Midday Summary:
Major averages remain deep in negative territory, just off session lows
The major averages remain significantly lower with the Dow Jones Industrial Average, S&P 500 and the Nasdaq almost 2% lower midday. The market opened to the downside this morning, with financials leading the move lower, on news that South Korean regulators told the Korea Development Bank to take a cautious approach before making an acquisition of an overseas bank after the company expressed interest in Lehman Brothers (-4.2%). Also in the financial sector, Credit Suisse cut its earnings estimates on AIG (-4.5%), while Fitch Ratings put the insurance giant's credit ratings on negative watch.
About a half-hour after the open, a better-than-expected July Existing Home Sales number (5.0 mln vs. consensus of 4.91 mln) showed a 3.1% increase in units vs. the prior month. However, the major averages showed a muted response to the report, and actually extended its' losses in broad-based fashion less than an hour after the release.
Further bolstering the losses, crude oil rebounded off its morning lows into positive territory just before 12:00 ET. It has been a relatively quiet day in terms of corporate earnings or news, but it's worth noting that Fannie Mae (+5%) and Freddie Mac (+18%) are very strong today, after Reuters reported that Freddie Mac's $2 bln bill sale drew stronger demand and interest rates rose compared with the most recent sales of the same maturities. Dow is currently -215 to ~11412; Nasdaq is currently -47 to ~2368; S&P is currently -23 to ~1269... From a technical perspective, the major indices are all trending down moving through midday with minimal counter-trend bounces seen. Volume is very light helping to exaggerate the propensity of today's down move. The Russell 2K (RUT) index is the only major average to breach last weeks 722.50 low. The S&P 500 (SPX) has crucial support seen @ 1260 with last weeks low @ 1261 but will need to break daily S4 @ 1265 noted in today's technical take.
TRIN levels on NASDAQ (COMPQ) are exceptionally high, currently nearing the 2.5 level and highlighting the heavy selling pressure which may persist throughout the remainder of the session. Breath remains very bearish heading into afternoon trading with both exchanges posting almost 4:1 decliners over advancers... The Bond market moved modestly higher in overnight trading and spiked sharply at the open of pit trading as equity futures indicated a lower open. After the sharp move higher, the 10-yr has moved in a tight range all day long. The 10-yr is currently +25/32 3.776%.
In Commodities, Oct crude ($114.25 -0.34) remains lower in a quiet day of trading, near the unchanged mark, midday after attempting to comeback off of session lows of $113.68... In Europe, mkts fell, led by financials amid ongoing worries about the health of the sector and energy majors as crude oil prices extended the previous session's steep slide. FTSE closed for holiday; DAX closed -0.7%; CAC closed -1.0%.
Note in Asia, the Nikkei closed +1.7%, the Hang Seng closed +3.5% and the Shanghai Composite closed +0.3%... On the Earnings calendar, 0 cos are confirmed to report today after the close. Tomorrow before the open, 10 cos are confirmed to report.
On the Economic calendar nothing remains on the schedule for today, nor is anything scheduled tomorrow before the open.