Stocks Regaining Ground But Buying Interest Subdued
Stocks have
moved modestly higher in early trading on Wednesday, regaining some
ground after ending the previous session mostly lower. The major
averages have moved to the upside, bouncing off yesterday's three-month
closing lows.
The major averages have pulled back off their highs for the young session but currently remain in positive territory. The Dow is up 6.95 points or 0.1 percent at 12,763.13, the Nasdaq is up 11.04 points or 0.4 percent at 2,894.93 and the S&P 500 is up 1.97 points or 0.1 percent at 1,376.50.
Bargain hunting
following the recent weakness in the markets is contributing to the
early strength on Wall Street, although buying interest has remained
somewhat subdued.
While better than expected quarterly results
from Cisco Systems (CSCO) have generated some positive sentiment,
traders are also digesting a report showing a bigger than expected drop
by U.S. retail sales.
Shares of Cisco have surged up by 6.9 percent after the networking giant reported better than expected fiscal first quarter results after the close of trading on Tuesday.
Other networking stocks are also moving higher on the news, contributing to a 1.9 percent gain by the NYSE Arca Networking Index.
Meanwhile, gold stocks have come under pressure on the day, dragging the NYSE Arca Gold Bugs Index down by 2 percent. IAMGOLD (IAG) is leading the sector lower after reporting disappointing third quarter results.
On the economic front, the Commerce Department
said retail sales fell by 0.3 percent in October following an upwardly
revised 1.3 percent increase in September. Economists had expected sales
to edge down by 0.1 percent compared to the 1.1 percent growth
originally reported for the previous month.
Peter Boockvar,
managing director at Miller Tabak, said, "Bottom line, the Northeast
storm had an obvious impact to sales in October so it's tough to gauge
what the natural state of business would have been otherwise."
A separate report from the Labor Department
showed that U.S. producer prices unexpectedly decreased in the month of
October amid a drop in prices for light trucks and passenger cars.
In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Wednesday. While Japan's Nikkei 225 Index closed only just above the unchanged line, Hong Kong's Hang Seng Index surged up by 1.2 percent.
Meanwhile, the major European markets moved to the downside on the day. The U.K.'s FTSE 100 Index has slid by 0.7 percent, while the German DAX Index and the French CAC 40 Index are down by 0.5 percent and 0.4 percent, respectively.
In the bond market, treasuries have
come under pressure, giving back some ground following recent strength.
Subsequently, the yield on the benchmark ten-year note, which moves
opposite of its price, is up by 3.3 basis points at 1.622 percent,
bouncing off a two-month closing low.
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TSX Dips At Open Wednesday
Toronto stocks dipped
at open Wednesday amid selling in commodities, with the S&P/TSX
Composite Index losing 42.72 points or 0.35 percent to 12,091.93.
Among gold plays, Iamgold Corp. dived 12 percent after reporting third-quarter net earnings that missed consensus estimates. Fertilizer maker Potash Corp. was down 2 percent, while Agrium Inc. was losing about 0.50 percent.
In the oil patch, Bonterra Energy and ARC Resources
were down around 1 percent each. Meanwhile, food and pharmaceutical
company METRO Inc. rose over 1 percent after posting improved
fourth-quarter net earnings
Precision GPS products and
technologies company Hemisphere GPS Inc edged up 1 percent even after
reporting a wider third quarter net loss.
The price of crude oil
was steady above $85 Wednesday morning as traders were cautiously
optimistic that President Barack Obama will resolve the impending
"fiscal cliff" that could derail the fragile recovery in the world's
largest economy. Crude for December eased $0.24 to $85.14 a barrel.
The price of gold was
little changed amid a steady U.S. dollar as traders await cues from the
minutes of the FOMC meeting, due out later today. Gold for December
edged up $3.00 to $1,727.80 an ounce.
In corporate news from Canada, Iamgold Corp.
reported improved third-quarter net earnings of $78.0 million or $0.21
per share compared to $50.0 million or $0.13 per share in the third
quarter 2011. However, adjusted net earnings dipped to $60.2 million or
$0.16 per share from $112.4 million or $0.30 per share Analysts expected
the company to report earnings of $0.25 per share for the quarter.
Food and pharmaceutical company METRO Inc.
posted an improved fourth-quarter net earnings of C$143.3 million or
C$1.46 per share compared to C$84.4 million or C$0.83 per share reported
a year ago. Adjusted net earnings were C$123.4 million or C$1.24 per
share for the quarter.
Precision GPS products and technologies company Hemisphere GPS Inc
reported a wider third quarter net loss of $2.7 million or $0.04 per
share compared with loss of $2.02 million or $0.03 per share for the
prior-year period. Further, the company said it does not expect to meet
the previous 10 percent revenue-growth target for the year, citing
lower-than-expected growth in the third quarter and that it will refrain
from providing full-year guidance due to the restructuring programs.
Healthcare services provider Medical Facilities Corp.
announced that it would acquire a 51 percent interest in the Arkansas
Surgical Hospital, L.L.C., which operates the Arkansas Surgical
Hospital.
China focused corn products company Asia Bio-Chem Group Corp.
reported that its third quarter net loss widened to C$11.1 million or
C$0.13 per share from C$4.3 million or C$0.05 per share in the year ago
quarter. Yesterday, the plunged 27 percent.
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European Markets Trade Weak Amid Economic Worries
The European markets
are trading lower on Wednesday, as global economic worries continued to
weigh on investor sentiment, amid anti-austerity protests in the
continent.
Greek Finance Minister Giannis Stournaras and
Labor Minister Giannis Vroutsis told the European Parliament's Economic
Affairs and Employment Committees on Tuesday that it is up to the EU to
come forward with the next aid tranche.
There were many
distortions in the Greek finance and labor markets that had to be
tackled, but Greece has taken all the necessary measures, they noted.
Debt-ridden
Greece successfully raised 4.06 billion euros on Tuesday by selling
short term bills, easing concerns about how it would repay its debt
maturing on Friday.
Meanwhile, The Greek economy contracted at a
faster pace in the third quarter, preliminary data from the Hellenic
Statistical Authority showed. Gross domestic product, on an unadjusted
basis and at constant prices, fell 7.2 percent year-on-year in the third
quarter, after falling 6.3 percent in the second quarter. The economy
has contracted for the seventeenth consecutive quarter.
Eurozone
industrial output dipped by a seasonally adjusted 2.5 percent in
September from a month ago, Eurostat said. Economists had forecast a 2
percent fall after rising 0.9 percent in August.
Number of people claiming jobseeker's allowance
in the U.K. rose by 10,100 in October from September to 1.58 million,
the Office for National Statistics said. The jobless claim figure was
forecast to remain flat in October. The claimant count rate remained
unchanged at 4.8 percent in October.
The Bank of England said in
its quarterly inflation report that GDP growth is likely to fall back
sharply in the fourth quarter. Inflation in near term is expected to be
higher than estimated in August.
The Euro Stoxx 50 index
of eurozone bluechip stocks is falling 0.33 percent, while the Stoxx
Europe 50 index, which includes some major U.K. companies, is losing
0.65 percent.
The German DAX, the French CAC 40 and Switzerland's SMI are losing 0.4 percent each. The UK's FTSE 100 is falling 0.6 percent.
In Frankfurt, Infineon Technologies is surging 5.2 percent. The company reported fourth-quarter results. Deutsche Bank is gaining 1.4 percent while Commerzbank is moderately lower.
RWE is
up 0.3 percent. The utility now sees slightly higher full-year EBITDA
as it is now slightly more confident than it was three months ago.
Peer EON,
which reported third-quarter results on Tuesday, is falling 1.8
percent. Several analysts reduced their ratings on the utility. K+S is losing 2.4 percent. The specialty chemicals firm also reported financial results on Tuesday.
In Paris, EDF is declining 2.5 percent. EADS is down 1.6 percent and LVMH is losing around 1 percent. Vivendi is advancing 4.6 percent. The media and telecommunications company Tuesday reported a sharply higher third-quarter profit. Alcatel Lucent is rising 3.4 percent and STMicroelectronics is gaining 2.4 percent.
In London, Inter-dealer broker ICAP reported
a sharp decline in profit for the first half, as margins dropped due to
reduction in revenue from voice broking as well as a decline in
electronic volumes. The stock is declining 5.3 percent.
Ryanair Holdings is declining 6.4 percent. Citigroup cut the stock to "Neutral" from "Buy.''
Evraz is declining 3.4 percent and Eurasian Natural Resources is falling 2.7 percent. Glencore and Xstrata are notably lower. S&P Equity raised Vodafone to "Buy" from "Hold.'' the stock is down 1 percent.
Sainsbury is losing 2.1 percent after reporting first-half results. Kingfisher and Burberry are down around 1.5 percent each.
AMEC is climbing 3 percent. Weir Group is gaining 1.7 percent and Centrica is rising 1.5 percent.
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Asian Stocks Pare Losses As Greece Fears Recede
Asian stock markets ended
mostly higher on Wednesday, paring early losses, as a successful bond
auction in Greece reduced the risk of a Greek default on a 5 billion
euro debt repayment due later this week. A survey showing a jump in
Australian consumer sentiment in November, renewed pledges by Chinese
leaders to take necessary steps to bolster the world's second-largest
economy during meetings this week in Beijing and a degree of optimism
that U.S. lawmakers would forge a deal to avoid the year-end "fiscal
cliff" spurred bargain hunting in beaten down stocks following recent
losses.
Japanese share rose marginally, ending seven days
of losses, as investors hunted for bargains among consumer finance,
realty and metal stocks following recent steep losses on worries over
U.S. budget woes. The Nikkei average closed up 0.04 percent, while the broader Topix index
ended down 0.02 percent. Sharp Corp soared 7.2 percent on reports that
Intel and Qualcomm Inc are in talks to invest about 30 billion to 40
billion yen in the debt-stricken consumer electronics maker. Aiful
climbed 30 percent to a three-year high after the consumer finance firm
reported a 76 percent jump in its April-September group net profit.
Among those that fell, China-related Komatsu and Fanuc fell 1-2 percent, exporters Nikon and Toyota Motor fell about a percent each and Seiko Holdings
plunged 10 percent after lowering its full-year earnings forecast.
Hitachi Metals and Hitachi Cable plummeted 10-12 percent after they
unveiled plans to merge in April.
China's Shanghai Composite
index rose 0.4 percent, with aluminum companies leading the gainers
after the state-run China Securities Journal said that the State Bureau
of Material Reserve plans to stockpile 400,000 metric tons of the metal
by Dec. 29. Yunnan Aluminum, Jiaozuo Wanfan Aluminum Manufacturing and Chalco rallied 3-5 percent.
Meanwhile,
the week-long 18th Communist Party Congress ended today, with the
country's ruling party re-electing the nation's future leaders Xi
Jinping and Li Keqiang onto its Central Committee, which will in turn
elect the Political Bureau, the Standing Committee of the Political
Bureau and the General Secretary at its first plenary session tomorrow.
Hong Kong's Hang Seng index gained 1.2 percent on bargain hunting.
Australian
shares rebounded from six-week lows, led by banks after data showed
Australian consumer confidence surged to a 19-month high. The Westpac-Melbourne Institute Index
of Consumer Sentiment increased 5.2 percent from the previous month to
104.3 in November, suggesting that the central bank's interest rate cuts
since November last year are starting to have an impact on household
confidence. "This is a welcome and surprisingly strong result," Westpac
Chief Economist Bill Evans said.
The benchmark S&P/ASX 200 rose 0.2 percent to 4,388 in cautious trading after hitting a low of 4,372 early in the session. The broader All Ordinaries index closed up 0.15 percent at 4,411. Among the major banks, Westpac, NAB, ANZ and Commonwealth rose between 0.2 percent and 0.7 percent. Insurer QBE
rallied 2.4 percent after steep losses in the previous session
following an earnings downgrade. In the resource sector, BHP Billiton
edged down marginally, but Rio Tinto gained 0.3 percent and Fortescue
Metals Group added 0.8 percent.
Seoul shares snapped a
four-session losing streak, led by technology stocks. However, gains
were capped by renewed foreign selling and the continued anxiety over
the looming U.S. fiscal cliff. The benchmark Kospi average ended
the session up 0.2 percent. Foreign funds remained net sellers for a
fifth straight day, offloading shares worth a net 75.3 billion Korean
won, data showed.
Among the prominent gainers, LG Electronics and SK Hynix jumped about 5 percent each. Shares of LG Display eased 0.3 percent amid reports that its ailing rival Sharp Corp is in talks to get a cash injection of hundreds of millions of dollars from U.S.-based Intel Corp.
New Zealand
shares lost ground, dragged down by carpet maker Cavalier and retailer
Kathmandu Holdings after weak third-quarter retail sales data reinforced
concerns about the sluggish economic recovery. Statistics New Zealand
said that retail sales fell a seasonally adjusted 0.4 percent by volume
in the three months ended September, adding to the gloom from data last
week showing the unemployment rate hit a 13-year high.
The benchmark NZX-50 index slipped 0.4 percent. Both Cavalier and Kathmandu fell about 3 percent each. Goodman Property Trust lost 2.8 percent after announcing a capital raising to fund full acquisition of an Auckland business park, Highbrook.
Elsewhere, Indonesia's Jakarta Composite index rose 0.4 percent and the Taiwan Weighted average added 0.3 percent, while Malaysia's KLSE Composite eased 0.4 percent and Singapore's Straits Times index was down 0.9 percent. The Indian market was closed for Diwali.
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Crude Steady Above $85
The price of crude oil was steady above $85 Wednesday morning as traders were cautiously optimistic that President Barack Obama will resolve the impending "fiscal cliff" that could derail the fragile recovery in the world's largest economy.
Light Sweet Crude Oil
(WTI) futures for December delivery, edged up $0.21 to $85.59 a barrel.
Yesterday, oil extended losses mostly on demand concerns after the
International Energy Agency slashed its global demand forecast for the
commodity. Investor also weighed the U.S. fiscal cliff looming ahead
with spending cuts and tax hikes indicated in January if a deal is not
reached.
This morning, the U.S. dollar was leveling off
from its 2-month high versus the euro, while steady around 2-month high
against sterling and the Swiss franc. The buck was paring recent losses
versus the yen.
In economic news, euro zone industrial output
dipped by a seasonally adjusted 2.5 percent in September from a month
ago, Eurostat reported. Economists had forecast a 2 percent fall after
rising 0.9 percent in August.
Meanwhile, the number of people
claiming job-seeker's allowance in the U.K. rose by 10,100 in October
from September to 1.58 million, the Office for National Statistics said.
The jobless claim figure was forecast to remain flat in October. The
claimant count rate remained unchanged at 4.8 percent in October, and
matched economists' expectations.
U.K. GDP growth is set
to fall back sharply in the fourth quarter, the Bank of England said its
quarterly Inflation Report, published on Wednesday. Further, the
outlook for UK growth remains uncertain, it said. According to BoE,
output is more likely than not to remain below its pre-crisis level
until towards the end of the forecast period. The bank sees a greater
risk of economy staying in a period of persistent low growth.
Traders will look to the retail sales
report for October from Commerce Department, due out at 8:30 am ET. For
October, economists estimate a 0.1 percent decline in retail sales but a
0.2 percent increase in retail sales, excluding autos.
Simultaneously, the U.S. Labor Department
will release its report on the producer price index for October.
Economists expect the headline index as the core producer price to have
risen by 0.2 percent in October.
Later during the session, the Commerce Department is
scheduled to release its business inventories report for September. The
report is expected to show a 0.4 percent increase in business
inventories for the month compared to a 0.5 percent increase in August.
The Federal Reserve is due to release the minutes of its September 12-13th meeting at 2 pm ET.
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