YAHOO: The stock market
settled with a 1.1% loss Wednesday after late-session surge made in the final
hour following an FOMC rate cut was reversed in the final minutes of trade
after headlines hit the wires that raised concerns regarding General Electric's (GE 19.20, -0.29) revenue in
2009. Meanwhile, commodities made one of the strongest gains on record as
the dollar got hammered.
Specifically, the S&P 500
was up 3.1% with 10 minutes left in the session and then quickly sank to a 1.8%
loss before settling with a decline of 1.1%. Small and mid-cap stocks
outperformed with gains of 1.7% and 1.8%, respectively.
With regard to GE, Dow Jones
reported that the conglomerate is aiming to keep 2009 profit the same as 2008,
even if revenue declines 10-15%. The profit outlook is good news given the
current consensus estimate anticipates a 9% decline year-over-year. However,
the revenue view doesn't say much about the economic outlook and implies that
GE will cost cuts to meet its profit goal.
This was disappointing to the
market when thinking of the demand outlook for this global company, sparking a
sweeping decline in other multi-national companies in the final minutes of the
trading session.
After the close, however, CNBC
noted that GE said the comment was not new and shares of GE were trading up in
the after hours session.
The Federal Open Market
Committee cut the fed funds rate by 50 basis points to 1.00%. This marks the
lowest level since June 2004. The discount rate was reduced by 50 basis points
to 1.25%. Both actions were unanimously approved. The Fed said the pace of
economic activity has "markedly" slowed as consumer expenditures
declined, while inflation pressures are expected to moderate due to the drop in
commodity prices and weaker economic prospects.
The FOMC believes that over
time this action, along with the Fed's other measures, will help promote
moderate economic growth. The announcement did not give any surprises, and left
the possibility for further rate cuts.
Separately, the Fed
established temporary currency swap lines with the central banks of Brazil,
Mexico, South Korea and Singapore. The move is meant to improve liquidity and
complement the Fed's current swap lines with ten other central banks.
Seven of the ten sectors
posted a loss.
Consumer staples stocks
trailed the broader market even though Procter & Gamble (PG 61.33, -1.90), Kraft (KFT 28.47, -0.41 ) and Kellogg (K 50.02, -0.66) all reported
better-than-expected quarterly earnings results.
The telecom (-3.3%) sector was
laggard after Qwest (Q 2.33, -0.27) reported worse than expected quarterly earnings and
said it was cutting 1,200 jobs, or 3% of its workforce.
The consumer discretionary
sector outperformed on a relative basis with a decline of 0.1%. Casino and
gaming stocks soared 11.5% after MGM Mirage (MGM 13.75, +3.42) reported an earnings
drop and outlook that was better-than-feared.
Commodities rallied across the
board in a rebound trade that was compounded by a 2.7% drop in the dollar.
Crude oil prices spiked 9.8% to $68.90 per barrel, getting an added lift after
the government's weekly energy report showed a smaller-than-expected increase
in crude inventory levels.
As a result, the energy
(+2.3%) and material (+2.7%) posted the largest gain this session.
In economic news, September
durable goods orders rose 0.8%, better than the expected decline of 1.1%.
Excluding transportation, durable goods orders fell 1.1%, which was better than
the expected decline of 1.5%. However, nondefensive capital goods excluding
aircraft, which is a proxy for business investments, fell 1.4%. DJ30 -74.16
NASDAQ +7.74 NQ100 +0.4% R2K +1.7% SP400 +1.8% SP500 -10.42 NASDAQ Adv/Vol/Dec
1610/2.78 bln/1138 NYSE Adv/Vol/Dec 1954/1.62 bln/1145