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Briefing excerpts 2008

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I found fun read Briefing (via. Yahoo Finance) market summary, esp. on an eventful day.

06-22-2009 Back to bear?
4:30 pm : The S&P 500 moved sharply lower in broad-based fashion, which took it below the key 900 level for the first time this month. With sellers in control, the session culminated in the stock market’s worst single-session percentage loss in two months.

Declining issues outnumbered advancers by 10-to-1 in the S&P 500. Losses were steepest among financial issues, which shed 6.2% as they steadily descended throughout the entire session. Diversified financial services (-7.5%) and specialized finance (-7.3%) made up some of the weakest performing stocks in the financial sector. Financial stocks are down more than 7% month-to-date, but still up nearly 50% from their March lows, making them ripe for plenty more profit taking.

Energy stocks and materials stocks showed weakness for the entire session. The lost a respective 4.6% and 5.3% amid broader market weakness and a drop in commodities prices, which were undercut by a stronger U.S. dollar.

With the greenback up 0.7% against a basket of major foreign currencies, the CRB Commodity Index dropped 2.7% in its sharpest downward move in more than two weeks. Oil prices showed particular weakness; July contract prices shed 3.6% to settle at $67.06 per barrel before expiring, while August contract prices settled 3.8% lower at $67.33 per barrel.

The negative bias in the broader market certainly wasn’t helped by news that the World Bank cut its forecast for major economies like that of the U.S. The news seemed to embolden the efforts of sellers, who just last week handed stocks their first weekly decline in five weeks. The latest selling effort led the S&P 500 to breach the 900 level, which marks the approximate intersection of the downward sloping 200-day moving average and the upward sloping 50-day moving average.

The only pockets of strength this session were found among defensive-oriented sectors. Utilities had been sporting enviable gains for most of the session, but surrendered them into the close and finished unchanged.

Telecom tacked on 0.5% as the only major sector to finish in the green.

Consumer staples stocks, also considered defensive, slipped 0.8%. Drug retailer Walgreen (WAG 29.64, -1.79) weighed on the group after posting quarterly earnings results that missed the consensus estimate.

Health care stocks, which have shown relative strength in recent sessions, fell 2.0%. Pharmaceutical stocks finished 1.5% lower amid news from The Wall Street Journal that the group will cut Medicaid costs as a proactive measure against more damaging industry reform.

There weren’t any economic reports released today, but the release of May existing home sales data on Tuesday will start a steady flow of reports for the coming days. DJ30 -200.72 NASDAQ -61.78 NQ100 -3.0% R2K -3.9% SP400 -3.7% SP500 -28.19 NASDAQ Adv/Vol/Dec 415/2.32 bln/2264 NYSE Adv/Vol/Dec 345/1.40 bln/2703

04-03-2009 Confirmed rally?
4:30 pm : Unmoved by the latest jobs report, participants traded stocks in low volume and in a limited range, until a late rally by financial stocks helped take the broader market to session highs heading into the close. Stocks slipped into the red in early action due to an absence of leadership.

Participants were content to let a recent string of gains consolidate after receiving word from the Labor Department that 663,000 jobs were slashed in March, lifting the unemployment rate to 8.5% from 8.1%. The data were on par with expectations.

The March ISM Nonmanufacturing Index was also given a cool response. The index showed continued contraction by coming in at 40.8, which was a bit worse than the reading of 42.0 that was widely expected, and down from 41.6 in February.

After falling to a loss of 0.8% stocks began their upward turn, which ran into a couple of resistance efforts but gathered momentum heading into the close as bids came in from the sideline, lifting share volume on the NYSE to 1.5 billion shares. That helped stocks close 1.0% higher at their best levels of the session, bringing stocks to their best closing level in more than one month.

Financials underpinned the late rally effort and closed 4.2% higher as the best performing sector. Financials had traded in a quiet manner for most of the session, uninspired by strength in European bank shares, which were bid higher after Royal Bank of Scotland (RBS 9.42, +1.27) indicated it is targeting considerable annual cost savings and plans to resume dividend payments as soon as possible.

03-23-2009 Second time is a charm
4:30 pm : The Treasury Department released details related to its plan to remove bad assets from banks’ balance sheets, sparking a massive surge in the stock market. In addition, the market benefited from a better-than-expected existing home sales report.

In the end, the S&P 500 spiked 7.1%, settling at session highs thanks to a late afternoon rally.

The Treasury plans to create a series of public-private investments funds to buy $500 billion to $1000 billion in legacy loans and securities. To encourage participation from the private sector, the government is taking on much of the risk and offering subsidies. In a show of support, Bill Gross, co-Chief Investment Officer of the world’s largest bond fund, told Reuters that Pimco plans to participate in the program.

Meanwhile, FDIC Chairman Bair said that the public-private investment program will likely make money for the FDIC, according to Reuters. Bair also said that 6-to-1 is the outer range of leverage it will provide for the program, Reuters reported.

The financial sector rallied a massive 17% on the news, with diversified financial services climbing 24.5% and diversified banks up 22.3%.

The move was broad-based as all ten of the economic sectors rose, with gains of at least 3.8%. The energy sector (+7.8%) finished second to financials, outperforming as May crude oil futures climbed 3.5%. Defensive sectors however, underperformed on a relative basis, but still posted solid advances.

101508: bear came back
4:30 pm : The stock market plunged the most since the crash of 1987 as disappointing retail sales data and credit concerns renewed economic fears. Specifically, the S&P 500 plunged 9.0%, settling near session lows.

Consumers continue to curtail spending in the face of economic headwinds. Retail sales in September tumbled 1.2% month-over-month, the third consecutive monthly drop and largest decline in three years. The decrease was larger than the expected drop of 0.7%. Sales are down 1.0% compared to last year, marking the first year-over-year decline since October 2002.

Separately, the Producer Price Index, an inflation reading, fell 0.4% in September due to a decrease in commodity prices. Excluding food and energy, PPI rose 0.4%, which was more than the expected increase of 0.2%.

Although credit markets are showing signs of improvement, there are concerns that a recovery will take longer than hoped for. Dollar Libor, which is the rate banks charge each other for short-term dollar loans, slightly declined across all terms for the second straight session, but remain at highly elevated states. This indicates banks are more willing to lend to each other, but are still showing extreme caution. In addition, there was a high demand for Treasuries as investors seek safety.

An afternoon speech from Fed Chairman Bernanke and the release of the Fed’s Beige Book did not give the market any real surprises, but painted a sobering economic picture and indicated that a recovery will take time.

Economic concerns sparked broad-based selling, with 99% of the S&P 500 posting a loss and all ten of the economic sectors ending the day deep in the red.

101308 Crazy Monday
4:20 pm : The S&P 500 posted its largest percent gain in 69-years on Monday, snapping an eight session losing streak in the process. The rebound was fueled by several governments taking steps to shore up the financial system and Morgan Stanley (MS 17.99, +8.31) completing its deal to receive a capital infusion from a Japanese bank.

The S&P 500 surged 11.6% in broad-based buying interest and ended the day at sessions highs following a late-session surge. The Dow rose 936 points — its largest point gain ever and largest percent gain since 1933. All ten of the economic sectors rallied, with gains ranging from 7.2% (industrials) and 18.5% (energy). Overseas markets also rallied, Hong Kong’s Hang Seng spiked 10.1%, and Europe’s Eurostoxx 600 rose 9.9%.

With regard to the global efforts to help the financial markets, the Fed and other central banks announced plans to provide as much dollar liquidity as needed in short-term funding markets. The 15 eurozone countries said they will guarantee new bank debt until the end of 2009. In addition, several European countries announced plans to guarantee interbank landing and directly inject capital in financial firms. The U.K. government plans to inject up to $63 billion in three U.K. banks.

The U.S. is expected to outline a comprehensive plan of its own as soon as Tuesday, and is likely to include interbank lending and bank debt guarantees, and direct capital injections in financial institutions.

Investors will have a clearer picture of how credit markets will react to the measures on Tuesday when banks and the Treasury markets reopen. They were closed on Monday in observance of Columbus Day.

Morgan Stanley and Mitsubishi UFJ Financial confirmed the closing of a $9 billion, or 21%, investment in MS, relieving some market concerns that the deal would fall apart due to a recent plunge in shares of MS. Under the terms of the renegotiated deal, MUFG acquired $7.8 billion perpetual noncumulative convertible preferred stock at a 10% dividend and a conversion price of $25.25. MUFG also acquired $1.2 billion of perpetual noncumulative nonconvertible preferred stock with a 10% dividend.

The financial sector rose 10.2% with the investment banking and brokerage industry group soaring 26.8%.

The improved outlook of investors was apparent in commodity trading, with the CRB Index climbing 3.0% as oil rose 5.3% to $81.85 per barrel. Conversely, gold prices fell 1.9% to $838.90 per ounce.

Although buying interest was mostly broad-based with 96% S&P 500 components posting a gain, not all stocks participated. General Electric (GE 21.37, -0.13) fell 0.6% despite its diversified business. GE considered seeking a bank charter in order to access government lending channels, Reuters reported, citing sources familiar with the situation.

The S&P 500 has spiked 19.5% from its multi-year intraday low reached on Friday. The index is down 31.7% year-to-date and down 36.3% from its October 2007 all-time high.DJ30 +936.42 NASDAQ +194.74 NQ100 +12.6% R2K +9.3% SP400 +10.5% SP500 +104.13 NASDAQ Adv/Vol/Dec 2166/2.60 bln/357 NYSE Adv/Vol/Dec 3029/1.82 bln/158

080508 Biggest gain in 4 months
4:25 pm : The stock market posted its largest percent gain in four months on Tuesday in a broad-based rally that was aided by favorable wording in the Fed’s latest directive, a drop in crude prices and a better-than-expected economic reading on the services sector.

All ten of the economic sectors posted a gain, with seven sectors advancing more than 2%. The S&P 500 surged 2.9%, with 91% of its components ending the session in positive territory.

The FOMC left the fed funds rate at 2.00%, and the discount rate at 2.25%, as expected. The Fed noted that there are both risks to inflation and growth. The FOMC said that although the economy grew in the second quarter, labor markets have “softened further” and financial markets remain under “considerable stress.”

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