Stock Market Update - Thu Nov 15 16:20:01 EST 2007
[BRIEFING.COM] Similar to Wednesday, a late-day sell-off pushed the indices lower on Thursday. The decline was led by the financial sector as negative news regarding the credit market eventually overshadowed mostly in-line economic data.
There were further financial company write-downs making headlines this morning. London based Barclays(43.00, -0.88) announced a $2.7 billion write-off. In addition, The Wall Street Journal reported that UBS may need to take a $7 billion write-off. The paper also reported that GMAC's mortgage unit ResCap may need an equity injection.
Comments that compared the current housing situation to the great depression by the CEO of Wells Fargo (WFC 31.97, -1.28) at the Merrill conference put additional pressure on financials. Specifically, Reuters reported that he said "We have not seen a nationwide decline in housing like this since the Great Depression." He added, "I don't think we're in the ninth inning of unwinding this," indicating that the market has not reached a bottom.
The financial sector (-3.1%) plummeted late in the session as it eventually succumbed to fears of additional write-downs and worries that the credit crisis is not behind the market. It finished the day as the main laggard.
Defensive sectors were in favor on Thursday as uncertain investors looked for safety. The utilities (+0.2%), telecom (-0.5%), consumer staples (-0.2%) and healthcare (-0.3%) sectors outperformed on a relative basis. In addition, as equities sold off, the bond market rallied.
On the economic front, the Consumer Price Index (CPI) data showed no sign of significant inflationary pressure and no uptrend. The October core CPI rose by 0.2% for the fifth straight month, which was in-line with economists' expectations. This leaves the year-over-year increase at a low 2.2%. Total CPI increased at 0.3%, which was also spot-on with expectations.
The weekly initial jobless claims increased to 339,000 from 319,000 the week before (325,000 consensus). Despite claims rising, they are still low at a historical standpoint, and certainly do not reflect the jobless claims typically associated with recessions.
The Empire State Index and the Philadelphia Fed, which are regional manufacturing surveys, both topped economists' expectations.
The Energy Information Administration reported that for the week ended Nov. 9 crude oil had a build of just over 2.8 million barrels. Analysts expected a draw of 750,000. The report caused oil prices to plummet 2%, but they eventually recovered to finish down only 0.7% to $93.47.
Commodities as whole declined today, as indicated by the 1.4% drop in the CRB Index. Specifically, precious metals had a 3.6% drop.
NYSE Adv/Dec 663/2608...Nasdaq Adv/Dec 826/2158
