Reply #104: blather [View All]

[ozymandius]

Close Dow -62.84 at 10285.26, S&P -11.96 at 1178.14, Nasdaq -14.30 at 2056.00:

Inflation concerns were fed this morning, catalyzing a downbeat day for equities that hindered the emergence of any leadership and sustained the indices relatively static stance below the unchanged mark. A post-lunch plunge in Exxon Mobil (XOM 56.31 -2.55), reportedly the result of a 24 mln share block trade initiated by Goldman Sachs for unknown reasons, led to a cascade of events that shoved the market lower. While the market anticipated a sizeable jump in the latest PPI read, due largely to the fact that energy prices soared 7.1% in the month trailing Katrina, total Sept. PPI rose 1.9% (consensus +1.2%) - reflecting a 6.9% year-over-year rise that was the sharpest in 15 years - and more than tripled the Aug. read. The core rate, which is arguably a more accurate inflation indication, increased 0.3% (consensus +0.2%); core PPI in Aug. was flat. Although one month of data does not signify a trend, the gain raises some concerns that broad-based inflationary pressures are building. However, the Sept. core CPI data that was delivered last week had already indicated that inflation remains in check at the consumer level, a realization that had perhaps helped temper today's PPI headlines and somewhat limit the broad-based selling that afflicted stocks. It was the fresh round of third quarter earnings reports that offered the strongest support today, but inflation concerns competed with the earnings front for the session's spotlight and took traders' attention off the fact that, thus far, roughly 65% of companies have beat analysts' estimates. To that end, an upside report delivered by IBM (IBM 83.48 +0.89), following yesterday's close, kept the Technology sector (-0.2%) trading on positive territory throughout the session, and earnings anticipation led to a respectable rise in Intel (INTC 24.08 +0.62) ahead of its evening report. Nonetheless, semiconductors extended a 1.2% loss that added to earnings-induced weakness in Novellus (NVLS 21.80 -3.09) to ultimately expunge the sector's gain just ahead of the bell. Healthcare also managed to keep its nose above the flat line during most of the session, but broad-based weakness in pharmaceuticals and particular weakness in medical equipment submerged the sector by session-end. Specifically, Guidant (GDT 64.13 -8.25) plummeted over 11% after Johnson & Johnson (JNJ 63.97 -0.03) - which posted a loss after delivering light revenues despite beating EPS estimates by a penny - indicated that it's considering alternatives to its Guidant acquisition agreement. Boston Scientific (BSX 22.95 -0.62) was an additional sore spot, off about 2.5% upon reports that the FDA instructed doctors to cease use of the company's Enteryx device; this counters the company's prior attribution of Enteryx problems to individual doctors'. Genzyme (GENZ 69.45 +0.13) stood as a bright spot within the within the space, following its better than expected Q3 report, but its gain faded late in the day and could not combat selling pressure that left the sector with a 0.2% loss. The list of upside earners also included Dow components 3M (MMM 74.65 +2.18) and United Technologies (UTX 50.00 -1.11), but their effects were muted by traders' focus upon inflation for the time being. While each sector closed in the red, Energy's 4.4% decline not only marked it the session's worst performer and erased another chunk of its market-best year-to-date gain, but also yanked the broader market down with it. While the aforementioned plunge in XOM shares exacerbated the sector's standing, a significant pullback in the price of crude sent the sector on a southward path from the early going. Reports that Tropical Storm Wilma veered from a track targeting the refinery-rich Gulf Coast induced the crude action, but, in the end, did nothing to help the overall market today. NYSE Adv/Dec 918/2338, Nasdaq Adv/Dec 952/2028