Overview: Concerns about the health of European banks hung over the global equities markets on Tuesday. In addition, traders coming back from the long Labor Day holiday weekend looked to be in a profit-taking mood following last week’s five-day market rally. There were no economic news releases and corporate news was light. Oracle’s (ORCL) weekend hiring of former Hewlett-Packard Co. (HPQ) CEO Mark Hurd as co-President was the headline news event. Later in the day, Hewlett Packard launched a lawsuit against Oracle citing Hurd’s knowledge base of HP’s key trade secrets, thus potentially violates confidentiality agreements. BP PLC (BP) released a 133-page report on its findings related to the Gulf oil well explosion, indicating that no single person or action caused the failure of the well. Crude oil futures prices closed at $73.92/barrel for the near-term contract. Market Recap: Wall Street came under selling pressure early on Tuesday before settling into a fairly narrow trading range. Composite volume on the NYSE and the NASDAQ was light with just 2.5 billion shares changing hands. Market breadth was negative with 799 NYSE issues ending the day with a gain while 2203 issues closed lower. The bond market closed higher, sending the yield on the 10-year Treasury note down to 2.57%. Sector Overview: Each of the ten market sectors posted losses, led by Financials (-2.4%), Energy (-1.6%), and Consumer Discretionary (-1.6%). Defensive issues including Consumer Staples (-0.3%), Telecom (-0.3%), and Utilities (-0.6%) saw the lightest selling pressure. Each of the four investment styles ended yesterday with losses. Small cap value dropped 2.0%, followed by small cap growth, off 1.8%, large cap value, off 1.2%, and large cap growth, off 0.70%. Tuesday’s Leading Industry Groups: Gold (+1.97%), Steel (+1.21%) Tuesday’s Lagging Industry Groups: Tires & Rubber (-6.02%), Specialized Consumer Services (-5.94%), Photographic Products (-5.50%), Building Products (-4.81%), Consumer Electronics (-4.20%) Companies in the News Today:BP’s (BP) internal investigation of the Gulf oil well disaster places blame on a number of companies, namely Transocean Ltd. (RIG) and Halliburton Co. (HAL), as well as its own procedures, but does not single out any individual person or factor for the disaster. Bristol-Myers Squibb Co. (BMY) plans to acquire biotech drug firm ZymoGenetics Inc. (ZGEN) in a deal valued at $885 million. U.S. researchers said that Pfizer’s (PFE)Wyeth unit used ghostwriters to play up the benefits and downplay the risks related to the harm of hormone replacement therapy published in medical journals. Companies reporting earnings above forecasts: CIEN, HITK, JTX, NAV, TLB Companies reporting earnings in line with forecasts: SFD, UNFI Companies reporting earnings below forecasts: TITN Companies raising earnings or revenue guidance: None Companies reiterating earnings or revenue guidance: UNFI, CIEN Companies lowering earnings or revenue guidance: SLP, TLB, NAV Analyst Upgrades (from Thomson, Briefing.com, Marketwatch.com): DELL, TEL, SKH, HBAN, JBL, TEL, PVH, DEI, KSP, CTV, SPLS, COST, MGM, METR, LFGRY Analyst Downgrades (from Thomson, Briefing.com): TNDM, VSEA, WDC, STX, KAR, SAH, TEN, PAG, MGA, LEA, LXP, HAR, HIW BXP, BWA, AWK, DKS, TER, HPQ, WDC, INTC, HRB, IDIX, BAX, ARM, NEP, VIA.B, TWX, LVS, CRH Looking Ahead: The U.S. stock market appears to be settling down after Tuesday’s sell-off. We view yesterday’s market action as normal profit-taking following five days of gains. Nervousness over the European bank debt situation reminds us that some of the long-term problems related to the 2007-2008 financial crisis have not disappeared and will periodically reappear. We also realize that the European debt situation is not as dangerous as seen two years ago when the financial crisis hit its crescendo. Our technical work suggests that near-term the U.S. stock market remains in an uptrend price channel, as does the long-term price trend, as defined using statistical price volatility Bollinger Bands. Later today, investors will look at the Federal Reserve’s Beige book of regional economic activity very closely to see if the slightly better than reported economic data released last week was widespread across the country. Unless the report delivers a big surprise, we do not expect significant market reaction to the release of this report. Investors will focus more closely on updates delivered by corporate CEOs at a number of institutional analyst meetings this week, including important analyst-sponsored retailing and technology conferences. Today’s Market Outlook: We expect a slightly higher stock market opening this morning following the successful sale of debt securities by Portugal’s government overnight. Stock futures prices are trading above fair value a half hour ahead of the opening bell. Stock prices fell overnight in most Asian markets. The Tokyo Nikkei fell 2.18%. The Hong Kong stock market dropped 1.46%. The Chinese CSI 300 Index was off 0.11%. Stock prices in the European markets are higher at mid-session. The London FTSE is up 0.28%. The near-term contract of light sweet crude is trading at $73.91/barrel. Natural gas futures are trading at $3.851/mcf. Gold is trading at $1261.00/ounce. The euro is trading higher at $1.2704. The 10-year Treasury note is yielding 2.60%. The 2-year Treasury note is trading to yield 0.494%. 3-month Treasury bills are trading to yield 0.172%. The Fed Funds Target range is 0% to ¼%. Upcoming Media Appearances: Tuesday, September 21: CNBC’s Squawk on the Street - 9:30AM EDT from the floor of the NYSE
Upcoming Chief Market Strategist Office Visits and Client Event Appearances:
Sept. 8:
Missoula, MT– Office Visit (Noon)
Sept. 9:
Travel back to Lake Oswego (AM)
Sept. 13:
Spokane, WA – Client Meetings (PM)
Sept. 14:
Coeur d’Alene, ID – Chamber of Commerce Breakfast Speech
Sept. 15:
Wenatchee, WA – Office Visit-Client Event
Sept. 16:
Kennewick, WA – Client Appreciation Event
Sept. 17:
Return to Lake Oswego (AM)
Sept. 19-23:
New York/Philadelphia-Securities Industry Institute (Wharton) Board of Trustees Meeting
Sept. 27-28:
Cheyenne, WY – Client Appreciation Events
Sept. 29-Oct. 1:
Chicago, IL – First Trust Meeting and Retail Conference
Oct. 5:
Seattle, WA – Davidson Investment Policy Summit Meeting (PM)
Oct. 6:
Burlington, WA – Office Visit/Client Meetings (AM)
Oct. 6:
Bellevue, WA – Economic Overview Presentation to Columbia Bank (PM)
Oct. 11:
Pocatello, ID – Office Visit –Client Event (PM)
Oct. 12:
Idaho Falls, ID – Office Visit & Client Event (?)
Oct. 13:
Twin Falls, ID – Rotary Club Luncheon Speech
Oct. 14:
Boise, ID – Idaho Women’s Investment Forum Speech/Client Event
Oct. 15:
Return to Lake Oswego (AM)
Oct. 18:
Great Falls, MT – Corporate Meetings (PM)
Oct. 19:
Great Falls, MT – Office Visit (AM), Helena, MT – Office Visit (noon)/Client Event
