Top Line: The stock market enjoyed the GDP news and jumped at the open. From there stocks didn't look back. The oil market had a brief scare from the hurricane (Gustav) which seemed to threaten the oil fields in the Gulf; but, after a quick shot up to $120, oil fell even quicker to the $114 level fueling the stock market (yes, we know, oil doesn't drive the stock market but they all think it does so that's what they report). After the close, Dell significantly disappointed the market.
Let's start with the GDP. The Deflator was up even though it was at 4.2%. This reading is at least "reasonable" enough for us to accept it. Still the GDP was up more than expectations of about 2.7%. We know there were a few extra dollars floating around from the government's rebate checks. We are surprised how the GDP can hold up this way even with the rebate checks because home sales are dismal.
The oil market did retreat a bit in the morning but there was persistent buying into the close after the lows of the day had been set shortly after the open.
But, a quick glance at the most active stocks on this very low volume day, shows us what was really moving. Top volume slot held Freddie Mac (FRE) up 11%, second was Fannie Mae (FNM) up 22%, Ambac Financial (ABK) up 41% was in third. Even the fourth volume leader, Citigroup (C), was up over 5%. On top of that, the Philly Housing Sector was also up nearly 5%. Apparently, the entire housing, financial problem has been fixed...maybe not.
The news after the market closed may be the biggest news of all. The world does think that the technology sector will be immune from any further weakening in the economy. How they can really think that is a mystery to us here at the Update. With the consumer starting to really pull back on spending, the technology sector should feel the effects just like everything else.
After the close this evening, DELL announced earnings that failed to meet expectations. The world expected them to Blow Out earnings which is also a reason for the 200+ run in the Dow. Then, after the news, there was a somewhat stunned spectator booth just before they sold off the stock to the tune of 10%, setting the stage for a fairly poor opening on Friday.
Look for the Update to return on Monday evening for your reading pleasure on Tuesday morning. Labor Day is Monday and the market is closed so there will be no post on Sunday evening.
FSI: 83.28 (up but not much)
VXO: 20.68 -1.00 (heading up to 50)
SDS: 63.87 -1.57
QID: 40.98 -0.32
Dow Industrials: 11,715.15 +212.64
Here are two of the best pics (so far) of Jackson: