Taking Stock of Wall Street 2008-08-19

Yesterday, the defeated bull could argue that the volume was only in millions. Not so today. The bear convincingly won today with volume running to over billion. NYSE traded a volume of 1.01 bln while at the Nasdaq it was 1.74 bln.

Only 855 stocks could advance against 2274 declined at the NYSE. Story was almost the same at the Nasdaq where 2035 declined against only 755 advanced.

Major indices fell for a second day this week:

Dow went down by -130.84 (-1.15%) to 11348.55
Nasdaq by -32.62 (-1.37%) to 2384.36
S&P 500 by -11.91 (-0.94%) to 1266.69

But then government started the day with discouraging economic data even before market open: rising inflation (Producer Price Index), falling housing starts and building permits proved a damper. In fact the year-over-year increase for PPI was the highest since 1981.

Government's interim relief for the housing sectors may not have been enough as July housing starts(-11%) and building permits (-17%) declined. Accordingly housing stocks fell too.

As for sectors, coal, all oil-related subsectors showed positive performance along with gold. Real estate, retail, specialty and hospitality stocks went down with the financials.

Financial stocks are still spearheading the decline including
AIG (AIG) Lehman Brothers (LEH) Fannie Mae (FNM) and Freddie Mac (FRE). American Express (AXP), Bank of America (BAC),
J.P. Morgan Chase (JPM) - all resumed yesterday's slide.

Quarterly reports too didn't give succor to the market. Home Depot (HD) and Target (TGT) Saks (SKS) and Staples (SPLS) who declared their results had their stocks falling whether they exceeded the market's expectations or not.

Dollar took a beating today against other currencies and that proved beneficial for the commodities which have started to look up today, led prominently by oil. "Spoilsports" crude went up +2.15% to $115.30 and gold followed with +1.81% to $820.30.

After a gap of some days, we have some M&A news:

General Dynamics (GD) has reached an agreement to acquire Jet Aviation (Switzerland) for $2.5 bln.

After an year of hectic haggling, Nymex agreed to merge with CME. The bid is for around $8.3 bln. CME is the world's largest exchange for derivative trading.

Yesterday we could give the market the benefit of doubt as the fall was not accompanied by any big volume. Today, the picture was more convincing. The bear won with significant volumes running to billions in its support. More than twice as many stocks declined for every stock that advanced for the second consecutive day.

Today in the after-hours, there were some good company news:

Hewlett-Packard (HPQ) beat market expectations with third quarter revenues of $28.03 blns and expects to better it with greater margin in the next quarter - something not many can do in the present economic confusion.

Veriphone (PAY) too expects to better its revenue for the coming quarterly results.

Chevron (CVX) announced a $6B deal with the Canadian government to develop their Hebron oil field.

Sirius XM Radio (SIRI) jumped 4.3% after signing a five-year contract with Mad Dog Russo. It is SIRI's good fortune that celebrities leaving other media conglomerates seek a niche there, as they come with millions worth of publicity and fanfare already paid for by their former employers.

Now, will HPQ's excellent results bring cheers to the bull tomorrow? Let us wait and see.