Moving the Market

[BRIEFING.COM] The major market averages fell in excess of 1% as the euro descended to a near two-year low, but support in afternoon action helped the broad market rally out of the red.

The tone ahead of the open was firmly negative as participants responded to renewed weakness abroad – the bourses of Europe had already closed when comments were made on Monday regarding possible plans by Greece to exit the euro. The averages of Asia also had to account for that headline, along with Monday’s announcement that Japan’s long-term debt rating was cut by analysts at Fitch. More recently, the World Bank trimmed its growth forecast for China to a rate slightly above 8%.

Talks today among European leaders about the need for stability were widely credited for helping the euro firm up this morning. The euro even made an incremental gain against the greenback, but eventually sellers renewed their efforts. The ensuing slide sent the euro to less than $1.26, or its lowest level in nearly two years. It eased up from there, but was still down about 0.6% against the greenback at the close of the session.

Energy stocks were a heavy drag on trade for most of the session, down nearly 2% at their lowest level of the day. The sector rallied to a 0.4% gain.

Materials stocks made an even more impressive swing into positive territory. The sector was also down almost 2%, but rallied all the way to a gain of more than 1%.

The swings by natural resource plays were more impressive in light of the losses suffered by commodities. Overall weakness in the commodity complex left the CRB Index to fall 1.8%, which stands as its worst single-session slide since early April. Oil fell to a new 2012 low of $89.28 per barrel before closing at $89.80 per barrel.

Short covering likely helped fuel the stock market’s afternoon reversal. Given the stretch of losses suffered by stocks in recent weeks and persistently precarious conditions in the eurozone, many market participants had placed bets that the path of least resistance would be downward. Once stocks stabilized and started to turn higher, many were prompted to exit their positions so as to take profits or protect against additional upside action.

Although the broad market was able to rebound in impressive fashion, Dell (DELL 12.49, -2.59) still endured its worst one-day drop in more than a decade to set a new 52-week low. The stock’s precipitous drop was owed to a disappointing quarterly report. Fellow Tech outfit Hewlett-Packard (HPQ 21.08, -0.70) suffered a marked loss ahead of its latest earnings announcement.

New home sales numbers for April made up the only dose of domestic data today. They hit an annualized rate of 343,000, which is up from the prior month rate of 332,000, and a little better than the rate of 339,000 that had been broadly expected.

Advancing Sectors: Materials +1.1%, Industrials +0.6%, Consumer Discretionary +0.6%, Energy +0.4%, Financials +0.4%, Tech +0.2%
Declining Sectors: Telecom -0.2%, Consumer Staples -0.3%, Health Care -0.6%, Utilities -0.7%

[BRIEFING.COM] Crude oil extended yesterday’s losses amid broad market weakness. The energy component spent its entire pit session in negative territory, falling to a new 2012 low of $89.28 per barrel in the face of better-than-expected inventory data that showed a build of 883,000 barrels when a build of 1.5 million barrels was anticipated. Gasoline had draw of 3.30 million barrels when the consensus called for a draw of 500,000 barrels. Crude eventually settled with a 2.2% loss at $89.80 per barrel. 

Although natural gas began pit trade in the red at its session low of $2.66 per MMBtu, it climbed into positive territory and finished with a 1.5% gain at $2.74 per MMBtu.

Precious metals dove deeper into negative territory in response to a stronger dollar. Better-than-anticipated U.S. home sales and turmoil surrounding the EU summit were in the mix. Gold sold-off to a floor session low of $1532.80 per ounce before gaining support from buyers. However, gold still finished 1.8% lower at $1548.20 per ounce. Silver followed suit as it dipped to a session low of $27.08 per ounce in morning action and settled with a 2.3% loss at $27.49 per ounce. 

Overall weakness in the commodity complex left the CRB Index to fall 1.8%, which stands as its worst single-session slide since early April.

[BRIEFING.COM] Stocks are at afternoon highs as they enter the final hour of the day. Materials stocks are now at the flat line, but every other sector remains in the red.

Following the close, Hewlett-Packard (HPQ 20.99, -0.79) will headline a handful of quarterly reports. Tomorrow morning brings Costco (COST 82.65, -0.45), Tiffany & Co. (TIF 61.05, -0.39), and HJ Heinz (HNZ 53.66, -0.40). The economic calendar for Thursday features weekly initial jobless claims. Monthly durable goods orders data are also due.

[BRIEFING.COM] Renewed selling pressure has caused stocks to forfeit most of what they gained during the course of the last couple of hours. Stocks are still above session lows, though.

The stock market's latest slip coincides with a drop by the euro that has left the currency to trade with a 0.9% loss near its session low. The euro's slide to $1.256 leaves the currency at its lowest level in nearly two years. Its downtrend in recent months has been driven by concerns about fiscal, financial, and economic health in both the core and periphery of the eurozone.

[BRIEFING.COM] Stocks continue to gradually build on their recent rebound, but the major averages still have a long way to go before fully offsetting their losses.

Materials stocks have made one of the more impressive comebacks in today's trade. The sector was down well in excess of 1% at its session low, but it has since slashed that. The Materials sector is now down 0.4%, but only recently appeared positioned to make a push at the neutral line. Among Materials plays, Mosaic (MOS 47.72, +0.54) is a primary source of strength. Newmont Mining (NEM 47.69, +0.50) is also contributing.

[BRIEFING.COM] Stocks are trying to extend their push up from session lows, but the broad market is still down 1%. Treasuries continue to trade with strength.

Results from an auction of 5-year Notes drew a bid-to-cover of 2.99, dollar demand of $104.7 billion, and an indirect bidder participation rate of 42.6%. For comparison, the prior offering produced a bid-to-cover of 3.09, dollar demand of $108.2 billion, and an indirect bidder rate of 47.5%, while an average of the past six auctions results in a bd-to-cover of 3.00, dollar demand of $105.1 billion, and an indirect bidder participation rate of 45.1%.

[BRIEFING.COM] The resumption of selling has sent the major equity averages down in excess of 1%. Many market participants continue to take their cues from the euro.

The euro had actually mustered an incremental gain over the greenback shortly before the open of pit trade, helping reduce negative sentiment in premarket trade. However, the currency has since tumbled to a 0.8% loss against the dollar. Its slide has evoked a concerted selling effort against stocks.

Weakness among stocks is widespread, but Energy stocks are in especially poor shape. The sector's near 2% drop comes alongside a 2.5% drop in oil prices to less than $90 per barrel for the first time in 2012. Oil's drop comes despite a smaller-than-expected build in weekly inventories.

Tech stocks are collectively down 1.4% with Dell (DELL 12.37, -2.71) at a new 52-week low upon suffering its worst one-day drop in more than a decade due to a disappointing quarterly report.

The only piece of domestic economic data released today was a slightly stronger-than-expected new home sales number. Even still, shares of homebuilders have been imbued by broad market weakness.

[BRIEFING.COM] Stocks remain near session lows. Persistent pressure has helped strengthen the case for Treasuries. Rotation into them has lifted the benchmark 10-year Note by about a half point, which has been enough to take its yield back near 1.7%. The top of the hour brings results from an auction of 5-year Notes, which currently carry a yield of 0.74%.

[BRIEFING.COM] The Nasdaq has extended its slide to a new session low that has it sitting on the 2800 line. Meanwhile, the S&P 500 remains near the 1300 line.

Tech stocks, which make up the heaviest sector by market weight, are under heavy pressure. The sector's 1.7% loss is among the worst of any in today's trade. Dell (DELL 12.44, -2.64) is among the Tech sector's worst performing stocks; its slump today stands as its worst one-day drop in more than five years, and has left the stock to trade at a new 52-week low. The stock's sell-off stems from a disappointing quarterly report that featured an earnings miss.

[BRIEFING.COM] Stocks have stabilized after suffering from the latest leg lower, but the major averages continue to contend with losses of a little more than 1%. Small and mid-cap stocks are in equally poor shape.

Selling pressure comes in close correlation with a weaker euro, which is now down 0.7% against the dollar. Earlier today the euro actually took an incremental lead against the greenback amid comments from European leaders regarding the need for efforts to stabilize conditions. Some also stated that they were unaware of contingency plans for Greece to exit the euro.

[BRIEFING.COM] The major equity averages are at session lows with losses of 1% or more. Intensified selling has left even the best performing sectors trading with losses of at least 0.7%. Energy, down 1.8%, is still in the worst shape of the 10 major sectors.

Despite the negative breadth, shares of automakers are in strong shape. Shortly before the prior session's close analysts at Moody's raised their credit rating on Ford (F 10.36, +0.17) to Baa3. General Motors (GM 21.64, +0.14) had its rating raised to Ba1. Stable outlooks were maintained on the ratings. Meanwhile, Japanese automakers Toyota (TM 76.42, -0.80) and Honda Motor (HMC 32.15, -0.49) are both down markedly as market participants consider the consequences of a stronger yen, which is up about 1.0% against the greenback today.

[BRIEFING.COM] Oil prices were at about $90.70 per barrel in the moments that immediately preceded the latest weekly inventory report, which showed a build of 883,000 barrels when a build of 1.5 million barrels had been widely expected. Oil prices have had virtually no reaction to the data.

Natural gas prices have managed to pare losses. Prices were down more than 2% at the start of pit trade, but now they trade with a 0.7% loss at $2.76 per MMBtu.

Precious metals have fallen deeper into negative territory so that gold prices are now down 2.3% to $1540 per ounce, while silver sits at $27.20 per ounce with a 3.5% loss. The pair has been under pressure all morning, but selling has intensified with a recent bounce by the dollar, which now leads a collection of competing currencies by about 0.7%.

[BRIEFING.COM] Stocks began to rebound, but the move has stalled with the release of the latest new home sales numbers. New home sales in April hit an annualized rate of 343,000, which is up from the prior month rate of 332,000, and a little better than the rate of 339,000 that had been broadly expected.

Although the broad market has been unable to extend its rebound, shares of the SPDR S&P Homebuilders ETF (XHB 20.53, +0.06) have moved into positive territory.

[BRIEFING.COM] The major equity averages are down with sizable losses in the early going. Defensive-oriented stocks have done a decent job of avoiding the flush -- Consumer Staples, Telecom, and Utilities are either unchanged or down only 0.1%.

Natural resource plays are in the worst shape this morning. Efforts to take them lower have left the Energy sector with a 1.5% loss, while Materials trade with a 1.2% loss. Down 1.1%, Financials aren't much better off.

[BRIEFING.COM] S&P futures vs fair value: -7.80.  Nasdaq futures vs fair value: -16.00.   Stock futures have spent the past hour trimming losses, but they still point to a lower open for the cash market. Their upturn comes in conjunction with comments from some of Europe's leaders regarding efforts needed to stabilize markets, and a slight improvement in the euro, which is now up a tepid 0.1% against the greenback. Europe's major bourses remain under pronounced pressure, however.

[BRIEFING.COM] S&P futures vs fair value: -6.30.  Nasdaq futures vs fair value: -15.00.   Many commodity prices were cut down in the prior session, resulting in a loss of more than 1% for the CRB Index. Today the CRB is down another 0.9% amid continued weakness. Crude oil prices are currently down 0.4% to $91.50 per barrel ahead of weekly inventory data at 10:30 AM ET. Natural gas prices pushed higher in the prior session, but are down 2.2% to $2.72 per MMBtu today. Precious metals are grappling with aggressive selling pressure, too. Specifically, gold prices are down to $1564 per ounce, while silver sits at $27.86 per ounce with a 1.1% loss.

[BRIEFING.COM] S&P futures vs fair value: -9.70.  Nasdaq futures vs fair value: -20.80.   A negative tone of trade in Europe follows comments yesterday from former Greece Prime Minister Papademos suggesting that Greece may leave the euro. Implications related to such an exit undercut the euro yesterday and fueled selling among US equities. Although the euro is currently flat against the greenback, Europe's major bourses are in the red with sizable losses. Germany's DAX is currently down 1.8%. ThyssenKrupp, Deutsche Lufthansa, and Adidas are among the poorest performers. Metro AG and Merck KGaA are currently the only two names in the DAX that have managed to muster gains. Britain's FTSE is presently off by 2.0% amid widespread weakness. Man Group Plc, Glencore International, and Xstrata are among its worst performing issues. Smith & Nephew, British Sky Broadcasting, National Grid, and ARM Holdings currently stand as the only stocks sporting gains in the FTSE. France's CAC is currently off by 2.3%. Credit Agricole, Michelin, and Peugeot are at the bottom of the action, but Carrefour and Alcatel-Lucent (ALU 1.56, +0.08) have managed to stage gains. Among Europe's peripheral markets, Greece's Athex 20 is off by 1.3%, while Spain's IBEX is down 2.4% and Italy's MIB is down 2.9%.

Japan's Nikkei closed its latest round of trade with a 2.0% loss. The action followed a downgrade of the country's long-term debt rating by analysts at Fitch. The country's central bank concluded its latest meeting. It opted to keep its asset purchase program unchanged. Mizuho Financial (MFG 2.91, +0.00) and Nomura Holdings (NMR 3.36, +0.00) weighed heavily on action. Fellow financial outfit Mitsubishi UFJ (MTU 4.25, +0.00) was also hit with selling pressure. Mazda Motor was among the few issues that managed to muster a gain, but Nissan Motor (NSANY 3.36, +0.00) and Toyota Motor (TM 77.22, +0.00) both booked losses. Hong Kong's Hang Seng sank to a 1.3% loss amid broad-based selling pressure. China Construction Bank, Industrial & Commercial Bank, Bank of China, and China Gas Holdings were among the heaviest drags on trade. Mainland China's Shanghai Composite closed its latest round of trade with a 0.4% loss. Banking plays were also a source of weakness there, but broad market losses were limited with help from CITIC Securities, Haitong Securities, and Founder Securities. Anhui Liuguo Chemical was also a strong performer. A growth forecast for China from the World Bank was revised downward to reflect growth of 8.2%, instead of the 8.4% rate projected previously.

Note: ticker quotes reflect premarket prices.

[BRIEFING.COM] S&P futures vs fair value: -12.10.  Nasdaq futures vs fair value: -24.30.   A late slide that coincided with a drop by the euro and comments that Greece may exit the eurozone left the stock market to settle at the flat line yesterday. Europe's major bourses have also responded negatively to the story, thereby helping selling interest take down domestic stock futures so that a firmly lower start for trade is expected. The dollar has moved higher amid the weakness; it currently leads a collection of competing currencies by more than 0.2%. The latest round of earnings results is rather small in scope, and somewhat mixed. Guess? (GES 26.02, +1.58) and Hormel (HRL 30.40, +1.21) both bested earnings expectations, but American Eagle Outfitters (AEO 19.10, -0.69) offered up in-line numbers, while Dell (DELL 13.10, -1.98) came short of the consensus forecast. Note: ticker quotes reflect premarket prices. Today's calendar features monthly new home sales numbers, weekly oil inventory data, and results from an auction of 5-year Notes.

[BRIEFING.COM] S&P futures vs fair value: -9.70.  Nasdaq futures vs fair value: -22.00.  

[BRIEFING.COM] FTSE...5297.73...-105.60...-2.00%.  DAX...6312.42...-123.20...-1.90%.

[BRIEFING.COM] Nikkei...8556.60...-172.70...-2.00%.  Hang Seng...18786.19...-253.00...-1.30%.

[BRIEFING.COM] Leadership from Financials had lifted the broad market to a nice gain, but a dive by the euro prompted participants to sell. Ensuing pressure sent the major averages into the red before a final rebound took the stock market to the flat line.

Financials led the broad market through choppy trade this morning. The sector was up about 2% with help from shares of banks and diversified financial services outfits. The Financial sector's gains petered out into the afternoon and were fully forfeited in the final hour, but a bounce off of the flat line enabled the sector to book a 0.7% gain.

Tech stocks, which were leaders in the prior session, generally lagged during trade today. The sector settled with a 0.3% loss. Energy stocks matched that move, but Materials slid 0.6% to suffer the worst loss of any major sector. Materials stocks had outperformed in the prior session by posting a 3% gain.

Many retailers were unable to sustain their gains, forcing the SPDR S&P Retail ETF (XRT 58.39, +0.05) back to the flat line after it had been up more than 1%. Quarterly reports from Best Buy (BBY 18.46, +0.29), Urban Outfitters (URBN 28.10, +1.94), and Polo Ralph Lauren (RL 150.27, +3.97) were in focus. Polo Ralph Lauren actually doubled its dividend to $0.40 per share.

News flow slowed in afternoon trade, so many became closely focused on comments from a former Greece prime minister who stated that the country may exit the euro. Although many believe that such a development would actually strengthen the euro, the currency sold off amid speculation about near-term costs and implications of the event. As of the final bell the euro trailed the dollar by about 1.0%. Prior to the open of trade it was learned that the OECD now expects a mild economic contraction in the euro area.

The Japanese yen was also hit with selling pressure. Its weakness followed a decision by analysts at Fitch to downgrade Japan's long-term debt rating to A+ from AA. 

The greenback's gain didn't help the case for commodities. Broad selling pressure there sent the CRB Index to a 1.1% loss.

The only dose of domestic data centered on existing home sales, which set an annualized rate of 4.62 million during April. A rate of 4.65 million had been broadly expected.

Advancing Sectors: Financials +0.7%, Utilities +0.6%, Consumer Discretionary +0.3%, Industrials +0.2%, Consumer Staples +0.1%
Declining Sectors: Telecom -0.1%, Health Care -0.2%, Energy -0.3%, Tech -0.3%, Materials -0.6%