The major indexes have dipped red with the Dow Industrials (INDU) 8,704 -0.21% slipping 18-point lower, while the broader S&P 500 Index (SPX.X) 915 -0.35 falls 3.25 points below the unchanged mark after media channels reported that U.N Weapons inspectors said they have found 11 empty chemical warheads in Iraq, that appear to be in "new" condition.
This news, which was released at approximately 01:00 PM EST found the major indexes dipping to their lowest levels of the session and follows some trading rumors circulation the floors earlier today that Iraq President Saddam Hussein had gone into exile in Syria. Earlier this morning, stocks were boosted to their best levels of the morning on the Saddam rumor, and while this rumor was easily dismissed by traders later in the morning, it now provides a bit of a twist to this afternoon's revelation by the U.N. Weapons inspection team. Again, there has been NO confirmation to Saddam's exile rumor, but the major indexes aren't seeing that severe of downside response.
With the Dow Industrials (INDU) off just 18-points, gold stocks as depicted by the Gold/Silver Index (XAU.X) 76.45 +3.38% are now leading today's sector gains. A quick look at the futures markets have February Gold futures (gc03g) 354.90 +1.11% at their best levels of the session. March Light, Sweet Crude (cl03h) is on the move at $32.80 +1.07% (I'm 30-minute delayed here, as I don't trade crude futures).
While gold and oil futures show a more "defensive" response to the U.N. news, Treasuries remains calm with and still show marginal selling in the 5, 10 and 30-year maturities on a total session basis. However, it is notable that Treasuries did reverse in price from their lows of the session, with the 10-year currently trading $113'04, which is up from it's 12:00 AM EST low of $112'165.
Technology sector weakness, which was lead earlier in the session by the Semiconductor Index (SOX.X) 315 -3.06% has spread to Disk Drives (DDX.X) 79.59 -3.18% and Fiber Optic (FOP.X) 57.42 -3.31%.
A quick review of the major indexes and our intra-day pivot analysis has the major index all holding their current S1 levels. These pivot and support/resistance levels were displayed in last night's Index Trader Wrap at OptionInvestor.com.
Shares of Americredit (NYSE:ACF) $4.10 -49.5% are being cut in half today after the sub-prime auto loan financer reported a Q2 loss of $0.18 per share (including items), which was worse than the $-0.06 EPS estimates found among analysts. ACF said results were hurt by larger than expected credit losses, which are expected to rise during the 1st-half of 2003. The company's also said "We're seeing continued weakness in recovery values on repossessed vehicles and in the overall economy, causing increases in both loss severity and frequency." ACF stated that it expects to be profitable in 2003 (consensus is for earnings of $0.66).
I (Jeff Bailey) would urge caution toward ACF. Having worked for an investment bank here in Denver, CO, a firm I worked for brought public a "sub-prime" auto loan financer (Western Fidelity Funding (WFFI) and it served as a tax write-off for my wealthier clients as an economic downturn had their used-car lots full of repossessed automobiles and existing debt burdens became too much to overcome. I have not looked at ACF's financials, but today's break to a 52-week low does not look favorable.