Market Monitoring – 09 December 2013

Edited by Vani Rao

Marketssnap losing streak on solid jobs data

US stock indexes rallied on Friday, 6 December, after a stronger-than-anticipated monthly employment report. In addition, a widely watched gauge of consumer sentiment beat expectations, fuelling hopes for a more robust economic recovery, with the S&P 500 and Dow snapping a five-session losing streak.

The jobless rate is now at the lowest level since November 2008, which suggests that the US economy continues to expand at a moderate rate.The job reports sparked fresh talks that the encouraging employmentgrowth rate raised the odds of the Fed announcing a tapering at its December meeting. Overall,the markettoday echoed consumer sentimentsthat either it didn’t believe or doesn’t fear a tapering this month.

Source: Bloomberg
Source: Bloomberg

The S&P 500 rose 20.06 points, or 1.12%, to close at 1,805.09, climbing back above the milestone level of 1,800 that it cleared for the first time in November 2013. The benchmark index scored its best daily advance since 8 November,making up for lost ground in its five-session losing streak, ending the week with less than 0.04% decline.

The Dow Jones Industrial Average gained 198.69 points, or 1.26%, to close at 16,020.20, achieving its biggest daily gain since 16 October and reconquering its own milestone level of 16,000. The blue-chip index ended the week with a 0.41% decline.

The two indexes camewithin a whisker to continue their winning streak to a consecutive 9th week.

The Nasdaq Composite Index jumped 29.36 points, or 0.73%, to finish at 4,062.52. The tech-heavy index rose less than 0.07% for the week for its fourth-straight weekly gain. It’s currently trading at levels last seen in September 2000.

The stock market action was decidedly positive throughout the day and featured broad-based participation that saw every S&P sector and every Dow component finish higher.

The Consumer Staples (+1.45%), Industrials (+1.46%), Financials (+1.40%), Materials (+1.43%), and Healthcare sectors (+1.38%) led today’s winners. The Energy sector, which gained 0.53%, was the weakest performer, although it wasn’t weak.

Movers & Shakers

  • mm pic 2Intel Corp. (NASDAQ:INTC)was up 2.31% after Citigroup raised its rating on the chipmaker to “Buy” from “Neutral.”
  • ElectronicArts Inc. (NASDAQ:EA) rallied 5.85% and was the top gainer in the S&P 500 Index. The videogame maker announced that it is shifting resources to fix bugs in its “Battlefield 4” game.It also noted that this will not impact the future release schedule of the popular game franchise. Shares of the company fell sharply on Thursday.
  • Argan Inc. (NYSE:AGX), which designs and builds energy plants through its Gemma Power Systems unit, rose 17.69% after reporting better-than-expected earnings and revenue for thethird quarter.
  • Procter & Gamble (NYSE:PG) was up 2.22%, and DuPont (NYSE:DFT) was up 2.04%.
  • J.C. Penney(NYSE:JCP) shares fell 8.59% after thedepartment store chain said it received a letter of inquiry from the USSecurities and Exchange Commission, seeking an explanationon the company’s financial position.
  • Barnes & Noble(NYSE:BKS)also disclosed an SEC investigation, its stock fell 11.96%.
  • Big Lots Inc.(NYSE:BIG)tumbled 12.55% after the closeout retailer said late Thursday that it would exit the Canadian market and issued a weaker outlook for its US operations.
  • Ulta Salon Cosmetics & Fragrance Inc. (NASDAQ:ULTA) slid nearly 21% after disappointing quarterly results late Thursday.
  • InterOil Corp.(NYSE:IOC) dropped 37.38% after news that France’s Total SAhad agreed to buy a 61.3% stake in InterOil’s Papua New Guinea naturalgas fields, a deal worth up to $3.6 billion.

Futures

  • Treasuryyields were steady after a strong jobs report that briefly sent them surging to their highest since September, as investors evaluated when the Federal Reserve is likely to begin paring back its bond-purchase program. The Benchmark 10-year notes were last up 2/32 to yield 2.86%, after briefly rising as high as 2.93%. The 30-year bonds rose 12/32 to yield 3.89%.
  • The dollar rallied against the yen after stronger-than-expected US jobs data raised chances the Federal Reserve may start paring its bond-buying program sooner than expected. The dollar last traded 1.0 higher at 102.86 yen. The euro was last at $1.3701, up 0.25%. The dollar index rose 0.05% to 80.28.
  • Precious metals bounced around in volatile trade during the early morning pit action following better-than-anticipated economic data.
  • Both February gold and March silver fell to their respective session lows of $1210.10 and $19.17 per ounce. However, they quickly rebounded into positive territory and to respective session highs of $1245.00 and $19.78 per ounce. The metals then consolidated near the breakeven line and spent the remainder of the session chopping around near that level. Gold settled 0.2% lower at $1,229.1 per ounce, booking a 1.7% loss for the week. Silver closed 0.2% lower at $19.5 per ounce, bringing losses for the week to 2.5%.
  • January crude oil rose for a sixth consecutive session in choppy trade following the strong economic data. It settled 0.3% higher at $97.70 per barrel, booking a 5.4% gain for the week, its biggest weekly gain since July. US oil ended with its largest weekly percentage gain since July amid hopes for increased demand following strong jobs data from the US, the world’s top oil consumer.However,the gains were curbed by speculations that the positive data would push furtherthe date that the US Federal Reserve begins unwinding its bond-buying program. This in turncould reduce support for riskier assets such as oiland other commodities. US crude last traded up 0.34% at $97.71 a barrel.
  • January natural gas climbed to a session high of $4.20, but was unable to hold the gain. It slipped into the red in afternoon floor action and settled 0.2% lower at $4.12 per MMBtu. Despite Friday’s dip, natural gas gained 4.0% for the week.

Economic Front

The US Department of Labor reported in its monthly employment report that the US economy added 203,000 jobs in November, beating expectations for an 180,000 increase and up from a downwardly revised 200,000 rise the previous month.

Non-farm payrolls increased by 203,000 and were revised upwards for September (to 175,000 from 163,000) and down slightly for October (to 200,000 from 204,000)

  • Non-farm private payrolls increased by 196,000
  • Unemployment rate fell to 7.0% from 7.3%
  • Average hourly earnings increased by 0.2%,while aggregate earnings increased 0.6% (a good portent for consumer spending)
  • Average workweek edged up 0.1% to 34.5 hours and factory overtime increased 0.1% to 3.5 hours

Also on Friday, the preliminary Thomson Reuters/University of Michigan consumer sentiment index increased to 82.5 in December from 75.1 the previous month, far surpassing expectations for a 76.0 reading.

The employment report drowned out the Personal Income and Personal Spending report for October, which was released at the same time that the report was mixed, with personal income declining 0.1% and personal spending rising 0.3%.

Top News


Yahoo Buys Live Concert Streaming Platform Evntlive

Yahoo has acquired online platform, Evntlive, which broadcasts live concerts. The news was announced by the two companies on Friday; however no additional information was given.

“We are excited to announce that we have been acquired by Yahoo!” tweeted the digital concert venue team. The company, founded in the second half of 2011, has raised up to $2.3 million, it was launched in beta during April 2012.

Evntlive is going to shut down; however, eight of its employees will be working at the Sunnyvale, California headquarters of Yahoo.

LA sues Citi, Wells Fargo over Discriminatory Mortgage Lending

The city attorney of Los Angeles has filed a lawsuit against Citigroupand Wells Fargo, seeking damages for a loss in tax revenuedue to discriminatory mortgage lending to the city’s minoritycommunities. In complaints filed in theUS Federal Court, LA City Attorney Mike Feuer said that Citigroupand Wells Fargo “engaged in a continuous pattern andpractice of mortgage discrimination in Los Angeles since at least2004 by imposing different terms or conditions on a discriminatoryand legally prohibited basis.” The lawsuit also said thatoverall, low and moderate-income African-Americans and middle and higher-income Latinos have experienced the highest foreclosure rates.

Release/Event


Economic Data Release
  • NFIB Small Business Optimism Index – Tuesday
  • Wholesale Trade – Tuesday
  • Treasury Budget – Wednesday
  • Jobless Claims – Thursday
  • Retail Sales – Thursday
  • Business Inventories – Thursday
  • Producer Price Index – Friday
Company Release
  • Monthly sales report from McDonald’s – Monday
  • Costco – Wednesday
  • Men’s Wearhouse – Wednesday
Other Important Events
  • The US Senate may vote on Federal Reserve Vice Chair Janet Yellen’s nomination to lead the central bank, a change of guardthat most expect will not immediately affect the direction of theFed’s super-easy monetary policy.
  • The Government agencies would vote on Tuesdayon whether to adopt the controversial Volcker rule to ban proprietarytrading by banks and limit their investments in hedge funds. The markets will be closely watching to see just how far theregulators would restrict market-making and hedging activities.
  • Executives from large financial services firms will be present at a Goldman Sachs Financial Services Conference in Manhattan on Tuesday and Wednesday. Speakers include Wells Fargo CEO John Stumpf, Bank of America CEO Brian Moynihan, JPMorgan CEO Jamie Dimon, Blackstone CEO Steve Schwarzman and TD Ameritrade CEO Fred Tomczyk.

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