Daily Market Commentary for April 3, 2008 from Millennium-Traders.Com
Economic Data released today added a sour tone to the market activity. Trading activity was generally muted today with the major indices cautiously moving into positive territory during the afternoon trading session. Fed Chairman Ben Bernanke testified in front of the Senate Banking Committee today, transcript of his comments can be found lower in this publication. At the hearing today regarding the Bear Stearns bailout were Chairman Bernanke; Timothy Geithner, President New York Federal Reserve; Christopher Cox, Chairman Exchange Commission; Robert Steel, Treasury Undersecretary; Jamie Dimon, representative from JPMorgan Chase and, Alan Schwartz, CEO of Bear Stearns. Part of the comments included that from Timothy Geithner that the assistance to bail out the Bear was risky "but the risks are modest in comparison to the substantial damage to the economy and economic well-being that potentially would have accompanied Bear's insolvency." "The purpose of our action, as with our other recent actions including our provision of liquidity to financial firms and our reductions in the federal funds rate target was, as best as possible, to improve the functioning of financial markets and to limit any adverse effects of financial turmoil on the broader economy," Bernanke said this morning. "I think they (the Fed) made the right decision," Senator Chris Dodd, chairman of the committee said today. "You could have had not only a national but a global meltdown" if Bear had collapsed. Additional comments from the hearing: "We did not cherry-pick the assets in the collateral pool," Dimon said in his prepared statement. "The notion that Bear Stearns's riskiest assets have been placed in the $30 billion Fed facility is simply not true." "We did not bail out Bear Stearns," Bernanke said on Wednesday. "We did what we did because we felt it was necessary to preserve the integrity and viability of the American financial system, which in turn is critical for the health of the economy." "The damage caused by a default by Bear Stearns could have been severe and extremely difficult to contain," Bernanke said.
At the closing bell on the Stock Exchange, here is how the major indices ended the session on the U.S. Markets:
DOW (Dow Jones Industrial Average) gain of 20.20 points on the day to end the session at 12,626.03
NYSE (New York Stock Exchange) gain of 36.18 points to end the session at 9,140.64
NASDAQ gain of 1.90 points for a close at 2,363.30
S&P 500 gain of 1.78 points for a close at 1,369.31
FTSE All-World ex-U.S. gain of 0.60 points to close at 246.24
FTSE RAFI 1000 loss of 0.90 points to close at 5,559.29
BEL 20 loss of 54.19 points on the day to end the session at 3,783.58
CAC 40 loss of 24.1 points on the day to end the session at 4,887.87
FTSE100 loss of 24.6 points on the day to end the session at 5,891.30
NIKKEI 225 gain of 31.47 points on the day to end the session at 13,545.60
On the NYSE today, advancers came in at 1,803, decliners totaled 1,343; unchanged came in at 97; new highs came in at 53 and new lows came in at 13. Momentum NYSE stocks traded by active Day Traders today: CF Industries Holdings, Incorporated (CF) gained 8.66 points with a high on the day of $116.60, a low of $104.01 for a closing price at $114.55; Transocean, Incorporated (RIG) gained 1.80 points with a high on the day of $141.96, a low of $137.00 for a closing price at $140.38; Bunge Limited (BG) gained 4.69 points with a high on the day of $96.40, a low of $86.82 for a closing price at $92.61; Patriot Coal Corp (PCX) gained 7.85 points with a high on the day of $58.50, a low of $48.02 for a closing price at $54.80; NVR Incorporated (NVR) gained 30.04 points with a high on the day of $639.79, a low of $601.50 for a closing price at $636.95; NAVTEQ Corporation (NVT) shed 2.51 points with a high on the day of $65.49, a low of $61.91 for a closing price at $63.39; MF Global Limited (MF) gained 1.45 points with a high on the day of $13.29, a low of $9.95 for a closing price at $11.47; UltraShort Financials ProShares (SKF) shed 0.13 points with a high on the day of $104.65, a low of $99.62 for a closing price at $101.10; Mosaic Corporation (MOS) gained 4.35 points with a high on the day of $109.60, a low of $99.61 for a closing price at $104.52; CME Group, Incorporated (CME) gained 5.80 points with a high on the day of $515.89, a low of $499.47 for a closing price at $513.90; Petroleo Brasileiro (PBR) gained 1.49 points with a high on the day of $112.11, a low of $107.34 for a closing price at $109.96; Monsanto Corporation (MON) gained 5.79 points with a high on the day of $119.45, a low of $110.65 for a closing price at $117.79; Uniao de Bancos Brasileiros S.A. (Unibanco) (UBB) gained 1.48 points with a high on the day of $129.69, a low of $124.29 for a closing price at $127.08; Potash Corp. of Saskatchewan, Incorporated (POT) gained 6.58 points with a high on the day of $169.33, a low of $160.16 for a closing price at $167.67.
On the NASDAQ today, advanced totaled 1,342; decliners totaled 1,561; unchanged came in at 143; new highs came in at 18 and new lows came in at 65. Momentum NASDAQ stocks traded by active Day Traders today: Plexus Corporation (PLXS) shed 3.64 points with a high on the day of $28.00, a low of $24.55 for a closing price at $25.64; Garmin Limited (GRMN) shed 3.60 points with a high on the day of $55.75, a low of $50.81 for a closing price at $52.81; Research In Motion Limited (RIMM) gained 6.79 points with a high on the day of $124.03, a low of $116.66 for a closing price at $122.58; Trimble Navigation Limited (TRMB) gained 0.62 points with a high on the day of $28.59, a low of $26.52 for a closing price at $28.43; Google Incorporated (GOOG) shed 10.58 points with a high on the day of $463.29, a low of $448.13 for a closing price at $455.12; Baidu.com, Incorporated (BIDU) gained 5.16 points with a high on the day of $289.20, a low of $273.30 for a closing price at $286.64; First Solar, Incorporated (FSLR) gained 2.05 points with a high on the day of $254.50 a low of $243.11 for a closing price at $251.60.
U.S. Institute for Supply Management (ISM): March Non-Manufacturing Composite Index came in at 49.6 U.S. ISM March Non-Manufacturing Composite Index Expected to come in at 48.7; U.S. ISM March Non-Manufacturing Business Index came in at 52.2; U.S. ISM March Non-Manufacturing Composite Index came in at 49.6 versus February reading of 49.3; U.S. ISM March Non-Manufacturing Business Index came in at 52.2 versus February reading of 50.8; U.S. ISM March Non-Manufacturing Employment Index came in at 46.9 versus February reading of 46.9; U.S. ISM March Non-Manufacturing Prices Index came in at 70.8 versus February reading of 67.9; U.S. ISM March Non-Manufacturing New Orders Index came in at 50.2 versus February reading of 49.6.
U.S. Jobless Claims rose 38K to 407K in week of March 29 compared to survey of an increase by 4K; U.S. Continuing Claims for week of March 22 rose by 97K to 2,937,000; U.S. Jobless Claims for week of March 22 revised to 369K from 366K. Report indicated highest number of claims filed since 1995.
Federal Reserve Chairman Ben Bernanke Testimony in front of the Senate Banking Committee: Chairman Dodd, Senator Shelby, and other members of the Committee, I appreciate this opportunity to discuss current economic and financial conditions and the actions the Federal Reserve has taken to stabilize financial markets and the economy. Although the situation has recently improved somewhat, financial markets remain under considerable stress. Pressures in short-term bank funding markets, which had abated somewhat beginning late last year, have increased once again. Many lenders have been reluctant to provide credit to counterparties, especially leveraged investors, and increased the amount of collateral they required to back short-term security financing agreements. To meet those demands, investors have reduced their leverage and liquidated holdings of securities, putting further downward pressure on security prices. Credit availability has also been restricted because some large financial institutions, including some commercial and investment banks and the government-sponsored enterprises (GSEs), have reported substantial losses and writedowns, reducing their capital available to support increased lending. Some key securitization markets, including those for nonconforming mortgages, continue to function poorly if at all. These developments in financial markets--which themselves reflect, in part, greater concerns about housing and the economic outlook more generally--have weighed on real economic activity. Notably, in the housing market, sales of both new and existing homes have generally continued weak, partly as a result of the reduced availability of mortgage credit, and home prices have continued to fall. Private payroll employment fell substantially in February, after two months of smaller job losses, with job cuts in construction and closely related industries accounting for a significant share of the decline. But the demand for labor has also moderated recently in other industries. Overall, the near-term economic outlook has weakened relative to the projections released by the Federal Open Market Committee (FOMC) at the end of January. Inflation has also been a source of concern. We expect inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully. Well-functioning financial markets are essential for the efficacy of monetary policy and, indeed, for economic growth and stability. Consistent with its role as the nation's central bank, the Federal Reserve has taken a number of steps in recent weeks to improve market liquidity and market functioning. These actions include reducing the cost and increasing the allowable term of discount window credit to commercial banks; increasing the size of our Term Auction Facility, through which credit is auctioned to depository institutions; initiating a Term Securities Lending Facility, which allows primary dealers to swap less-liquid mortgage backed securities for more-liquid Treasury securities; and creating the Primary Dealer Credit Facility, which is similar to the discount window but accessible to primary dealers. Although these facilities operate through depository institutions and primary dealers, they are designed to support the broader financial markets and the economy by facilitating the provision of liquidity by those institutions to their customers and counterparties. With respect to monetary policy, at its March meeting the FOMC reduced its target for the federal funds rate by 75 basis points to 2-1/4 percent. It was in this context of intensifying financial strains that, on March 13, Bear Stearns advised the Federal Reserve and other government agencies that its liquidity position had significantly deteriorated and that it would have to file for bankruptcy the next day unless alternative sources of funds became available. This news raised difficult questions of public policy. Normally, the market sorts out which companies survive and which fail, and that is as it should be. However, the issues raised here extended well beyond the fate of one company. Our financial system is extremely complex and interconnected, and Bear Stearns participated extensively in a range of critical markets. The sudden failure of Bear Stearns likely would have led to a chaotic unwinding of positions in those markets and could have severely shaken confidence. The company's failure could also have cast doubt on the financial positions of some of Bear Stearns' thousands of counterparties and perhaps of companies with similar businesses. Given the exceptional pressures on the global economy and financial system, the damage caused by a default by Bear Stearns could have been severe and extremely difficult to contain. Moreover, the adverse impact of a default would not have been confined to the financial system but would have been felt broadly in the real economy through its effects on asset values and credit availability. To prevent a disorderly failure of Bear Stearns and the unpredictable but likely severe consequences for market functioning and the broader economy, the Federal Reserve, in close consultation with the Treasury Department, agreed to provide funding to Bear Stearns through JPMorgan Chase. Over the following weekend, JPMorgan Chase agreed to purchase Bear Stearns and assumed Bear's financial obligations. The purpose of our action, as with our other recent actions including our provision of liquidity to financial firms and our reductions in the federal funds rate target was, as best as possible, to improve the functioning of financial markets and to limit any adverse effects of financial turmoil on the broader economy. We will remain focused on those objectives. Clearly, the U.S. economy is going through a very difficult period. But among the great strengths of our economy is its ability to adapt and to respond to diverse challenges. Much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year. I remain confident in our economy's long-term prospects.
The trend was lower across the board today for the Energy Sector: Light crude moved lower today by $0.98 to close at $103.85 a barrel; Heating Oil moved lower today by $0.03 to close at $2.92 a gallon; Natural Gas moved lower today by $0.42 to close at $9.42 per million BTU and Unleaded Gas moved lower today by $0.05 to close at $2.72 a gallon.
Metals Markets ended the session higher across the board today: Gold moved higher today by $9.40 to close at $909.60 a Troy ounce; Silver moved higher today by $0.30 to close at $17.48 per Troy ounce; Platinum moved sharply higher today by $48.30 to close at $2,012.90 per Troy ounce and Copper moved higher today by $0.02 to close at $3.90 per pound.
On the Livestock and Meat Markets, the trend was higher across the board today: Lean Hogs ended the day higher by $3.00 to close at $69.60; Pork Bellies ended the day higher by $3.00 to close at $70.88; Live Cattle ended the day higher by $1.53 to close at $89.15 and Feeder Cattle ended the day lower by $1.53 to close at $89.15.
Other Commodities: Corn ended the day nicely higher by $7.25 at $610.25 and Soybeans ended the day nicely higher by $14.00 to end the session at $1,257.00.
Bonds were higher across the board today: 2 year bond closed higher by 1/32 at 99 23/32; 5 year bond moved higher by 1/32 to close at 98 29/32 today; 10 year bond moved higher by 5/32 to close at 99 10/32 and the 30 year bond moved higher by 2/32 to close at 99 22/32 on the day.
The e-mini Dow ended the session today at 12,628 with a gain of 9 points on the trading session. The total Dow Exchange Volume for the day came in at 169,955 which are comprised of Electronic, Open Auction and Cash Exchange. Traders should review workshops available at the CBOT (Chicago Board of Trade) Educational in-person seminars schedules available on CBOT (Chicago Board of Trade) website.
The end of day results for the CBOT (Chicago Board of Trade) which is comprised of the total Exchange Volume for Futures and Options (EVFO) including Electronic, Open Auction and Cash Exchange ended the day at 3,806,710; Open Interest for Futures moved lower by 54,617 points to close at 9,326,510; the Open Interest for Options moved higher by 71,134 points to close at 8,391,585 and the Cleared Only moved higher by 308 points to close at 28,316 for a total Open Interest on the day of 17,746,411 for a total Change on the day with a gain of 16,825 points.
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