings, and reporting in-line revenues. The company also announced the repurchase of up to $1.5 billion of its outstanding common stock by June 30, 2015. When commenting on the future outlook, the management said, "We are well positioned for the holiday season and remain confident in our ability to deliver double-digit growth during our planning horizon."
Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET. In addition, September new home sales and the August FHFA Housing Price Index will be released at 10:00 ET. Lastly, the Federal Reserve will release a policy statement at 14:15 ET.
The U.S. Treasury will auction off $35 billion in 5-yr notes. ..NYSE Adv/Dec 806/2236. ..NASDAQ Adv/Dec 884/1593. |
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Commodities
Treasuries
Market Call: NOT GOING TO MAKE MARKET CALL
Date: 24 Oct 2012
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