The major market indices have staged an impressive rally back from their lows of the morning following an emergency rate cut of 75 basis points by the Fed. The Fed funds rate now stands at 3.5%. The surprise rate cut comes after heavy selling weighed down overseas trading for 2 straight session as foreign markets became convinced that the U.S. economy was headed for a recession.
The Dow Jones Industrial Average (DJIA) has bounced back from its morning low of 11,634.8, a loss of 464 points, or 3.8% from the previous session's close. The Dow is currently down roughly 150 points and remains below key support at the 12,000 level. Of its 30 components, only 5 are currently in positive territory, while IBM, Altria Group, and Exxon Mobil currently lead the downward slide.
The S&P 500 Index (SPX) dropped more than 50 points at its lowest level this morning, but is currently sitting on a loss of only 23 points, or 1.7%. The index has also reclaimed the 1,300 level in late-morning trading. Meanwhile, the Nasdaq Composite (COMP) has shed nearly 57 points, or 2.4% this morning, but has rebounded from a fresh annual low of 2,221.2.
Examining the market stat, the New York Stock Exchange has reported 1,159 advancers versus 1,962 decliners, for an advance/decline ratio of 0.59. Volume on the exchange has already topped 1 billion as 9 new highs have been reached compared to 855 new lows. Meanwhile, the Nasdaq has reported 981 advancers against 1,928 decliners for a ratio of 0.51. Volume on the Nasdaq has reached 701 million, with only 4 new highs against 887 new lows.
Around the market this morning, March crude oil futures were trading down 2.4% early today following the rate cut. The contract tagged an intraday low of $85.42 per barrel and is currently at $88.10, down $2.47. Elsewhere, gold futures bounced back from their steep losses, as the dollar fell sharply after the Federal Reserve slashed rates. February gold has jumped $13.30, or 1.5%, to $895 an ounce after tagging an intraday low of $849.50.
In other news, we find shares of Apple (AAPL) have dropped more than 3% this morning, pulled lower by the broad-market sell-off and potential concerns surrounding the company's upcoming earnings report. The firm is slated to post quarterly results after the close today, with analysts predicting a profit of $1.62 per share on $9.47 billion in revenue. Apple is also expected to post iPod sales of as much as 25 million units in the quarter ended December 31.
In other earnings news, Johnson & Johnson (JNJ) announced a 9.5% rise in fourth-quarter profit, boosted by favorable foreign-exchange rates, a tax gain and increased sales of consumer-health-care products. However, sales of its drug-coated stents and anti-anemia drugs continued to decline, due partly to safety concerns and increased competition. The company reported earnings of $2.37 billion, or 82 cents per share. Excluding items, earnings were 88 cents per share, beating the Street by 2 pennies. Total sales increased nearly 17% to $15.96 billion, as worldwide pharmaceutical sales rose 7.5% in the quarter. Worldwide consumer sales jumped 48.5% and medical device sales grew 11.3%. At last check, the shares were down 1.5%.
To read more of our analysis on the market's biggest stories, please visit our Schaeffer's Daily Market Blog section throughout the trading day.
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