Econ Worries Sink Stocks
4:25p ET October 27, 2008 (Briefing.com)
The S&P 500 was poised to buck a negative trend seen in overseas markets after a better-than-expected new home sales lifted sentiment, but a surge in selling interest going into the closing bell caused the S&P 500 settle with sharp loss at session lows. It was a volatile start to the week. The S&P 500 opened with a 2.4% loss, climbed to a gain of as much as 1.9% and settled with a loss of 3.2%. Volume was on the light side, with only 1.3 billion shares exchanging hands on the NYSE. Small- and mid-cap stocks saw the largest decline, with the Russell 2000 falling 4.8% and the S&P 400 dropping 4.3%. Each index hit a fresh multi-year low this session. Nine of the ten economic sectors posted a loss in broad-based selling interest as economic worries continue to sink stocks. The energy sector tumbled 5.7%. A 3.1% decline in crude oil prices and a 3.2% RBOB gasoline prices added to the selling interest. The financial sector was a laggard with a decline of 4.1%. Multi-line insurers tumbled 17.7% after traders were disappointed with a quarterly earnings decline at Humana (HUM). Goldman Sachs (GS 92.88, -7.52) and Citigroup (C 11.73, -0.41) were in focus on reports that last month Goldman approached Citi about a possible merger, which Citi quickly rejected. However, Regional banks rose 1.6% after several banks disclosed how much capital they would be receiving from the Treasury The telecom (+1.9%) sector outperformed. Verizon (VZ 27.61, +2.53) reported a 4.8% year-over-year increase in third quarter earnings per share that met expectations. Strength in cellular and FiOS helped offset weakness in its traditional telecom business. Separately, CenturyTel (CTL 25.62, +3.88) is acquiring Embarq (EQ 30.38, +0.64) in all-stock transaction valued at $11.6 billion, including $6 billion in Embarq debt. In economic news, new home sales for September rose 2.7% month-over-month to a seasonally adjusted annual rate of 464,000, from a downwardly revised August reading of 452,000 (revised from 460,000). Economists forecast sales of a month-over-month decline of 2.2% to 450,000. Sales are down 33.1% year-over-year. The median sales price of a new house is down 0.9% month-over-month and down 9.1% year-over-year. The inventory level declined 1.0 to 10.4 months, which is a good sign. Shares of homebuilders fell 3.3%. Overseas markets fell, with Asia getting hit especially hard. Japan's Nikkei declined 6.4% to its lowest closing level since 1982 as traders worried that the strengthening yen will take a toll on Japanese exporters. The recent sharp rally in the yen prompted the G-7 to issue a statement warning about the "excessive gains" in the currency. Hong Kong's Hang Seng dropped 12.7%. The Eurostoxx 600 declined 1.9%, paring some losses in conjunction with a midday U.S. stock market recovery and word that ECB President Trichet said the ECB may cut rates again at its November 6 meeting. The S&P 500 closed at a new 5.5 year low, but remains 1.1% above its 5.5 year intraday low that was reached on October 10. The index is down 27% in October and 42% this year.
4:25p ET October 27, 2008 (Briefing.com)
The S&P 500 was poised to buck a negative trend seen in overseas markets after a better-than-expected new home sales lifted sentiment, but a surge in selling interest going into the closing bell caused the S&P 500 settle with sharp loss at session lows. It was a volatile start to the week. The S&P 500 opened with a 2.4% loss, climbed to a gain of as much as 1.9% and settled with a loss of 3.2%. Volume was on the light side, with only 1.3 billion shares exchanging hands on the NYSE. Small- and mid-cap stocks saw the largest decline, with the Russell 2000 falling 4.8% and the S&P 400 dropping 4.3%. Each index hit a fresh multi-year low this session. Nine of the ten economic sectors posted a loss in broad-based selling interest as economic worries continue to sink stocks. The energy sector tumbled 5.7%. A 3.1% decline in crude oil prices and a 3.2% RBOB gasoline prices added to the selling interest. The financial sector was a laggard with a decline of 4.1%. Multi-line insurers tumbled 17.7% after traders were disappointed with a quarterly earnings decline at Humana (HUM). Goldman Sachs (GS 92.88, -7.52) and Citigroup (C 11.73, -0.41) were in focus on reports that last month Goldman approached Citi about a possible merger, which Citi quickly rejected. However, Regional banks rose 1.6% after several banks disclosed how much capital they would be receiving from the Treasury The telecom (+1.9%) sector outperformed. Verizon (VZ 27.61, +2.53) reported a 4.8% year-over-year increase in third quarter earnings per share that met expectations. Strength in cellular and FiOS helped offset weakness in its traditional telecom business. Separately, CenturyTel (CTL 25.62, +3.88) is acquiring Embarq (EQ 30.38, +0.64) in all-stock transaction valued at $11.6 billion, including $6 billion in Embarq debt. In economic news, new home sales for September rose 2.7% month-over-month to a seasonally adjusted annual rate of 464,000, from a downwardly revised August reading of 452,000 (revised from 460,000). Economists forecast sales of a month-over-month decline of 2.2% to 450,000. Sales are down 33.1% year-over-year. The median sales price of a new house is down 0.9% month-over-month and down 9.1% year-over-year. The inventory level declined 1.0 to 10.4 months, which is a good sign. Shares of homebuilders fell 3.3%. Overseas markets fell, with Asia getting hit especially hard. Japan's Nikkei declined 6.4% to its lowest closing level since 1982 as traders worried that the strengthening yen will take a toll on Japanese exporters. The recent sharp rally in the yen prompted the G-7 to issue a statement warning about the "excessive gains" in the currency. Hong Kong's Hang Seng dropped 12.7%. The Eurostoxx 600 declined 1.9%, paring some losses in conjunction with a midday U.S. stock market recovery and word that ECB President Trichet said the ECB may cut rates again at its November 6 meeting. The S&P 500 closed at a new 5.5 year low, but remains 1.1% above its 5.5 year intraday low that was reached on October 10. The index is down 27% in October and 42% this year.
