Reply #27: 2:15 and getting by with a little help from some friends

[54anickel]

Seems to be doing a bit better than just an hour or so ago...

Dow 13,414.64 56.33 (0.42%)
Nasdaq 2,583.30 0.02 (0.00%)
S&P 500 1,477.89 3.98 (0.27%)
10-yr Bond 4.7980% 0.0060
30-yr Bond 4.9380% 0.0210
NYSE Volume 2,623,747,000
Nasdaq Volume 1,705,879,000

2:00 pm : The major averages are now trading in split fashion as the resurfacing of more subprime concerns takes the wind out of the market's sails. About 45 minutes ago the market began to weaken after American Home Mortgage Investment Corp (AHM 10.47) said that it is unable to borrow on its credit facilities and is struggling to raise money, including "the orderly liquidation of its assets."

Yesterday, AHM was unable to fund lending obligations of approximately $300 mln and it does not anticipate funding roughly $450-500 mln today. The stock closed at $10.47 on Friday, is currently halted, and indicated to open between $1.00 and $1.75 a share. That translates into the elimination of about 83-90% in AHM's market value should the troubled mortgage lender open within that range.DJ30 +22.47 NASDAQ -6.29 SP500 +1.22 NASDAQ Dec/Adv/Vol 1198/1751/1.58 bln NYSE Dec/Adv/Vol 889/2366/1.11 bln

1:30 pm : The market is trading at improved levels as buying remains widespread across most areas. Of the 147 S&P industry groups, however, not all of them are participating in today's reflex rally. Personal Products (-5.0%) is the biggest laggard after Avon Products (AVP 36.35 -2.50) missed expectations on a 25% drop in Q2 profits. Another Q2 earnings shortfall is responsible for earmarking Internet Retail (-3.6%) as today's second worst performer. Before the bell, IAC/InterActiveCorp (IACI 29.15 -1.20) fell short of Wall Street's forecasts.

Biotech (-0.9%) ranks third as Amgen (AMGN 54.34 -1.85) plunges 3.3% on reports that Medicare tightened reimbursement rules for anemia drugs. while Thrifts & Mortgage (-0.7%) rounds out today's 10 worst. The latter is weak after MGIC Investment (MTG 41.42 -4.02) disclosed that its investment in residential mortgage issuer C-BASS has been "materially impaired" due to an "unprecedented" amount of margin calls. DJ30 +87.06 NASDAQ +9.19 SP500 +9.32 NASDAQ Dec/Adv/Vol 1102/1844/1.48 bln NYSE Dec/Adv/Vol 768/2488/1.04 bln

1:00 pm : More of the same for stocks as the blue-chip averages continue to outpace the Nasdaq to the upside. The Tech sector continues to vacillate in and out of negative territory, stalling some of the momentum that within the first hour of trading help vault all three major indices up 1.0% on average.

At its intraday highs, the tech-heavy Composite was finally back above last Thursday's close and in positive territory for the month; but it is now down about 0.6% for the month. DJ30 +73.61 NASDAQ +4.91 SP500 +7.83 NASDAQ Dec/Adv/Vol 1173/1751/1.37 bln NYSE Dec/Adv/Vol 871/2367/944 mln

12:30 pm : No real change in the proceedings as the afternoon session commences. Oil prices, though, are near their best levels of the day as traders price in expectations that tomorrow's EIA report will show a drawdown in weekly crude supplies. Crude for September delivery is now up 1.6% at $78.05/bbl, just $0.35 below the intraday record level reached on July 14, 2006.

Fortunately for market bulls, the Energy sector (+1.4%) subsequently hitting fresh session highs is offering enough needed leadership to offset the commodity's inflationary characteristics. Oil & Gas Storage (+3.8%) now ranks among today's top 10 performing S&P industry groups.DJ30 +81.24 NASDAQ +7.63 SP500 +7.54 XOI +1.1% NASDAQ Dec/Adv/Vol 1172/1736/1.25 bln NYSE Dec/Adv/Vol 840/2364/846 mln

12:00 pm : The major averages are sporting modest gains midday as tame inflation data and a batch of upbeat earnings reports lend further evidence that stocks remain oversold following last week's sizable downturn.

With the Fed still citing inflation as its predominant concern, their favored inflation gauge rising just 0.1% for the fourth straight month has left investors believing policy makers now have more breathing room to justify a rate cut at some point. The year-over-year core PCE rate currently stands at 1.9%, which is still within the Fed's 1.0% to 2.0% "comfort zone."

On the earnings front, Sun Microsystems (SUNW 5.23 +0.34) posting its third straight profitable quarter last night initially helped set a positive tone coming into today's session. Dow component General Motors (GM 33.96 +1.35) swinging to a much larger than expected Q2 profit, however, has been an even bigger catalyst contributing to this morning's respectable follow-through efforts.

Of the 10 economic sectors trading higher, Utilities (+1.4%), Materials (+1.3%), and Telecom (+1.1%) are pacing the way. Renewed confidence throughout the beaten-down and much more influential Financial sector (+0.8%), though, is again the key to a second straight day of trying to recoup what was lost last Friday. The S&P 500 is trading exactly where it closed last Thursday.DJ30 +83.32 DJTA +0.6% DJUA +1.5% DOT -0.3% NASDAQ +7.68 NQ100 -0.1% R2K +0.8% SOX -1.0% SP400 +0.7% SP500 +8.75 XOI +0.9% NASDAQ Dec/Adv/Vol 1251/1651/1.10 bln NYSE Dec/Adv/Vol 867/2317/742 mln