Morning Watch, Nov. 19
November 19, 2007
Stocks opened lower Monday morning, with weakness in the financials and retailers. Shortly after the opening bell on Wall Street, the Dow Jones Industrial Average ($INDU) had lost 66 points and the NASDAQ ($COMPQ) was down 15.
Citigroup (C) shares fell after Goldman Sachs analysts cut the rating on the stock to “sell” from “neutral”. The firm estimates that Citirgroup will write down $15 billion due to losses in collateralized debt obligations [CDOs].
Meanwhile, shares of Swiss Re fell 6 percent in overseas trading after the bank said it suffered $876 million in losses due to trouble in the subprime mortgage market. Lowe’s (LOW) is also trading lower after the company reported better than expected earnings, but lowered its outlook for the full year due to a poor outlook for the housing market.
Etrade (ETFC) might see action after TD Ameritrade Chief Executive Joe Maglia told CNBC on Friday that his firm might be interested in acquiring Etrade’s retail business. Pharmion (PHRM) is set to open higher after Celgene (CELG) agreed to acquire the company for $2.9 billion. Hewlett Packard (HPQ) could see action today ahead of an earnings report due out after the closing bell.
No economic data is due out today. With not much else to guide the early action, bonds are little changed. The benchmark ten-year Treasury bond is down 2/32nd and its yield remains near 4.16 percent.
Crude oil is higher after the Organization of Petroleum Exporting Countries [OPEC] held a summit, but announced no changes to oil output. Crude was recently up 92 cents to $94.76 a barrel. Gold is holding steady near $787.50 an ounce.
For the stock market, early indications point to weakness amid ongoing concerns about the financials and earnings. Needless to say, market action has been poor lately with, for example, advancing issues trailing declining issues on the New York Stock Exchange during seven of the past eight trading sessions. However, volume and volatility might ease a bit this week due to the holiday on Thursday. Then, attention turns to Black Friday and whether or not retail sales can hold up despite the slump in housing, problems in the credit markets, and the recent rise in energy quotes.
Frederic Ruffy
Senior Writer
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