Tuesday, February 27, 2007

Stocks Finish Sharply Lower on Emerging Market and Economic Worries

Indices
S&P 500 1,399.04 -3.47%
DJIA 12,216.24 -3.29%
NASDAQ 2,487.07 -3.86%
Russell 2000 792.67 -3.77%
Wilshire 5000 14,189.97 -3.10%
Russell 1000 Growth 553.39 -3.42%
Russell 1000 Value 806.90 -3.41%
Morgan Stanley Consumer 689.50 -2.82%
Morgan Stanley Cyclical 934.38 -3.86%
Morgan Stanley Technology 562.03 -3.94%
Transports 4,863.76 -3.43%
Utilities 479.48 -2.88%
MSCI Emerging Markets 112.0 -4.67%

Sentiment/Internals
Total Put/Call 1.69 +65.69%
NYSE Arms 14.22 +1,432%
Volatility(VIX) 18.31 +64.22%
ISE Sentiment 111.0 +15.63%

Futures Spot Prices
Crude Oil 60.34 -1.69%
Reformulated Gasoline 179.30 +.86%
Natural Gas 7.43 -3.53%
Heating Oil 175.20 -.24%
Gold 664.30 -3.70%
Base Metals 242.76 +1.00%
Copper 275.50 -4.01%

Economy
10-year US Treasury Yield 4.51% -11 basis points
US Dollar 83.49 -.52%
CRB Index 313.26 -.58%

Leading Sectors
Defense -2.45%
Drugs -2.47%
Homebuilders -2.73%

Lagging Sectors
Alternative Energy -5.80%
Steel -6.85%
Gold & Silver -6.96%

Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
AG Edwards:
- Rated (BKC) Buy.

Afternoon/Evening Headlines
Bloomberg:
- The price of gold plunged 4% today despite its status as an investment safe haven.
- Great Atlantic & Pacific Tea, the owner of A&P and Food Emporium supermarket chains, is in talks to acquire Pathmark Stores(PTMK) for $652.5 million.
- Asian stocks may slide for a second day after a plunge in Chinese shares sparked a global sell-off. New Zealand NZX 50 Index, Asia’s first market to open, tumbled the most in more than four years. The Nikkei 225 futures are trading down 4.25%.
- Dow Jones(DJ) said its Dow Jones Industrial Average failed to keep up with stock trades for part of the day, making it appear as though the market plunged suddenly once computer problems were fixed about an hour before the close.
- Emerging-market bonds and currencies fell as a tumble in Chinese stocks curbed investor demand for riskier assets.
- Federated Dept. Stores(FD) reported higher fourth-quarter profit as customers shopped at Macy’s stores, and Target Corp.’s(TGT) net income rose on sales of consumer electronics and groceries.
- Treasuries posted the biggest gains since June 2005 as a rout in global stocks and bonds bolstered demand for the safest debt.
- Latin stocks fell the most since Sept. 11, 2001, as a plunge in Chinese shares prompted foreign investors to shed emerging market equities.
- Copper dropped 4% today as speculators cut long bets on concerns that demand from the US and China will slow further.

Financial Times:
- TXU Corp.(TXU), the Texas power producer being acquired fro $45 billion by KKR and Texas Pacific Group, is gauging interest from private equity groups and energy companies in a rival bid.

Vedomosti:
- Polo Ralph Lauren Corp.(RL) will open its first three stores in Moscow this year under a franchise agreement with Russia’s Mercury Group.

BOTTOM LINE: The Portfolio finished lower today on losses in my Retail longs, Computer longs, Biotech longs and Telecom longs. I added to my (EEM) short and added large (IWM)/(QQQQ) hedges today, thus leaving the Portfolio 50% net long. The tone of the market was extraordinarily negative as the advance/decline line finished substantially lower, every sector fell and volume was very heavy. Measures of investor anxiety were very elevated into the close. Today's overall market action was very bearish. Panicky trading was prevalent throughout the day. The VIX soared the most ever in a day, rising 64%. The NYSE Arms hit 15.95 today, the highest since Bloomberg began tracking it in 1998. As well, the CBOE total put/call was elevated throughout the day. My proprietary gauge of investor angst finished at a very elevated level. Today's losses were the most extreme in emerging market and commodity stocks. Chinese commodity stocks were hit the hardest. If in fact the bubble in Shanghai shares is bursting, U.S. stocks will likely see further downside in the near-term. However, longer-term, an end to the emerging market and commodity manias has hugely positive implications for U.S. stocks, specifically growth stocks. While today's losses were substantial, the Value Line Geometric Index, the best gauge of the broad market, is still 2% higher year-to-date, which is still a very good start to the year. Moreover, the average mid-cap stock is still about 3% higher ytd.

No comments: