Ah, not today, guys. Stocks went the other way this time.
Tomorrow’s upcoming quadruple witching probably played some role, but hard not to notice volume picked up notably in today’s sell-off in US stocks. As Art Cashin at UBS often says, volume equals validity, and a key feature to the rally has been the tepid, unconvincing volume. NYSE listed volume pretty strong today at more than 7.6 billion.
Along with increased volume, another item in today’s action that stands out is that the major averages all closed near session lows. Late cavalry charge of buyers we’ve seen so many times during the past few months was absent.
Strong dollar set a negative tone for equities from the outset, and there was never a serious attempt at reversal. Dollar index up about 1%. Gold gets hammered, but oil hangs in relatively well.
Materials were hardest hit sector, followed by financials and consumer stocks. Coke, 3M and IBM lead the Dow’s dollar decliners.
DJIA falls 132.86 to 10308.26, and Nasdaq Comp sheds 26.86 to 2180.05. S&P 500 ends 13.11 lower at 1096.07. DJIA now negative for December.
Newswires’ Madeleine Lim and Kathleen Madigan discuss jobless claims and the stabilizing labor market as well as good news on Philadelphia-area factory growth and FedEx spotting a “turning point” in the economy. It’s Tomorrow’s News Today.
- Paul Volcker’s been relatively quiet for much of the last 12 months. Not anymore. On important policy, the former Fed chairman won’t easily yield. “Expect him to pound away until he prevails,” former IMF chief economist Simon Johnson says.
- Palm has something up its sleeve for CES. The company unveiled the Pre and its WebOS operating system last January. What will it announce in 2010?
- Just days after Google said it will introduce a branded cell phone, TechCrunch says Google is in talks with an undisclosed hardware maker to build a Google-branded netbook in time for the 2010 holiday season.
- Not enough acknowledgment of TARP’s successes? Former Dallas Fed President Bob McTeer says he “still expects the recovery of TARP funds as applied to banks will be close to 100%.”
- Newspaper publishers’ optimism on advertising market seems to be wishful thinking.
Pragmatic Capitalist hits on a subject we’ve harped on here for a few months now – specifically, the lack of any substantial recovery in freight volumes, for both railroads and truckers, and what that says about the US economic “recovery.”
One reason we don’t buy the notion that the economy is poised to snap right back is that there hasn’t been any sign of stronger demand translating into more goods being shipped. Happy to see Pragmatic Capitalist ain’t buying it either.
Blog notes latest data show railcar loads down 10.2% vs the same week a year ago, and 18.5% vs 2007. For the year so far, total carloads are down almost 17% and more than 18% vs 2007.
This far into the equity rally and the so-called economic recovery you could easily begin to make the claim that the economy is not actually recovering at all, but rather bumping along the bottom,” blog says. After all, if this data is still showing year over year decline (when the economy was falling off a cliff last year) then how much better can things really be?
Couldn’t agree more, fellas. But to be fair, while the data continue to show declines in volume, the magnitude of the drops have eased. But not by much.
So, based on what we see in freight shipping, we’re not hopeful about the quick bounce-back many are now predicting.
Treasury’s inability to sell any Citi stock has put the shares in quite a bind.
Institutions are reluctant to hold Citi — only 20% of the shares were held by them, Citi said recently — and analysts blamed investor fear that the US, as a large shareholder, could act capriciously. Selling 5% of Citi’s shares by Treasury yesterday would’ve reduced that fear, and for technical reasons allowed index funds to own more.
Now those benefits are delayed. Institutions dislike government ownership and are reluctant to buy; the government won’t sell unless the price goes up.
Citi’s secondary offering shows the big difference that long-term fundamental investors and short-term speculators have on the sustainability of a company’s stock price, Reuters blogger Felix Salmon says.
Citigroup (C) shares fall as the government decides against trimming its 34% stake in the banking behemoth. Abrupt decision comes after the pricing of a recent secondary offering comes 10 cents below what the Treasury Department originally paid for Citi shares, meaning taxpayers would’ve lost money on the deal. WSJ has the details:
The embarrassing reversal came two days after the Treasury said it planned to sell as much as $5 billion of stock in the New York company, as part of Citigroup’s plan to pay back $20 billion in taxpayer aid the troubled bank received last year.
The huge offering encountered a lukewarm reception on Wall Street, where investors were skeptical of the company’s earnings prospects and had already spent heavily on shares of rival banks this week.
As a result, Citigroup had to sell its stock at a discounted price of $3.15 a share. That’s 10 cents below what the Treasury paid for each of its 7.7 billion shares.
Market observers expressed skepticism earlier this week when Citi said it would repay TARP, suggesting the bank was wrong-headed in rushing to pay back taxpayers and risked demoralizing investors. But Citi has argued that being a bailout recipient has hindered its ability to lure top talent.
“Earlier this week, when Citi announced its plan to repay TARP, we characterized it as a mixed blessing and noted that we were disappointed that the plan began with capital raising to repay the TARP preferreds and ended with the sale of government shares rather than the other way around,” analysts at Oppenheimer said. “In retrospect, we had no idea of our gift for understatement.”
US stock futures point to a lower open when regular trading begins shortly, as the US dollar posts sharp gains. Dollar index up more than 1% at 77.78, its highest level since early September.
USD’s strength being credited to more positive sentiment on a US economic recovery and setbacks (ah, Greece) in Europe. European stock markets are also lower. Citi shares down 9% premarket after its giant, TARP-liberation stock offering was met with tepid demand.
Weekly jobless claims, continuing claims both a little higher than expected, and claims for emergency benefits continue to climb, up almost 46,000 to more than 4.2 million in week of Nov. 28.
Weaker-than-expected fiscal 3Q guidance from FedEx, along with weaker jobs data, put added pressure on premarket stock futures.
Philly Fed’s December manufacturing index, Conference Board’s November LEI both set for 10:00am. Oil and gold both retreat in the face of USD strength. S&P futures down 8.70, Dow futures down 65.00; 10-yr higher, yield at 3.54%.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
It doesn’t look like George Zimmer is going to be able to guarantee it, anymore. The founder of Men’s Wearhouse has been fired from his own company, the clothier announced today. Click here to read the announcement. “The Board expects to discuss with Mr. Zimmer the extent, if any, and terms of his ongoing relationship […]