Stock Market Update

Updated: 04-Apr-06

09:35 ET Dow -1.36, Nasdaq +2.34, S&P +0.50
[BRIEFING.COM] As expected, the stock market opened in a relatively flat manner. Investors have little in the way of a catalyst to provoke much excitement on either side of the aisle. The earnings calendar is an uneventful one, and the market is looking ahead to the launch of the Q1 earnings season that starts next week. On a related note, a profit warning from Checkpoint Software (CHKP) is getting some attention. On the flip side, Merck (MRK) just upped its guidance. Also on the corporate front are reports that Computer Sciences (CSC) is conducting talks that could lead to an approximate $10.6 billion sale of the company. The economic calendar is similarly an uneventful one, as no data will be released today. There is some Fed Speak - four regional presidents are on the docket - though, that the bond market is especially apt to watch. That market remains in the stock market's spotlight. At this point, it's slightly improved, but comments out of the Fed speakers and anticipation ahead of the Friday jobs report may serve as factors behind its performance throughout the day.
09:16 ET Market is Closed
 [BRIEFING.COM] S&P futures vs fair value: +1.0. Nasdaq futures vs fair value: +2.8.  
09:02 ET Market is Closed
 [BRIEFING.COM] S&P futures vs fair value: +1.7. Nasdaq futures vs fair value: +3.5.  Futures trade is still suggesting that the stock market will open near the unchanged mark.  Treasuries remain in the equity market's spotlight.  At this point, the 10-year is slightly improved - it's up two ticks and yielding 4.85%.  At the close of trade yesterday, that note was yielding 4.85%.  While the bond market lacks much of a catalyst, as the economic calendar is blank, it may direct some attention to Federal Reserve presidents' comments. Also on its radar is the upcoming Employment report.  That's slated for Friday, and may give traders reason to remain cautious. 
08:31 ET Market is Closed
 [BRIEFING.COM] S&P futures vs fair value: +1.2. Nasdaq futures vs fair value: +3.5.  The cash market remains poised to open in flat to slightly higher fashion.  The broader market did not much respond to yesterday's energy price action.  Today, crude futures have pulled back about 1.3% and are trading just under $66 per barrel.  At this point, that move appears to be a supportive factor.  As a side note, energy traders await tomorrow's inventory report from the Energy Department. 
07:56 ET Market is Closed
 [BRIEFING.COM] S&P futures vs fair value: +0.9. Nasdaq futures vs fair value: +2.5.  Futures trade is signaling a subdued start for the stock market.  At this point, there is not much of a catalyst to excite investors in one way or the other.  The earnings docket is uneventful, and the session's economic calendar is a blank one.  There will be some Fed speak, though.  A number of Fed presidents - Moskow, Hoenig, Fisher, and Lacker - will speak throughout the day.  Action within the Treasury market will remain in focus, with the 10-year as the focal point.  It's slightly improved (+03/32 at 4.85%) at this juncture.
06:25 ET Market is Closed
 [BRIEFING.COM] S&P futures vs fair value: +0.3. Nasdaq futures vs fair value: +1.8.  
06:24 ET Market is Closed
[BRIEFING.COM] FTSE...6005.00...-19.30...-0.3%. DAX...6014.82...-9.23...-0.2%.
06:24 ET Market is Closed
[BRIEFING.COM] Nikkei...17292.91...-40.40...-0.2%. Hang Seng...16100.09...+36.34...+0.2%.
16:20 ET Dow +35.62 at 11144.94, Nasdaq -3.05 at 2336.74, S&P +2.98 at 1297.81
[BRIEFING.COM] The second quarter attempted to begin with a bang. Buyers were in control of the trading action from the early going, and virtually every area of the market participated in a broad-based rally. That rally lost steam, though. By mid-afternoon, the market began to pare its gains. By the closing bell, the Nasdaq was in the red and its blue chip counterparts were approaching unchanged territory.

Beginning of quarter inflows had been behind the market's rise. A slightly softer than expected reading on the March ISM Index and some news on the merger and acquisition front gave investors a reason to buy. In the M&A spotlight was General Motors (GM 20.14 -1.13), which sold a 51% stake in GMAC to an investor consortium, and Lucent (LU 3.08 +0.03), which finally agreed to a merger with Alcatel (ALA 16.21 +0.91). Some less significant items included a third bidder for Aztar and reports that Constellation Brands (STZ 25.25 +0.20) will acquire Canadian winemaker Vincor. Essentially, the M&A front did not offer much of a fresh catalyst. Outside of it, developments on the corporate front were limited. Autos were a drag on the market following their March same-store sales results. Ford (F 7.77 -0.19) posted a slightly better than expected 5% decline, Chrysler (DCX 58.12 +0.71) booked a slightly better than expected 2% gain, and GM announced a much worse than expected 14% slide. GM was a particular drag on the Dow.

GM's fellow Dow component Wal-Mart (WMT 46.77 -0.47) also weighed on trade. The retailer indicated that it expects a 1.3% gain in March same-store sales, which is at the low-end of its previously issued forecast. That news affected the retail industry, and Wal-Mart's decline also helped cap the Consumer Staples sector's (+0.2%) advance.

With respect to the aforementioned ISM Index, the national gauge of manufacturing activity checked in at 55.2. That was below the 57.7 consensus estimate, but was at a level that is still indicative of expansion. Lately, strong numbers have exacerbated concerns over inflation and the length of Fed tightening. As such, the report appeared to have underpinned the stock market's early tone. It did not completely help the Treasury market, which remained on the defensive. Throughout most of the session, the equity market turned another blind eye to rising market rates. Intra-day, the yield on the 10-year note lingered around 4.90%. That level has not been seen in nearly four years. While yields eased a little bit after the ISM number, conditions within the bond market were still negative for stocks.

Late in the day, rate-sensitive areas of the stock market finally reacted. The Financial sector (+0.1%) had been behind the early rally, but it retreated to the flat line. The Utilities sector (+0.2%) similarly declined, and the homebuilding industry reversed course. Technology's loss of steam was another factor behind the market's afternoon sell-off. After a volatile week, semiconductors had been a strong source of support. The industry more than halved its gain, though, at which point the sector gave back ground and the Nasdaq dipped. On the bright side, strength in Microsoft (MSFT 27.56 +0.35), a result of a Barron's cover story, lent support.

Commodities spiked again today. Many metals continued to trade at or near historic highs, and related stocks continued to benefit. The Materials sector, as a result, fared well. On the energy side of the aisle, crude was pushing $68 per barrel for a good part of the day. Price gains across the complex were not sustained, though, and with their declines came a substantial pullback in the Energy sector. The deterioration of its leadership contributed to the broader market's decline. Outside of that sector, the rocky energy price action also went under the market's radar.

Separately, first quarter earnings season commences a week from today. While the numbers should be strong ones - Wall Street expects an 11 to 12% aggregate gain for the S&P 500 - it is our view that quarters ahead will prove less exciting and potentially disappointing. The Fed is almost certain to keep raising interest rates, and economic growth is almost certain to slow. Accordingly, our view on the market remains a neutral one. ..NYSE Adv/Dec 1588/1698. ..NASDAQ Adv/Dec 1126/1942.