Reply #65: Crying in your pretzels time [View All]

[54anickel]

Dow 11,406.20 -63.08 (-0.55%)
Nasdaq 2,167.84 -37.86 (-1.72%)
S&P 500 1,300.26 -12.99 (-0.99%)
10-yr Bond 4.801 +0.02 (+0.42%)
30-yr Bond 4.952 +0.02 (+0.41%)
NYSE Volume 2,268,116,000
Nasdaq Volume 1,841,755,000

4:20 pm : Given the scope of the market's broad-based rally during what is historically one of the worst months of the year for stocks (August), the sustainability of such an impressive performance came into question Wednesday as a sense that stocks were overbought prompted widespread profit-taking.

With tame inflation data of late acting as the impetus behind a more optimistic underlying tone in the market, it wasn't too surprising to see a disappointment on the inflation front ruffle the hawks' feathers today. Before the bell, the Labor Dept. showed that the final read on Q2 productivity came in at a higher 1.6% annual rate, which matched economists' forecasts and was an encouraging revision, yet unit labor costs rose a larger than expected 4.9%, leaving the year/year increase at 5% -- the largest rise since 1990.

Normally, this report seldom has a significant impact on the market, since productivity can be quite volatile from one quarter to the next. However, with little else in the way of market-moving news and the blue chip averages coming off their best August performance in six years as a result of encouraging reads on inflation for Q3, especially last Friday's good August hourly earnings figure, investors used the relatively outdated Q2 data as an excuse to take some money off the table. Even a 1.5% decline in crude oil prices to five-month lows below $68 a barrel wasn't enough to attract buyers from start to finish.

As a result of oil's pullback, coupled with analyst downgrades on Sunoco (SUN 67.24 -3.98) and Valero Energy (VLO 53.02 -2.73), the Energy sector got hammered (-2.98%). That removed key industry leadership from the biggest profit engine for the S&P 500 over the last several quarters and merely added to uncertainty about earnings prospects amid continued signs of an economic slowdown.

Also not surprising was a notable sell-off in Technology since it was best performing sector in August (+8.4%) and largely responsible for the Nasdaq turning in an impressive 4.4% advance last month and even inching the Composite into positive territory yesterday for the first time since June. Accordingly, the Nasdaq was hardest hit among the majors. News that Intel (INTC 19.31 -0.68) will slash fewer jobs than some on Wall Street expected and an analyst downgrade on SanDisk (SNDK 54.71 -3.35) were just two of the catalysts raising concerns that the tech sector's huge run-up last month was overdone.

Autos, however, was a bright spot for investors Wednesday, turning in the day's biggest gain (+2.2%) and extending its reach as this year's third best performing S&P industry group (+31.7%). General Motors (GM 31.17 +0.73), the day's best performing Dow component, surged 2.4% after saying it will extend warranties on 2007 vehicles to five years and 100,000 miles while Ford Motor (F 8.55 +0.16) gained 1.9% after appointing a former Boeing executive as its new CEO.BTK -2.4% DJ30 -63.08 DJTA -1.8% DJUA -0.8% DOT -1.1% NASDAQ -37.86 NQ100 -2.0% R2K -2.1% SOX -3.3% SP400 -1.7% SP500 -12.99 XOI -3.5% NASDAQ Dec/Adv/Vol 2273/754/1.84 bln NYSE Dec/Adv/Vol 2621/656/1.43 bln

3:30 pm : A widespread negative tone continues to weigh on equities as broad-based consolidation leaves the indices languishing at session lows going into the close. Adding to today's struggles has been the inability by the Dow, S&P 500 and Nasdaq to find support above key technical levels of 11407, 1302 and 2176, respectively. The tech-heavy Composite (-1.6%) continues to feel the brunt of the selling pressure, which is understandable since it led the majors last month with a 4.4% advance fueled by an impressive 8.4% surge in Technology. DJ30 -66.28 NASDAQ -36.10 SOX -2.9% SP500 -12.79 NASDAQ Dec/Adv/Vol 2245/731/1.54 bln NYSE Dec/Adv/Vol 2554/705/1.20 bln

3:00 pm : Even as oil prices spike lower going into the close of trading on the NYMEX, the stock market is back to trading at its worst levels of the day. Crude oil futures recently closed down 1.5% at $67.56 a barrel as the U.N. does everything possible to not put sanctions on Iran. While oil's decline bodes well for consumers, further deterioration in Energy (-2.8%), which removes key leadership from the biggest profit engine for the S&P 500, has only added to uncertainty about earnings prospects amid continued signs of an economic slowdown. DJ30 -58.60 NASDAQ -31.56 SP500 -11.87 NASDAQ Dec/Adv/Vol 2199/758/1.39 bln NYSE Dec/Adv/Vol 2497/734/1.09 bln

2:30 pm : Stocks are choppy as investors continue to soft through the details of the Fed's Beige Book. Bonds, however, continue to strengthen and have pushed the 10-yr yield to session lows of 4.79% as five of the Fed's 12 districts pointed to evidence that the pace of economic growth has slowed. Words like "flat," "declining" and "weak" housing information have also helped the Treasury market pare its losses, but the recovery has been short-lived since the report was not all bad as it also said economic conditions continued to expand overall.DJ30 -37.55 NASDAQ -25.31 SP500 -8.98 NASDAQ Dec/Adv/Vol 2166/770/1.27 bln NYSE Dec/Adv/Vol 2442/781/988 mln