Closing Wrap-Up, Oct. 24
Stocks fall short of a positive close, but show strong comeback. The Dow () closed flat at 13,657.25. The S&P 500 () fell 3.71 points to close at 1,515.88. The NASDAQ () was weaker with the tech laden index down 24.50 points to finish at 2,774.76. Volume was heavy on the session with the NYSE trading 1.56 billion shares and the Naz turning over 2.78 billion shares. Market breadth was negative by a 12-to-21 and 10-to-20 margin on the Big Board and Naz respectively.
After moving lower by more than 200 points Wednesday, blue chips were able to recover. The Naz still closed with a significant loss and stocks continued to show a lot of volatility. Earnings news and further data on the housing sector were the main stories Wednesday including reports from Amazon.com () and Merrill Lynch ().
AMZN reported that earnings rose to 19-cents a share from 5-cents in the year ago period. This beat analyst expectations, but analysts are concerned about margins going forward for the web retailer. On Wednesday, AMZN shares rose more than 10 percent, but the stock gave back these gains by falling 12 percent Wednesday. However, AMZN shares did close at $88.73, more than five dollars off its intraday low.
MER shares fell 5.8 percent after the financial giant reported earnings that disappointed the street. Merrill lost $2.24 a share due to a nearly $8 billion in write downs due to problems in its subprime and collateralized divisions. This was nearly double what the company warned about just a few weeks ago.
Existing home sales in September continued to worsen, coming in below estimates. Existing home sales fell to an annualized level of 5.04 million units from 5.48 million units in August. Expectations were for a figure of 5.30 million units. The median price of an existing home fell 5.7 percent and there are concerns prices will continue to fall considering that inventory levels are at records highs.
Another concern for traders is the fact that energy prices are near record highs. Crude on Wednesday rose $2.39 a barrel to close at $87.66. This occurred following the weekly petroleum inventory release. Crude supplies fell by 5.3 million barrels with gasoline reserves down 2.0 million barrels.
The fact is that there is a lot of uncertainty in the market place right now and this could continue until the FOMC decision next week. The odds are highly in favor of a rate cut, which could erase some of the bearish tone seen of late. However, earnings are what ultimately drive the market and so far, earnings have been short of expectations on the whole.
Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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