The Week In Review
9/10-9/14/12
9/14/2012Today's session started on a positive note as stocks appeared poised for a second day of broad post-FOMC gains. However, the major averages marked their respective session highs during the first hour of trade and headed lower since. The Nasdaq was able to outperform as it held the bulk of its gains throughout the day. Afternoon selling pressure increased slightly after Egan Jones lowered the credit rating of the U.S. from 'AA' to 'AA-.' Looking at the major indices, the Nasdaq led the way with a 0.9% gain while the Dow and S&P 500 added 0.4% each. Financial stocks continued to rally after yesterday's news. The SPDR Financial Select Sector ETF (XLF 16.28, +0.13) closed higher by 0.8% as most major names advanced. The ETF has seen a 4.0% rally since the Fed's announcement. Bank of America (BAC 9.55, +0.15), Morgan Stanley (MS 18.24, +0.34), and Wells Fargo (WFC 36.13, +0.58) all posted gains near 1.5%. European financials were also in focus as monetary easing in the U.S. carries global implications. Barclays (BCS 14.81, +0.46), Deutsche Bank (DB 44.28, +1.41), and UBS (UBS 13.48, +0.46) all gained near 3.5%. Stocks within the defensive telecom space were lower as the sector underperformed the broader market. Verizon (VZ 44.53, -1.05) and AT&T (T 37.26, -0.89) both slid near 2.3%. The two telecom giants saw relative weakness after Stifel Nicolaus downgraded both stocks from 'buy' to 'hold.' With the majority of the sector sliding, Sprint (S 5.26, +0.06) and MetroPCS (PCS 10.63, +0.15) were able to buck the trend and post respective gains of 1.2% and 1.4%. AK Steel (AKS 5.87, -0.57) slumped 8.9% after lowering its third quarter guidance on expectations of a 7% quarterly decrease in the price of steel. Following the announcement, AK Steel was downgraded by Credit Agricole. Other steelmakers continued to rally along with producers of basic materials. Steel Dynamics (STLD 13.01, +0.61) added 4.9%, while Cliffs Natural Resources (CLF 45.55, +2.37) advanced 5.5%.
Office supply retailer OfficeMax (OMX 8.15, +1.04) surged 14.6%. Earlier, the company confirmed it would extinguish a non-recourse liability which is related to Lehman-backed timber notes. Because of this, OMX will recognize a non-cash, pre-tax gain of $671.1 million in the third quarter. Today's buying lifted the stock to a 21.2% gain on the week. Meanwhile, peer Staples (SPLS 12.21, +0.25) advanced 2.1% following recent rumors of a possible private equity buyout.
Western Digital (WDC 41.06, -1.51) fell 3.6% after lowering its revenue guidance for the first quarter. Shares of the hard drive producer have been in a downtrend since the stock reached a 2-year high at $45.48 on August 17.
Social media stocks were on the rise. Facebook (FB 22.00, +1.28) jumped 6.2% following reports which suggested the company is set to introduce a real-time ad program. FB's peer Zynga (ZNGA 3.18, +0.22) surged 7.4% after the company hired an online-gambling executive, Maytal Olsha as its new Chief Operating Officer. Elsewhere, Groupon (GRPN 5.27, +0.51) soared 10.7% as the stock of the online deals site continues rebounding after reaching an all-time low of $4.00 on September 4.
A slew of economic data points hit the wires today.
Consumer prices increased by 0.6% during August, which was in-line with the 0.6% gain that had been generally expected. Core prices increased by 0.1%, which was slightly short of the 0.2% increase expected by economists polled by Briefing.com.
Separately, retail sales rose during August by 0.9%, which was better than the 0.7% increase that had been broadly expected. The prior month's reading was revised down to show an increase of 0.6%. Excluding autos, retail sales rose by 0.8%, which was in-line with the Briefing.com consensus call.
Industrial production decreased during August by 1.2%, which was worse than the 0.2% decrease that had been widely expected. The reading followed the revised 0.5% increase experienced in the prior month. Capacity utilization hit 78.2%, which was worse than the 79.2% that had been expected and down from the revised prior month reading of 79.2%.
The preliminary University of Michigan Survey for September came in at 79.2, which was ahead of the prior month's 74.3, and better than the reading of 73.5 that had been widely expected.
Lastly, monthly business inventory data for July showed an inventory build of 0.8% for the month which was slightly above the 0.4% that had been expected.
Sept 13, 2012
Today's session was highlighted by a risk rally sparked by the Federal Reserve's decision to increase policy accommodations by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The program is open-ended by design, which allows the Federal Reserve to terminate it once the employment picture shows substantial improvement. The S&P 500 was the best performing index and it settled higher by 1.6%. In addition, the Federal Reserve has released its latest economic projections. Among items of note, the 2012 GDP growth expectation has been lowered, while the outlook for 2013 and 2014 was raised. This year's GDP is now expected to increase by a rate between 1.7% to 2.0%, which is lower than the previous forecast of growth between 1.9% and 2.4%. Looking ahead, the 2013 GDP growth is now expected to be between 2.5% and 3.0% while the previous forecast suggested growth expectations between 2.2% and 2.8%. The Federal Reserve extended its forward guidance, suggesting rates will likely remain at exceptionally low levels through at least mid-2015. Lastly, 'Operation Twist' will conclude at the end of 2012. Financial stocks made broad advances following the news. Bank of America (BAC 9.40, +0.43) led all majors with an advance of 4.8%. Meanwhile, Citigroup (C 34.45, +1.40), JPMorgan Chase (JPM 41.40, +1.48), Wells Fargo (WFC 35.55, +1.22), and American Express (AXP 59.05, +1.78) all posted gains between 3.0% and 4.2%. The SPDR Financial Select Sector ETF (XLF 16.15, +0.41) advanced 2.6%. The materials sector outperformed with a 2.5% gain. The group was paced by steelmakers as AK Steel (AKS 6.44, +0.36), Cliffs Natural Resources (CLF 43.18, +2.56), and Steel Dynamics (STLD 12.40, +0.60), all added between 5.0% and 6.3%. Paper and packaging stocks were lifted as well. Louisiana-Pacific (LPX 14.60, +0.37) and Neenah Paper (NP 30.11, +0.63) both gained near 2.5%. Among chemical producers, OM Group (OMG 20.15, +1.06) and LyondellBasell (LYB 51.92, +2.31) jumped 5.6% and 4.7%, respectively. Coal stocks within the energy sector made notable advances. Alpha Natural Resources (ANR 8.23, +0.89) surged 12.1% while Arch Coal (ACI 7.39, +0.68) spiked 10.1%. Large energy names Halliburton (HAL 36.44, +0.71) and ConocoPhillips (COP 57.65, +1.11) both closed higher by 2.0%.
The 30-yr yield briefly crossed the 3.00% threshold and closed at 2.967%, its highest yield in four months. Maturities across the rest of the complex reversed their post-FOMC selling to finish the day with fractional gains. The 10-yr yield settled at 1.756% after running to almost 1.840% in reaction to the Federal Reserve launching another round of quantitative easing. Overall producer prices rose by 1.7% in August, which is hotter than the 1.2% increase that had been widely forecasted. Core producer prices were up 0.2% which is in-line with the 0.2% Briefing.com consensus.Separately, the latest weekly initial jobless claims count totaled 382,000, which is higher than the 369,000 that had been expected. The tally is above the revised prior week count of 367,000. As for continuing claims, they fell to about 3.283 million from 3.322 million. The U.S. Treasury has released its August budget which showed a deficit of $191 billion. This was slightly better than the broadly expected deficit of $192 billion.
Tomorrow's economic calendar contains a full slate of releases. Retail sales, retail sales ex-auto, CPI, and core CPI will all be announced at 8:30 ET. Industrial production and capacity utilization will hit the wires at 9:15 ET, while the Michigan Sentiment and business inventories will be released at 9:55 ET and 10:00 ET, respectively.
Sept 12, 2012
Stocks started the day higher but were only able to hold a portion of their gains in a session which saw two pullbacks to the unchanged line. After spending most of the day in the black, the S&P 500 ended higher by 0.2%. Telecoms were broadly higher as indicated by the iShares Dow Jones US Telecom ETF (IYZ 25.22, +0.29), which added 1.2%. MetroPCS (PCS 10.31, +0.25) advanced 2.5% on rumors regarding a possible merger with another major carrier. Meanwhile, Sprint (S 5.10, +0.10) and Verizon (VZ 44.89, +0.65) settled higher by 2.0% and 1.5%, respectively.
The Dow Jones Transportation Average has been on a steady rise over the past week, and it added another 0.8% today. Airline stocks showed strength as Delta (DAL 9.50, +0.22), Southwest (LUV 9.18, +0.23), and United Continental (UAL 20.31, +0.51) all posted gains between 2.3% and 2.6%. Shipping and trucking stocks were also higher as Overseas Shipholding Group (OSG 6.72, +0.34) and Landstar (LSTR 49.62, +0.94) advanced 5.3% and 1.9%, respectively.Financial stocks outperformed the broader market as banks continued adding to their recent gains. Goldman Sachs (GS 118.24, +1.55), JPMorgan Chase (JPM 39.92, +0.32), and Citigroup (C 33.05, +0.39) all gained near 1.0%. Meanwhile, Bank of America (BAC 8.97, -0.06) lagged the other majors with a 0.7% loss. European financials were also on the rise with Credit Suisse (CS 22.55, +1.06) and UBS (UBS 12.82, +0.26) ending higher by 4.9% and 2.1%, respectively. On the downside, Deutsche Bank (DB 42.43, -0.19) slipped 0.5% after rallying more than 55.0% since July 25th.
Chinese internet stocks were on the move after Citigroup initiated coverage of three names. Youku (YOKU 18.79, +0.94) and Sohu.com (SOHU 42.50, +1.50) received a 'buy' rating and gained 5.3% and 3.7%, respectively. Meanwhile, Renren (RENN 3.81, +0.04) added 1.1% despite receiving a 'sell' rating. Elsewhere, Yahoo! (YHOO 15.40, +0.24) rose by 1.6% as the company is expected to acquire the assets of online business-to-business trading platform, Alibaba, by the end of the week.
Shares of Facebook (FB 20.93, +1.50) jumped 7.7% after Chief Executive Officer Mark Zuckerberg participated in a Q&A session at an event in San Francisco last evening. At the event, Mr. Zuckerberg commented on mobile ads, saying that they are performing better than the ones which appear on the desktop platform. In addition, Zuckerberg called Zynga (ZNGA 3.07, +0.28) a "fundamentally strong company." Shares of ZNGA spiked 10.0% in response to the comments. Export prices, excluding agriculture, increased by 0.4% in August after they had decreased by 1.4% in the prior month. Excluding oil, import prices were down in August by 0.2%, which follows a 0.3% decrease experienced in the prior month.
Separately, wholesale inventories were up 0.7% in July. That is higher than the increase of 0.3% which had been broadly forecast.
Tomorrow's key economic events include the Federal Open Market Committee announcing its statement and rate decision at 12:30 ET, and its economic projections at 14:00 ET. Finally, Federal Reserve Chairman Ben Bernanke will hold a press conference at 14:15 ET.
A handful of economic data points are scheduled to be released tomorrow. Initial and continuing claims, as well as PPI and core PPI will be released at 8:30 ET while the U.S. Treasury will report its budget at 14:00 ET.
The U.S. Treasury will hold a $13 billion, 30-yr reopening.
Sept 11, 2012
Equities were broadly higher throughout the day before late afternoon selling sent the Nasdaq into negative territory. The dip also pushed the other indices lower, but they were able to hold most of their gains. The Dow finished higher by 0.5% while the Nasdaq ended flat. The energy sector was the top performer as the SPDR Energy Select Sector ETF (XLE 73.91, +0.78) finished higher by 1.1%. Within the group, Halliburton (HAL 35.35, +1.08) added 3.2%, while Anadarko Petroleum (APC 71.62, +1.22) and National Oilwell Varco (NOV 83.13, +2.11) gained between 1.7% and 2.6%.
Solar stocks were broadly higher with the Guggenheim Solar ETF (TAN 17.52, +0.46) ending firmer by 2.7%. First Solar (FSLR 21.80, +1.01) rose 4.9% after signing a power purchase agreement with PG&E (PCG 43.32, -0.13) for 72 megawatts of solar electricity generated at two photovoltaic plants in central California. First Solar also announced that its Agua Caliente project achieved a peak generating capacity of 250 megawatts. Meanwhile, ReneSola (SOL 1.51, +0.09) jumped 6.3% after announcing the release of its Micro RePlus inverter module. The financial sector outperformed the broader market. Within the space, Bank of America (BAC 9.03, +0.45) led the advancers with a 5.2% gain. Earlier today, Morgan Stanley (MS 17.25, +0.64) announced it will purchase the remainder of the Morgan Stanley Smith Barney stake held by Citigroup (C 32.66, +0.83). Morgan Stanley and Citigroup finished higher by 3.9% and 2.6% respectively.
European banks continued their recent rally as Deutsche Bank (DB 42.62, +2.44) added 6.1% after announcing plans to cut costs by EUR4.5 billion in order to improve its capital position. The stock is up 55.9% since its 52-week low was hit on July 25th. Other European financials were also stronger as Barclays (BCS 13.72, +0.62) and Banco Santander (7.84, +0.24) posted gains of 4.7% and 3.2%, respectively. Apparel and luxury retailers were under pressure after Burberry cut its profit expectations for the second half of the fiscal year. The lower guidance clouded the outlook for companies with a similar line of business. Ralph Lauren (RL 156.22, -4.09) and Coach (COH 61.48, -1.12) slid 2.6% and 1.8%, respectively. Meanwhile, Fossil (FOSL 84.95, -0.92) and Tiffany (TIF 62.26, -0.78) both shed near 1.2%. Chipmaker AMD (AMD 3.75, +0.28) surged 8.1% after announcing a strategic licensing agreement with provider of 3D technology, RealD (RLD 9.82, -0.15). In addition, AMD announced an investment in CiiNOW, a provider of cloud gaming technology.
Facebook (FB 19.43, +0.62) advanced 2.6% as Chief Executive Officer Mark Zuckerberg is scheduled to speak at the TechCrunch Disrupt Conference at 17:00 ET. This will be Mr. Zuckerberg's first public interview since the company's initial public offering in May.
Another company which began trading recently, Groupon (GRPN 4.61, +0.34) finished higher by 8.0% after a reported increase in site traffic during the month of August. Shares of the online deals site have The trade deficit widened to $42.0 billion during July after a downwardly revised prior month deficit of $41.9 billion. Economists polled by Briefing.com had expected that the deficit for July would come in at $44.0 billion.
Sept 10, 2012
Equities were broadly higher throughout the day before late afternoon selling sent the Nasdaq into negative territory. The dip also pushed the other indices lower, but they were able to hold most of their gains. The Dow finished higher by 0.5% while the Nasdaq ended flat.
The energy sector was the top performer as the SPDR Energy Select Sector ETF (XLE 73.91, +0.78) finished higher by 1.1%. Within the group, Halliburton (HAL 35.35, +1.08) added 3.2%, while Anadarko Petroleum (APC 71.62, +1.22) and National Oilwell Varco (NOV 83.13, +2.11) gained between 1.7% and 2.6%.
Solar stocks were broadly higher with the Guggenheim Solar ETF (TAN 17.52, +0.46) ending firmer by 2.7%. First Solar (FSLR 21.80, +1.01) rose 4.9% after signing a power purchase agreement with PG&E (PCG 43.32, -0.13) for 72 megawatts of solar electricity generated at two photovoltaic plants in central California. First Solar also announced that its Agua Caliente project achieved a peak generating capacity of 250 megawatts. Meanwhile, ReneSola (SOL 1.51, +0.09) jumped 6.3% after announcing the release of its Micro RePlus inverter module.
The financial sector outperformed the broader market. Within the space, Bank of America (BAC 9.03, +0.45) led the advancers with a 5.2% gain. Earlier today, Morgan Stanley (MS 17.25, +0.64) announced it will purchase the remainder of the Morgan Stanley Smith Barney stake held by Citigroup (C 32.66, +0.83). Morgan Stanley and Citigroup finished higher by 3.9% and 2.6% respectively.
European banks continued their recent rally as Deutsche Bank (DB 42.62, +2.44) added 6.1% after announcing plans to cut costs by EUR4.5 billion in order to improve its capital position. The stock is up 55.9% since its 52-week low was hit on July 25th. Other European financials were also stronger as Barclays (BCS 13.72, +0.62) and Banco Santander (7.84, +0.24) posted gains of 4.7% and 3.2%, respectively.
Apparel and luxury retailers were under pressure after Burberry cut its profit expectations for the second half of the fiscal year. The lower guidance clouded the outlook for companies with a similar line of business. Ralph Lauren (RL 156.22, -4.09) and Coach (COH 61.48, -1.12) slid 2.6% and 1.8%, respectively. Meanwhile, Fossil (FOSL 84.95, -0.92) and Tiffany (TIF 62.26, -0.78) both shed near 1.2%.
Chipmaker AMD (AMD 3.75, +0.28) surged 8.1% after announcing a strategic licensing agreement with provider of 3D technology, RealD (RLD 9.82, -0.15). In addition, AMD announced an investment in CiiNOW, a provider of cloud gaming technology.
Facebook (FB 19.43, +0.62) advanced 2.6% as Chief Executive Officer Mark Zuckerberg is scheduled to speak at the TechCrunch Disrupt Conference at 17:00 ET. This will be Mr. Zuckerberg's first public interview since the company's initial public offering in May.
Another company which began trading recently, Groupon (GRPN 4.61, +0.34) finished higher by 8.0% after a reported increase in site traffic during the month of August. Shares of the online deals site have rebounded slightly after marking an all-time low at $4.00 last week.
The trade deficit widened to $42.0 billion during July after a downwardly revised prior month deficit of $41.9 billion. Economists polled by Briefing.com had expected that the deficit for July would come in at $44.0 billion.
Tomorrow's economic data shows the weekly MBA Mortgage Index will be released at 7:00 ET. Also, export prices ex-agriculture and import prices ex-oil will be reported at 8:30 ET while wholesale inventory data will hit the wires at 10:00 ET.