Dow Jones 30: Industrials Index

[setravis]

Rate-Cut Hopes Ignite Rally.......


Wednesday 8/29/2007


Stocks in the U.S. were solidly higher Wednesday following a two-session selloff, as traders bid up equities amid hopes for a rate reduction.

The Dow Jones Industrial Average jumped 247.44 points, or 1.9%, to 13,289.29. The S&P 500 added 31.40 points, or 2.19%, to 1463.76, and the Nasdaq was better by 62.52 points, or 2.5%, at 2563.16.

Chipmakers, retailers, computer hardware stocks and precious-metals names were among the leaders of what was a broad-based rally.

The mood improved as investors learned that Federal Reserve Chairman Ben Bernanke had sent a letter to New York Sen. Chuck Schumer saying that the central bank would "act as needed" if the economy appeared to be imperiled by the troubles in the financial markets.

The change in direction comes a day after the minutes from the last Fed meeting failed to convince investors that an ease in interest rates was being considered.

However, the bulls interpreted the Bernanke correspondence as a sign the fed funds target rate could come down. Many market participants are looking for a cut at or before the next Fed meeting Sept. 18.

The minutes indicated that members of the FOMC judged that risks to the credit market and economic growth were on the rise, saying that "conditions in markets for subprime mortgages and related instruments, including segments of the asset-backed commercial paper market, deteriorated sharply toward the end of the period."

However, they also showed that the central bank continues to worry about inflation, which will affect any decision on rates.

Combined with several downgrades in the financial sector, the Fed minutes handed the U.S. averages their worst session in three weeks. The Dow plunged 280.28 points, or 2.1%, to 13,041.85, taking its two-day loss to 330 points.

The S&P 500 declined 34.43 points, or 2.35%, to 1432.36, and the Nasdaq fell 60.61 points, or 2.37%, at 2500.64.

"The letter from Bernanke to Schumer shows that the Fed minutes yesterday were misinterpreted," said Peter Cardillo, chief market economist with Avalon Partners. "Once again, the Fed is saying it will be available if necessary, and the market again had to rethink and refocus."

Breadth strengthened considerably from the previous session. On the New York Stock Exchange 2.58 billion shares changed hands Wednesday, as advancers topped decliners by a 7-to-1 margin. Volume on the Nasdaq reached 1.64 billion shares, with winners outpacing losers nearly 3 to 1.

Besides the Fed, strong earnings news also helped buyers move back in. Big Lots (BIG:) beat second-quarter estimates and guided its outlook higher for the year. Big Lots finished higher by $2.62, or 10%, to $28.92.

Williams-Sonoma (WSM:) also topped second-quarter forecasts, and it upped its full-year forecast, as well. The stock jumped $3.37, or 11.4%, to $32.94.

DaimlerChrysler (DAI:) said its second-quarter profit fell to $2.5 billion, or $2.36 a share, from $2.9 billion and $2.80 a share a year earlier. Revenue slipped 3% to $32.2 billion. For the year, the company expects revenue of around $134 billion, roughly the same as 2006.

Shares of the automaker rose after DaimlerChrysler approved a buyback of 10% of its outstanding shares. Daimler gained $3.25, or 3.9%, to $87.59.

Elsewhere, Altria (MO:) rose nearly 1.1% after announcing it will seek to spin off its Philip Morris International division. The company also is raising its dividend. Altria added 79 cents at $69.86.

Away from stocks, oil prices spiked following the Energy Department's latest inventory report. The front-month October crude contract surged $1.78 to close at $73.51 a barrel.

The Energy Department said that gasoline stocks fell by 3.6 million barrels last week. Crude stores, meanwhile, fell by a greater-than-expected 3.5 million barrels, and distillates rose 900,000 barrels.

Treasury bonds turned lower. The 10-year note eased 9/32 in price, pushing the yield to 4.54%. The 30-year bond ended down 19/32 in price to yield 4.88%.

Asian markets stumbled overnight. Japan's Nikkei 225 slid 1.7% and Hong Kong's Hang Seng Index gave back 1.5%. European bourses were faring better. London's FTSE 100 gained 0.5%, and Germany's Xetra Dax tacked on 0.1%.

[setravis]

Bernanke, Bush Boost Stocks.......


Friday 8/31/2007


Stocks in the U.S. rallied Friday after Federal Reserve Chairman Ben Bernanke addressed the current subprime mess and President Bush moved to offer federal help to mortgage borrowers.

The Dow Jones Industrial Average jumped 119.01 points, or 0.9%, to 13,357.74, led by a 3.4% jump in shares of Home Depot (HD:) . The S&P 500 added 16.35 points, or 1.12%, at 1473.99, and the Nasdaq Composite rose 31.06 points, or 1.21%, to 2596.36.

While the major averages finished the week nearly unchanged, the market logged its first winning month since May. The Dow added 1.1% in August, the S&P 500 climbed 1.2%, and the Nasdaq jumped 2%.

The gains came after a speech from Bernanke on housing and monetary policy in Jackson Hole, Wyo., and remarks from President Bush encouraging the use of Federal Housing Administration insurance.

In his speech, Bush noted that the subprime crisis is relatively modest compared with the entire U.S. economy, but he urged mortgage holders to refinance and count on the FHA if they become delinquent on adjustable-rate loans.

The president, however, emphasized that it is not the government's position to provide a wholesale bailout to all borrowers. He also promised to penalize predatory lenders.

"That's not really the answer to the subprime issue that's out there," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "Too many people have bought homes that they can't afford. It's hard to protect people from themselves forever. There's a strong reaction to this proposal, but this isn't the answer."

While the president's plan took some of the heat off the Central Bank's chairman, Bernanke's testimony drove home the point that the Fed is still ready and willing to act if needed.

The speech didn't provide any indication of an interest rate cut at the Bank's Sept. 18 meeting, but Bernanke reiterated that the Fed stands ready to "take additional actions as needed to provide liquidity and promote the orderly functioning of markets."

Bernanke also warned that "if current conditions persist in mortgage markets, the demand for homes could weaken further, with possible implications for the broader economy."

Additionally, he said that because of the recent developments in the financial markets, the Fed considers economic data from the past few months to be less useful in gauging economic activity and inflation.

"Consequently, we will pay particularly close attention to the timeliest indicators, as well as information gleaned from our business and banking contacts around the country," he said. "Inevitably, the uncertainty surrounding the outlook will be greater than normal, presenting a challenge to policymakers to manage the risks to their growth and price stability objectives."

Like President Bush, Bernanke also stressed that a widespread bailout won't be coming. "It is not the responsibility of the Federal Reserve -- nor would it be appropriate -- to protect lenders and investors from the consequences of their financial decisions," he said.

Paul Mendelsohn, chief investment strategist with Windham Financial, said that traders didn't get exactly what they wanted from Bernanke's speech in terms of policy.

"He isn't making any commitments to any move, which is what the market was really looking for," said Mendelsohn. "He did say we could see this spread further into the economy, which was unsettling to the market. Bernanke views this crisis as worrisome, and he basically said the Fed is not sure how big this problem will grow."

Breadth was strong for a second straight session. On the New York Stock Exchange 2.74 billion shares changed hands, as advancers topped decliners by a 4-to-1 margin. Volume on the Nasdaq reached 1.58 billion shares, with winners outpacing losers nearly 3 to 1.

Several economic reports were also in the spotlight. The Commerce Department said personal income rose a better-than-expected 0.5% last month, compared with a 0.4% rise in June. The core deflator -- a key Fed inflation gauge -- increased a mere 0.1%, and the year-over-year rate remained at 1.9% for the second straight month.

Elsewhere on the economic docket, the Chicago Purchasing Managers'' index unexpectedly rose to a reading of 53.8 from 53.4, slightly higher than the consensus. The University of Michigan's consumer sentiment index, on the other hand, fell to a worse-than-expected reading of 83.4 in August from 90.4 last month.

U.S. Treasuries pared losses following the economic releases and the speeches from Bush and Bernanke. The 10-year bond was off 4/32 in price, pushing the yield to 4.53%. The 30-year note rebounded as well and was unchanged in price, yielding 4.83%.

After the prior session's close, Dell (DELL:) posted earnings that topped Wall Street's estimates. However, the stock was off 21 cents, or 0.7%, closing at $28.25.

Several credit and mortgage-related names finished higher. Accredited Home Lenders (LEND:) surged 43.4% to $9.05 after it got a revised, but reduced, buyout offer from Lone Star.

Countrywide (CFC:) , Lehman Brothers (LEH:) , and Bear Stearns (BSC:) also rose.

Elsewhere, the October front-month crude contract rose 68 cents to finish at $74.04 a barrel.

Overseas markets were higher. Japan's Nikkei 225 jumped 2.6%, and Hong Kong's Hang Seng rallied 2.1% overnight. In Europe, London's FTSE 100 and Germany's Xetra Dax both ended up 1.5%.

[setravis]

Tech Leads Stocks Higher.......


Tuesday 9/4/2007


Stocks in the U.S. overcame a sluggish open Tuesday and were in rally mode after traders digested the latest round of economic data. The tech sector led the increase.

After opening lower, the Dow Jones Industrial Average recently was up 74 points, or 0.6%, at 13,432. The S&P 500 was adding 15 points, or 1%, at 1485. The tech-heavy Nasdaq Composite was rising 38 points, or 1.5%, to 2635.

Among tech shares, Yahoo! (YHOO:) jumped nearly 7% after Bear Stearns named the Internet portal one of its top picks. Apple (AAPL:) was up 4.1% a day before it is expected to unveil an update to its iPod line of products.

General Motors (GM:) was a bright spot on the Dow after the automaker posted an unexpected 6.1% rise in auto sales last month. Shares of GM, one of the Dow's 30 components, were up 2.5%.

Among its rivals, Ford (F:) said that sales fell 14.4% last month. Chrysler, now only 20%-owned by DaimlerChrysler (DAI:) , reported a 6% decline in sales.

Several reports on the economy were also in the spotlight. The Institute for Supply Management said its manufacturing index slipped slightly last month to 52.9 from 53.8 in July, essentially in line with estimates.

"History shows that the ISM tends not to react rapidly to market events," said Ian Shepherdson, chief economist with High Frequency Economics. "The next few months will be key, though, as it will reveal how companies are responding to tighter credit conditions."

Separately, the Commerce Department said that construction spending eased a greater-than-expected 0.4% in July, following a 0.3% decline in June. Economists had anticipated a 0.1% decline.

U.S. Treasuries were slipping lower after the data. Recently, the 10-year note was down 3/32 in price, raising the yield to 4.56%. The 30-year bond was off 3/32 in price, yielding 4.84%.

On Friday, the major averages surged to close out last month after comments from President Bush, who offered federal help to mortgage borrowers, and Federal Reserve Chairman Ben Bernanke, who reassured the market that the Fed will act if necessary.

The Dow finished the session with a rally of 119.01 points, or 0.9%, to 13,357.74. The S&P 500 added 16.35 points, or 1.12%, at 1473.99, and the Nasdaq rose 31.06 points, or 1.21%, to 2596.36. The market was closed Monday for the Labor Day holiday.

"We still expect volatility, but with a little more bullish confidence, now that the Fed is firmly behind us," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "Bernanke may not have come out and said he was going to cut the fed funds rate, but investors came away feeling that 25 basis points was a lock at the Sept. 18 FOMC meeting and that the door was open for something bigger."

Meanwhile, Paul Nolte, director of investments with Hinsdale Associates, said that the decline in volume headed into the holiday weekend rendered the last advance suspect.

"We will be watching the early-week market moves to determine whether the rally was merely a snapback after a large decline or the beginning of a new bullish phase," said Nolte. "Unfortunately, nearly every investor is anticipating that the recent market lows will be visited once again prior to another assault on all-time highs."

Little was due in the way of earnings to start the shortened week, but reports from Altera (ALTR:) , National Semiconductor (NSM:) , Campbell Soup (CPB:) and homebuilder Hovnanian (HOV:) are expected later this week.

As for ratings changes, Bear Stearns downgraded Research In Motion (RIMM:) to peer perform from outperform. Still, RIM was tacking on 3 cents to $85.44.

Home Depot (HD:) slid after the home repair retailer detailed results of its share tender offer, saying it would spend $10.7 billion to buy back stock. Shares were losing $1.91, or 5%, to $36.40.

Elsewhere, oil prices were on the rise by $1.02 at $75.06 a barrel.

Overseas markets were mixed. Japan's Nikkei 225 slid 0.6% and Hong Kong's Hang Seng was off 0.1% overnight. In Europe, markets reversed early losses. London's FTSE 100 and Germany's Xetra Dax both rose 1%.

[setravis]

Wall Street Ends In the Red.......


Wednesday 9/5/2007


Stocks in the U.S. pulled back Wednesday as negativity about the housing market and the Federal Reserve's latest economic report put an end to a two-day rally for the Dow Jones Industrial Average.

The Dow lost 143.39 points, or 1.07%, to 13,305.47, as only three of the average's 30 components finished with gains. General Motors (GM:) , Citigroup (C:) and JPMorgan Chase (JPM:) were among the worst performers.

The S&P 500 was down 17.13 points, or 1.15%, at 1472.29, and the Nasdaq Composite was off 24.29 points, or 0.92%, at 2605.95.

Part of what pinned the market in the red was the 2 p.m. EDT release of the Fed's regional business survey, known as the beige book.

Economic activity continued to expand in most of the nation's 12 districts at a modest or moderate pace in August, the Fed said. Growth slowed, however, in the Philadelphia, Richmond, Dallas and San Francisco regions.

The recent problems in the financial markets were emphasized, with the credit crisis having a dampening effect on the housing sector. Still, the report indicated that much of the trouble had been contained, leaving traders concerned that the Fed might not be moved to cut interest rates.

"Most [banks] reported that the recent developments in financial markets had led to tighter lending standards for residential mortgages, which was having a noticeable effect on housing activity, and several noted that the reduction in credit availability added to uncertainty about when the housing market might turn around," the survey read.

"Outside of real estate, reports that the turmoil in financial markets had affected economic activity during the survey period were limited."

Michael Sheldon, chief market strategist with Spencer Clarke LLC, said that the beige book "is an example of a situation where good news is bad news.

"Comments from the beige book indicate that outside of housing and real estate, Fed districts did not see much of the way in spillover to the broader economy," he said. "As a result of more positive-than-expected comments, the market continued to sell off on reduced expectations for the next Fed meeting."

While the beige book did show signs of credit-related worry in the Fed's districts, some of the sting was curtailed already. Last week, Fed Chairman Ben Bernanke delivered a speech on the recent housing and credit problems, and he said the central bank is taking very seriously the threats to economic growth.

"Economic data bearing on past months or quarters may be less useful than usual for our forecasts of economic activity and inflation," Bernanke said. "We will pay particularly close attention to the timeliest indicators."

Prior to the beige book release, stocks had already been tumbling after the National Association of Realtors said its pending home sales index dropped 12.2% in July to a reading of 89.9, providing the latest evidence that the slowdown in housing is continuing.

The decline follows a 5% rise in June. Over the last year, the index has fallen 16.1%.

Ian Shepherdson, chief economist with High Frequency Economics, said that July's swoon in pending home sales offers conclusive proof that June's unexpected leap was a fluke.

"Note that this collapse in pending home sales predates the turmoil in the markets and the subsequent jump in jumbo mortgage rates, even for prime borrowers," Shepherdson said. "Accordingly, we expect the index to drop further over the next few months. This is disastrous."

The Philadelphia Housing Sector Index slid 3.2%. D.R. Horton (DHI:) , Hovnanian (HOV:) , Lennar (LEN:) and Pulte Homes (PHM:) were all down 2.8% or more.

The latest data arrived just two days ahead of the closely watched jobs report. The Labor Department is expected to say at the end of this week that the U.S. economy added 120,000 jobs in August, compared to an increase of 92,000 in July.

"Bernanke has already set the stage for an interest rate cut, but the real question will be whether its by 25 basis points or 50," said Peter Cardillo, chief market economist with Avalon Partners. Weak economic numbers will probably determine what the Fed does. The core rate of inflation is near their comfort zone, which works in the favor of an interest rate cut."

Meanwhile, the Organization for Economic Cooperation and Development cut its anticipated growth for both the U.S. and Europe, citing the tribulations of the mortgage-securities market. The group is now looking for a 1.9% U.S. expansion, down from its prior outlook of 2.1%. Europe's forecast was lowered to 2.6% growth from 2.7%.

At the same time, the European Central Bank might take action Thursday if it sees the need to calm the money markets.

On Tuesday, investors returned from a long holiday weekend on this side of the Atlantic and put their money to work. Gains in Yahoo! (YHOO:) , Apple (AAPL:) , and other big tech names led the market to the upside.

The Dow ended ahead by 91.12 points, or 0.68%, at 13,448.86. The Dow added 1.6% over the previous two sessions. The S&P 500 advanced 15.43 points, or 1.05%, at 1489.42. The tech-heavy Nasdaq surged 33.88 points, or 1.3%, to 2630.24 for its fourth straight win.

Volume was greater than Tuesday's session while breadth turned negative. On the New York Stock Exchange, 2.98 billion shares changed hands as decliners topped advancers by an 8-to-3 margin. Volume on the Nasdaq reached 1.96 billion shares, with winners outpacing losers nearly 2 to 1.

Treasury securities rallied. The 10-year note rose 19/32 in price, cutting the yield to 4.47%. The 30-year bond added 29/32 in price, yielding 4.77%.

Among equities, toymaker Mattel (MAT:) initiated a third recall of Chinese-made toys due to lead paint. In all, 800,000 toys were included in the current recall, in addition to the millions covered by two previous actions. After spending most of the session in negative territory, Mattel finished with a penny gain at $21.98.

During the session, Apple unveiled a complete refresh to its line of iPod products and cut prices on its heavily hyped iPhone. Shares of Apple had jumped more than 13% over the last week in anticipation of the iPod redesign. Following the announcement, though, shares slid $7.40, or 5.1%, to close at $136.76.

Financial stocks had a tough time after Lehman Brothers downgraded Deutsche Bank (DB:) and Credit Suisse (CS:) to underweight and equal-weight, respectively. Deutsche slid 1.9% to $125.92, and Credit Suisse ended down 1.7% at $66.22.

Merrill Lynch raised its long-term price forecasts for aluminum, nickel and iron ore. The firm also upgraded Alcoa (AA:) and a few other metal stocks to buy. Alcoa tacked on 7 cents, or 0.2%, to $36.48.

Elsewhere, the October front-month crude contract added 65 cents at $75.73 a barrel.

Overseas markets were mostly lower. Japan's Nikkei 225 slid 1.6% overnight, and both London's FTSE 100 and Germany's Xetra Dax lost 1.7%. Hong Kong's Hang Seng rose 0.8%.

[setravis]

Stocks Find Higher Ground.......


Thursday 9/6/2007


Stocks had an up-and-down morning, but they went green at midday and closed higher Thursday as strong monthly retail sales outweighed more bad news out of the housing sector.

The Dow Jones Industrial Average advanced 57.88 points, or 0.44%, at 13,363.35, and the S&P 500 rose 6.26 points, or 0.43%, at 1478.55. The Nasdaq Composite climbed 8.37 points, or 0.32%, to 2614.32.

Helping the major indices was a string of upbeat monthly retail sales spurred by the back-to-school shopping season.

Wal-Mart (WMT:) , the world's biggest retailer, surprised analysts after it said comp sales climbed 3.1% in August, twice as much as expected. The company also said same-store sales should climb 1% to 3% in September. Wal-Mart tacked on 31 cents, or 0.7%, to $42.76.

Rival Target (TGT:) saw same-store sales jump 6.1% last month, also topping estimates, and said September's comp sales would likely be up between 4% and 6%. Target added $1.51, or 2.4%, to close at $63.39.

Among other retail winners, Macy's (M:) said August same-store sales increased 2.4%, and Abercrombie & Fitch's (ANF:) monthly comps were up 6%. AnnTaylor's (ANN:) same-store sales rose 2.9%, and Nordstrom (JWN:) had a 6.6% rise in comp sales.

On the losing side, Kohl's (KSS:) said same-store sales slipped 0.6% last month. Sharper Image (SHRP:) saw a 16% comparable-sales decline.

Despite the many stronger-than-expected reports, the S&P Retail Index fell 0.6% for the session. Among other decliners, the Amex Airline Index fell 1.1% and NYSE Financial Sector Index slipped 0.1%

On the winning side, the Philadelphia Gold & Silver Sector Index surged 5.7% as the price of gold topped $700 an ounce. Elsewhere, the Philadelphia Utility Sector Index gained 1.2% and the Philadelphia Semiconductor Sector Index rose 0.7%.

The major averages shook off weakness stemming from the Mortgage Bankers Association, which released a report that said 5.1% of the loans in its survey were delinquent in the second quarter and that the number of dwellings entering foreclosure hit a record high. Subprime delinquencies rose to 14.82%, the highest since the second quarter of 2002.

Ian Shepherdson, chief economist with High Frequency Economics, said there is a big difference between the subprime book in the second quarter of 2007 and that of five years ago.

"In the second quarter of 2002, there were 1.19 million subprime loans outstanding; now there are about 5.9 million," he said. "In other words, a 14.82% subprime delinquency rate now is equivalent to a 74% rate in 2002. That's why the problem now is so much worse despite similar headline delinquency rates."

On Wednesday, New York stocks plunged after the National Association of Realtors said its pending home sales index dropped 12.2% in July to a reading of 89.9, providing the latest evidence that the slowdown in housing is continuing.

The Dow fell 143.39 points, or 1.07%, to 13,305.47. The S&P 500 was down 17.13 points, or 1.15%, at 1472.29, and the Nasdaq was off 24.29 points, or 0.92%, at 2605.95.

In the new session, breadth turned around from Wednesday's weak levels. On the New York Stock Exchange, 2.79 billion shares changed hands Monday, as advancers topped decliners by an 5-to-3 margin. Volume on the Nasdaq reached 1.84 billion shares, with winners outpacing losers nearly 8 to 7.

Economic data were also in focus. The Labor Department said initial jobless claims dropped by 19,000 last week to 318,000. The latest data arrived a day before the closely watched jobs report. The government is expected to say that the U.S. economy added 120,000 jobs in August, compared with an increase of 92,000 in July.

"Given the level of apprehension, we could take advantage of any weakness," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "Gutsy traders should buy the close, hoping stocks rally on either low rates or solid jobs tomorrow."

St. Louis Fed President William Poole offered his thoughts about the health of the U.S. economy and job growth, noting that the labor market is strong and "operating near full employment."

In a separate report, the Labor Department said that second-quarter productivity was revised upward to a 2.6% gain from a preliminary reading of 1.8%, above expectations.

Also on the economic front, the Institute for Supply Management said the August reading for its services index came in at 55.8, unchanged from July and above estimates.

Treasury securities lost ground. The 10-year bond was down 11/32 in price, yielding 4.51%. The 30-year note was off 15/32 in price, yielding 4.80%.

Meanwhile, policymakers overseas made headlines. Both the European Central Bank and the Bank of England left their key interest rates unchanged at 4% and 5.75%, respectively. The ECB noted that monetary policy is still accommodative, but that volatility in the financial markets has led to uncertainty.

Similarly, the Bank of England said that it is too soon to judge the impact of the liquidity crisis on financial markets, but that there are tentative signs that consumer spending is slowing.

Earlier, the ECB injected more than $57 billion into the banking system as a measure to calm liquidity fears. Shortly after the opening bell, the Fed announced it added a total of $31.25 billion to its own system by way of a series of repurchase operations.

Paul Mendelsohn, chief investment officer with Windham Financial, said that the rate decision by the ECB and Bank of England should have no bearing on what the Fed will do at its Sept. 18 policy meeting.

"The Fed is in a different position than the ECB. European banks may be holding securities, but they're not the source of the mortgage problem," he said. "This credit problem is more of a problem for the U.S. economy than foreign economies. If the European central banks had cut rates, it would've made an impact. Leaving rates unchanged won't really affect us."

Elsewhere, the People's Bank of China, trying to keep a lid on inflation, raised the reserve requirements for banks for the seventh time in 2007. Now, 12.5% of deposits will have to be held in reserve, up from the prior 12%.

Major overseas markets were generally higher. London's FTSE 100, the Paris'' CAC 40 and Germany's Xetra Dax were all up 0.5%. Overnight in Asia, Japan's Nikkei 225 added 0.6%, while Hong Kong's Hang Seng eased 0.1%.

Crude oil rose 57 cents to close at $76.30 a barrel after the Energy Department's weekly inventory report showed bigger-than-anticipated declines in gasoline and crude stocks. Also supporting higher prices was more violence in the Middle East, where Syria claims to have fired on Israeli aircraft that crossed its border.

[setravis]

Jobs Data Wallop Wall Street.......


Friday 9/7/2007


Stocks tumbled Friday after a government report showed the U.S. economy unexpectedly lost jobs last month, raising fears in some quarters of a recession.

The Dow Jones Industrial Average slumped 249.97 points, or 1.87%, to 13,113.38. The S&P 500 fell 25 points, or 1.69%, to 1453.55, and the Nasdaq Composite sank 48.62 points, or 1.86%, to 2565.70.

The U.S. economy gave up 4,000 jobs last month, according to a report from the Labor Department, the first decline in the nonfarm payrolls in four years. The figure was shockingly below economists'' expectations for an addition of 100,000 nonfarm jobs. There was also a net downward revision of 81,000 jobs to the previous two months.

With credit market jitters still swirling, many now expect that the Federal Reserve will cut the fed funds rate at its Sept. 18 policy meeting, having kept the overnight target rate at 5.25% for the last nine meetings.

Over the last several weeks, Fed Chairman Ben Bernanke and his colleagues have offered clues that the central bank is willing to act if economic growth slows because of liquidity problems.

"I don't see any choice at this point for Ben Bernanke and the Fed," said Paul Mendelsohn, chief investment officer with Windham Financial. "This is a very horrendous, problematic number, even though it increases the chances of a Fed rate cut.

"This indicates we may already be going into a recession," he continued. "If the Fed doesn't cut rates here, the mess is going to get even worse. It's now a question about how many basis points the Fed will cut."

Ian Shepherdson, chief economist with High Frequency Economics, said that one number is not a trend, but these data will scare the Fed into believing the worst is yet to come.

" [The Fed] will ease 25 basis points on Sept. 18 but should ease 50," he said. "Remember, this report does not fully reflect the market turmoil."

Meanwhile, former Fed chief Alan Greenspan said there are many similarities between the current market situation and those of years when the stock market crumbled.

"The behavior in what we are observing in the last seven weeks is identical in many respects to what we saw in 1998, what we saw in the stock-market crash of 1987," said Greenspan, according to The Wall Street Journal.

"The jobs data are saying the Fed has to cut rates, but Greenspan has come out saying it's not going to make a difference," said Mendelsohn. "There is a commodity play developing, which shows that that side of the market expects a rate cut."

Treasury bonds rallied following the weak labor report. The 10-year rose 1-3/32 in price, cutting the yield to 4.37%. The 30-year note added 1-20/32 in price, yielding 4.70%.

Gold futures rose $5.10 to close at $709.70 an ounce, and silver jumped 22 cents to $12.76 an ounce. The dollar, meanwhile, sank against the world's major currencies.

On Thursday, the major averages finished with modest gains thanks to strong retail same-store sales data. The Dow advanced 57.88 points, or 0.44%, at 13,363.35, and the S&P 500 rose 6.26 points, or 0.43%, at 1478.55. The Nasdaq climbed 8.37 points, or 0.32%, to 2614.32.

For the week, the Dow slid 1.8%, the S&P 500 lost 1.4%, and the Nasdaq fell 1.2%.

On the New York Stock Exchange 3.26 billion shares changed hands, as decliners topped advancers by a 3-to-1 margin. Volume on the Nasdaq reached 1.90 billion shares, with losers outpacing winners nearly 4 to 1.

Markets overseas fell hard, as well. The Paris CAC 40, London's FTSE 100 and Germany's Xetra Dax were down 1.9% or more. In Asia, Japan's Nikkei 225 eased 0.8% and Hong Kong's Hang Seng dipped 0.3%.

Elsewhere, the October front-month crude contract was up 42 cents at $76.72 a barrel.

Among equities, Harley-Davidson (HOG:) cut its shipment targets due to weak sales. The motorcycle producer also reduced its earnings expectations for 2007 and 2008 while withdrawing guidance for 2009 altogether. Shares were down $5, or 9.2%, to $49.09.

Following the last close, homebuilder Hovnanian (HOV:) posted a fiscal third-quarter loss of $80.5 million, or $1.27 a share. The loss was worse than expected, according to Thomson First Call. Hovnanian lost 81 cents, or 7.1%, to $10.56.

Fellow builder Beazer Homes (BZH:) dropped 12.9% after word the company had received default notices for certain of its senior notes. The stock was off $1.41 to $9.50.

[setravis]

Angst Reigns on Wall Street.......


Monday 9/10/2007


U.S. stocks were volatile again Monday and closed mixed, as traders weighed cautious comments from Federal Reserve officials against positive news out of the tech sector.

The Dow Jones Industrial Average swung in a 160-point range before ending up 14.47 points, or 0.11%, at 13,127.85. The S&P 500 slipped 1.85 points, or 0.13%, to 1451.70, and the Nasdaq Composite was off 6.59 points, or 0.26%, at 2559.11.

"This was typical behavior of a nervous market this is still awaiting more news from the Fed," said Peter Cardillo, chief market economist with Avalon Partners. "A lot of today was technical movement. We're probably going to have an indecisive market that is held in captivity until we get that Fed decision next week."

Breadth was slightly negative to start the week. On the New York Stock Exchange 2.74 billion shares changed hands Monday, as decliners topped advancers by an 3-to-2 margin. Volume on the Nasdaq reached 1.78 billion shares, with losers outpacing winners nearly 6 to 5.

With little economic data on the docket, traders were focusing on remarks from several Fed bankers. San Francisco Fed President Janet Yellen told the National Association for Business Economics that the recent financial market turmoil will prolong the housing sector adjustment.

"I see significant downward pressure based on recent data indicating further weakening in the housing sector and the tightening of financial markets," said Yellen. "A big issue is whether developments in the relatively small housing sector will spread to the large consumption sector, perhaps through declines in house prices."

If the decline in house prices occurs in the context of rising unemployment, "the risks could be significant," she said.

Over the weekend, Philadelphia Fed President Charles Plosser somewhat lowered expectations for a rate cut at the next Federal Open Market Committee meeting on Sept. 18 as he delivered a speech in Hawaii.

"Disruptions in financial markets can be addressed using the tools available to the Fed without necessarily having to make a shift in the overall direction of monetary policy," he said.

On Tuesday, Fed Chairman Ben Bernanke will speak in Germany about recent developments in the global financial system.

Most investors are looking for a reduction of at least 25 basis points in the fed funds target rate when the central bank meets next week.

"Investors will be listening for any indication that the Fed will move and is now focused more on the economy than inflation," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "Gross domestic product estimates for the third quarter are likely to be revised down from the current 2.6% consensus, especially in light of the recent data, but we are still a long way from calling this a recession."

During the prior session, the major averages tumbled after a government report showed that the domestic economy unexpectedly lost jobs in August. The Dow slumped 249.97 points, or 1.87%, to 13,113.38, and the S&P 500 fell 25 points, or 1.69%, to 1453.55. The Nasdaq sank 48.62 points, or 1.86%, to 2565.70.

"The very weak jobs report on Friday moved the Federal Reserve to front and center in the debate on economic growth," said Paul Nolte, director of investments with Hinsdale Associates. "While a negative reading on ''job creation'' does not necessarily mean we are entering a recession, the likelihood of one has increased."

Homebuilders dropped following Yellen's speech. The Philadelphia Housing Sector Index sank 2.2%, as D.R. Horton (DHI:) , Lennar (LEN:) , Hovnanian (HOV:) , and Toll Brothers (TOL:) all slid by 2.1% or more.

Several finance names were also lower. Embattled lender Countrywide (CFC:) fell 5.5% after saying it would slash up to 20% of its workforce, or 12,000 jobs. The eliminations will occur "in areas most impacted by lower mortgage market origination volumes," the company said. Countrywide lost $1 to $17.21.

U.S. Treasury securities, meanwhile, rallied. The 10-year bond gained 16/32 in price, cutting the yield to 4.32%. The 30-year note added 30/32, yielding 4.64%.

Tech stocks got a lift from Advanced Micro Devices (AMD:) , whose shares tacked on 2.6% after the company unveiled its new Barcelona microchip, which it expects to help seize market share from rival Intel (INTC:) . AMD ended the day with a gain of 33 cents at $12.94.

Separately, Intel raised its third-quarter revenue forecast, saying it should have a top line of $9.4 billion to $9.8 billion, up from its prior outlook of $9.0 billion to $9.6 billion. Shares finished down 12 cents, or 0.5%, at $25.35.

Apple (APPL:) was another tech leader, rising 3.8% after the company announced it has sold 1 million iPhones. Last week, shares sold off after Apple reduced the retail price on the 8-gigabyte model by $200. Apple finished up $4.94 at $136.71.

Shares of Palm (PALM:) fell 4% after Lehman Brothers downgraded the stock to underweight from equal weight, citing softening demand for the company's Treo phone. The stock eased 62 cents to $14.75.

Outside of tech, Disney (DIS:) was also making news after the company said it would be testing its toys for lead content. The move comes after toymaker Mattel (MAT:) issued three separate recalls for toys made in China that were found to have unsafe levels of lead. Disney dipped 3 cents, or 0.1%, to $33.56.

Elsewhere, the October front-month crude contract added 79 cents to finish at $77.49 a barrel. Gold futures added $2.50 to close at $712.20 an ounce, while silver was off 6 cents at $12.70 an ounce.

Markets overseas were mostly lower. Japan's Nikkei 225 plunged 2.2% overnight. The Paris CAC 40, London's FTSE 100 and Germany's Xetra Dax were off 0.4% or more.

[setravis]

Blue Chips Ignite Rally.......


Tuesday 9/11/2007


Stocks surged ahead Tuesday as traders focused on upbeat news from McDonald's (MCD:) , GM (GM:) and Western Digital (WDC:) after getting little guidance on monetary policy from Federal Reserve Chairman Ben Bernanke.

The Dow Jones Industrial Average rose 180.54 points, or 1.38%, to 13,308.39. The S&P 500 finished up 19.79 points, or 1.36%, at 1471.49. The Nasdaq Composite was higher by 38.36 points, or 1.5%, at 2597.47.

GM lead the Dow with a 4.6% gain, aided by news it plans to offer environmentally friendly vehicles that aren't as reliant on gasoline for power.

Fellow Dow component McDonald's climbed 4% after the fast-food restaurant chain reported an 8.1% jump in August same-store sales. The stock added $1.61 to close at $51.76.

Shares of Western Digital were up 4.4% following the data storage company's move to lift its first-quarter guidance above analysts'' forecasts. The shares were higher by 99 cents at $23.40.

ImClone (IMCL:) supported the Nasdaq with an 18.4% surge after a clinical trial showed that the company's Erbitux drug helped lung cancer patients live longer. ImClone's development partner Bristol-Myers Squibb (BMY:) also ended the day with gains.

"Investors are getting more comfortable with how the consumer is still spending," said Paul Nolte, director of investments with Hinsdale Associates. "All kinds of consumer-related stocks bounced-back today. That means we might not get anywhere near a recession. There was across-the-board buying today in all sectors. At least for today, traders were feeling a bit better.

Breadth was positive, and volume perked up a bit. On the New York Stock Exchange 2.89 billion shares changed hands, as advancers topped decliners by an 11-to-5 margin. Volume on the Nasdaq reached 1.77 billion shares, with winners outpacing losers nearly 2 to 1.

Markets were unfazed by comments from Bernanke, who spoke in Germany about widening global imbalances. His remarks, the last expected ahead of the Sept. 18 Federal Open Market Committee meeting, had no mention of monetary policy.

With problems in the credit market still looming and with signs the U.S. economy may be slowing, as seen in the negative jobs report on Friday, most investors are looking for a reduction of at least 25 basis points in the fed funds target rate when the central bank meets next week.

Larry Wachtel, senior market analyst with Wachovia Securities, said that with a speech title including the term "Global Markets" that traders shouldn't have expected any mention of U.S. rate policy.

"It's going to be wait-and-see until the actual Fed policy meeting," he said.

Bernanke's comments came after several speeches from other Fed officials.

Over the weekend, Philadelphia Fed President Charles Plosser somewhat lowered expectations for a rate cut. During the last session, San Francisco Fed President Janet Yellen told the National Association for Business Economics that the recent financial market turmoil will prolong the sluggishness in housing.

Fed Board Governor Fred Mishkin and St Louis Fed President William Poole also offered cautious comments late Monday.

The Commerce Department said the international trade deficit shrank to $59.2 billion in July from a revised $59.4 billion in June. Economists had expected the trade gap to come in at $59.0 billion. U.S. exports rose 2.7% in July, the fastest rate in three years.

Treasury bonds were losing ground. The 10-year was down 11/32 in price, yielding 4.36%. The 30-year note was off 5/32, yielding 4.64%.

Elsewhere, the October front-month crude contract rose 74 cents to close at a record $78.23 a barrel following OPEC's decision to raise its production levels by 500,000 barrels a day. That was a smaller increase than some analysts had been expecting.

Gold futures added $8.90 to close at $721.10 an ounce, and silver tacked on 13 cents at $12.83 an ounce.

Among equities, Wal-Mart (WMT:) said it will revise its second-quarter profit lower by $153 million, due to expenses tied to the unloading of stores in Germany. Wal-Mart climbed 1.6% to $42.94.

PepsiCo (PEP:) saw some buying action after Goldman Sachs upgraded the stock to buy from hold, citing valuation. Shares ended up $1.41, or 2.1%, to $69.87.

One day after Intel (INTC:) boosted its third-quarter sales outlook, fellow chipmaker Texas Instruments (TXN:) delivered its mid-quarter update. Third-quarter revenue should be $3.56 billion to $3.72 billion, compared with the prior range of $3.49 billion to $3.79 billion.

TI expects a profit from continuing operations between 49 cents and 53 cents, compared with the earlier guidance of 46 cents to 52 cents. Texas Instruments rose 50 cents, or 1.4%, to $35.72.

Markets abroad were mostly higher. Japan's Nikkei 225 rose 0.7% overnight. The Paris CAC 40, London's FTSE 100 and Germany's Xetra Dax each jumped 1.1% or more.

[setravis]

Standstill on Wall Street.......


Wednesday  9/12/2007


Stocks never strayed far from the unchanged mark Wednesday and ended the session little moved from where they went out last time.

After zigzagging between positive and negative territory, the Dow Jones Industrial Average closed down 16.74 points, or 0.13%, at 13,291.65. The S&P 500 tacked on 0.07 point to 1471.56, while the Nasdaq Composite lost 5.40 points, or 0.21%, at 2592.07.

Some of the most interesting developments of the day actually took place away from the stock market. Crude prices set an intraday record in New York, crossing the $80-a-barrel level for the first time ever. The October contract finished at $79.91, up $1.68, and established an all-time high for the second time in as many days.

Bullish weekly inventory data from the Energy Department was behind the move. The report said that crude stocks dropped a greater-than-expected 7.1 million barrels last week. Gasoline stocks declined 700,000 barrels, whereas distillates increased by 1.8 million barrels.

Elsewhere, the dollar struck its worst point ever against the euro, dropping to $1.3903 from $1.3833 previously. The greenback also eased against the yen.

With no economic data on the calendar, Treasury securities were lower. The 10-year bond was down 8/32 in price, pushing the yield 4.40%. The 30-year note was off 16/32, yielding 4.68%.

Phillip Roth, chief technical market analyst with Miller Tabak, said that "every rally we've had since the August lows had a dead day afterwards with no follow through, and today is a continuation of that pattern.

"The market has been in a struggling advance, however temporary it may be in the recent downtrend," he continued. "There's still a so-called carrot out there leading the market, with a bullish incentive that the expected Fed rate cut is on the way."

Breadth turned negative compared with the previous session. On the New York Stock Exchange 2.94 billion shares changed hands, as decliners topped advancers by a 9-to-7 margin. Volume on the Nasdaq reached 1.91 billion shares, with losers outpacing winners nearly 3 to 2.

On Tuesday, stocks rallied, thanks to good news out of General Motors (GM:) , McDonald's (MCD:) and Western Digital (WDC:) .

The Dow rose 180.54 points, or 1.38%, to close at 13,308.39. The S&P 500 finished up 19.79 points, or 1.36%, at 1471.49. The Nasdaq was higher by 38.36 points, or 1.5%, at 2597.47.

Among individual stocks, Texas Instruments (TXN:) offered its midquarter report following the prior close and tightened its third-quarter financial targets, although the forecast was still near Wall Street's estimates. TI closed down 60 cents, or 1.7%, to $35.12.

Meanwhile, subprime and credit fears began to churn again, this time at H&R Block (HRB:) , which said it will eliminate roughly 575 jobs from its Option One Mortgage subprime lending unit. Block is trying to sell the division. Shares eased by 17 cents, or 0.9%, to $19.64.

The recent mortgage crisis was the subject of comments from Treasury Secretary Henry Paulson, who met with the heads of several lenders, including Citigroup (C:) , Countrywide (CFC:) and Washington Mutual (WM:) .

Paulson noted that the credit and subprime lending mess "will take some time to work its way out," but that the U.S. economy remains strong.

Nucor (NUE:) lost ground after guiding lower for the third quarter. The company cited continued softness in the sheet markets and the increasing costs of some raw materials. Nucor was down 8 cents, or 0.2%, to $53.46.

As for analysts'' actions, UBS upgraded Amgen (AMGN:Nasdaq) to neutral from sell after a Food and Drug Administration panel rejected a proposal that would limit the use of anemia drugs. Amgen was higher by $1.76, or 3.3%, to close at $55.64.

UBS raised its stock price target for Apple (AAPL:) to $182 from $175. Shares finished up $1.36, or 1%, to $136.85.

Overseas markets were mixed. Japan's Nikkei 225 eased 0.5% overnight after Japanese Prime Minister Shinzo Abe announced his resignation. Hong Kong's Hang Seng, on the other hand, jumped 1.5%.

In Europe, London's FTSE 100, Germany's Xetra Dax, and the CAC 40 in Paris tacked on 0.2% or more.

[setravis]

GM, McDonald's Bolster Stocks.......


Thursday  9/13/2007


Stocks jumped Thursday as positive news out of a trio of Dow components outweighed stubbornly high oil prices and another warning from networker Alcatel-Lucent (ALU:) .

The Dow Jones Industrial Average rose 133.23 points, or 1%, to 13,424.88, and the S&P 500 was up 12.39 points, or 0.84%, at 1483.95. The Nasdaq Composite lagged behind but was better by 8.99 points, or 0.35%, at 2601.06.

Traders found reasons to buy, thanks in part to three Dow stocks, McDonald's (MCD:) , Microsoft (MSFT:) and GM (GM:) .

McDonald's climbed $3.10, or 6.1%, to close at a record $54.30 on word it expects to return a total of $15 billion to $17 billion to shareholders over the next three years through dividends and share buybacks. The fast-food restaurant chain also said it has bought back $2.4 billion worth of stock this year.

GM soared 10% after Citigroup began coverage of the automaker with a buy rating and a $41 stock price target.

Those positive developments come on the same day that an article in The Wall Street Journal said United Auto Workers President Ron Gettelfinger is willing to agree in principle to a health care trust fund that would help automakers cut $95 billion in retiree costs.

However, the UAW and Detroit are still working out the details, and a significant gulf remains between the sides, the paper said, citing sources. Still, shares of GM added $3.04 to $33.29. Ford (F:) was higher by 42 cents, or 5.6%, to $7.92.

Microsoft was helping to prop up tech shares after announcing it bumped its quarterly dividend higher by a penny to 11 cents a share. Shares climbed 0.8% to $29.16.

Also aiding the mood was Countrywide (CFC:NYSE) , whose shares gained 13.9% to $18.93 after the company arranged for $12 billion in additional secured borrowing through new or existing credit lines.

Breadth turned positive compared the previous session. On the New York Stock Exchange 2.79 billion shares changed hands, as advancers edged decliners by a 2-to-1 margin. Volume on the Nasdaq reached 1.66 billion shares, with winners outpacing losers nearly 8 to 7.

Traders were ignoring a few negative headlines. Among them, serial profit-warner Alcatel-Lucent sank 8.8% to close at $9.16 after lowering its third-quarter financial outlook.

One day after crossing the $80-a-barrel threshold intraday, crude oil had a record close about that level for the first time.

"There are more buyers than sellers in commodities because of the inflation play," said Paul Mendelsohn, chief investment strategist with Windham Financial. "It seems that traders are betting that a Federal Reserve interest rate cut will have inflation running rampant, creating this commodity play. This is putting a floor under oil stocks, and it's supporting the major market."

With the next Fed policy meeting less than a week away, traders are counting on a rate cut in order to help improve liquidity in tightening credit markets. The debate now centers over whether the central bank will cut the overnight rate by 25 or 50 basis points.

"Despite high commodity prices, the market is focused entirely on the Fed lowering rates," said Art Hogan, chief market analyst with Jefferies. "There was a handful of good corporate news traders leaned on today. However, this is all built on the same momentum driven by expectations the Fed will cut rates next Tuesday."

Meanwhile, former Fed Chairman Alan Greenspan said in comments made available by CBS that he didn't grasp that subprime lending trends were significant enough to hurt the broader economy until late 2005. He also defended his interest rate-cutting campaign that went from 2001 to 2004.

"While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late," he says in the interview. "I really didn't get it until very late in 2005 and 2006."

Greenspan's comments were made to Lesley Stahl, whose interview with the longtime central-bank chief will appear Sunday on 60 Minutes.

On the economic front, the Labor Department said initial jobless claims rose by a less-than-expected 4,000 last week to 319,000. Economists had predicted claims would rise to 330,000. The report is the first on employment since last Friday's August nonfarm payrolls report, which showed that the U.S. economy lost 4,000 jobs last month.

A survey conducted by the Journal showed that economists anticipate a 36% chance of a recession for the domestic economy, up from 28% last month.

U.S. Treasury prices lost ground. The 10-year bond finished lower by 20/32 in price, yielding 4.49%. The 30-year note was falling 1 2/32, yielding 4.75%.

A day after the dollar hit an all-time low against the euro, it was slightly stronger in trading with most of its competitors, with the exception of the Canadian dollar. The euro was worth $1.3886, down from $1.3907 previously.

Overseas markets were higher. Japan's Nikkei 225 tacked on 0.2% overnight, and Hong Kong's Hang Seng rose 0.9%. In Europe, London's FTSE 100, Germany's Xetra Dax and the CAC 40 in Paris added 0.8% or more.

[setravis]

Stocks Fall as Fed Looms.......


Monday  9/17/2007


Stocks were sluggish to start the week as the fallout from the credit crisis continued to hit a mortgage lender overseas, hurting sentiment a day before an interest rate decision from the Federal Reserve.

The Dow Jones Industrial Average fell 39.10 points, or 0.29%, at 13,403.42. The S&P 500 was off 7.60 points, or 0.51%, at 1476.65. The Nasdaq Composite fared the worst, dropping 20.52 points, or 0.79%, to 2581.66.

British lender Northern Rock pressured European bourses, and by extension the U.S., falling 40% on word that its customers withdrew roughly $4 billion from its branches.

On Friday, Northern Rock dropped more than 20% after the company sought emergency funding from the Bank of England. The company also warned that 2007 earnings will come in below current estimates and that profits in 2008 would also be soft.

London's FTSE 100 ended down 1.7%, and the CAC 40 in Paris was off 1.8%. In Asia, China's Shanghai Composite rose 2.1%, while Hong Kong's Hang Seng declined 1.2%. Japan's Nikkei 225 was closed for a holiday.

While most expect the Fed to cut the fed funds rate by 25 basis points when the Federal Open Market Committee convenes on Tuesday, traders were disturbed by comments out of former Fed Chairman Alan Greenspan during a televised interview with CBS over the weekend.

Greenspan said in the interview, broadcast Sunday night on 60 Minutes, that the forecast for the U.S. economy is "pretty gloomy" and that "the re-emergence of inflation" is the worst problem facing the Fed.

"The Fed is locked in for a 25-basis-point cut, according to the bond market. However, that hasn't stopped Alan Greenspan from making comments on inflation," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "We should expect the trading to be rather cautious until the FOMC comments are released."

Indeed, breadth was negative and volume was meager to start the week. On the New York Stock Exchange 2.38 billion shares changed hands Monday, as decliners topped advancers by a 2-to-1 margin. Volume on the Nasdaq reached 1.41 billion shares, with losers outpacing nearly 2 to 1.

"News out of the U.K. and Greenspan comments set a negative tone for the day, keeping investors cautious," said Michael Sheldon, chief market strategist with Spencer Clarke LLC . "It was a generally narrow trading range."

Nearly all of the market's subsector indices were lower Monday. Among the worst decliners, the Nasdaq Biotech Index declined 1.5%, the Dow Jones Transportation Average fell 1%, and the Philadelphia Semiconductor Sector Index shed 0.6%

Among equities, Microsoft (MSFT:) fell after a European court dismissed an appeal of an antitrust ruling and ordered the tech giant to pay a nearly $700 million fine. Microsoft shed 31 cents, or 1.1%, to $28.72.

General Motors (GM:) was in the spotlight as negotiations continued between the automaker and the United Auto Workers union over a new labor agreement.

The UAW has threatened to have workers strike, and the old contract has now expired, but the union has extended the deadline each hour that negotiations have gone on. Shares of GM climbed $1.01, or 3%, to $35.23.

A number of deals were being struck, though all were small or midsized. Among them, Deutsche Telekom's (DT:) T-Mobile unit is planning to buy the cell-phone company SunCom Wireless (TPC:) for about $1.6 billion, and Paetec Holding (PAET:) will acquire McLeodUSA for $492 million.

On the economic front, the New York Fed said its Empire State index dropped to a reading of 14.7 from 25.1, below economists'' consensus of 18.0. It was the lowest reading for the index since May's 8.0.

U.S. Treasury bonds were little changed. The 10-year note was down 3/32 in price, yielding 4.47%. The 30-year bond rose 3/32, yielding 4.72%.

Crude oil set another intraday record. The October front-month crude oil contract jumped $1.47 to close at $80.57 a barrel. Gold and silver futures were also advancing.

As for analyst moves, Bear Stearns upgraded Ford (F:) to outperform from peer perform, citing the automaker's strong cash flow. JPMorgan lifted Advanced Micro Devices (AMD:) to neutral from underweight on the expected strong performance of the company's new Barcelona server chip.

Ford advanced 3.1% to $8.28, and AMD tacked on 1.2% to $12.84.

After the closing bell, Adobe Systems (ADBE:) is posted an adjusted third-quarter profit of 45 cents a share, topping analysts'' 40-cent forecast, according to Thomson First Call.

Tuesday marks the start of a string of key earnings reports from investment banks this week, with Lehman Brothers (LEH:) kicking things off. Best Buy (BBY:) and AutoZone (AZN:) are also due to report.

[setravis]

Bulls Stampede After Rate Cut.......


Tuesday  9/18/2007


Stocks in New York rallied sharply Tuesday after the Federal Reserve cut interest rates for the first time in more than four years.

The Dow Jones Industrial Average advanced 335.97 points, or 2.51%, to 13,739.39. The S&P 500 climbed 43.13 points, or 2.92%, to 1519.78, and the Nasdaq Composite gained 70 points, or 2.71%, to 2651.66.

The rally ensued when Federal Open Market Committee, the Fed's policymaking arm, decided to lower the fed funds target rate by 50 basis points to 4.75%. Most analysts had expected a 25-point cut, so the surprise move boosted averages. It was the first rate reduction since June 2003.

In the accompanying statement, the Fed said the move was "intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.

"The tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally," the statement read.

Steven Sheldon, principal with SMS Capital Management, said the phrasing meant officials didn't want to be accused of doing too little, too late.

"The Fed is acting to try and prevent the problems from spiraling any further," he said. "The Fed will now have to see where the bottom of the housing sector is before they know when to stop cutting rates."

The central bank also slashed the discount rate by 50 basis points to 5.25%. It was the second cut to the discount rate, or the interest rate it charges banks that want to borrow, in about a month.

"The market loves this move, but I'm surprised the Fed was so aggressive," said Paul Mendelsohn, chief investment strategist with Windham Financial. "This is the way the market wanted to go, and it was just waiting for this decision.

"However, this creates a problem with the dollar and inflation," warned Mendelsohn. "There are some negatives still. But what the Fed is seeing is concerning them."

Richard Yamarone, director of economic research with Argus Research, said that other than giving the stock market another reason to rally, it is unclear what the Fed's decision does for the economy.

"The housing market certainly isn't going to emerge out of its 18-month recession any quicker," said Yamarone. "Nor are consumers about to pick up the pace of spending any faster than the current optimal pace."

Commodities shot upward, with crude setting yet another new intraday high. The October front-month oil contract rallied 94 cents to close at $81.51 a barrel. Gold futures fell 10 cents in the regular session before surging in electronic trading, climbing above the $730-an-ounce level.

Long-term Treasury prices sank, while the short end rallied. The 10-year was down 6/32, raising the yield to 4.48%, and the 30-year lost 1-5/32, yielding 4.78%. The 2-year and 3-year notes each gained roughly 5/32 in price.

The Philadelphia Housing Sector Index took off after the rate cut announcement, soaring 5.2%. Financial subsector indices also finished with gains, as the NYSE Financial Sector Index, the KBW Bank Index, and the Nasdaq Financial 100 Index all were higher by 3.9% or more.

Breadth was overwhelmingly positive and volume was strong. On the New York Stock Exchange 3.56 billion shares changed hands, as advancers trounced decliners by nearly a 10-to-1 margin. Volume on the Nasdaq reached 2.07 billion shares, with winners outpacing losers about 4 to 1.

Stocks built on the momentum started by stronger-than-expected earnings data from Lehman Brothers (LEH:) and Best Buy (BBY:) .

Lehman Brothers posted third-quarter earnings that topped Wall Street's estimates. Investors had worried that the broker's profit could take a big hit from the mortgage mess and subsequent credit-market woes. Shares rallied $5.87, or 10%, to close at $64.49.

Later this week, Bear Stearns (BSC:) , Morgan Stanley (MS:) and Goldman Sachs (GS:) are due to report.

Best Buy also helped ease some worries about consumer spending, posting earnings that were well above analysts'' targets. The electronics retailer also raised its full-year profit forecast. Best Buy finished up $2.92, or 6.6%, to $47.46.

The main impetus for the rate cut is trouble stemming from bad loans in the subprime mortgage market, and the fear the broad economy will be dragged down.

After the previous session, E*Trade Financial (ETFC:) said it will exit the wholesale mortgage business because of tightening conditions in the credit and financial markets. The broker also lowered its profit forecast for the year. E*Trade lost 21 cents, or 1.5%, to $14.

Bank of America (BAC:) was also out with comments Monday, saying that the recent turmoil in the credit market will have an impact on third-quarter earnings. The stock climbed $1.70, or 3.4%, to $51.21.

Subprime lender NovaStar (NFI:) dropped after suspending a planned dividend because of liquidity problems. Shares ended down 21 cents, or 2.6%, at $8.03.

Meanwhile, property marketing firm RealtyTrac said that the number of homes in default jumped 36% in August. RealtyTrac expects that total foreclosure filings will exceed 2 million this year.

Traders also had to deal with the Labor Department's producer price index, which unexpectedly plunged 1.4% last month. Economists expected the PPI for August to decline 0.3%. The core number, which excludes food and energy and is a main reading on inflation at the wholesale level, rose 0.2%, slightly above expectations.

"Increases in core wholesale prices indicate bringing core consumer price inflation down below Federal Reserve Chairman Ben Bernanke's target of 2% a year remains an illusive target," said Peter Morici, professor at the University of Maryland School of Business and former chief economist at the U.S. International Trade Commission.

Among analyst moves, Goldman Sachs downgraded Dow component General Motors (GM:) to neutral from buy, citing valuation.

GM is still in negotiations with the United Auto Workers labor union over a new contract. The UAW has threatened to have workers strike, and the old contract has now expired, but the union has extended the deadline repeatedly as talks have gone on. Shares of GM added 54 cents, or 1.5%, to $35.77.

Overseas markets were mixed. Japan's Nikkei 225 fell 2%, and Hong Kong's Hang Seng was off 0.1%. In Europe, London's FTSE 100 rose 1.6%, and Germany's Xetra Dax advanced 1.3%.

[setravis]

Futures Point To More Gains.......


Wednesday  9/19/2007


Stocks were set to continue marching higher Wednesday following the Federal Reserves surprise decision to cut the overnight fed funds rate by 50 basis points.

Futures on the S&P 500 were adding 4.80 points to 1537.90 and were 4.93 points above fair value. Nasdaq 100 futures were up 4.25 points at 2063.50 and were 4.21 points higher than fair value.

Major averages in the U.S. had one of their best performances of the year after the Federal Open Market Committee, the Central Bank's policymaking arm, cut interest rates by 50 basis points. Most analysts had anticipated a cut of only 25 basis points. It was the first rate cut in more than four years.

By the end of the day, the Dow Jones Industrial Average had rallied 335.97 points, or 2.51%, to 13,739.39. The S&P 500 climbed 43.13 points, or 2.92%, to 1519.78, and the Nasdaq Composite gained 70 points, or 2.71%, to 2651.66.

Overseas markets were following U.S. averages higher. Overnight, Japan's Nikkei 225 surged 3.7%, and Hong Kong's Hang Seng rose 4%. In Europe, London's FTSE 100 and the Paris CAC 40 were up 2%. Germany's Xetra Dax was up 1.9%.

While traders were still cheering the Fed's move, there was plenty to contend with ahead of the start of the session. The Labor Department will post its consumer price index for August at 8:30 a.m. EDT. No change is expected in the headline number, while the core data, which excludes food and energy, should rise 0.2%.

Meanwhile, plenty of housing data will also come due. At 8:30 a.m. EDT, the Census Bureau will release housing starts data for August, which are expected to have declined, and the Mortgage Bankers Association will post its weekly applications survey at 9 a.m. EDT.

Among those reporting earnings, Morgan Stanley (MS:) and General Mills (GIS:) are expected before the opening bell.

One potential sticking point for investors could be higher oil prices. Crude was on the rise again, topping the $82-a-barrel level for the first time ever. Recently, the October front-month contract was adding 61 cents to $82.12 a barrel.

U.S. Treasury bonds continued to slide. The 10-year note was down 9/32 in price, yielding 4.51%. The 30-year bond was losing 22/32, raising the yield to 4.80%.

[setravis]

Rate-Cut Rally Goes On.......


Wednesday  9/19/2007


Stocks continued to march higher Wednesday, retaining their momentum after the Federal Reserves surprise decision to cut the overnight fed funds rate by 50 basis points.

After rising more than 125 points earlier, the Dow Jones Industrial Average pared its gains but still closed ahead by 76.17 points, or 0.55%, at 13,815.56. The S&P 500 was up 9.25 points, or 0.61%, at 1529.03. The Nasdaq Composite rose 14.82 points, or 0.56%, to 2666.48.

The Dow has now jumped 7.6% since it last closed below the 13,000 level a month ago. The S&P 500 is only 25 points away from its record close, set on July 19.

Breadth was positive and volume was strong. On the New York Stock Exchange 3.73 billion shares changed hands. Volume on the Nasdaq reached 2.12 billion shares. Winners outpaced losers about 2 to 1.

Major averages in the U.S. had one of their best performances of the year on Tuesday after the Federal Open Market Committee, the Central Bank's policymaking arm, cut interest rates by 50 basis points. Most analysts had anticipated a cut of only 25 basis points. It was the first rate cut in more than four years.

By the end of the day, the Dow had rallied 335.97 points, or 2.51%, to 13,739.39. The S&P 500 climbed 43.13 points, or 2.92%, to 1519.78, and the Nasdaq gained 70 points, or 2.71%, to 2651.66.

" [Investors should] take yesterday's move as confirmation that the Fed is behind the bulls on the economy and the market 100%," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "This was a technical breakout and a fundamental and psychological lift."

Overseas markets followed U.S. averages higher. Overnight, Japan's Nikkei 225 surged 3.7%, and Hong Kong's Hang Seng rose 4%. In Europe, London's FTSE 100 and the Paris CAC 40 were up roughly 3%. Germany's Xetra Dax was up 2.3%.

While traders were still cheering the Fed's move, there was plenty to contend in the new session. The Labor Department said its consumer price index for August slipped 0.1%, compared with expectations for no change. As expected, the core index, which excludes food and energy and is a key measure of inflation, rose 0.2%.

Ian Shepherdson, chief economist with High Frequency Economics, said the CPI data are a sign that "the Fed's ease yesterday was not a gamble."

"The exact core month-over-month number was enough to nudge down the year-over-year rate to 2.1% from 2.2%," said Shepherdson. "We expect a dip below 2% early next year. Either way, core inflation has now been falling for nearly a year."

Meanwhile, investors also had to sort through data about the flailing housing market. The Census Bureau said that housing starts fell 2.6% in August, compared with a 6.9% drop in July. Building permits were down 5.9% last month, steeper than the 1.7% decline in July.

Additionally, the Mortgage Bankers Association said its weekly applications survey index rose last week to a reading of 673.2 from 657.4 the week before.

Broker earnings were again in focus. Morgan Stanley (MS:) posted a 17% decline in third-quarter earnings, and the results fell well short of the Thomson First Call average estimate. Shares of Morgan Stanley lost $1.48, or 2.2%, to $67.03.

The report came a day after Lehman Brothers (LEH:) posted a better-than-expected quarter. Later this week, Bear Stearns (BSC:) and Goldman Sachs (GS:) will report their quarterly results.

Elsewhere, foodmaker General Mills (GIS:) posted fiscal first-quarter results that increased 8% from a year ago, beating estimates by a penny. The stock rose 24 cents, or 0.4%, at $58.91.

Stubbornly high oil prices wasn't nagging traders. Crude earlier topped the $82-a-barrel level for the first time ever before pulling back. The October front-month contract finished up 42 cents at $81.93 a barrel.

Crude rallied after the Energy Department's weekly inventory report said crude stocks dropped by 3.8 million barrels last week. Gasoline stocks rose by 400,000 barrels, and distillates also increased.

U.S. Treasury bonds continued to slide. The 10-year note was down 14/32 in price, yielding 4.53%. The 30-year bond shed 1-2/32, raising the yield to 4.83%.

Among analysts'' actions, UBS cut its ratings for merger partners Sirius Satellite Radio (SIRI:) and XM Satellite Radio (XMSR:) to neutral from buy. Sirius declined 4.3% to close at $3.35, and XM slid 5.5% to $14.

[setravis]

Bulls Take a Breather.......


Thursday  9/20/2007


Stocks closed slightly lower Thursday as traders took a breather after an impressive two-session rally stemming from the Federal Reserves first rate cut in four years.

The Dow Jones Industrial Average lost 48.86 points, or 0.35%, to close at 13,766.70, and the S&P 500 was 10.28 points, or 0.67%, lower at 1518.75. The Nasdaq Composite shed 12.19 points, or 0.46%, to 2654.29.

Before the modest pullback, blue-chip averages had climbed back close to all-time highs after the Federal Open Market Committee, the Central Bank's policymaking arm, cut interest rates by a greater-than-expected 50 basis points on Tuesday.

Last time out, the Dow closed ahead by 76.17 points, or 0.55%, at 13,815.56. The S&P 500 was up 9.25 points, or 0.61%, at 1529.03. The Nasdaq rose 14.82 points, or 0.56%, to 2666.48.

Over the prior two sessions, the Dow surged 412 points and got within 200 points of its July 19 record close. The S&P 500 was only about 25 points from its all-time best, which it reached two months ago.

Traders cooled down amid Fed Chairman Ben Bernanke's appearance before the Committee on Financial Services in Washington. Bernanke and Treasury Secretary Henry Paulson delivered testimony on the subprime crisis and potential solutions.

Prepared remarks from the central bank chief were released before his comments were made to legislators, and he said the global financial system is in "a relatively strong position," even with the troubles in the mortgage and credit arenas.

Bernanke said the Fed's action earlier this week "was intended to help forestall some of the adverse effects on the broader economy that might arise from the disruptions in financial markets and to promote moderate growth over time." He said recent woes in the financial markets have increased uncertainty about the economic outlook.

"The Committee will continue to assess the effects of these and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth," Bernanke said.

Record crude oil cast something of a shadow over the most recent session, as prices topped the $84-a-barrel level for the first time. The October front-month contract ended with a gain of $1.39 to $83.32 a barrel. Gold and silver futures were also surging higher.

The dollar fell against the Canadian dollar and neared parity with its northern counterpart for the first time since 1976. Meanwhile, the greenback hit its worst level ever against the euro.

U.S. Treasury bonds continued to slide. The 10-year note slid 1-1/32 in price, yielding 4.67%. The 30-year bond lost 1-23/32, raising the yield to 4.94%. The dollar continued to decline against the world's major currencies.

"The action was in a lot of other markets besides equities today," said Paul Mendelsohn, chief investment strategist with Windham Financial. "The dollar hit multiyear lows, gold took off, crude hit record levels, and Treasury's disintegrated. All of this will have tremendous ramifications for the financial situation. We still have a problem, and we're not out of the woods yet."

Breadth was negative while volume was sturdy. On the New York Stock Exchange 3.01 billion shares changed hands, as decliners topped advancers by nearly a 2-to-1 margin. Volume on the Nasdaq reached 1.41 billion shares, with losers outpacing winners about 3 to 2.

There was also some caution ahead of Friday's expiration of four separate derivatives contracts, an event known as quadruple witching. Single-stock futures, stock options, index futures and index options all were trading for the last time. The simultaneous expiration happens quarterly and can lead to considerable volatility.

The economic docket was fairly busy. The Labor Department said initial jobless claims fell by 9,000 last week to 311,000, well below economists'' forecasts of 321,000. Elsewhere, the Conference Board said that leading economic indicators slipped 0.6% in August, indicating slower growth ahead for the U.S. economy. The Philadelphia Fed manufacturing index rose to 10.9 in September from 0.0 last month, above the consensus 2.6.

Earnings out of two big finance names also were in the spotlight. Bear Stearns (BSC:) reported an 88% decline in third-quarter earnings and missed the Thomson First Call mean estimate, as the mortgage and credit businesses "were extremely challenging this quarter," the company said. Bear Stearns dipped 18 cents, or 0.2%, to $115.46.

On the other end of the spectrum, Goldman Sachs (GS:) handily beat forecasts with a 79% jump in third-quarter profits. Shares were off $1.97, or 1%, to close at $203.53.

Earlier this week, Lehman Brothers (LEH:) and Morgan Stanley (MS:) delivered mixed results.

Among others reporting earnings, ConAgra Foods (CAG:) topped estimates, as did FedEx (FDX:) . However, FedEx fell 2.9% after the shipping giant cut its 2008 earnings forecast due to higher energy costs and economic uncertainty.

Circuit City (CC:) dropped 18% after the electronics retailer posted a fiscal second-quarter loss and predicted a weak third quarter. Shares were down $1.90 to $8.67.

Results from Nike (NKE:) and Oracle (ORCL:) were out after the close.

Overseas markets were mixed. Overnight in Asia, Japan's Nikkei 225 tacked on 0.2% and Hong Kong's Hang Seng rose 0.6%. In Europe, London's FTSE 100 lost 0.5%, and Germany's Xetra Dax was off 0.2%.