Stocks Remain Stuck In The Red In Mid-Day Trading
After
moving modestly lower in early trading on Monday, stocks have remained
mostly negative over the course of the session. Profit taking is
contributing to the weakness on Wall Street following the recent strength in the markets.
The major averages have been rangebound in recent trading, stuck modestly below the unchanged line. The Dow is down 25.93 points or 0.2 percent at 13,567.44, the Nasdaq is down 11.04 points or 0.4 percent at 3,176.09 and the S&P 500 is down 2.07 points or 0.1 percent at 1,463.70.
The weakness on Wall Street comes as traders are cashing in on recent gains following the Federal Reserve-inspired rally that was seen late last week.
The gains lifted the Dow and the S&P 500 to their best closing levels in well over four years, while the tech-heavy Nasdaq reached a nearly twelve-year closing high.
Last
week's rally came on the heels of the Federal Reserve's announcement of
its plans to launch a third round of quantitative easing as part of an
effort to boost the sluggish economy.
The
Fed said it would purchase additional agency mortgage-backed securities
at a pace of $40 billion per month, adding that it will continue the
purchases until the outlook for the labor market improves substantially.
Disappointing
manufacturing data has also helped to drag stocks lower, with a report
from the New York Federal Reserve showing that conditions for New York
manufacturers have deteriorated at an accelerated rate in the month of
September.
The New York Fed said its
general business conditions index fell to a negative 10.41 in September
from a negative 5.85 in August, with a negative reading indicating a
contraction in regional manufacturing activity. Economists had been
expecting the index to climb to a negative 2.0.
James
Knightley, senior economist at ING, said, "This is the weakest reading
since April 2009 and will heighten fears that the U.S. manufacturing
sector is returning to recession."
In
corporate news, shares of Lowe's are moderately higher after the home
improvement retailer announced that it has withdrawn its offer to
acquire Canadian rival Rona for C$14.50 per share in cash.
Sector News
While
most of the major sectors are showing relatively modest moves, steel
stocks have come under substantial selling pressure. The NYSE Arca Steel Index has fallen by 2 percent after ending the previous session at a four-month closing high.
Cliffs
Natural Resources has helped to lead the steel sector lower, falling by
6 percent after J.P. Morgan downgraded its rating on the stock to
Neutral from Overweight.
Significant
weakness is also visible among housing stocks, as reflected by the 1.9
percent loss being posted by the Philadelphia Housing Sector Index. The
loss by the index comes after it reached a nearly five-year closing high
last Friday.
Electronic storage
stocks are also under considerable pressure, dragging the NYSE Arca Disk
Drive Index down by 1.3 percent. Transportation, brokerage, and
chemical stocks are also posting notable losses.
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TSX Slips After Big Rally - Canadian Commentary
Canadian
stocks were lingering in the red Monday morning after registering smart
gains last week as the Federal Reserve embarked on a third round of
quantitative easing and promised to keep interest at rock-bottom rates
until mid-2015.
The S&P/TSX Composite Index slipped 21.02 points or 0.17 percent to 12,478.45, after adding nearly 300 points or over 2 percent in the past four sessions.
The Diversified Materials Index was the major lower, shedding close to 2 percent. Inmet Mining and Teck Resources were down close to 3 percent each. First Quantum Minerals was down 1 percent.
The price of Crude oil extending gains Monday morning as traders await further cues from this week's economic data. Crude for October added $0.34 to $99.34 a barrel.
In the oil patch, Paramount Resources was down close to 3 percent.
The price of gold was hovering around its seven-month high Monday morning as the US dollar continued to trade weak on QE3 announcements. gold for December slipped $1.50 to $1,771.20 an ounce.
Among gold plays, Royal gold and Agnico-Eagle Mines were down about 2 percent each.
Hardware
retailer RONA lost over 7 percent after Lowe's Companies Inc. formally
withdrawn its $1.80 billion acquisition proposal.
Real
estate investment trust Cominar Real Estate Investment Trust
(CUF_UN.TO) slipped 0.25 percent after announcing that it has closed the
acquisition of a portfolio of 68 properties in Montréal, Québec City
and Ottawa from GE Capital Real Estate's Canadian equity platform
comprising a total of 4.3 million square feet.
Meanwhile,
bio-pharmaceutical company Cangene Corp. (CNJ.TO ) rose close to 4
percent after announcing that its wholly owned subsidiary, Cangene
Plasma Resources, Inc. would sell three of its U.S. based plasma centers
to Spanish company, Grifols.
Full-service
investment dealer Canaccord Financial Inc. (CF.TO) announce that it has
appointed Peter O'Malley as Chief Executive Officer or CEO of Canaccord
Genuity Asia. The stock edged up 0.40 percent.
In
economic news, Statistics Canada said non-resident investors acquired
$6.7 billion of Canadian securities in July, following a $7.8 billion
divestment in June. Meanwhile, Canadian investment in foreign securities
strengthened to $4.6 billion and was equally split between debt and
equity securities.
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European Markets Finished With Modest Losses Monday
The majority of the European markets ended Monday's session with modest
losses. After the strong rally last week, some profit taking was to be
expected. Last week's rally was sparked by the release of some rather
large news announcements, including the European Central Bank's bond
purchase plan and the implementation of a third round of quantitative
easing by the U.S. Federal Reserve.
The
new trading week has begun with little market moving news. There were a
number of upgrade and downgrades from the brokerages and a profit
warning from SSAB of Sweden. The warning from SSAB put pressure on the
rest of the steel companies. Mining stocks also turned in a weak
performance Monday.
The European
finance ministers' meeting in Cyprus on Saturday failed to find a
consensus over the European Commission's proposal on the banking union.
Countries, including Germany, have aired differences over the timetable
for the single supervisory mechanism.
Direct
recapitalization of Cypriot banks through the European Stability
Mechanism (ESM) should start at the beginning of next year, European
Central Bank Governing Council member Panicos Demetriades reportedly
said in an interview to German daily Handelsblat.
"It
would be very important" for Cyprus that the ESM directly recapitalize
the country's banks by January 2013, Demetriades, who also heads Cyprus'
central bank, told the daily.
The
policymaker said he expects the Eurozone and the International Monetary
Fund to conclude a review on the expected aid package by October, adding
that the country may need external funding for up to five years.
The euro Stoxx 50 index of eurozone bluechip stocks declined by 0.47 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.23 percent.
The DAX of Germany fell by 0.11 percent and the CAC 40 of France decreased by 0.78 percent. The FTSE 100 of the U.K. dropped by 0.37 percent and the SMI of Switzerland finished down by 0.10 percent.
In Frankfurt, ThyssenKrupp declined by 4.73 percent. UBS downgraded its rating on the stock to "Sell" from "Neutral."
Credit Suisse downgraded its rating on Deutsche Bank to "Underperform" from "Neutral." The stock finished up by 0.40 percent and Commerzbank gained 3.32 percent.
Gerry Weber was downgraded to "Neutral" from "Buy" by Merrill Lynch. The stock is dropped by 3.14 percent.
In Paris, Vivendi declined by 1.86 percent. UBS downgraded the stock to "Sell" from "Neutral."
HSBC downgraded Societe Generale to "Neutral" from "Overweight." The stock gained 1.13 percent. Credit Agricole rose by 0.79 percent, while BNP Paribas added 0.51 percent.
9/17/2012 11:59 AM ET
Shares of ArcelorMittal fell by 2.91 percent. Steel stocks were under pressure following the profit warning from Sweden's SSAB.
In London, Vodafone dropped
by 1.25 percent. The telecom giant might make a provision of $2.2
billion to cover some tax risks in India, as a result of a law change in
the South Asian country, Bloomberg reported, citing an interview with its Chief Financial Officer Andy Halford.
BT Group finished lower by 2.06 percent. Exane BNP downgraded the stock to "Neutral" from "Outperform."
Unilever increased by 1.02 percent, after UBS upgraded the stock to "Buy" from "Neutral."
Mining stocks turned in a weak performance Monday. Anglo American fell by 2.28 percent and BHP Billiton lost 1.15 percent. Rio Tinto also decreased by 2.00 percent.
JJB
Sports sank by 23.33 percent. There were reports that nearly half of
the sports goods retailer's stores may be closed and around 2000 jobs
may be eliminated after its takeover deal with Sports Direct
International concludes.
The
Eurozone current account surplus declined in July largely due to a fall
in trade surplus, the European Central Bank said Monday. The surplus
fell to a seasonally adjusted EUR 9.7 billion from EUR 14.3 billion in June.
The euro area
trade surplus increased in July despite a fall in exports, official
data showed Monday. The latest decline in exports, after two straight
months of increase, suggests that it will act as a drag on the activity
in the third quarter. The trade surplus rose to EUR 15.6 billion from EUR 13.6 billion in June, Eurostat said. Economists had forecast a surplus of EUR 15 billion.
Eurozone
labor costs increased 1.6 percent year-on-year in the second quarter of
2012, data released by Eurostat showed Monday. The increase was in line
with expectations and followed a 1.5 percent gain in the first quarter.
Conditions
for New York manufacturers have deteriorated at an accelerated rate in
the month of September, according to a report released by the Federal
Reserve Bank of New York on Monday, with the index of activity in the
sector falling to its lowest level in over three years.
The
New York Fed said its general business conditions index fell to a
negative 10.41 in September from a negative 5.85 in August, with a
negative reading indicating a contraction in regional manufacturing
activity. Economists had been expecting the index to climb to a negative
2.0.
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Asian Markets Mostly Trade Higher On Wall Street Lead
Asian
stock markets are mostly trading higher on Monday with investors
tracking cues from the U.S. and European markets where stocks extended a
recent rally and posted solid gains on Friday.
However,
with profit taking creeping in amid a lack of fresh triggers, most of
the markets in the region are currently trading off their highs.
The
Australian market is trading modestly higher with investors indulging
in some selective buying. Mining stocks are mostly trading notably
higher. Financial and energy stocks are trading mixed, while consumer
staples, industrial and healthcare stocks are trading weak.
The benchmark S&P/ASX 200 index,
which rose to around 4,406, is currently trading at 4,398.6, up 8.6
points or 0.2 percent from its previous close. The broader All Ordinaries index is up 6.6 points at 4,416.8, off the day's high of 4,424.8.
In the mining sector, BHP Billiton (BHP,) is up more than 2 percent, Rio Tinto (, RIO.L) is adding 1.6 percent and Newcrest Mining is up with a gain of 1.4 percent.
Among energy stocks, Woodside Petroleum, Santos and Oil Search are trading modestly higher, while Origin Energy and Caltex Australia are trading lower by 0.3 percent and 0.4 percent, respectively.
In the banking space, ANZ Bank (), Commonwealth Bank of Australia, National Australia Bank and Westpac () are up 0.4 to 0.8 percent, while Bank of Queensland and Bendigo & Adelaide Bank are trading flat.
Leighton
Holdings shares are up 5 more than percent. The company announced that
the first large-scale production of drinking water has started at its
troubled Victorian desalination plant. The desalination plant and the
company's Brisbane Airport Link toll road were the main reasons Leighton
downgraded its profit forecast by A$256 million in March.
Iluka
Resources is trading higher by nearly 7 percent. Boart Longyear is up
by around 2.5 percent and Aurora Oil & Gas is up with a gain of 2
percent.
Primary Healthcare and Brambles are down more than 3.7 percent. Whitehaven Coal, Seven West Media, CSL, Ramsay Healthcare, ResMed Inc () and Perseus Mining are down 2 to 3 percent.
David Jones is down nearly 2 percent amid reports of a likely 40 percent slump in earnings for the year.
AGL Energy, Sonic Healthcare, Fairfax Media, Computershare and Regis Resources are also trading notably lower.
Macmahon
Holdings are under a trading halt. The company said it will release a
fresh update on its earnings guidance following a deterioration in the
financial performance of its construction business.
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Eurozone Trade Surplus Increases In July
The euro area
trade surplus increased in July despite a fall in exports, official
data showed Monday. The latest decline in exports after two straight
months of increase suggest that it will act as a drag on the activity in
the third quarter.
The trade surplus rose to EUR 15.6 billion from EUR 13.6 billion in June, Eurostat said. Economists had forecast a surplus of EUR 15 billion. In July 2011, the trade surplus totaled EUR 2.1 billion.
On a seasonally adjusted basis, the surplus fell to EUR 7.9 billion from EUR 9.3 billion in June.
Exports
dropped by a seasonally adjusted 2 percent month-on-month in July after
rising 2.4 percent in June. Likewise, imports fell 1.2 percent,
reversing last month's 0.7 percent rise.
The
decline in exports reinforces belief that the Eurozone is headed for
further GDP contraction in the third quarter given that growing exports
was one of the few positives for the Eurozone economy in the first half
of 2012, IHS Global Insight's Chief U.K. economist Howard Archer said.
The
17-nation economy shrank 0.2 percent in the second quarter as a marked
improvement in export growth was offset by a further fall in investment.
The Organization for Economic Co-operation Development warned that the
global economy has weakened with recession hitting key euro area economies such as Spain and Italy.
Annually, exports rose an unadjusted 11 percent, while imports gained only 2 percent.
The extra-EU27 trade in goods showed a surplus of EUR 3.1 billion, compared with a EUR 15.3 billion shortfall last month. Exports and imports fell by 1.7 percent and 1.3 percent, respectively.
The EU27 deficit for energy increased to EUR 208.6 billion during January to June compared with EUR 187.2 billion deficit in the same period of last year.
Concerning
the total trade of member states, the largest surplus was observed in
Germany during six months ended June, followed by the Netherlands and
Ireland. Meanwhile, the United Kingdom registered the largest deficit.
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