This morning, the stock mkt opened higher partially due to positive news items including reports that the Treasury Dept is considering taking ownership stakes in U.S. banks; central banks in South Korea, Hong Kong and Taiwan joined their counterparts in coordinated interest rate cuts; shares of IBM (IBM) higher after preannouncing mixed Q3 results. An additional catalyst contributing to a higher open was the fact that the government's ban on short selling in certain stocks was lifted last night at 23:59ET. Shortly after the open, the financial sector began dragging the market lower (see below). It fell well into negative territory, hitting morning lows just after 11:00ET, with the Dow and S&P modestly extending their 5-year lows. But the major averages have rebounded off those levels, and are trading modestly lower at midday.
The Nasdaq is holding up after the tech sector received an early vote of confidence from IBM. Shares are up 1.5% at midday after the co reported revenue of $25.3 bln vs. the $26.5 bln First Call consensus and EPS of $2.05 vs. the $2.02 consensus. It also reaffirmed its Y08 EPS guidance of $8.75 vs. the $8.76 consensus. These mixed results follow back-to-back blowout quarters for the co, but shares are reacting positively after being knocked down since the beginning of the month (-23%). On the flip side, the financial sector has been a drag on the market since the open, with some key names showing significant declines. Last night it was announced that the Federal Reserve will provide an additional $38 bln in liquidity to AIG (AIG). Shares are off 17% at midday, and other insurers such as XL (-54%) and PRU (-14.5%) have followed suit, though the latter has rebounded nicely off its lows. Separately, Morgan Stanley (MS -12.1%) remains under pressure, but has jumped off its low on rumors that Mitsubishi UFJ Financial (MTU) may be interested in acquiring the entire co. In recent activity, the major averages remain trading in a tight range, which has occured since around 11:10ET, with the Dow and S&P 500 still in negetive territory and the Nasdaq modestly higher. Dow is currently -93 to ~9165; Nasdaq is currently +3 to ~1743;
S&P is currently -11 to ~974... From a technical perspective, The major indices are mostly mixed in slightly tamer trading than recently seen. We are seeing relative strength out of the technology sector with both the COMPQ & NDX posting modest gains. Furthermore, the aforementioned indices are the only two to not breach yesterday's multi-year lows this morning. The SPX, INDU, and RUT all hit new 52 week lows before seeing some stabilization. The INDU came within 45 points of testing the 9,000 level. Still, deeply oversold conditions are visible on the daily, weekly, and monthly charts with the SPX testing both the 200 period SMA/EMA for the first time in nearly two-and-a-half decades. Market breadth remains negative with decliners outpacing advancers by about 2.5:1 on NYSE. TRIN levels on both the NASDAQ & NYSE remain below 1.00 at this time...
The Bond market trended steadily lower overnight. At the open of pit trading, the 10-yr attempted a comeback, but this was very short-lived and the 10-yr fell even sharply lower The 10-yr is currently -1-05/32 3.781%... In Commodities, Nov nat gas ($7.093 +0.019) is reversing course again and heading back toward the unchanged level after rallying off lows of $6.622 following the reported inventory data. Specifically, the build reported was 88 bcf vs consensus build of 87 bcf... In Europe, mkts extended their slide, ending sharply lower despite an early rally as bank and oil shares slipped and Wall Street faltered. FTSE closed -1.2%; DAX closed -2.5%; CAC closed --1.6%, RTS +10.9%... Note in Asia, the Nikkei closed -0.5%, the Hang Seng closed +3.3% and the Shanghai Composite closed -0.8%... On the Earnings calendar, 3 cos are confirmed to report today after the close. Tomorrow before the open, 0 cos are confirmed to report... On the Economic calendar, nothing remains on the schedule for today. Tomorrow before the open, export prices ex-ag, import prices ex-oil, and trade balance figures are scheduled to be released at 8:30ET.