Intraday Market Update
On Monday the markets cheered an aid package for Greece worth 110 billion Euros that was, in principal, supposedly agreed to over the weekend. A day later fears of the European debt contagion is the central issue again and is sending the US indices to their lowest levels in nearly a month. Rumors and speculation are amplifying the anxiety and prompting denials from world leaders. Spain's Prime Minister vehemently denied the country would soon ask for an aid package worth 280 billion Euros. Stanley Nabi, vice-chairman of Silvercrest Asset Management Group said "Spain and Portugal are both endangered species," and that "The attention could shift to one of those countries."
The Spain and Portugal equity markets were both down approximately -5%. The EUR/USD has been crushed since its November highs and is now at fresh 1-year lows. The Euro appears to be headed to lows it has not seen since the October 2008 global financial crises.
On the US economic front strength in the manufacturing sector accelerating. The factory orders report was strong and was boosted by rising energy prices, which made for a solid +2.9% gain in the non-durables component for March. April increases in energy prices, together with indications of solid consumer and industrial demand for fuel, point to gains for this component in the next report as well. Total factory orders, with non-durables and durables combined, rose +1.3%.
The National Association of Realtors Pending Home Sales index rose +5.3% in March but was boosted by the approaching end to government stimulus, which expired on April 30th. The report indicates that low home prices and government tax credits gave a boost to the March total. In addition, the report notes that the NAR sees sales falling back now that the latest round of stimulus has expired.
In earnings news, MasterCard beat easily beat earnings expectations in its Q1 report. However, MA's CFO warned that volume headwinds may continue throughout rest of 2010 due to its loss of bank customers. Shares of MA are up +0.60% while competitor Visa is down -1%.
Leading US pharmaceutical names Merck and Pfizer both beat earnings estimates, although Pfizer missed revenue and Merck guided a bit softer than expected. Generic drug leader Teva was in line with expectations and reiterated its full year guidance. Teva's CEO said he believes the benefits of healthcare reform would far outweigh its negative aspects. MRK and PFE are both up about +2%, while TEVA is off by about -2%.
Diversified energy name Marathon blew out EPS estimates and also beat on revenue. Anadarko Petroleum crushed both earnings and revenue targets, and raised its full year production volumes. MRO and APC are both slightly in the red. Homebuilder Beazer Homes surprised investors with a profitable Q2 versus expectations for another big loss. Beazer's new orders and backlog have grown substantially but its shares are down -13%.
Agricultural name Archer Daniels Midland reported disappointing results, missing estimates across the board. Fresh Del Monte also missed earnings targets, but its revenue was better than expected. Shares of ADM are down -5% and FDM is down -3%.
Commodities are under pressure with the exception Natural Gas which is about breakeven. Front month crude is trading off by more than -3.5% to $82.95 per barrel. Gold is off by -1% to $1,170 per ounce, while silver is getting crushed, down -4.75%. Copper is down -3.3%.
Just about every major market throughout the world was lower on Tuesday, especially in Europe. Leading declines in the Asia-Pacific region was China (-1.23%) and Australia (-1.00%).
European markets took it on the chin with big losses. Spain gave up -5.41%, France was down -3.19%, Germany - 2.60%, and London was off -2.56%.
Core Sector List:
Overall reading: All 16 sectors declining.
Weakest Sectors:, Semiconductor, Home Construction, Internet
NOTE: I am having technical difficulties with my charts so I can not post them in today's update. Sorry for the inconvenience. All of the indices are off by more than -2%. Large cap techs are leading the way down as the NASDAQ 100 is off -3%.