Intraday Market Update
Equities gapped higher at the open this morning but immediately rolled over into the red, despite a sharp decline in the US Dollar and an unexpected drop in initial jobless claims. Earnings results continue to funnel in and the results are mixed. Dow member 3M's results beat estimates but they lowered full year EPS guidance and shares are under pressure, down around -7%. In a volatile session all of the major indexes are posting minor losses in early afternoon trading, led by a -0.40% decline in the Russell 2000. Commodities are doing well on the heels of a -1% decline in the US Dollar. Gold has reversed course, gaining +$21.00 and erasing all of yesterday's losses. Silver has also erased yesterday's losses with more than a +2% gain. Crude oil is posting modest gains but remains stuck in the middle of its October trading range between $80.00 and $84.00. Overseas, the Asia-Pacific region was mixed with no significant moves, while European markets posted modest gains.
The main economic report today was US weekly jobless claims which fell to 434,000, compared to estimates calling for a reading of 455,000. The four week moving average fell to 453,250. Both of these readings are the lowest levels since July. Continuing claims fell by -122,000 to a new fresh two year low of 4.356 million. Today's report is perhaps the best of the recovery so far and it will most likely cause upward revisions to estimates for the non-farm payrolls report on Friday, November 5. The favorable data also makes me wonder what sort of impact it may have on the FOMC's QE2 announcement coming next week, if any.
In equities, Dow member Exxon (XOM) beat on the bottom line but missed revenue estimates. The integrated oil giant said that "Despite continuing economic uncertainty," they had strong quarterly results as oil equivalent production was more than +20% higher than Q3 last year and capital and exploration expenditures were up +35% y/y. Fellow Dow member 3M (MMM) beat on both the bottom and top line, however, the company lowered their full guidance. XOM is up nearly +1% while MMM is down about -7%.
Shares of Visa (V) are down nearly -5% after the firm reported results that were in-line with estimates, however, their full year 2011 guidance was merely in line with estimates. The credit card processor characterized the business environment as "very challenging," even though payment volume growth was +14% higher y/y and total processed transactions rose +16% y/y. Insurance major Allstate (ALL) reported mixed results as earnings were well below estimates, while revenues were well above estimates. Allstate's CEO said the company had missed opportunities to improve its competitive position, while customer retention shrank in both automotive and homeowners insurance. ALL is down -7% and headed lower.
Shares of Colgate-Palmolive (CL) are down about -1% after earnings were a bit weaker than expected. The company said they saw big sales declines in their key Latin American markets and also said they expect earnings in 2011 to be flat. Hotel and Casino operator Las Vegas Sands (LVS) has gained +8% after the company handily beat earnings estimates. Revenue jumped a whopping +67% y/y as the company cited strong results from its Macau and Singapore units. Eastman Kodak (EK) has gained +10% after the company reported a much narrower loss than expected (-2 cents compared to -31 cents). The company said its results reflect continued momentum of the their digital growth businesses, improved operating efficiencies, and the successful conclusion of an intellectual property licensing agreement.
In tech land, Motorola (MOT) was up +7.5% but is now only up +1% after reporting earnings that were slightly ahead of estimates. The company said its mobile devices had sales growth of +20% y/y and reached profitability for the first time in over three years, with its Droid X device continuing to sell "extremely well." Computer security firm Symantec (SYMC) is up more than +3% after its bottom line was strong, while revenues met estimates.
Shares of Halliburton (HAL) have collapsed -10% after the investigative panel on the Gulf oil spill found that Halliburton's slurry cement may have been unstable, citing that the cement used on the Macondo well was not tested, and HAL should have considered redesigning the cement for the well.
Core Sector List:
Overall reading: 10 sectors advancing, 10 sectors declining
Strongest Sectors: Gold Miners, Broker Dealers, Software
Weakest Sectors: Insurance, Real Estate, Home Construction
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