Closing Wrap-Up, Nov. 19
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November 19, 2009
Stocks tumble for second straight day, led by chip stocks. The Dow ($INDU) lost 93.87 points to a level of 10,332.44. The S&P 500 ($SPX) fell 14.90 points to 1,094.90. The Nasdaq ($COMPQ) gave up 36.32 points, or 1.66 percent, to 2,156.82. Volume was light once again with the NYSE trading 1.08 billion shares and the Naz turning over 2.23 billion shares. Market breadth was negative by a 6-to-25 and 6-to-21 margin on the Big Board and Naz respectively.
The economic calendar was heavy this morning with the results mixed. Jobless claims were flat at 505,000, though the four-week moving average fell by 6,500 to 514,000. This is the 11th straight week that this moving average has moved lower. However, economists feel that until jobless claims move below 400,000, payrolls will continue to decline.
In other economic news, the leading indicators index rose 0.3 percent, but this was below expectations for a gain of 0.4 percent. However, economists feel that this data points to slow growth in the first half of 2010. The Philly Fed survey came out stronger than expected, which helped ease some concerns about recent slowing in the manufacturing sector. This index rose to 16.7 from 11.5 in October, which was well above estimates for a reading of 12.0.
The semiconductor sector took a hit Thursday with the Semiconductor HOLDRs (SMH) falling 3.34 percent to 25.20. Bank of American Merrill Lynch downgraded the sector and lowered its rating on several chip stocks to "Neutral" from "Buy." Intel (INTC) and Texas Instruments (TXN) shares fell 4.08 percent and 3.38 percent respectively. BofA Merrill feels that excess inventory levels could prove to be a detriment next year when demand eases.
Shares of Time Warner (TWX) fell 1.55 percent Thursday to a price of $32.31. The stock suffered from news its AOL unit was expected to lay off a third of its workforce in preparation for the AOL spinoff. TWX shares recently hit a 52-week high at $33.45. AOL is set to leave its unsuccessful marriage with Time Warner in three weeks.
In earnings news, Sears (SHLD) reported better than expected results, yet the stock fell 3.72 percent to $72.95. SHLD shares had risen nearly 95 percent in 2009, so it seems traders took a "sell the news" mentality. The most impressive part of Sears results was a same-store sales gain of 0.5 percent for Kmart.
Technicians will be looking for the SPX to recapture the 1,100 level heading into the weekend. However, there won't be much news to trade on Friday, other than a few earnings report, including Dell (DELL).
Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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