Market Monitoring – 22 November 2013

Edited by Vani Rao

Markets cheer Yellen approval, jobless data; Dow surges above 16,000

The US stock markets broke a three-day losing streak on Thursday as stocks rallied, boosted by better-than-expected weekly jobless claims report and as Janet Yellen’s nomination as the next Federal Reserve chief. Yellen’s nomination was approved by the Senate Banking Committee and now needs final confirmation by the entire Senate.

Source: Bloomberg
Source: Bloomberg

The Dow Jones Industrial Average rose more than 109 points, or 0.69%, to its first ever close above the 16,000 mark. The S&P 500 gained 14.48 points, or 0.8%, to finish at 1,795.85.The Nasdaq Composite Index surged 47.88 points, or 1.2%, to end at 3,969.15.

The market moved higher even as investors parsed through lackluster earnings from retailers and tried to make sense of the latest signals from the Federal Reserve about its bond-buying program. The bulk of the gains came in the first 90 minutes of trading. Trading remained range-bound since then.

With Thursday’s gain, the Dow has advanced 22% so far this year; it took just 139 trading days to gain 1,000 points and cross this milestone. The blue-chip index is up 145% from its 2009 low.

All the major sectors were in green, apart from Telecommunication Services.

Movers & Shakers

mm pic 2Target Inc. (NYSE:TGT) shares slumped 3.5% to close at $64.19,after the discount retailer cut its earnings for the fiscal year 2013 and reported lower-than-expected comparable same-store sales for Q3.

Gap Inc. (NYSE: GPS) gained 1.5% after it reported that net sales for Q2 FY 2013 increased 8% compared to Q2 FY 2012, and that July 2013 net sales increased 5% compared with last year.

Source: WSA
Source: WSA

Dollar Tree (NASDAQ:DLTR) shares tumbled 4.5% after the discount retailer’s earnings missed expectations. The company also lowered its guidance for FY2013.

Abercrombie & Fitch (NYSE:ANF) were mostly flat, losing 0.06% after the company posted a quarterly loss and provided weak guidance for Q4. In Q3, same-store sales plunged 14%.

Shares of Green Mountain Coffee Roasters (NASDAQ:GMCR) soared 14.14% after its quarterly earnings beat market expectations. The company also boosted its stock buyback and announced that it will pay dividends.

Williams Sonoma (NYSE:WSM) rallied 7.6% after the house wares and furniture retailer topped Q3earnings and raised its fiscal year 2013 full-year guidance.

Micron Technology (NASDAQ:MU) shares rallied 6.3% after the chip maker was singled out by prominent hedge fund manager David Einhorn as his favorite long-term bet at an investment forum.

Liquidity Services Inc. (NASDAQ:LQDT) slumped 19%, tripping NASDAQ’s circuit breaker, when the company offering online marketplaces and services, reported lower-than-expected Q4 adjusted earnings.

GameStop Corp. (NYSE:GME) declined 6.9% after the video-game retailer provided disappointing forecasts despite reporting better-than-expected quarterly results.

Commodities

Gold futures extended their losses. December gold dipped to a session low of $1,235.80 per ounce before inching slightly higher and settled with a 1.1% loss at $1,243.70 per ounce.

December silver touched a session low of $19.70 per ounce in the morning, but managed to trend higher until late afternoon, reaching a session high of $20.05 per ounce and settling at $19.93 per ounce with 0.6% losses.

Crude-oil futures gained 1.7% to settle at $95.44 a barrel, the largest one-day dollar and percentage gain in seven weeks.

Economic Front

  • Mortgage rates fell significantly this week amid weaker-than-expected economic reports, according to a weekly survey by Freddie Mac. The average number of mortgage applications declined 2.3% this week on a seasonally adjusted basis. The average rate for a 30-year fixed-rate loan fell to 4.22% from 4.35% last week. Meanwhile, average rates on 15-year fixed-rate loans, typically used for refinancing higher interest mortgages, dropped to 3.27% from 3.35% the week before.
  • Wholesale prices dipped for the second straight month in November. The US Department of Labor reported on Thursday that lower gas prices helped push down the US Producer Price Index. The index, which reflects the wholesale price of goods before they reach consumers, fell 0.2% in October, following a 0.1% dip in September.
  • Excluding volatile energy and food prices, wholesale costs increased 0.2% in October and 1.4% in the past 12 months. Core wholesale prices were elevated in part last month by a 1.7% increase in the cost of new cars.
  • Manufacturing data in the Philadelphia region expanded at the slowest pace in six months. The Federal Reserve Bank of Philadelphia said that its manufacturing index fell to 6.5 in November from 19.8 in October.
  • Jobless claims data fell significantly; the employment component of the index dropped to 1.1 from 15.1 last month. The US Department of Labor said that the number of individuals filing for initial jobless benefits in the US last week fell by 21,000 to a seasonally adjusted 323,000, beating expectations for a decline of 9,000.

Top News

US set to sell last of its GM stake

The US Treasury Department on Thursday said it planned to sell its remaining 31.1 million shares in General Motors (GM) by the year-end. This is part of the final step in winding down the 61% stake it took with taxpayer money at the height of the global financial crisis.

The US has so far recouped $38.4 billion of the $50 billion initially invested in the Detroit-based company. The sales of its remaining stake in GM would raise another $1.2 billion based on the company’s current share price $38.12. Post the sale, the deal will have cost taxpayers about $10.4 billion. For GM, the Treasury’s divestment will make it much easier for the company to reinstate a dividend and select a new chief executive with greater freedom to pay market compensation.

In total, the government has received $431.4 billion on the $421.6 billion that it invested in banks and auto companies, including interest payments.

Apple wins $290 million from Samsung in patent case

Apple Inc. (NASDAQ: AAPL) has won $290 million in a patent infringement case from Samsung Electronics Co., a California court announced on Thursday. Apple has been awarded $929 million in patent damages from Samsung. The world’s leading two Smartphone makers have spent millions in legal fees fighting copyright and patent cases since 2011. Meanwhile, Samsung expressed its disappointment on the verdict, and is expected to challenge the verdict in the Federal Circuit Court of Appeal. Post the announcement, Apple Inc.’s stock rose 1.19% to close at $521.14 on the NASDAQ Composite.

Nike announces increase in dividends

Iconic apparel and footwear maker Nike Inc. (NYSE:NKE) announced that it is increasing its quarterly cash dividend by 14% to 24 cents a share, up from 21 cents a share. The dividend is payable on January 6, 2014, to shareholders on record at the close of business on December 16, 2013. This is the 12thyear in a row that Nike has increased its annual dividend. Nike has seen its share price surge 51% following robust growth during 2013.

News to look forward in the next 24 hours

The below mentioned global and US news would be monitored by the markets.

Global

  • German Info Business Climate Index(Monthly)
  • Canadian Core CPI (Monthly)
  • Core Retail Sales Canada (Monthly)

US

  • E-commerce retail sales (Monthly)
  • Kansas City Fed Manufacturing Index (Monthly)

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