Wall Street Greek: Business News Summary 10-27-09

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Business News Summary

The day's business news summary offered a mixed report, but the remnants of economic decimation threaten a second impact and controlled the day's trading. Most importantly on the day's business news, consumer sentiment disappeared in October. Needless to say, nascent stabilization of home pricing might be gone soon as well if demand dries up without a First-Time Homebuyer Tax Credit renewal. Thus, the day's good news was drowned out, and the S&P 500 Index and Nasdaq Composite fell while the Dow inched fractionally higher.

S&P Case Shiller Home Price Index

Last week's Existing Home Sales Report showed prices continued to decline on average across the country. The data out of the National Association of Realtors (NAR) showed the median price of a home fell 8.5% in September when compared against the prior year. The price of the average American home (including all types) fell to $174,900, influenced of course by foreclosures and reversion to non-criminal market drivers.

Unfortunately, S&P Case Shiller produces its data on a two month lag. Published today, it shows an improvement in the annual rate of home price decline in August. Shiller's 10-City and 20-City Composite Home Price Indices fell 10.6% and 11.3%, respectively, when matched against last year's data. When compared against July's price data, sales rose across composites and across 17 of 20 MSAs. Only Cleveland posted year-over-year price decline.

Judging by the NAR's up-to-date report, pricing should firm even more in Shiller's September data, which is due toward the end of NOVEMBER... However, Case Shiller rightly points out the pending expiration of the homebuyer tax credit, though we expect that to be renewed BECAUSE IT SIMPLY MAKES SENSE.

In case you were wondering, Shiller reports the peak-to-trough price decline in housing, as measured by the 10-City Composite, was 33.5%.

Consumer Confidence Sinks

The Conference Board reported a steep drop in Consumer Confidence in October. Deepening unemployment led the index to 47.7, down from 53.4 in September. American worry may be reaching a breakpoint at a critical time, just before holiday shopping season. Last year, spending was impacted by fear. This year, spending is threatened by tangible reason, empty pockets and prospects.

Investor Confidence Also Falls

State Street's (NYSE: STT) Investor Confidence Index fell 10 points in October. The index slipped to 108.4, from 118.1 in September. Valuation concern, as the economy runs through its own after-burn at the same time it runs down on fuel, has institutions perhaps reconsidering "jobless recovery" prospects.

Same-Store Sales

The International Council of Shopping Centers reported on weekly same-store sales this morning for the week ended October 24. While they might not be spending much, consumers still spent significantly more than they did last year at this time. Sales increased by 2.4% over the prior year period, which was consistent with last week's 2.8% increase. Sales only moved 0.1% over its sequential predecessor, versus a 0.2% rise the week before that.

Shortly this week, GDP is expected to be reported significantly improved in the third quarter. However, the boost may be unsustainable, as "cash for clunkers" is seen as the key driver. As we all know by now, auto sales have dropped off a cliff since the incentive program was allowed to expire. Thus the same may be in store for GDP, and more likely for stocks, especially given government debate over renewing the First-Time Homebuyer Tax Credit.

Corporate Earnings

Earnings reporters for the day included AGCO (Nasdaq: AGCO), Akzo Nobel (AKZOF.PK), Amkor Technology (Nasdaq: AMKR), Avery Dennison (NYSE: AVY), Baidu (Nasdaq: BIDU), Ballard Power (Nasdaq: BLDP), B.E. Aerospace (Nasdaq: BEAV), Boyd Gaming (NYSE: BYD), British Petroleum (NYSE: BP), Buffalo Wild Wings (Nasdaq: BWLD), Calamos Asset Management (Nasdaq: CLMS), Celanese (NYSE: CE), Ceradyne (Nasdaq: CRDN), Daimler (NYSE: DAI), DreamWorks (NYSE: DWA), E*TRADE Financial (Nasdaq: ETFC), Fiserv (Nasdaq: FISV), Honda Motor (NYSE: HMC), Hospira (NYSE: HSP), Johnson Controls (NYSE: JCI), L-3 Communications (NYSE: LLL), McKesson (NYSE: MCK), Norfolk Southern (NYSE: NSC), Panera Bread (Nasdaq: PNRA), Plantronics (NYSE: PLT), Pool Corp. (Nasdaq: POOL), RF Micro Devices (Nasdaq: RFMD), TD Ameritrade (Nasdaq: AMTD), Under Armour (NYSE: UA), Visa (NYSE: V) and others.