Market Talk

There were two things I saw last week that put the fear of God in me. Both came Wednesday. One seems to be improving; the other remains a wild card, and that’s why I bring it up.

That was the first time I saw close-up pictures of the mangled Fukushima Daiichi nuclear plant. The walls that contain two of the reactors are completely gone. The upper third is missing from another. Seeing those pictures, it was pretty obvious to me that a total meltdown was a very real possibility. Those pictures were worth more than 1,000 words, and every word was absolutely shocking.

The Fukushima 50 have had some success in stabilizing the plant as of Sunday, and I fervently pray they are ultimately successful. God bless their courage. Were that others were so dedicated.

The second thing caught my attention Wednesday was the yen’s frenzied spike just after 5 p.m. New York time. The yen, which had been strengthening since last Friday’s earthquake, suddenly broke through all resistance and spiked higher. Lightning fast. Straight up. It was a black-swan kind of thing. Shorts were forced to sell, and that only contributed to the rise. It was chaotic.

“I can almost guarantee you that a few (hedge) funds out there were hurt very, very badly,” Dennis Gartman, who edits and publishes The Gartman Letter, said via email.  “No one ever escapes that sort of action entirely.”

I’ve had the feeling since last Friday that the ramifications of Japan’s nightmare are going to be larger than people initially suspected, and they are going to end up in places where people don’t expect, and in a world as tightly connected as the one in which we live, that increases the odds that one haywire event will have a cascading and destructive effect. Something like the yen’s sudden jerk has the potential to spark a global unwinding. It’s a scary thing to contemplate.

Continue reading…

US stocks surge, a day after falling, on…what, exactly?

Because BofA offered a bullish picture at its investor day? Because crude oil futures slipped 42 cents?

Doesn’t look like much changed between yesterday and today, but stock traders are buying today after selling yesterday. The market has been especially volatile lately, and you can count this as just one more session in that string. It’s not a string that likely to end, either.

DJIA surges 124 (1%) to 12214, S&P 500 gains 12 (0.9%) to 1322, Nasdaq Comp rises 20 (0.7%) to 2766. Crude drops, but is still over $105/barrel. Which means today’s action is just traders playing games with numbers. It was the first gain in three sessions for the Dow, and while it regained about 75% of what it lost over the previous two sessions, it’s still down from Thursday.

Banks do lead the way broadly, but the Dow’s biggest gainers are IBM and Caterpillar. Those two, along with Boeing, are often the stocks traders play when they want to juice the index. John’s written about this more than I have, but Caterpillar’s relatively small float makes it particularly susceptible to, ah, suggestion.

Meanwhile, the euphoria yesterday over rumors floating around that Gadhafi was trying to figure a way to get out of Libya have just disappeared, because all the news today is about pro-Gadhafi forces digging in.

Crude futures were indeed essentially flat today. But, twice in the morning, at least twice that we noticed, the market tried to push Nymex crude under the $103/barrel mark, which was previously a resistance point and now appears to be a support point, because traders turned back both attempts. That means, technically speaking at least, crude futures are still poised to rise.

I expect, too, that crude prices will keep rising, as will prices at the pump. At some point, and I think that point is coming soon, it will start to exert a noticeable drag on the economy. The only question you should be seriously worried about is: will oil prices rise enough to break the economy? We know that they can; we don’t know yet whether they will.

So yesterday, I said we could see Dow 12000 before noon. As it turns out, we got it right around 10 a.m., after the release of the new-home sales report (the fact that the report, which capped off the worst year for new home sales on record, was the final spark to get the index over that mark shows you exactly how excited you should be about it.)

Sure, the Fed’s as excited as the guys in the pits about this rising stock market, we’ll see if they can actually hold it; right now, Dow’s under the mark, but we’ll get the Fed statement at 2:15, which always sends stocks off in zany directions.

Basically a two-stock show for the Dow Industrials today, with a couple perennials — Boeing and Caterpillar — supplying 75% of the average’s nearly 51-point gain. The outsized effect from BA and CAT drove the DJIA to a 0.4% rise while the S&P 500 was only up 0.1%.

Got to hand it to those Boeing investors — they’re a very forgiving bunch, no doubt about it. BA shares tore 3.4% higher, climbing $2.40 to $72.47 after the company said it now expects to deliver its first 787 Dreamliner in the third quarter, which is more than three years late. Three years late, citizens. Cause for celebration. And even that plan is no guarantee.

It’s the seventh official delay, and pushes back delivery that had been expected next month, before an electrical fire during a November test flight scuttled those notions.

But here’s the good news, investors — the stock is well back above its levels just prior to the fire, so it’s as if it never happened. And that fresh, six-month delay in deliveries? Eh, all priced in. “We’re just happy it wasn’t longer,” relieved investors are said to be thinking. Continue reading…

The only thing I can say for sure about today is this: it’s no dog day of summer, kids.

Beats me why the stock market is up.

This may be the silliest trading session Wall Street has seen in a while. Stocks are up when every piece of news out there is pretty awful, exemplifying how screwy market psychology can be.

Here’s a snip Vigna just published on the wire:

GDP gets revised down sharply, although not as sharply as feared. Intel cuts its revenue outlook, although apparently everybody expected it. Boeing delays the Dreamliner, again. Ben Bernanke says the Fed’s ready to go all in, although it’s not going all in now and doesn’t really expect to need to go all in. That all may sound confusing, but not to the market: to Wall Street that’s all positive. The major indexes are higher, Intel is higher, Boeing is higher. If you want to know just how, well, weird that all is, consider this: Boeing right now is actually the Dow’s top dollar gainer.

What’s worse, the consumer outlook regarding the economy remains pretty bleak. Reuters/University of Michigan consumer sentiment index for August dropped again and fell below economists’ expectations.

Not enough for you? Try this on for size: growth in the ECRI weekly leading index remained little changed, edging up to -9.9% from -10.1%.

Add it all up and, surprisingly, the stock market is significantly rallying. The Dow was recently up 115 at 10101, S&P 500 gains 11 at 1058 and Nasdaq Comp up 21 at 2139.

“What do you get when you flood the market with an Intel downward guidance update, a disappointing money printer dictate, and a drop on consumer confidence?” Zero Hedge ponders. “In a word — total market insanity.”

Attention this morning riveted on Kansas City Fed’s economic symposium in Jackson Hole, Wyo., and Ben Bernanke’s upcoming remarks on the US outlook and policy response.

While the Fed meets annually there, it’s oddly appropriate this year that it’s in a locale with “hole” in the name. Tip for Ben: Try to open with a little joke or funny anecdote before getting to the real serious stuff. He’s set to speak at 10:00 a.m. ET.

Of course, before that we’ll get a second look at 2Q GDP growth at 8:30 a.m.; economists see a revision down around 1.3% from original 2.4%. Also, a final look at Reuters/Univ of Michigan August consumer sentiment at 9:55 a.m.

Elsewhere in the world, Boeing delays the first delivery of the Dreamliner — again — and Dell matches Hewlett-Packard’s $27/share offer for 3Par. This is a company, mind you, that was trading at $9.65 on Aug. 13, before Dell’s original offer. Good month for 3Par shareholders.

S&P futures up 3.60, DJ futures up 28. Ten-year roughly flat, yield at 2.50%.

The rally’s going nowhere fast today, as the market fuel – earnings report – were pretty uninspired this morning. Add that weak durables report, and well, there’s your stalled rally. We break it down for you on the Markets Hub.

Bulls kick off the week flexing their muscles.

US stocks wipe away much of Friday’s losses as everything seems to fall the bulls’ way.

Rising consumer spending and increasing auto sales as well as manufacturing activity hitting its highest level since July 2004 boosts sentiment. The market, which loves M&A, got a big, headline making deal with United and Continental. And what finally seems like a resolution to Greece’s debt woes contributed to the run-up.

Consumer discretionaries among the market’s biggest gainers as the consumer is slowly returning to pre-recession habits. Consumers increased their spending and cut their savings in March, not a good sign for the long-term economy but a positive development for these stocks in the short-term.

DJIA closes up 143, or 1.3%, to 11152, marking its biggest gain since Feb. 16 and fourth largest gain of the year. The index recaptured roughly 90% of Friday’s 159-point drop. Still, this marked the fourth triple-digit move out of the last six sessions, and that kind of volatility doesn’t exactly speak to overriding confidence.

Dow components Caterpillar and Boeing each rise 2.7% and contribute to about 20% of the index’s overall gain. The floats of those two stocks are among the smallest of the 30 in the average, so when the momentum gets cooking, as it did today, it’s easier to see a more pronounced increase (or decrease) in the dollar-value change in those stock prices.

S&P rises 16 to 1202, crossing back above the key 1200 level. Nasdaq Comp jumps 38 to 2499.

(John Shipman and Paul Vigna contributed to this post.)

US stocks close mixed, with weakness in health-care and financial sectors weighing on the market. DJIA gains 8 to 11125, marking its third straight day of gains. Index has risen in nine of the last 10 sessions. S&P 500 falls 1 to 1206 and Nasdaq Comp rises 4.3 to 2505.

Losses were muted as United Technologies (UTX) jumped 3.7% on better-than-expected earnings and Boeing (BA) rose 3.9% as it anticipates additional aircraft orders this year. Apple (AAPL) jumps 6% on, you guessed it, blowout earnings.

With earnings in full swing there’s lots to digest after hours.

Both Chipotle Mexican Grill (CMG) and Starbucks (SBUX) issue quarterly reports ahead of estimates, helped by stronger sales, offering more evidence of a consumer recovery. Customer traffic was up at both companies. In after-hours trading, CMG up 4.9% to $133; SBUX up a fraction at $25.42.

But Qualcomm (QCOM) couldn’t match heightened Wall Street expectations. Despite raising its fiscal full-year forecast, the estimates still fell below what analysts were looking for. FY3Q estimate, meanwhile, looks soft, with earnings flat to slightly below expectations. QCOM shares off 7.6% at $39.37 after hours.

And eBay shares were off more than 7% in late trading after providing disappointing 2Q earnings and revenue guidance.

(Paul Ziobro and Roger Cheng contributed to this post.)