Midday Action, Oct. 24

The Dow () was down more than 200 points early in the session, but has come off these lows. Nonetheless, stocks are sharply in the red with day to day volatility continuing. Even the likelihood of another rate cut by the Fed has not provided gains for the major market indices.

The housing market continues to worsen with existing home sales falling to an eight year low. The September data was expected to show an annualized figure of 5.3 million units, down from 5.5 million in August. However, the figure came in at 5.04 million units. Inventory remained very high at 10.5 months, its highest level since 1999.  The median price for a home fell 5.7 percent to $211,700 during the month.

Oil prices are soaring higher Wednesday after the EIA reported that inventory levels fell by 5.3 million barrels for the week ending Oct. 19. Gasoline reserves also fell by 2.0 million barrels, hardly data that will ease prices at the pumps. Crude is up more than a $1.25 in midday action with the December contract trading near $86.50 a barrel.

In earnings news, Merrill Lynch () reported a third quarter loss of $2.24 billion due to write-downs from bad mortgage loans. The loss for MER equated to $2.82 a share, much worse than estimates for a loss of 45-cents. This has led to a sharp decline for MER shares of six percent with the stock trading near $63.

AMZN bested earnings estimates in the quarter, but concerns about the company’s margins have taken a toll on the stock. AMZN shares are down more than 15 percent on the session partly due to the 10 percent run up the stock experienced heading into its release.

Blue chip stock Boeing () also announced earnings that showed a 59 percent rise in profits. The aircraft maker also raised its guidance for the year, yet the stock is down one percent on the session. Nonetheless, the stock is up about seven percent this year, currently trading near $94 a share.

Jody Osborne

Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site