Stock Market Update - Tue Aug 21 12:00:01 EDT 2007
[BRIEFING.COM] The indices are trading at fresh session highs midday, as stocks finally take Senator Dodd's comments in stride and get some added relief from a sizable 2.5% sell-off in oil prices. Market gains, though, remain modest at best.
The major averages struggled to find their footing all morning as the Fed adding $3.75 bln to reserves via one-day repos leaving the market again questioning whether Fed actions will be enough to preempt credit crunch and fostering more aversion to risk. The Bank of England's lending facility to banks being tapped for the first time in about a month and U.S. foreclosure filings soaring 93% year/year were also acting as an overhang. The yield on the 10-year note (+7/32) at 4.59% is now roughly 60 basis points more than the 2-year yield, the most since May 2005.
However, Senator Dodd recently offering some reassurance that Congress is actively monitoring the recent volatility in the credit markets and saying that Fed Chairman Bernanke is "absolutely" prepared to use "all the tools at his disposal" to address the credit crisis is now being viewed in a positive light.
The Financial sector, which was garnering some support from reports that Warren Buffett's Berkshire Hathaway may use some of its nearly $50 bln of cash to buy parts of Countrywide Financial (CFC 21.11 +1.30), has since turned positive and is now up 1.0%. It is only being surpassed on an intraday performance basis by a 1.3% advance on the much less influential Telecom sector.
Energy (-0.9%) is the only sector trading lower and failing to participate in the market's recent recovery; but that's due in large to a sharp reversal in oil prices as the likelihood of Hurricane Dean damaging oil platforms in the Gulf of Mexico continues to diminish. Crude for September delivery, which expires today, has fallen off a cliff within the last hour and slipped through the psychological $70/bbl mark for the first time in seven weeks.
NYSE Adv/Dec 1692/1443...Nasdaq Adv/Dec 1644/1226
