Monday, December 10, 2007

Market Summary 12-10-07

Index Last Change % Chg
DJ Industrials 13727.03 101.45 0.74%
Nasdaq Comp 2718.95 12.79 0.47%
S&P 500 1515.96 11.3 0.75%
DJ Wilshire 5K 15311.35 116.25 0.77%
Russell 2000 791.2 5.68 0.72%
Nasdaq 100 2134.88 4.88 0.23%

Issues NYSE Nasdaq Amex
Advancing 2,107 1,690 739
Declining 1,164 1,337 507
Unchanged 88 122 101
Total 3,359 3,149 1,347




New 52 WkHigh 122 64 51
New 52 Wk Low 29 63 40




Total 1,171,283,340 1,783,168,965 33,151,620
Advancing 842,688,750 1,138,101,126 21,374,170
Declining 320,143,590 626,220,703 10,026,750
Unchanged 8,451,000 18,847,136 1,750,700

Futures Last Change
Crude Oil 88.22 0.36
Natural Gas 7.09 0.058
Gold, Feb 813 -0.5

From Briefing.com:
Moving the Market Sector Watch
Investors await tomorrow's FOMC announcement; most expect a 25 basis point cut in the fed funds rate

UBS will write-down $10 bln in losses on subprime lending, gets injection of nearly $12 billion from two strategic investors

McDonald's tops same-store sales expectations

Pending home sales top expectations
Strong: homebuilding; home entertainment software; investment banks & brokerages; IT consulting & services; diversified banks; aluminum; regional banks; fertilizer & agriculture chemicals; industrial REITs; forest products

Weak: biotech; motorcycle manufacturing; education services

The market started the week on a bullish note, aided by a financial sector (+2.1%) that rallied again on the back of news about capital infusions.

Swiss bank UBS (UBS 51.66, +1.18) and bond insurer MBIA (MBI 33.95, +3.95) were the headliners on this front, with each company providing a disappointing update on their actual operations that the market all but dismissed in favor of capital infusion announcements that engendered a belief that the bottom was in for their stocks.

In the case of UBS, it announced before the start of trading that it expects to record a $10 billion write-down for its subprime holdings and anticipates reporting a net loss for the fourth quarter versus its prior expectation that it would record a profit. UBS added that it was possible it could report a net loss for the full year.

The news that drove the stock, though, was the indication that two strategic investors, one of which is the Government of Singapore Investment Corp., will be providing nearly $12 billion of new capital. The other investor wasn't named, though there was some speculation it could be Abu Dhabi Investment Authority, which recently provided Citigroup (C 34.77, +0.46) with $7.5 billion in new capital.

MBIA for its part warned that its mark-to-market losses will be greater in the fourth quarter than in the third quarter. Investors concentrated on the indication that private equity firm Warburg Pincus is going to bolster the company's capital position with a $1 billion investment.

The involvement of these large investors in both situations was deemed to be a value-based signal for the distressed financial sector. Accordingly, many stocks rallied on the reports and garnered further help from the belief that the FOMC will cut the fed funds rate at Tuesday's meeting by at least 25 basis points.

The rate cut outlook permeated the market throughout the day's trading and kept most sellers at bay.

Also helping today's buyers was the recognition that bad news in the financial sector didn't undercut the stocks. Bank of America (BAC 46.64, +1.27), for example, said it is closing a $12 billion enhanced cash fund for institutional investors after losses on holdings dropped the net asset value of the fund below $1.00. A few weeks ago this news wouldn't have been met with such aplomb by the market.

Outside of the financial sector, the materials sector (+1.3%) enjoyed a nice gain that was aided by some takeover activity/speculation that included news of Lafarge (LFRGY 39.15) buying Orascom Cement for approximately $12.9 billion.

Separately, McDonald's (MCD 61.90, +1.74) posted a handsome gain after the company reported an 8.2% increase in global comparable sales that exceeded the consensus estimate which called for a 4.9% increase.

McDonald's and the homebuilders helped drive gains in the consumer discretionary sector (+0.3%). The homebuilders (+4.49%), in fact, comprised the best-performing S&P industry group, having gotten a needed jolt from a better than expected pending home sales report that showed a 0.6% jump in October versus an expectation for a 1.0% decline. The report also showed an upward revision to the September data from 0.2% to 1.4%.

While today's gains were on the healthy side, participation was on the light side. NYSE volume didn't top 1.0 billion shares until late in the session, which underscores a wait-and-see attitude on the part of many investors going into Tuesday's FOMC meeting.

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