Markets Stage Considerable Recovery U.S. Commentary
Volatility once again dominated the U.S. stock markets on Thursday, as the major averages were able to climb off severe losses in afternoon trading but still ended the session in negative territory. The market's weakness was mostly due to tech stocks, which reacted to comments made by the CEO at Cisco (CSCO). The statements concerned a slowdown in sales due to declining orders from financials intuitions, raising fears that problems in the credit markets may be spreading to the recently insulated technology sector. The markets also reacted negatively to comments from Chairman Bernanke to a Joint Economic Committee of Congress. The chairman said that while the economy has performed reasonably well since he last testified before the Committee in March, the recent growth is not likely to be sustained in the near term. However, in the last hour of trading, bargain hunters took over and helped the averages reverse the majority of their losses, with the S&P closing slightly higher. The Dow finished the session down 26.91 points, or 0.20 percent, to close at 13,273.11, while the S&P 500 finished nearly unchanged, up 0.06 points at 1,475.68. The Nasdaq still posted a sharp loss, losing 53.16 points, or 1.93 percent, to end at 2,695.60. The weakness was due to sharp loss in the technology sector, moving the Dow below its 50 day moving average. Dow Components The Dow was down more than 200 points during trading on Thursday, moving below its 200 day moving average, a bearish indicator that may have inspired bargain hunting. In late afternoon trading, the average was able to regain most of its losses, ending just shy of the unchanged line. Leading the Dow's decliners were technology stocks, with IBM (IBM) posting the largest loss, closing down 4.5 percent. The weakness came as investors feared that a slowdown in the domestic economy could cut into IT spending. Hewlett Packard (HPQ) was another tech stock that dragged on the Dow after the company said it would take a $30 million charge as it shifts resources from camera design and distribution to focus on home photo printing and online photo services. American Insurance Group (AIG) also posted a sharp loss, although it was able to move well off of its intraday low. The company came under pressure after it reported third-quarter earnings and revenue that fell short of Wall Street's estimates. Shares of the insurance giant fell 3.3 percent. Citigroup (C) also recouped the majority of its early losses, but it still posted a 1.5 percent loss. The company has been under selling pressure since warning late last week that more write-downs are on the horizon. Home Depot (HD) also contributed to the Dow's loss, declining 0.8 percent. The home-improvement retailer experienced weakness after an analyst at Goldman Sachs trimmed his profit forecast for the company for the next three years. Other Dow components that traded lower include Intel (INTC), Microsoft (MSFT), Caterpillar (CAT), General Motors (GM), and Verizon (VZ). On the other hand, Coca Cola (KO) helped lift the Dow from its considerable lows, ending the day with a 2.5 percent gain. Investors bought into the soft drink giant due to its large international exposure. McDonald's (MCD) also saw buying interest after the fast food giant reported that October's same store sales jumped 6.9 percent, beating analysts' estimates of 5.4 percent growth. Shares of the fast food giant jumped 1.7 percent. Alcoa (AA) also saw modest strength, benefiting from a general upward trend among mining companies after BHP Billiton (BHP) offered to buy rival mining company Rio Tinto (RTP). Sector News Technology stocks led the market's decline on Thursday, sending the tech-heavy Nasdaq down more than 3 percent in early afternoon trading. Cisco originated the weakness with bearish comments by its CEO. Cisco's CEO said this morning that the company saw a slowdown in business related sales, resulting in a disappointing second quarter sales forecast for the company. The statement has worried investors that previously insulated sections of the economy may feel a slowdown in their businesses related to the credit crisis. Tech's weakness was seen across a broad section of sectors, such as the computer hardware, computer technology, disk drive, internet, networking, and wireless sectors. Outside of tech, airline stocks continued to decline, reacting to a price of oil that has continually climbed to record levels in the past few weeks. The weakness sent the Amex Airline Index to its lowest level in over two years with a 1.6 percent decline. Housing stocks also moved sharply to the downside, sending the Philadelphia Housing Sector Index to a 1.1 percent decline. The sector saw pressure after reacting to comments made by Fed Chairman Bernanke indicating that the housing slump will most likely not bottom out till sometime in mid-2008. Retail stocks also traded lower, as investors feared that consumer spending will be weak heading into the holiday season. Consumers have been hit with higher energy and food prices in recent months, which when combined with the slumping value of homes are thought to curb spending. On the other end, steel stocks saw the greatest strength within the markets on acquisition speculation. The Amex Steel Index rose 4.1 percent on the day after BHP Billiton offered to buy Rio Tinto for $110 million early this morning. Rio Tinto has since rebuffed the offer, but statements made by BHP Billiton leave the door open for a future agreement. Utility stocks also traded higher, with the Philadelphia Utility Sector Index rising 2 percent. Among utility stocks, PG & E Corp. (PCG) posted the largest gain after Jefferies & Co upgraded the company to Buy from Hold. Oil stocks also saw some strength even though the price of oil closed lower for the second consecutive session. The Amex Oil Index climbed 0.7 percent on the strength in the sector. Other sectors that ended the session notably higher include the tobacco, biotechnology, chemical, natural gas, and bank sectors. Other Markets In overseas markets, Asian stocks posted considerable losses on Thursday, as the averages reacted to the sharp sell-off on Wednesday in America. Hong Kong's Hang Seng index declined 3.2 percent. In Europe, stocks ended mixed, with strength within the mining sector and extreme weakness in financials. The treasury market rose to a 2-year high on Thursday, as concerns about the economy drove money out of stocks and into the relative safety of fixed income investments. The yield on the benchmark 10-year note dropped to 4.273%, its lowest finish since 2005. This represented a decline of 6.1 basis points on the day. Crude oil dropped again on Thursday to pull further away from the record levels it saw earlier in the week. Light sweet crude oil closed at $95.46 a barrel, down 91 cents. Meanwhile, the price of gold moved higher again on Thursday, extending its record closing high. December gold finished at $837.50 an ounce, up $4.00 on the session. Looking Ahead On Friday, investors will continue to analyze comments from companies and analysts in an effort to understand the future losses due to the credit crisis. Economic data will also be important, with data on the trade balance set to be released. On the earnings front, several notable companies are set to release their quarter results, most importantly the mortgage giant Fannie Mae (FNM). Other companies set to release include Six Flags (SIX), Citadel Broadcasting (CDL), and United Industrial (UIC).
November 8, 2007 4:45 PM
广告位招租，广告代号：EN-fx-bottom-menu