Market Talk

US stocks get the 4Q off to a bad start, falling sharply after a spate of data paints a less than glowing picture of the recovery.

DJIA drops 203 (2.1%) to 9509, its biggest one-day fall in three months, since July 2 and the sixth drop in the past seven sessions. All 30 of the index’s components drop.S&P 500 loses 27 (2.6%) to 1030, Nasdaq Comp slides 65 (3.1%) to 2057. Treasurys rally, with 30-year yield falling below 4%, to 3.96%. That 4% level has been mentioned by several people as being some sort of line in the sand. We’ll see, but it’s increasingly looking like  a bad bet to bet against the bond market.

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This ship's sailed, brother

Some sell-side research has been pretty kooky lately, and we’ve stumbled upon a couple fresh examples today.

First is Cantor Fitzgerald’s one-day round trip on Radvision (RVSN).

Just hours after cutting Radvision (RVSN) to sell, Cantor boosts shares to hold, after stock drops by a third in reaction to Cisco’s (CSCO) acquisition of RVSN rival Tandberg (TAA.OS). Firm said this morning, when it cut shares to sell, that the move by CSCO — Radvision’s biggest customer — puts RVSN’s revenue at risk.

But after RVSN drops more than 33%, firm comes back with the upgrade, saying at this level, shares are near tangible book value. Cantor adds RVSN has “ample runway” in adjusting to its new post-Cisco life. RVSN down 33% to $5.93. Continue reading…

The data today once again threw the market a spanner, although it looks like they won’t recover this time.

The ISM’s manufacturing report was not what the market wanted; the market wants to see at the least steady progress, if not the other half of that V shape it’s pining for. But ISM says while manufacturing still showed some expansion in September, it was narrower than in August.

You know, I said to Eduardo that we  might not get a V-shaped recovery, but a jigsaw shaped one. But actually, it might be more accurate to say we’re going to have a saw-tooth shaped recovery, where there’s a rise, then a slide back, then a rise, then a slide back. And who knows how long that will last.

Anyhow, if you’ve got three minutes (or so), we’ve got tomorrow’s news today.

Bank of America (BAC) failing to announce a clear succession plan after Ken Lewis’ announced he’s stepping down gives BofA investors something else to worry about.

Not announcing a successor or even an interim CEO is a negative for BofA, Fox-Pitt says, while questioning the bank’s ability to attract a top exec while operating under close government supervision. BofA said it’ll announce a successor by year’s end, but analysts and bloggers are already speculating who’ll take the helm.

Stifel Nicolaus analyst Christopher Mustascio speculates that Bill Winters, who lost out as co-CEO of JPMorgan Chase’s (JPM) investment bank in Tuesday’s management reshuffle, might be a candidate to succeed Lewis. Other internal candidates are likely consumer banking head Brian Moynihan, and Thomas Montag, head of investment banking, but “potential external candidates could include former (BofA) CFO Al de Molina,” Mutascio writes.

BofA’s wealth management chief Sally Krawcheck is also being mentioned as a potential successor. “[Krawcheck] has the kind of credibility as a straight-shooter that the company desperately needs, and she might be able to mollify some of the bank’s more antagonistic foes,” Reuters blogger Felix Salmon says.

Ultimately, whoever the board picks must have savvy political skills, especially considering the banking giant’s dicey relationship with the government. From Salmon:

The job of the CEO is not really about managing down, so much as managing out — repairing relationships with Andrew Cuomo, Sheila Bair, Barney Frank, Mary Shapiro, Elizabeth Warren, and other Washington VIPs. The board will want an experienced manager, to be sure. But they’ll really want someone with political skills, who can calm the savage beast that has woken up DC and which is eyeing the giant of Charlotte.

(Brendan Conway and Matthias Rieker contributed to this post.)

Do I look chipper to you?

Here’s another dip-buying opportunity for the bulls (and seemingly getting more opportunistic by the minute.) Are they up for the challenge?

There’s a definite pattern developing in the stock market this week. Disappointing economic data yesterday pushed the Dow down more than 100 points in early trading. But, as has been evident since early March, bulls didn’t panic and used the dip as a buying opportunity. Stocks actually turned positive late in the afternoon before closing down a mere 30 points.

Today, weaker-than-expected ISM manufacturing data is the main culprit for the early-morning plunge. The Dow is, once again, down more than 100 points, but whether the bulls will muster any fight to cut into the losses remains to be seen.

The “buy on the dip” mentality, which we detailed yesterday, has been a recurring theme since early March. This seven-month rally, which has seen major indexes rise more than 50%, has been based on better-than-expected corporate profits and economic data as well as the notion that economy’s no-longer in free fall. It’s a sentiment-driven rally as investors have been piling into stocks largely because they don’t want to miss out on the run-up.

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The headline on personal spending that crossed the tape at 8:30 a.m. was an eye opener, huh?

=DJ DATA SNAP: US Spending Jumps By Most In More Than A Year

Of course, being a skeptic, my first thought was, okay, what was it? Are consumers hitting the plastic like an alkie who’s given up all hope? Did the Plunge Protection Team infiltrate the Bureau of Economic Analysis and alter the data? Are people actually buying Crocs again?

No, it was just cash-for-clunkers.

Personal spending rose in August as consumers hit the dealerships for their $4,500 rebate on that new, fuel-efficient automobile. That’s what drove a 1.3% increase in consumer spending. It certainly wasn’t rising wages, which were up 0.2% nominally, and were down on a real basis, i.e. adjusted for inflation. And seeing as inflation is about as prevalent these days as subtlety is in a Michael Bay movie, that means wages are just stagnating, while everybody waits for this purported recovery to get underway.

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US stocks face a slightly softer premarket tone following yesterday’s turbulence. Bears growled a bit louder, but in trading’s final hour, bulls once again were able to keep things from getting out of hand.

Still, major averages are down five of last six sessions and investors face a raft of US economic data this morning that will no doubt have a strong bearing on the day. August personal income and spending, and weekly jobless claims due at 8:30; September ISM manufacturing index, August pending home sales and construction spending all set for 10:00 a.m. September auto sales also due for release today.

Lewis’ departure from BofA comes as no surprise; his exit package should be interesting.

S&P futures down 5.00; DJ futures down 38. Ten-year flat, yield at 3.31%. Dollar looks stronger, after EU official says policy makers are discussing the euro’s appreciation.