Stock Market Update - Thursday, September 23, 2010 Cautious Lower Outlook Ahead

Stock Market Update
Thursday, September 23, 2010

Latest News Headlines:

US Stocks Fall - US Dollar Climbs, Data Weighs on Market

US stocks fell on Thursday after the US dollar made mild gains, and a round of weak economic data from both; the United States and Europe, underlined the weaknesses that face the recovery.

Dow Jones	10,662.42	-76.89	(-0.72%)
S&P 500	1,124.83	-9.45	(-0.83%)
Nasdaq	2,327.08	-7.47	(-0.32%)

Sector	Change
Basic Materials	-0.79%
Capital Goods	-1.22%
Conglomerates	-1.78%
Cons. Cyclical	-0.58%
Cons. Non-Cyclical	-0.56%
Energy	-0.58%
Financial	-1.18%
Healthcare	-0.52%
Services	-0.63%
Technology	-0.16%
Transportation	-1.45%
Utilities	-0.93%

Dow Jones CLOSING Averages: DJIA 10,662.42 DN 76.89
  30 INDUS     10,662.42 DN   76.89 OR    0.72%
  20 TRANSP     4,382.93 DN   84.71 OR    1.90%
  15 UTILS        393.62 DN    3.64 OR    0.92%
  65 STOCKS     3,671.08 DN   40.85 OR    1.10%

Commodities
Crude Oil	74.92	- 0.35%
Natural Gas	4.02	-
Gasoline	1.91	- 0.30%
Heating Oil	2.11	-
Gold	1292.04	+ 0.05%
Silver	21.14	+ 0.05%
Copper	3.58	+ 0.73%
Quotes delayed 15 min.		» Add to your site

US August Existing Home Sales Up 7.6% To 4.13

Sales of previously owned U.S. homes rose in August, bouncing off a record low as the housing sector fights to recover without government support. Existing-home sales increased to an annual rate of 4.13 million, the National Association of Realtors said Thursday.

Inventories of used homes decreased by 0.6% at the end of August to 3.98 million available for sale. That represented an 11.6-month supply at the current sales pace, compared with a 12.5-month supply in July.

The median price for an existing home was $178,600 in August, up 0.8% from August 2009.

The report was the second this week giving a sign of stability for the beaten-down housing sector. The Commerce Department said housing starts in August rose a better-than-expected 10.5%. Still, the gain in starts was driven partly by apartment construction, a sign demand for housing could be shifting from purchases of houses to apartment rentals. Analysts say recovery of the housing sector will take a long time.


US Stocks Fall On Weak US Job Numbers

U.S. stocks fell Thursday as weak jobs numbers in the U.S. coupled with disappointing economic data out of Europe had investors worried again about the strength of the global recovery.

The Dow Jones Industrial Average dropped 60 points, or 0.6%, to 10678. General Electric and Caterpillar lost the most in the index, falling 1.5% each. McDonald's was the only gainer, up 0.3%, as it raised its quarterly dividend payment 11%.

The Standard & Poor's 500-stock index fell 0.8% to 1125 and the Nasdaq Composite slid 0.7% to 2318.



US Jobless Claims Jump

U.S. stock futures fell Thursday morning as worse than expected employment data indicated persisting weakness in the job market.
The Dow Jones Industrial Average futures dropped 82 points to 10591 while the Standard & Poor's 500-stock Index futures lost 11 points to 1119 and the Nasdaq Composite's futures fell 14 points to 1965.
Initial unemployment claims increased by 12,000 to 465,000 in the week ended Sept. 18, the Labor Department said in its weekly report Thursday. New claims for the previous week, ended Sept. 11, were revised upward to 453,000 from 450,000. Economists surveyed by Dow Jones Newswires had expected new claims would rise by only 3,000.
Stock futures had been down heading into the data as euro zone fears were again in focus with the European markets lower. Dow futures were down 62 points, while the S&P 500 futures had lost 8.6 points

The Conference Board Economic Indicators
The Conference Board released a separate report showing that its leading
indicators index increased by 0.3 percent in August following a 0.1 percent
increase in July. Economists had been expecting the leading index to show a
more modest increase of about 0.1 percent.

Before the Bell - US Dollar Climbs, Shares Lower

US Dollar climbs, Wall Street futures signal losses for U.S. shares ahead of market open. US markets are looking at a negative open to Thursday morning trading following a disappointing European economic output report dragged European shares and growth outlook lower.

The dollar was slightly firmer Thursday against some major trading partners, as a report of slower-than-expected euro-zone economic growth sent investors fleeing the euro. The precious metal historically trades inversely to the greenback. Gold is frequently used to diversify portfolios, as it isn't closely tied to economic cycles as are many commodities and equities.

U.S. markets were looking at a negative open to Thursday trading following a disappointing European economic output report dragged both European and U.S. equities lower.

As of 6:35 a.m. in New York, the Dow Jones Industrial Average futures lost 40 points, or 0.36%, to 10633, the S&P 500 index futures were down 5.8 points to 1124.00 and the Nasdaq 100 futures fell 5.5 points to 1974.00.

U.S. investors will get weekly jobless claims figures from the Labor Department followed later in the day by existing home sales data from the National Association of Realtors.

Economists expect that the number of people who filed for unemployment benefits last week remained steady at 450,000 claims. Existing home sales for August are expected to recover to an annualized pace of 4.1 million units.

In commodities, oil was down 0.7% to $74.19 a barrel while gold rose 90 cents to $1,293 a troy ounce.


US Dollar Climbs

US Dollar Futures Index DXY, Day's Range: 79.72 - 80.15, Now 80.10

Forex Currencies:

EUR/USD	1.3335	-0.0053 (-0.40%)
USD/JPY	84.5000	-0.0500 (-0.06%)
GBP/USD	1.5687	+0.0018 (0.11%)
CAD/USD	0.9674	-0.0030 (-0.31%)
USD/HKD	7.7593	+0.0016 (0.02%)
USD/CNY	6.7060	+0.0025 (0.04%)
AUD/USD	0.9497	-0.0067 (-0.70%)

U.S. Gold Prices:

GOLD: $1,293 SILVER: $21.12

Engelhard Corp's base price for industrial gold bullion was $1296.35 per troy ounce, unchanged from previous.

It's selling price for gold in fabricated form was $1393.58, unchanged. Handy & Harman's base price for gold was $1290.75 per troy ounce, down $2.75. The fabricated form price was $1394.01, down $2.97.


Blockbuster Filed for Bankruptcy

US based Blockbuster video rental to slash debt by $900 million via bankruptcy. Blockbuster filed for bankruptcy early Thursday morning in its latest attempt to overcome nearly $1 billion in debt.

The movie rental giant's U.S. businesses filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of New York. As part of its re-capitalization plan, Blockbuster (BBI, Fortune 500) said it would attempt to reduce its debt load to $100 million or less.

Blockbuster has struggled for survival ever since media conglomerate Viacom (VIA) spun off the company in 2004. As a part of the deal, the company had to pay Viacom shareholders a $5 per-share dividend, and the movie rental giant racked up about $1 billion of debt in the process.

The company also suffered losses from unprofitable stores and increased competition from both Netflix (NFLX) and Coinstar's (CSTR) Redbox.


CRUDE OIL:

Crude Oil

74.89

- 0.39%

EIA Top 10 US Crude Oil Import Sources

(figures in million barrels per day)
.....................June.......May.......June....... Jan-June.......Jan-June
Date...............10...........10..........09...........2010.............2009
Canada..............2.174.....1.997.....2.001..... 1.976...........1.876
Saudi Arabia....1.120......1.093....0.902......1.076...........1.060
Mexico..............1.066.......1.290...1.099.......1.103..........1.152
Nigeria..............1.064.......1.004... 0.769......0.999..........0.642
Venezuela..........0.850......1.011.....1.134......0.906.........1.009
Iraq....................0.630......0.394.....0.390.....0.505.........0.477
Angola................0.425......0.423.....0.435.....0.405..........0.534
Russia................0.416.......0.358.....0.305.....0.281..........0.266
Colombia...........0.387........0.295.....0.286.....0.320..........0.256
Algeria...............0.375........0.352.....0.207.....0.318..........0.242





Canadian Market:

Toronto Stocks Flat At Midday
The stock market was flat at midday Thursday.

At 11:45 a.m. EDT (1545 GMT), the S&P/TSX Composite Index was down 4.85 points, or 0.04%, at 12142.41. Declines led advances 644 to 628. Trading volume was 204.60 million shares. The S&P/TSX 60 Index was down less than a point at 702.91.


Toronto Indexes, Volume; 11 AM EDT Composite Down 33.51


S&P/TSX Composite 12113.75 off 33.51 or 0.3%
S&P/TSX 60 Index 701.02 off 2.40 or 0.3%
Financials 173.80 off 0.35 or 0.2%
Materials 390.31 off 0.63 or 0.2%
Energy 271.32 off 1.10 or 0.4%
Industrials 103.13 off 0.55 or 0.5%
IT 27.19 off 0.14 or 0.5%

Volume Thursday Wednesday
10-11 92.1M 96.7M
9:30-11 160.2M 177.5M

Toronto Most Actives At 11:15 AM EDT

Baffinland Iron Mines 15,014,374 1.00 up 0.06
Horizons NYMEX Natural Gas Bull 8,340,985 4.28 up 0.11
iShares Cdn S&P/TSX 60 6,672,902 17.70 off 0.03
Air Canada B 5,418,188 2.79 off 0.05
Manulife Financial 3,182,237 12.69 off 0.10
Kinross Gold 2,812,014 19.52 up 0.07
Southern Pacific Resource 2,726,160 1.14 up 0.03
Horizons NYMEX Natural Gas Bear 2,701,453 7.97 off 0.23
Suncor Energy 2,368,894 32.11 off 0.24
Western Coal 2,337,565 5.13 off 0.01




South American Markets:

BRAZIL:

Brazil Stocks Open Lower Amid Global Economic Concerns

Brazilian blue-chip shares opened lower Thursday as global economic concerns weighed on stocks despite an upbeat mood ahead of the launch of state-run energy giant Petroleo Brasileiro's (PBR, PETR4.BR) massive share offer.

The Ibovespa opened 0.2% lower at 68,186 points on the Sao Paulo Stock Exchange, or Bovespa, down from Wednesday's close at 68,325 points.


MEXICO:

Mexican stocks lacked direction in early trading Thursday despite a flurry of solid data on the local economy.

At 11 a.m. EDT, Mexico's benchmark IPC stock index was down 0.1% at 33,184.65 points. Volume was 48.6 million shares traded at a total value of 1.42 billion pesos ($112 million).


Mexico Registers $699 Mln August Trade Deficit - Mexico's August Unemployment 5.4%, Down From July's 5.7%

Mexico ran up a $699 million trade deficit in August as both imports and exports maintained a solid pace of growth from a year earlier.

The National Statistics Institute, or Inegi, said Thursday that exports rose 38% from a year ago to $26.92 billion, and imports were 37% higher at $27.62 billion.

The deficit was similiar to the $669 million shortfall registered in August 2009, and roughly in line with the $653 million median estimate in a Dow Jones Newswires survey of 11 economists.

Unemployment in Mexico fell in August from July and from a year ago as the export-led economic recovery continued gradually to feed into the labor market.

The National Statistics Institute, or Inegi, said Thursday that unemployment was 5.4% last month, down from 5.7% in July and 6.3% in August 2009. The jobless rate also fell in seasonally adjusted terms from July, when the end of the school year tends to put pressure on the jobs market. Underemployment--people who needed more work--fell to 8.7% from 9.2% a year ago, Inegi said.

Exports in the manufacturing sector continued to lead the way, rising 40% to $22.89 billion. Petroleum exports rose 28% to $3.47 billion, including $2.92 billion for crude oil. State oil monopoly Petroleos Mexicanos exported 1.351 million barrels a day of crude oil at an average price of $69.64 a barrel. Crude export volume was up from 1.101 million barrels a day in August 2009, but below the 1.386 million exported in July of this year.

Imports of intermediate, or producer, goods rose 44% to $21.41 billion, and consumer goods imports were 25% higher at $3.58 billion. Imports of machinery and equipment continued to lag other categories, rising 5.8% from a year ago to $2.63 billion.

The August result brought the accumulated trade deficit for the first eight months of the year to $1.42 billion, 62% smaller than the deficit in the January-August period of 2009.


Mexico Inflation Below Estimates
Consumer prices in Mexico rose less than expected in the first half of September, as higher costs for education and fresh fruits and vegetables were offset by relatively small increases for housing, health and transportation costs.

The Bank of Mexico said Thursday that the consumer price index rose 0.40% in the first two weeks of the month, pushing the annual rate down to 3.65% from 3.68% at the end of August. The core inflation index, which excludes volatile prices for energy, and fresh fruits and vegetables, rose 0.34% in the first half of September, leaving with the annual rate unchanged from the end of last month at 3.68%.

The readings were below the median estimates in a Dow Jones Newswires survey of 15 economists of 0.46% for the CPI and 0.40% for core CPI.

The central bank said higher fees for all levels of education contributed most to inflation in the first half of September. Price hikes for tomatoes and heating gas also pushed up the rate.

The Bank of Mexico attributed price increases for air transport and hotel services to the extended holiday for the 200th anniversary of Mexico's Independence.

Below-forecast inflation in recent months, along with relatively weak domestic demand, has allowed the Bank of Mexico to hold its benchmark overnight lending rate at 4.5% since July 2009, when the economy was in the depths of the 2009 recession. The median estimate of banks surveyed by local Citigroup unit Banamex is that interest rates won't rise until the third quarter of 2011.

The Bank of Mexico's official inflation target is 3%. The bank expects the CPI to accelerate toward the end of 2010 before approaching the target late next year.


Hurricane brings fresh flood misery to Mexico - 40,000 Homeless

Mexico has been hit by a new storm, compounding the flood misery which has affected one million people nationwide. Tropical Storm Georgette brought heavy rains and pounding waves to the Baja California region on the Pacific coast.

The storm, now downgraded to a Tropical Depression, made landfall near the resort town of Cabo San Lucas. It hit amid the worst rainy season ever recorded in some parts and just days after Hurricane Karl flooded large areas and killed at least 15 people.

Although Georgette has reduced in power it is still bringing strong winds and torrential rain to the area as it moves across the Gulf of California. In Baja California, the region's director of civil defence, Jose Gajon, said that about 1,000 families had been evacuated from areas vulnerable to flooding and storm surges.


CHILE:

Chile Peso Ends At 2-Year High On Copper Prices
Chile's peso ended stronger against the dollar Thursday, to levels not seen since mid-2008, on surging international copper prices.

The peso ended stronger at CLP488.50 to the dollar, versus Wednesday's close of CLP492.80, while trading in a range of CLP488.50 to CLP492.80.




European Markets:

News Thursday that Ireland's economy slipped back into contraction in the second quarter is not just a setback for a country already grappling with a major crisis: it's also a warning shot for other nations embarking on austerity, including the U.K.

As Ireland was last year, the U.K. has become a poster-boy for fiscal tightening efforts, with Prime Minister David Cameron and Treasury chief George Osborne using every international gathering to preach the virtues of austerity.

The U.K. government has set out ambitious fiscal consolidation plans for the next five years, seeking to cut spending and raise taxes by GBP113 billion by 2015 in a bid to break the back of a budget deficit of some 11% of Gross Domestic Product.

Those plans have been broadly welcomed by international organizations and credit rating agencies - just as Ireland's swift efforts to come to grips with its deficit was initially last year.

Yet concerns remain that the U.K. could find itself thrust into the same vicious cycle that Ireland is confronting right now--as austerity measures hits growth harder than expected, triggering credit rating downgrades and demands for even deeper austerity than first ordered.

While economists say the U.K. has several key advantages that Irish policymakers do not enjoy, they say the U.K. should not be oblivious of the economies woes in its Celtic neighbor.

Economy worries push European shares lower. FTSE falls as clouds gather over global recovery. Banks, and commodity stocks lead fall. The major European indices were down between 0.7% and 1% across the continent.

The European purchasing managers survey dropped to a reading of 53.8 in September, the firm Markit said Thursday, compared with the reading of 56.2 that was reported in August. While the report still shows some expansion in economic activity - a reading of 50 is neutral - traders expressed concerns that Europe could be next to suffer from the stalled recovery that's hindered
the United States.



GERMANY:

German Economic Contraction Begins As Both Mfg And Services PMI Prints Miss Expectations

September flash PMIs show another big decline. The manufacturing PMI came in at 55.3 after 58.2, while the services PMI declined to 54.6 after 57.2. The 'new orders' and 'new business' sub indices reported a similar decline as the headline figures.

Export expectations declined to the lowest level since September last year (51.9 after 54.3). German 'employment' edged higher in both manufacturing and services.

The September PMIs are signaling a further loss of momentum of the economy at the end of Q3, though the index level remains consistent with moderate growth. The fact that employment is still growing suggests that companies remain relatively optimistic about the medium-term outlook.

Germany is forecasting GDP growth to be at 0.4%qoq in Q3 and Q4. While business sentiment in July and August pointed to some upside risk to this forecast, the September PMIs are roughly consistent with this forecast.




IRELAND:

Irish economy contracts by 1.2%

The Irish Republic's economy shrank in the second quarter from the previous three months, surprising analysts who had been expecting growth. Most economists had predicted the Irish economy to have grown by 0.5% in the second quarter.

Gross domestic product (GDP) fell 1.2%, the Central Statistics Office said. It also revised down its measure of growth in the first quarter to 2.2% from 2.7%. Gross national product (GNP), seen by some as a more accurate barometer of the economy, fell by 0.3%.

The government has been seeking to reassure investors about the economy. Irish debt is trading 4.25 percentage points above equivalent German bonds. This spread reflects how much riskier markets perceive the Irish economy to be compared to Germany's.




Asian Pacific Markets:


NEW ZEALAND:

New Zealand Economic Growth Lags Forecast; Currency Declines

New Zealand’s economic growth unexpectedly weakened even before the nation’s worst earthquake in eight decades crippled infrastructure in the south of the country. The local currency snapped a four-day rally.

Gross domestic product increased 0.2 percent in the second quarter from the previous three months, less than the 0.7 percent median estimate in a Bloomberg News survey of 12 economists and the 0.9 percent forecast by the central bank, Statistics New Zealand figures showed in Wellington today.

http://www.bloomberg.com/news/2010-09-22/new-zealand-economy-expanded-0-2-in-the-second-quarter-lagging-estimate.html



World Markets Snapshot:

Shanghai	2,591.55	+2.84 (0.11%)
Nikkei 225	9,566.32	-35.79 (-0.37%)
Hang Seng Index	22,047.71	+45.12 (0.21%)
TSEC	8,202.54	+6.14 (0.07%)
FTSE 100	5,512.09	-39.82 (-0.72%)
DJ EURO STOXX 50	2,730.32	-22.45 (-0.82%)
CAC 40	3,695.01	-40.04 (-1.07%)
S&P TSX	12,147.26	-23.31 (-0.19%)
S&P/ASX 200	4,633.60	+8.40 (0.18%)
BSE Sensex	19,861.01	-80.71 (-0.40%)

Thursday's US Economic Calendar:

8:30 a.m.
Sep 18 Unemployment Insurance Claims Report - Initial Claims Weekly Jobless Claims (expected 453K) Weekly Jobless Claims Net Change (previous +3K) Cont Jobless Claims (prior week) (previous 4485000) Cont Jobless Claims Net Chg (prior week) (previous -84K)

9:40 a.m.
Chicago Fed Pres Evans gives welcoming remarks at Chicago Fed/IMF banking conference in Chicago

10:00 a.m.
Aug Mass Layoffs

10:00 a.m.
Aug Leading Indicators Leading Index (previous +0.2%) Coincident Index (previous +0.2%) Lagging Index (previous +0.4%)

10:00 a.m.
Aug Existing Home Sales Total Sales (previous 4.1M) Percent Change (previous +7%) Month's Supply (previous 12.5)

10:00 a.m.
Sept. 11 DJ-BTMU U.S. Business Barometer DJ-BTMU Business Barometer (previous +0.2%) DJ-BTMU Business Barometer (52 Wk) (previous +4.9%)

10:30 a.m.
Sept. 17 EIA Natural Gas Storage Report Total Working Gas in Storage (previous 3267B) Total Working Gas in Storage (Net Change) (previous +103B)

1:00 p.m.
Chicago Fed Pres Evans introduces Paul Volcker at Chicago Fed/IMF banking conference in Chicago

4:30 p.m.
Sep 22 Foreign Central Bank Holdings Foreign US Debt Holdings (previous 3.2T) US Foreign Agency Holdings (previous 752.52B) Foreign Treasury Holdings (previous 2.44T)

4:30 p.m.
Sept. 22 Federal Discount Window Borrowings Primary Credit Borrowings (previous 24M) Primary Credit Borrowings W/E Daily Avg (previous 29M) Discount Window Borrowings (previous 52.6B) Discount Window Borrowings W/E Daily Avg (previous 52.79B)

4:30 p.m.
Money Stock Measures

Note:
Chicago Fed and IMF's Annual International Banking Conference commences

Market Summary for Tuesday, Sept. 22, 2010:

Stocks
Concerns about the implications of further Treasury buying by the Federal Reserve sent stocks slightly lower Wednesday.

Gold rallied toward a record high of $1,291 an ounce. Stocks, meanwhile, traded in a tight range of less than 100 points amid sluggish trading volumes. Just 3 billion shares changed hands in New York Stock Exchange composite volume with a little over an hour left in trading, set to fall far below the year's average of 5 billion shares.
Treasurys:
Long-dated Treasurys rose for a fourth straight session Wednesday on the prospects of large-scale bond purchases from the Federal Reserve to support the economy. The market got an extra boost from a decline in U.S. stocks and a 0.5% drop in the Federal Housing Finance Agency's home price index. The report reinforced concern about the health of the economy and supported the case for further monetary stimulus.
Forex:
The US Dollar fell below support levels and the euro shot to its strongest level against the dollar since April as investors broadly ditched the greenback Wednesday on speculation the Federal Reserve could soon act to kick-start a slowing U.S. economy. The euro and other higher-yielding currencies gave back some of their early gains as U.S. stocks dipped into the red by noon EDT, but the dollar still remained broadly weaker.