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Uncategorized
US stocks staged an impressive rebound last week, with the Dow Industrials rising more than 4% following last Monday’s selloff. Even among the bullish, stocks look remarkably overbought.
But it’ll clearly take more than some shaky trading in Shanghai derail this upside momentum. Strength in Asia overnight appeared to be reaction to US rally Friday, so stock futures here point to a more sedate open.
Lots of economic data to chew on this week, including readings on home prices, new home sales, consumer confidence and spending as well as a second look at 2Q GDP.
S&P futures up 3.00; DJ futures up 30. Ten-year up slightly, yield at 3.55%.
The fierce stock-market rally has scared away short sellers.
Short interest at the NYSE fell 10.27% during the second half of July, marking the biggest percentage drop since the 13.4% plunge last September when the SEC temporarily banned short selling of many financial stocks.
Improving economic data and better-than-expected earnings reports have helped propel the stock market nearly 50% higher off the early March lows. Investors who’ve borrowed stock in the last five months with the intention of buying it back in the future at a lower price have certainly been disappointed.
“The plunge in shorted NYSE shares in late July shows that many bears were scrambling to get out of their trades as optimism blossomed,” Tom Petruno writes at LA Times’ Money & Co blog. “Better-than-expected second-quarter corporate earnings reports just made life tougher for the shorts.”
It’s also worth noting the SEC took further action in late July on short-selling, offering investors more disclosure about these negative bets. But the agency failed to ban naked short-selling.
The average stock in the S&P 500 had 4.97% of its float sold short as of July’s end, which marked the lowest level since the end of January and a 17% decline from peak levels in July 2008, Bespoke Investment Group noted.
“Bears will cite this number as proof that investors are crowded on the long side,” said Bespoke co-founder Paul Hickey. “While bulls would probably prefer to see higher levels of short interest, they are likely to note that short interest remains high from a longer term perspective.”
Dow industrials were recently up 122 ahead of the FOMC statement expected at 2:15.
US stocks start off August still in rally mode, driving the major indexes to their highest points since the fall, after a key report on manufacturing points to a strengthening economy, and reports from overseas also point to strength.
DJIA rises 115 (1.3%) to 9287, S&P 500 jumps 15 (1.5%), retaking the 1000 level and closing at 1003. Nasdaq Comp gains 30 (1.5%) to 2009, retaking the 2000 level. Dollar gets slammed, hitting year lows against a number of currencies, as crude rises above $71.
Reports on the manufacturing sector out of China, the UK and US all point to a strengthening sector, which pushed stocks up overseas as well; the major indexes in Europe all hit year highs. One of those improving manufacturing arenas, it appears, is the auto sector. Ford today reported the first rise in sales in nearly two years, as it benefited from the cash for clunkers giveaway. Video recap (3:04 running time) here.
They do like to make a statement, don’t they? A day after the Dow broke it’s winning streak, the bulls picked up the pieces and, seizing upon the optimistic tone of this morning’s housing report, ran off like the proverbial thundering herd.
That housing report, as well as something we haven’t seen out of Detroit in a while – a profit – is driving (pun sort of intended) home builders and Ford, which are components of the consumer discretionary sector, which fueled the early run (materials, telecom and financials have since overtaken it.)
If you’re looking for one report that sums up what earnings season is about, it’s 3M. The company, which makes everything from Scotch Tape to traffic signs, reported earnings fell 17% on weak demand. But the numbers beat Street expectations (never mind how accurate those expectations were,) and 3M reaffirmed it’s opinion that the economy’s at or near the bottom. That is exactly what the Street wanted to hear, and 3M is the Dow’s top dollar gainer, up more than $4.
Posted by Steven Russolillo
on July 16, 2009
Banks, Economy, Treasury Department, Uncategorized, Washington / 2 Comments
Banks, Economy, Treasury Department, Uncategorized, Washington / 2 Comments
CIT Group has a long road ahead
CIT Group’s (CIT) ominous financial situation just got a lot worse, now that the government has decided not to save the ailing lender.
CIT said “there is no appreciable likelihood” it’ll receive government aid in the near future, which has sent its shares down 75% to 41c in mid-afternoon trading. The lender is scrambling to line up at least $2B in rescue financing from existing debtholders, according to WSJ. Without the financing it’ll likely file for bankruptcy protection.
CIT is the first major financial company the government hasn’t propped up since the Lehman collapse. Several bloggers expressed optimism that the government showed restraint by not bailing out CIT, especially amid the recent bailout mania.
“CIT had friends, but not enough – and maybe this tells us something about the shifting political sands,” former IMF chief economist Simon Johnson writes at The Baseline Scenario.
As UBS’ Art Cashin is fond of saying, it was a waste of cab fare and a clean shirt.
Bulls and bears dance to a draw, as US stocks end little changed a day after a big selloff and indexes fell through some key technical levels.
DJIA drops 16 to 8323, as Boeing gets slammed after its latest delay to the Dreamliner; S&P 500 adds 2 to 895, Nasdaq Comp slips 1 to 1765. Big Board volume’s low, again. Crude rises back above $69/barrel as dollar slides. Treasurys gain on well receive auction of two-year notes.
Some might read the lack of a rebound in equities after yesterday’s big selloff as a bad sign in itself. In fact, we might be among those people.
Another test for investors today: Will they buy on yesterday’s dip or let stock prices continue drifting lower amid a weak environment that’s lacking many positive catalysts, Barron’s Bob O’Brien posits.
“That it’s all playing out in a seasonal lull for equities — the kind of quirk of the calendar that capital markets haven’t seen in a couple summers — plus transpiring among rapidly decelerating volume would make the action all that more confounding,” he says. “Is it a test if no one is proctoring? Do you have to try if no one is grading?”
Overall, trading in US stocks has been relatively dull this week, spiced up here and there with a few fragile rally attempts and unconvincing selloffs. Beyond the data, there could be some drama down in Washington today.
Stocks futures spiked up after the jobs and retail sales reports, but have since moderated. S&P futures down 1.50; DJ futures down 5. Ten-year yield spiked up to the highly anticipated and worrisome 4% level, but has since moved back down to 3.96%. Crude rose above the $72/barrel level, but has since come back down into the $71 range.
Posted by Paul Vigna
on April 30, 2009
Earnings, Economic Indicators, Economy, Markets, Uncategorized / Comments Off
Earnings, Economic Indicators, Economy, Markets, Uncategorized / Comments Off
What GDP numbers? Have a drink!
There are so many tails wagging so many dogs, you’d think you’re at the pound.
Gross domestic product contracted sharply in the first quarter, down 6.1%; that was barely narrower than the fourth quarter’s 6.3% slide. Two million people have been thrown out of work so far in 2009, and the unemployment rate has spiked to 8.5%, and the continued ascent of both of those numbers is widely expected.
And yet, the market rallied yesterday, and is continuing the rally today. All the talk, since Citi’s Vikram Pandit first crowed about a profitable two months that sparked this rally, has been about recovery, as if enough people say it, surely it will be. We’ve heard more than once that the only thing this economy needs is to restore consumer confidence.
Green shoots is clearly the Kool-Aid flavor of choice this spring.
