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MARKET SNAPSHOT: Stocks Resume Slide; Fed Minutes Do Little To Help
By Peter McKay
Stocks slumped Tuesday as investors worried about consumer spending and a possible clampdown on bank lending in China.
The Dow Jones Industrial Average (DJI) was down 29 points, or 0.3%, to 10,422 in afternoon action. The measure has fallen in three of the past four full trading sessions, with a 133-point surge Monday.
The S&P 500 (SPX) was off 0.3% at 1,103, led by a 1% decline in its financial sector. Its consumer-discretionary sector was down 0.4%.
The technology-oriented Nasdaq Composite Index (RIXF) was down 0.6%. The small-stock Russell 2000 (RUT) was down 1%.
Volume remained weak, extending a trend that has run since the second day of trading this month. Composite trading activity recently hit 2.6 billion shares, on pace to fall well shy of the daily average around 5.7 billion shares.
Crude futures also declined, recently trading down $1.44 at 76.12 a barrel and hurting energy companies such as Murphy Oil (MUR), Rowan Cos. (RDC) and Cabot Oil & Gas (CBT).
Among stocks in focus, Medtronic (MDT) jumped 4.5%. The medical-device maker raised its financial outlook for the year and said fiscal second-quarter earnings soared 59%, beating analyst estimates, amid prior-year charges.
Barnes & Noble (BKS) fell 6.5% as its fiscal second-quarter loss widened and the bookseller slashed its earnings forecast for the year. It warned that due to "overwhelming" demand, it would have to ramp up production for its not-yet-released e-reader, which will mean higher costs.
The dollar and Treasury prices were little changed. The 10-year note was up 7/32 to yield 3.329%.
The stock market's losses have narrowed slightly since the afternoon's release of a summary of the Federal Reserve rate committee's policy meeting earlier this month. Meeting minutes showed that officials upgraded their reading of economic growth, but predicted inflation would be slightly lower than previously believed on the back of a soft recovery.
Those remarks did little to undermine the consensus among investors that the central bank will keep borrowing costs low well into next year. For now, many participants are also shrugging off signs of weakness in the economy, focusing instead on whether stocks are fairly valued for the gradual recovery that is likely to emerge in 2010.
"We've had such a run from the lows, I think a lot of people are just squaring their positions at this point, getting their trading done for the year," said Kent Engelke, managing director at Capitol Securities Management in Glen Allen, Va.
Investors are also beginning to focus on the key holiday shopping season, a make-or-break period for many U.S. retailers. Tuesday's economic releases sent mixed signals about how the period is shaping up.
"Everything we've seen suggests that the consumer hasn't been taken entirely out of this economy," said Steve Condon, managing director at the portfolio-management firm Truepoint Capital, which has been keeping its clients' stock exposure steady for now.
Condon said that go-slow approach reflects his firm's skepticism that the market can sustain the momentum it's shown since spring. But, regarding the shopping season in particular, he added: "We're cautiously optimistic."
The Commerce Department lowered its estimates of third-quarter gross domestic product and consumer spending. But other reports were more promising.
The S&P Case-Shiller home-prices indexes showed a fifth monthly increase in U.S. home prices in September and a sequential rise in home prices in the third quarter. The Conference Board's monthly reading of consumer sentiment rose more than analysts were expecting.
Before the opening bell in New York, investors were also spooked by a warning from China's main banking regulator, which told the nation's lenders to strictly comply with capital requirements or face sanctions. The tough statement indicates Beijing is ready to more actively tighten the credit growth that has been the linchpin of China's economic recovery, fueling fears about the potential fallout on the U.S. from any slowdown in China.
"If they have capital constraints, their lending might slow, which is part of the growth engine over there, and part of our recovery is really dependent on the global story with growth out of Asia," said Maury Fertig, chief investment officer at Relative Value Partners. "China is where a lot of demand is coming from, so any kind of slowing there will ultimately have some kind of impact."
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=N%2Bx7ar2RUJ5nP%2BaDNzlJwA%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
November 24, 2009 14:39 ET (19:39 GMT)
Copyright (c) 2009 Dow Jones & Company, Inc.
Stocks slumped Tuesday as investors worried about consumer spending and a possible clampdown on bank lending in China.
The Dow Jones Industrial Average (DJI) was down 29 points, or 0.3%, to 10,422 in afternoon action. The measure has fallen in three of the past four full trading sessions, with a 133-point surge Monday.
The S&P 500 (SPX) was off 0.3% at 1,103, led by a 1% decline in its financial sector. Its consumer-discretionary sector was down 0.4%.
The technology-oriented Nasdaq Composite Index (RIXF) was down 0.6%. The small-stock Russell 2000 (RUT) was down 1%.
Volume remained weak, extending a trend that has run since the second day of trading this month. Composite trading activity recently hit 2.6 billion shares, on pace to fall well shy of the daily average around 5.7 billion shares.
Crude futures also declined, recently trading down $1.44 at 76.12 a barrel and hurting energy companies such as Murphy Oil (MUR), Rowan Cos. (RDC) and Cabot Oil & Gas (CBT).
Among stocks in focus, Medtronic (MDT) jumped 4.5%. The medical-device maker raised its financial outlook for the year and said fiscal second-quarter earnings soared 59%, beating analyst estimates, amid prior-year charges.
Barnes & Noble (BKS) fell 6.5% as its fiscal second-quarter loss widened and the bookseller slashed its earnings forecast for the year. It warned that due to "overwhelming" demand, it would have to ramp up production for its not-yet-released e-reader, which will mean higher costs.
The dollar and Treasury prices were little changed. The 10-year note was up 7/32 to yield 3.329%.
The stock market's losses have narrowed slightly since the afternoon's release of a summary of the Federal Reserve rate committee's policy meeting earlier this month. Meeting minutes showed that officials upgraded their reading of economic growth, but predicted inflation would be slightly lower than previously believed on the back of a soft recovery.
Those remarks did little to undermine the consensus among investors that the central bank will keep borrowing costs low well into next year. For now, many participants are also shrugging off signs of weakness in the economy, focusing instead on whether stocks are fairly valued for the gradual recovery that is likely to emerge in 2010.
"We've had such a run from the lows, I think a lot of people are just squaring their positions at this point, getting their trading done for the year," said Kent Engelke, managing director at Capitol Securities Management in Glen Allen, Va.
Investors are also beginning to focus on the key holiday shopping season, a make-or-break period for many U.S. retailers. Tuesday's economic releases sent mixed signals about how the period is shaping up.
"Everything we've seen suggests that the consumer hasn't been taken entirely out of this economy," said Steve Condon, managing director at the portfolio-management firm Truepoint Capital, which has been keeping its clients' stock exposure steady for now.
Condon said that go-slow approach reflects his firm's skepticism that the market can sustain the momentum it's shown since spring. But, regarding the shopping season in particular, he added: "We're cautiously optimistic."
The Commerce Department lowered its estimates of third-quarter gross domestic product and consumer spending. But other reports were more promising.
The S&P Case-Shiller home-prices indexes showed a fifth monthly increase in U.S. home prices in September and a sequential rise in home prices in the third quarter. The Conference Board's monthly reading of consumer sentiment rose more than analysts were expecting.
Before the opening bell in New York, investors were also spooked by a warning from China's main banking regulator, which told the nation's lenders to strictly comply with capital requirements or face sanctions. The tough statement indicates Beijing is ready to more actively tighten the credit growth that has been the linchpin of China's economic recovery, fueling fears about the potential fallout on the U.S. from any slowdown in China.
"If they have capital constraints, their lending might slow, which is part of the growth engine over there, and part of our recovery is really dependent on the global story with growth out of Asia," said Maury Fertig, chief investment officer at Relative Value Partners. "China is where a lot of demand is coming from, so any kind of slowing there will ultimately have some kind of impact."
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=N%2Bx7ar2RUJ5nP%2BaDNzlJwA%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
November 24, 2009 14:39 ET (19:39 GMT)
Copyright (c) 2009 Dow Jones & Company, Inc.
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