Thread: US STOCKS-Wall St edges lower after Japan quake, data

US STOCKS-Wall St edges lower after Japan quake, data

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Thu, Mar 10 2011

Fri Mar 11, 2011 10:37am EST

* Massive earthquake rocks Japan

* China inflation accelerates

* Consumer sentiment below expectations

* Indexes off: Dow 0.4 pct, S&P 0.2 pct, Nasdaq 0.4 pct

* For up-to-the-minute market news see [STXNEWS/US] (Updates to early morning, with University of Michigan data)

By Chuck Mikolajczak

NEW YORK, March 11 (Reuters) - U.S. stocks edged lower on Friday after a massive earthquake hit Japan and a disappointing reading on consumer sentiment.

The biggest earthquake on record to strike Japan triggered a roughly 30-foot tsunami, killing hundreds of people and sweeping away everything in its path, including houses, ships and cars. For details, see [ID:nL3E7EB0MF]

U.S. consumer sentiment fell to its lowest level in five months in early March as gas prices rose, a survey released on Friday showed. [ID:nN10186886]

The data ran counter to a report from the Commerce Department showing retail sales rose 1.0 percent, the largest gain since October and in line with expectations. [ID:nCAT005392]

"The market held together well because of the retail sales numbers," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York.

"But those are not good numbers when you think about the future of retail sales. This is going to take some of the upward momentum out of the market."

The Dow Jones industrial average .DJI dropped 42.50 points, or 0.35 percent, to 11,942.11. The Standard & Poor's 500 Index .SPX lost 2.64 points, or 0.20 percent, to 1,292.47. The Nasdaq Composite Index .IXIC fell 9.46 points, or 0.35 percent, to 2,691.56.

Among insurers likely to have exposure in Japan, Aflac Inc (AFL.N) fell 1.5 percent to $54.87 and Berkshire Hathaway Inc (BRKb.N) lost 0.8 percent to $84.26. The KBW Insurance index .KIX fell 0.8 percent.

Oil prices fell, with Brent crude futures LCOc1 down 1.2 percent to $114, and U.S. crude CLc1 off 2.2 percent at about $100.

http://www.reuters.com/article/2011/03/ ... 9820110311

Tsunami Impacts Weaker Markets
Mar. 11 2011 - 10:26 am | 0 views | 0 recommendations | 0 comments
By TOM ASPRAY

The world and financial markets are reacting to news about the Japan earthquake and resulting tsunami. Here’s what to watch for in key Asian markets as well as in the US.

The powerful overnight earthquake in Japan and widespread tsunami warnings throughout the area are likely to add more pressure on the already weak Japanese and Hong Kong stock markets. Both lost over 1.5% in Friday’s session. Japanese stocks have been receiving quite a bit of attention recently, as some managers have commented that Japanese stocks are undervalued. The charts suggest they are unfortunately likely to drop further over the next few weeks. The US markets, after Thursday’s pummeling, are also likely to be under further pressure on Friday, though technically, they look much stronger.

chart
Click to Enlarge

Chart Analysis: The iShares MSCI Japan Index (EWJ) gapped lower on Thursday and is likely to show another down gap Friday and break the daily uptrend, line a.

* The daily chart shows further support in the $10.80 area with the 38.2% support level at $10.68
* The more important 50% support is at $10.38 with the rising 200-day moving average (MA) at $10.22
* The daily on-balance volume (OBV) peaked in early February and formed a negative divergence at the highs (line b). The OBV dropped through support, line c, early in the week
* There is initial resistance now in the $11-$11.20 area

The iShares MSCI Hong Kong Index (EWH) peaked on Nov. 8, 2010 and has been correcting while many of the other world markets have made a series of new highs.

* EWH tested the $18 area in late February before rebounding to trend line resistance, line d, in the $19.15 area

* Thursday’s lower close suggested the rebound was over with the next target at $17.98 and the 38.2% support
* The longer-term uptrend (line e) and the 200-day MA are at $17.50 with the 50% retracement support at $17.16
* The daily OBV violated its uptrend, line f, in November, and has since been in a fairly narrow range

chart
Click to Enlarge

The chart of the Spyder Trust (SPY) looks much stronger than EWJ or EWH as it made significant new highs in February and is still above the late February lows.
· The daily chart shows next good support in the 128.25-34 area which is the short term 38.2% support as well as the equality target derived from the earlier decline.
· There is additional support in the $127.50 area with the 50% retracement support at $126.14.
· The chart has first resistance now at $131 with stronger in the $133.50 area

* The S&P 500 A/D line did confirm the price highs which is bullish for the intermediate term trend.
* The A/D line made s secondary high on March 3rd before turning lower and breaking its initial uptrend, line b. It is just above next support (line a) with more important support at line c.

The Powershares QQQ Trust (QQQQ) tracks the Nasdaq 100 index, which has been the strongest US market sector. It has been hit hard with profit taking over the past few days, as it gapped below the 50-day MA on Thursday.

* The next support is at $55.30-$55.50 with further support at $54, which corresponds to the highs from last November
* The 38.2% support is at $53 with the 50% retracement support at $51.10. The rising 200-day MA is at $50.50
* The Nasdaq 100 Advance/Decline (A/D) line made further new highs on March 3 (line e) as it was stronger than prices. It is already back to first support, with stronger support at the uptrend (line f) dating back to the October lows

What It Means: The weak technical picture for EWJ and EWH makes them more vulnerable to the impact of the earthquake and tsunami. I remember the weaker 1995 Kobe earthquake quite well, as I was writing daily commentary on both the Japanese and Hong Kong markets at the time. The economic impact of that quake was pegged at $100 billion, and a similar economic loss this time could seriously derail Japan’s economic recovery.

As for the US market, the short-term A/D indicators are reaching oversold levels, suggesting a short-term low in the next few days. Also, American Association of Individual Investors (AAII) sentiment is currently neutral, with only 36% bullish and 32.3% bearish. Next week, the number of bulls should drop even more. This would put the sentiment numbers closer to levels consistent with a market bottom, not a top. They are quite different from the 63% bullish reading in late December.

How to Profit: If you are still long either EWJ or EWH, I hope you determined an appropriate stop before this disaster. The opening price could be the low for the day, but both markets should stabilize, if not bounce, in the next week. A weak rebound in EWJ would be a reason to sell.

Technically, EWH has been correcting for some time and could bottom out in the next several weeks. As for SPY and QQQQ, the intermediate-term picture remains positive, while the short-term outlook favors further weakness. The strength of the next rally, which should begin next week, will be important

http://blogs.forbes.com/tomaspray/2011/ ... r-markets/

* MARCH 11, 2011, 10:40 A.M. ET

US Stocks Fluctuate As Investors Digest Japan Quake; DJIA Off 32

By Donna Kardos Yesalavich

Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--U.S. stocks flickered between small gains and losses Friday despite the strongest earthquake to hit Japan in at least 300 years, as investors predicted that the impact on the global economy would be relatively modest.

The Dow Jones Industrial Average slipped 32 points, or 0.3%, to 11949, in recent trading. The Nasdaq Composite was off 0.3% at 2692. The Standard & Poor's 500 index edged down 0.1% to 1294, with gains in its energy and materials sectors helping limit the decline.

The earthquake in Japan, one of the five biggest in history with a magnitude of 8.9, caused mass panic around Tokyo. The natural disaster could derail the country's nascent economic recovery and increase Japan's already massive public debt, which is 200% of gross domestic product. Japan's Nikkei Stock Average fell 1.7%.

However, the reaction in the U.S. market was minimal, as investors expected that the quake wouldn't significantly hurt global economic growth.

"These types of events, they're very sad and they're very alarming, but they don't have a huge impact on economic activity and momentum," said Christian Thwaites, president and chief executive of Sentinel Investments. "They kind of distract people from their terminals but I don't think people see them as big buying or big selling opportunities. Ultimately, they don't stop an economy in its tracks."

The event may actually help boost industrial, energy and materials stocks, given that those sectors could benefit from increased demand as Japan tries to rebuild what was damaged by the quake, Thwaites said.

While those sectors have already been strong for months, "people have been looking for reasons to add to that, and what happened today gives you reason to add to that," Thwaites added.

The quake comes a day after the Dow registered its biggest one-day drop since August. Thursday's drop had come on escalating turmoil in the Middle East, fresh reminders that Europe's debt crisis remains unresolved and surprisingly downbeat economic news out of China.

"From a global economic impact, the North Africa/Middle East situation is probably much larger" than the impact of the earthquake, said Arne Espe, vice president of Mutual Fund Portfolios as USAA Investment Management. "It looks like some of the European reinsurers are down today like Swiss Re, and in terms of an industry being impacted, that would be the biggest concern to investors."

Shares of Swiss Re fell 5.4% on the Swiss Exchange.

Among U.S. insurers, XL Group fell 2.9%, Hartford Financial Services Group fell 1.9%, and American International Group shed 1.6%. XL Group said its probable maximum loss from a 1-in-250 year Japan quake is $309 million, or 3.2% of tangible shareholders' equity, although there are no credible damage estimates yet that would indicate if the quake was a 1-in-250 event.

Friday's round of U.S. economic data came in largely below expectations. U.S. retail sales rose less than expected, a sign that rising gasoline prices might be weighing on consumers. And consumer sentiment dropped back in early March as expectations plunged.

However, U.S. business sales increased in January by the largest amount in 10 months, while inventories grew more than expected as companies anticipated greater demand.

The U.S. Dollar Index, tracking the U.S. currency against a basket of six others, fell 0.2%. The yen surged as nervous Japanese companies and investors brought funds home after the devastating earthquake there.

Treasurys slipped, lifting the yield on the 10-year note up to 3.40%. Gold futures edged higher.

Crude-oil futures tumbled below $100 for the first time since March 2 in the wake of the quake, although traders cautioned that any news of spreading unrest in the Middle East and North Africa could reverse the day's losses.

Among stocks in focus, Aeropostale fell 6.4%. The company's fiscal fourth-quarter profit slid 13% as the teen-apparel retailer posted weaker gross margins and a small decline in same-store sales. Aeropostale also issued weak earnings outlooks for the current quarter and the full fiscal year.

AnnTaylor Stores jumped 12%. The women's clothing retailer's fourth-quarter profit surged, thanks to improved demand at both its namesake chain and Loft online and outlets.

-By Donna Kardos Yesalavich, Dow Jones Newswires

http://online.wsj.com/article/BT-CO-201 ... 10202.html

related

Should We Be Alarmed That The Biggest Bond Fund In The World Has Dumped All Of Their U.S. Treasury Bonds?

http://www.alipac.us/ftopic-231061-0-da ... rasc-.html

Nobody seems all that alarmed that the largest bond fund in the world has dumped all of their U.S. Treasuries. But with world financial markets in such a state of chaos right now, shouldn't we all take note when one of the biggest players in the game makes such a bold move?

[quote="Dixie"]US STOCKS-Wall St edges lower after Japan quake, data

President Obama is offering millions if not billions of our tax dollars to aid in Japan. Our own Country is BROKE and can't afford to keep bailing our other Country's!!!!!!!!!! That's why we are at record number deficit! Let OTHER Countries fork out their money for a change!! We've GOT to stop handing over money, when our own Country is in dire straights right now! Where's Mexico when disasters strike in other Country's?? Oh yah, it's illegal citizens are here cashing in on OUR tax dollars!! United States congress are the dumbest people on earth!!

related

UPDATE On The Number Of Missing People In Japan

http://www.businessinsider.com/japan-mi ... z1GJU2VUy2

According to the Kyodo News Agency, via BBC, the official missing persons tally is around 88,000.

http://www.eitb.com/news/world/detail/6 ... ach-japan/

[quote="HAPPY2BME"]related

I had no idea how swiftly the water moves during a tsunami ! Does anyone know how much of a warning, if any, they had? What a horrible, tragic, terrifying event to have to go through ! My thoughts are with all of the people who are suffering heart breaking loss. I have friends in the medical field who are members of humanity organizations, and are already coordinating trips there to aid in anyway needed. I call them heros ! I hope that if someday USA has tragic event like that, Japan or another Country will help us !