Reply #70: end of the day and all that jazz

[UpInArms]

Dow 12,743.44 237.44 (1.83%)
Nasdaq 2,540.99 55.61 (2.14%)
S&P 500 1,407.22 33.48 (2.32%)
10-Yr Bond 3.847% 0.165

NYSE Volume 3,731,710,000
Nasdaq Volume 2,033,180,500

4:25 pm : For a brief period today, there was a twinge of optimism that the stock market would be able to score back-to-back gains. Reports of stronger than expected retail traffic over the Thanksgiving holiday contributed to that view. However, it wasn't long before concerns about the financial sector (-4.1%) took hold again and knocked the market down to size.

At the end of the day, the stock market relinquished everything it gained in Friday's shortened session, and then some, and returned to negative territory for the year.

Several factors combined to take the financial sector sharply lower.

UBS downgraded Freddie Mac (FRE 24.50, -1.97) and Fannie Mae (FNM 28.92, -3.28) to Neutral from Buy, CNBC reported that Citigroup (C 30.70, -1.00) is on the verge of a massive layoff announcement that could include as many as 45,000 positions, or nearly 15% of its current workforce, and Senator Charles Schumer reportedly urged regulators to examine the risks involved with the increased lending by the Federal Home Loan Bank of Atlanta to Countrywide (CFC 8.64, -1.01).

The latter report accelerated the selling in the financials as it evoked lingering concerns about Countrywide's liquidity position and fueled fears about the ramifications for Countrywide in the event that source of funding is diminished.

In essence, the enduring sense of uncertainty regarding the mortgage market triggered another broad-based sell-off that saw selling intensify at the end of the day and left the indices at, or near, their worst levels of the session at the closing bell.

Every sector traded lower with all but the defensive-oriented utilities sector (-0.7%) losing more than 1.0%.

Telecom services (-3.1%) followed the financial sector as a loss leader. Energy (-2.8%), technology (-2.5%) and consumer discretionary (-2.3%) also suffered sizable losses.

Despite a report from ShopperTrak RCT that sales rose 8.3% versus last year on the day after Thanksgiving, and 7.2% in the two-day period following Thanksgiving, retailers were not spared in today's sell-off. The homebuilders, though, were the biggest pocket of weakness in the discretionary sector. The S&P industry group plunged 7.2% following some negative comments out of Citigroup with respect to the near-term outlook.

By and large, there was little that worked in the stock market as a risk averse mindset took hold.

The risk aversion was plain to see in the Treasury market, which rallied sharply as losses in the stock market compounded. The 10-year surged more than a point and its yield dropped to 3.84%.

Separately, the dollar index (-0.3% to 74.859) lost further ground Monday. Its weakness, though, didn't help commodities much as slowdown concerns tempered buying efforts. Oil prices slipped 0.5% to $97.70 amid reports that Saudi Arabia has increased its production.DJ30 -237.44 NASDAQ -55.61 SP500 -33.48

3:30 pm : Equities extend their late-day sell-off as the major indices hit fresh session lows. No particular news item triggered the selling and bonds continue to rally in a flight to quality. The S&P 500 is now trading slightly below the unchanged mark for the year.

The latest selling pressure has been widespread, but once again the financial sector (-3.5%) is leading the way, giving up all of its advance on Friday and then some. Financials are the worst performing sector year-to-date, with consumer discretionary coming in second.

Tomorrow, the Conference Board will release the November Consumer Confidence reading at 10:00 ET. Economists expect the number to come in at 91.5.DJ30 -173.45 NASDAQ -43.83 SP500 -25.63 NASDAQ Dec/Adv/Vol 2166/845/1.51 bln NYSE Dec/Adv/Vol 2270/1031/971 mln

3:00 pm : The major indices drop to minor new session lows following a new wave of broad-based selling interest. Only the utilities sector remains in positive territory (+0.7%). The sector was the main laggard last Friday. Meanwhile, Treasuries have hit new highs.

In currency trading, the DXY Index has slipped 0.22%. The weakness in the dollar has not supported commodities this session, as indicated by the 0.4% decline in the CRB Index.DJ30 -74.30 NASDAQ -20.67 SP500 -13.49 NASDAQ Dec/Adv/Vol 1976/1004/1.33bln NYSE Dec/Adv/Vol 2014/1270/859 mln

2:30 pm : For now, selling pressure has eased as the major indices trade slightly above their worst levels of the session. Five of the ten economic sectors are posting gains, but the heavily weighted financial (-2.3%), tech (-0.6%), and energy (-1.0%) sectors are keeping the broader market in the red.

Investors continue to show risk aversion. Defensive oriented stocks are outperforming, the small-cap Russell 2000 Index is underperforming the S&P 500, and the 10-year note is up 27 ticks.DJ30 -37.23 NASDAQ -14.11 R2K -1.1% SP500 -9.19 NASDAQ Dec/Adv/Vol 1972/1001/1.22 bln NYSE Dec/Adv/Vol 2024/1233/770 mln

2:00 pm : The major indices trade near their worst levels of the session. Financials (-2.4%) deserve most of the blame for the recent decline, led by a sell-off in Fannie Mae (28.81, -3.38) and Freddie Mac (23.34, -3.11). The breadth of the market is somewhat bearish. Decliners outpace advancers at the NYSE by a 18-to-14 margin, while the Nasdaq Composite clocks in at 18-to-11.

Separately, crude oil has pared some of its intraday losses, and is now only down 0.4% to $97.86.DJ30 -51.40 NASDAQ -15.96 SP500 -11.29 NASDAQ Dec/Adv/Vol 1805/1141/1.09 bln NYSE Dec/Adv/Vol 1871/1368/707 mln

1:30 pm : The stock market is back on the decline as financials (-2.2%) continue to falter. As stocks dip, buying interest picks up in the Treasury Market. The 10-year note is now up 15 ticks.

Regarding the S&P 500, Cisco Systems (CSCO 27.69, -1.00) is the main laggard. Morgan Stanley said that Cisco's emerging market business is slowing and is an area of concern. The AP reports that Morgan Stanley still kept its Buy rating on Cisco.

Fellow Nasdaq components Apple (AAPL 176.01 +4.47) and Google (GOOG 687.15, +10.14) are providing leadership. DJ30 -25.36 NASDAQ -9.24 SP500 -7.66 NASDAQ Dec/Adv/Vol 1765/1169/1.01 bln NYSE Dec/Adv/Vol 1754/1470/652 mln

1:00 pm : The stock market has made a slight advance. The Dow continues to trade with small gains, while the S&P 500 and Nasdaq are trading with modest losses.

Twelve of the 30 components in the Dow Jones Industrial Average are trading higher, with airplane manufacturer Boeing (BA 92.04, +2.50) leading the way. Boeing was upgraded to Outperform from Market Perform at Wachovia.

Meanwhile, Citigroup (C 30.70, -1.00) is the main laggard after CNBC reported that the company will be making a larger number of layoffs. DJ30 +14.63 NASDAQ -3.83 SP500 -3.73 NASDAQ Dec/Adv/Vol 1773/1141/902 mln NYSE Dec/Adv/Vol 1791/1419/573 mln