Stock Market Update - Wednesday, August 25, 2010

Stock Market Update
Wednesday, August 25, 2010

Latest News Headlines:

US Stocks Narrow Losses But Remain In Troubled Waters Disappointing Data

Dow Jones	10,060.06	+19.61	(0.20%)
S&P 500	1,055.33	+3.46	(0.33%)
Nasdaq	2,141.54	+17.78	(0.84%)

Caution Issued on Bearish Positions:

The S&P is range bound. Today it touched lower support areas at 1042. The Dow had made 24 forays below 10000 since the beginning of the year, but closed below that level just 11 times, writes Tomi Kilgore. In one a five-session streak, the sub-10000 level was rejected viciously, with the Dow soaring back. A Dow reversal below the former primary support level at 9900 would indicate another down-swing, with a target of 8700.

DJIA down 42.46 points to 9997.99
NASDAQ down 4.37 points to 2119.39
S&P 500 down 5.62 points to 1046.25
10-year T-note 101 06/32 at 2.4876 yield
NYMEX Crude down $0.20 at $71.43/bbl
Dollar/Euro up 0.0032 at 1.2660


OIL FUTURES: Nymex Crude Settles Up 89 Cents At $72.52/Bbl, but Inventory Data Shows Build in Supplies.

DOE: US Crude Oil Stocks +4.108 Mln Bbl At 358.282 Mln Bbl
US Refineries Ran At 87.7%; Seen 89.40%
Distillate Stocks +1.763 Mln Bbl At 175.974 Mln Bbl
US Gasoline Stocks +2.273 Mln Bbl At 225.617 Mln Bbl

US Gas futures close 4.3% Lower At $3.867/MMBtu. A slump in prices of natural-gas futures is pulling eastern U.S. coal prices lower as the two fuels compete for waning demand from power producers.

US July New-Home Sales Drop To Record Low

New-home buying dropped in July to a record low as inventories increased, another signal that the housing market could continue struggling without support from the government's first-time home buyer's tax credit. Sales decreased 12.4% from the previous month. Sales decreased 12.4% from the previous month to a seasonally adjusted annual rate of 276,000, the Commerce Department said Wednesday. That was the lowest level of sales on record going back to 1963.


US Stock-Index Futures Extend Drop as Goods Orders Signal Slow Recovery

Durable goods orders drop 3.8% in July. US stock-index futures extended losses after orders for durable goods trailed economists' estimates, adding to evidence the economic rebound is in peril. Any large gains in civilian airplanes and cars are offset by declines outside the transportation sector.


Annual US Food Inflation Rate:

U.S. Agriculture Department says it expects the U.S. Consumer Price Index for food to climb between 0.5% and 1.5% this year, the slowest annual food inflation rate since 1992.


Canadian Market:

Toronto's composite index is down 20.41 points, or 0.2%, to 11536.94, with declines leading advances by 4 to 3. Volume of 37.6 million shares after the first 15 minutes of the session is in line with Tuesday's early volume of 39 million shares.

South American Market:

Brazil:
Brazilian stocks opened lower Wednesday as home builders declined on U.S. housing data and oil companies slumped on low crude prices.

The benchmark Ibovespa stock index opened at 64,707 points, down 0.69% from Tuesday's close of 65,156. It was the fourth day of decline for the index, which earlier Wednesday touched its lowest level since July 22.

Columbia:
Colombian officials raised the alert on the Galeras volcano to "red," the highest level, on Wednesday and ordered the evacuation of 8,000 people after a small dawn eruption. The small eruption, which wasn't an explosion, occurred at 4 a.m. (0900 GMT).

Chile:
Chile's blue-chip stock index, Ipsa, was down 1% midday Wednesday, as renewed fears over the vigor of the global economic recovery sparked profit-taking in the local market. Chile's peso closed weaker against the dollar Wednesday, as international copper prices retreated on concerns about the global economic recovery.

The peso ended at CLP506.40 to the dollar, compared to Tuesday's close of CLP504.00, while trading in a range of CPL506.00 and CLP509.50.

Copper futures are on the defensive after reports showed new-home buying in the U.S. fell to a record low and demand for durable goods rose much less than expected. Copper futures in New York were recently down 2.35 cents, or 0.7%, at $3.24 a pound.

The Ipsa slipped to 4459.68 points while market volume totaled 59.1 billion Chilean pesos ($116.8 million).


European Market:

Europe's main stock markets ended lower Wednesday after another round of weak economic data from the U.S., with energy group Tullow Oil falling sharply after it warned of delays over its Uganda projects. The Stoxx Europe 600 index fell 0.8% to end at 247.54 points, paring some of its intraday losses.

The $1 trillion sovereign backstop has prevented panic breaking out for now: at least the market doesn't face months of political wrangling again. But if things continue to get worse, Europe may yet need to use it for real - which could put the focus firmly back on the future of the euro zone.

Underlying euro-zone jitters are hardly new. Skepticism still abounds over Greece despite reports of progress on deficit reduction. Standard & Poor's downgrade of Ireland Tuesday simply moved the rating into line with that of Fitch and while the cost of supporting the country's banks is high, this too is not a new worry for investors. Concerns about backsliding on austerity in Spain also seem a little overdone given it relates to an announcement about EUR500 million of infrastructure spending.

Europe's government bond market is looking ugly again. A string of indicators are back at levels seen in the debt crisis of May and June, and the speed of the deterioration has been swift.

Bonds from peripheral euro-zone countries have fallen sharply, with Greek 10-year bonds yielding more than 11% for the first time since May and Irish and Portuguese government bond spreads widening sharply. In the flight to safety German Bund yields have fallen precipitously, with the 10-year hitting 2.1% on Wednesday - down a staggering 57 basis points from end-July.

Data in Europe were more positive Wednesday, with Germany's Ifo business-sentiment index continuing to climb and hitting its highest level since mid-2007. The Ifo figures weren't enough to provide a boost for Germany's DAX 30 index, which fell 0.6% to end at 5,899.50.

German growth, in particular, has been spectacular; Wednesday brought a further unexpected rise in German business confidence.

Among the other major indexes, the U.K. FTSE 100 index dropped 0.9% to 5,109.40 and the French CAC 40 index lost 1.2% at 3,450.19. European stocks slipped on Ireland downgrade; banks fall.

Nikkei hits 16-month low, lack of action on yen weighs. The Nikkei 225 Stock Average fell to a 16-month low today amid increased signs that the global economy is faltering. Japan's Finance minister is waving the "currency intervention flag" hoping to halt the Yen's rise. Given that markets do their best to apply pressure exactly where it is not wanted, this flag-waiving exercise practically guarantees intervention will follow.


Russia Winter Grain Sowing Falls 63% Behind 2009 Levels

The sowing of winter grain, mostly wheat, in Russia has fallen 63% behind levels seen a year ago amid extreme drought, the Agriculture Ministry said Wednesday. As of Monday, some 356,400 hectares had been sown with winter grain, compared with 964,800 on Aug. 25, 2009, the ministry said on its website.


More US Banks Could Be in Trouble this Year:

The number of troubled banks is still rising, and is expected reach record levels this year. Last Friday, eight US banks in four states were closed. The Federal Deposit Insurance Corp.(FDIC) has said it expects bank failures to peak this year. A total of 729 banks are in potential jeopardy of failure because of weak capital, bad loans and concern from regulators, according to a new Dow Jones Newswires quarterly analysis. That's up 8% from 677 last quarter.

To get the complete list of Failed Banks and Credit Unions, Visit:

http://ocnww.blogspot.com/2010/08/bank-failure-list-update-august-20-2010.html

Market Summary:

Stocks:

Stocks hit lowest level in seven weeks

Investors sent U.S. stocks to a broad and sharp decline Tuesday as they snapped up safe-haven Treasurys, fearing a protracted and faltering recovery.

Stocks fell to their lowest level in seven weeks on Tuesday as an unexpectedly large drop in home sales ratcheted up concerns that the economic recovery is even weaker than had been feared.

The Dow and S&P 500 racked up their fourth day of losses in a row after an industry group reported that sales of U.S. existing homes in July fell to their slowest pace in 15 years.

"What's really driving us is the sense that the economic outlook is unraveling a bit," said Bernie McSherry, senior vice president at Cuttone & Co in New York.

Prices of U.S. Treasuries soared, sending two-year yields to another record low. On the S&P 500, defensive plays telecoms and utilities were the only sectors to gain for the day.

The Dow Jones industrial average (DJI:^DJI - News) fell 133.96 points, or 1.32 percent, to 10,040.45. The Standard & Poor's 500 Index (^SPX - News) shed 15.49 points, or 1.45 percent, to 1,051.87. The Nasdaq Composite Index (Nasdaq:^IXIC - News) lost 35.87 points, or 1.66 percent, to 2,123.76. The broad Russell 2000 index (Chicago Options:^RUT - News) was down 1.2 percent at 595.59, but held above its July intraday low of 587.67.

The S&P approached short-term oversold levels, dropping below 35 on the 14-day relative strength index. A level of 30 indicates the index could be oversold. The S&P also fell below its lower Bollinger band at around 1,053.

All three indexes closed at their lowest level in seven weeks.

A report that at least seven of the 17 top Federal Reserve officials at the U.S. central bank's August policy meeting had reservations about the decision to buy more Treasuries further rattled investors.

World market snapshot:

Shanghai 2,596.58 -53.73 (-2.03%)
Nikkei 225 8,845.39 -149.75 (-1.66%)
Hang Seng Index 20,634.98 -23.73 (-0.11%)
TSEC 7,736.98 -203.66 (-2.56%)
FTSE 100 5,094.23 -61.72 (-1.20%)
CAC 40 3,440.42 -50.69 (-1.45%)
S&P TSX 11,557.35 0.00 (0.00%)
S&P/ASX 200 4,320.10 -61.20 (-1.40%)
BSE Sensex 18,179.64 -131.95 (-0.72%)

Treasurys:

An auction of $36 billion in five-year Treasury notes results in a record low yield of 1.374% as worries about the economy boost the allure of safe assets.

The Treasury market posted a broad-based rally as weak U.S. housing data added to anxiety about the global economic outlook, spurring demand for safe assets. "Treasurys continue to see heavy inflows as investors look to preserve capital due to growing concerns the economic data keep disappointing and fueling the belief the that we slip back into recession," said Sean Murphy, a senior Treasury trader at Societe Generale in New York.

Forex:

The US Dollar gained against other currencies Wednesday.

Currencies

Euro - USD	1.2645	-0.0025 (-0.20%)
USD - JPY	84.5300	+0.2900 (0.34%)
GBP - USD	1.5422	-0.0018 (-0.12%)
CAD - USD	0.9418	-0.0017 (-0.18%)
USD - HKD	7.7772	+0.0003 (0.00%)
USD - CNY	6.7986	+0.0020 (0.03%)
AUD - USD	0.8835	-0.0001 (-0.01%)

The dollar lost ground Tuesday after U.S. housing data for July came in well under expectations and raised further doubts about the pace of the U.S. recovery. The euro reversed its slide against the dollar. Other higher-yielding currencies, such as the Canadian and Australian dollars, pared earlier losses but remained down on the day.

Commodities
Crude Oil	71.24	- 0.54%
Natural Gas	4.00	- 0.84%
Gasoline	1.84	- 0.62%
Heating Oil	1.94	-
Gold	1239.04	+ 0.78%
Silver	18.75	+ 2.12%
Copper	3.18	- 1.82%
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Wednesday's US Economic Calendar:

7:00 a.m.
August 20 MBA Mortgage Applications Survey Market Composite Index (previous 829.7), Cur Chg (previous +13%), Purchase Index (S.A.) (previous 169.4), Cur Chg (previous -3.4%), Refinance Index (previous 4676.7), Cur Chg (previous +17.1%)

8:30 a.m.
July Durable Goods Total Orders (expected +2.8%), Orders, Ex-Defense (previous -0.7%), Orders, Ex-Transportation (previous -0.6%)

10:00 a.m.
July New Residential Sales Overall Sales (expected 333K), Percent Change (expected +0.9%), Months' Supply (previous 7.6)

10:30 a.m.
August 20 EIA Petroleum Status Report Crude Oil Stocks (previous 354.17M), (Net Change) (expected -400K), Gasoline Stocks (previous 223.34M), (Net Change) (expected -400K), Distillate Stocks (previous 174.21M0, (Net Change) (expected +800K),