U.S. MARKET AVERAGES

U.S. stock markets opened in the red and for the past hour have been trading down, awaiting the ISM Services read, expected to show a decline to 60.0 from 65.0 last month. Oil inventory report, which has a significant impact on the oil market, is expected to show declines in crude, gasoline and distillate stocks for the previous week. Oil steadied near $64 on Wednesday after losing more than $2 a barrel this week, but prices are expected to start rising after the data release.

The biotech sector is a notable mover to the downside, falling by 1.8% with the decline being attributable to Human Genome Sciences (HGSI: chart). The networking sector, which is down 1.6%, is experiencing weakness on earnings warning from ADC Telecom (ADCT: chart).

There are very few sectors posting solid gains. The drug space is modestly higher. HMO, semiconductor and computer hardware stocks also post modest gains.

Dow Jones futures were recently up 4 points, S&P 500 futures were ahead 1 point and Nasdaq 100 futures were up 1.50 points.

Treasury yields are slightly lower in the first hour of trading on the fixed income market. The 10-year yield is lower by 1.9 basis points to 4.357%.

MOVERS AND SHAKERS

The auto sector will be in focus today.

The carmaker General Motors Corp. (GM: chart) said it was selling its entire interest in Fuji Heavy Industries Ltd, which owns the Subaru car brand, because it intents to concentrate its Asia-Pacific strategy toward high-growth markets. The company said cash proceeds received and any potential gain on the Fuji Heavy sale will be recorded in the fourth quarter. At the same time, the Detroit news posted that General Motors and the United Auto Workers are close to an agreement that would save the company $1 billion in annual health care costs. General Motors dropped 3.1% yesterday.

The auto-parts maker Delphi Corp. (DPH: chart) declined 16.6% after New York Times reported the company will only keep from Chapter 11 bankruptcy protection if it can bring forth concessions from General Motors, its former parent, and from the United Auto Workers' union.

Viacom (VIA: chart) could gain because of the preliminary prospectus with the Securities and Exchange Commission filed for the separation of the company into two divisions. Viacom first planned this move in June and said its purpose is to unlock the value in its cable networks and filmed entertainment businesses. Viacom fell 1.1% yesterday.

Yum Brands Inc (YUM: chart) is also likely to gain because the company moved up its profit prospectus for 2005 due to achieved third-quarter results that were over analyst forecasts. The operator of Taco Bell, KFC and Pizza Hut fast-food restaurants added 1.8% yesterday.

The fast-food giant Wendy's International (WEN: chart) was down 2.4% after it announced a 5% lower third-quarter same-store sales and warned Hurricanes Katrina and Rita brought together with higher beef prices would narrow earnings for the period by 4 cents.

Bank of America cut Harley-Davidson (HDI: chart) to sell from neutral due to worries over rising retail inventory and slowing demand. Analysts also believe the lackluster customer response to the motorcycle maker's 2006 models will lead to decline in wholesale unit shipments.

Maytag (MYG: chart) was downgraded at Prudental to underweight from equal-weight, pointing breakable earnings, a more delicate macro environment and weakening consumer spending.

ECONOMIC NEWS

Mortgage application volume fell in the most recent week, according to industry data released Wednesday, continuing the decline it recorded in the previous period. A drop in purchase activity led the recent slide.

The Mortgage Bankers Association revealed that its market composite index of mortgage loan application volume decreased by a seasonally-adjusted 1.1% for the week ended September 30, dropping to 713.5 from the 721.2 recorded in the previous week. This added to a 6.6% decline recorded in the previous week. The 4-week moving average for the market index, which flattens out the week-to-week volatility, dipped by 1.9%.

The MBA's purchase index fell by 1.9% for the week of September 30, adding to declines in the prior 2 weeks of 3.4% and 2.6%. The organization said its refinance index was basically flat in the most recent week, ticking up by just 0.1%. The share of mortgage activity made up by refinancing rose to 44.5% from the prior week's level of 43.9%, the MBA reported, but did not return to the 45.6% of two weeks before.

The Mortgage Bankers Association stated that the average contract interest rate for a 30-year fixed-rate mortgage climbed to 5.94% from the previous week's level of 5.85%. The organization reported that the share of mortgage activity made up by adjustable-rate mortgages, or ARMs, ticked up to 29.8% from the level of 28.8% recorded in the previous week.