Broadgate: Market News 12/2
12 February 2013
Stocks ended a quiet session with slight moves on Monday as investors found few reasons to keep pushing shares higher following a six-week advance, though the longer-term trend was still viewed as positive.
The benchmark index is up more 6.4 percent in 2013, putting both the S&P 500 and Dow industrials near multi-year highs. The S&P is less than 4 percent from its all-time intraday high of 1,576.09, hit in October 2007.
“This is still a market that looks terrific, but when you’re up for six weeks in a row, everyone is going to want to take a pause going into the seventh week even if there is no bad news out there,” said Eric Kuby, chief investment officer at North Star Investment Management in Chicago.
Volume was light, with about 4.812 billion shares changing hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, well below the daily average so far this year of about 6.48 billion shares.
Wall Street was modestly lower throughout the session but regained some ground in the final hour of trading as Google Inc rebounded off earlier losses. Shares of the Internet search giant dipped 0.4 percent to $782.42, recovering from earlier declines of 1 percent after the company said in a filing former chief executive Eric Schmidt is selling roughly 42 percent of his stake in the company.
Also in the tech space, Apple Inc rose up 1 percent to $479.93 after the New York Times reported the iPhone maker was experimenting with the design of a device similar to a wristwatch.
The Federal Reserve’s Vice Chair Janet Yellen, seen as a potential successor to Fed Chairman Ben Bernanke next year, said the Fed is still aggressively stimulating an anemic U.S. economic recovery that has failed to bring rapid progress on employment.
The Dow Jones industrial average was down 21.81 points, or 0.16 percent, at 13,971.16. The Standard & Poor’s 500 Index was down 0.92 points, or 0.06 percent, at 1,517.01. The Nasdaq Composite Index was down 1.87 points, or 0.06 percent, at 3,192.00.
Upbeat U.S. and Chinese data last week helped the S&P 500 extend its weekly winning streak to six. The index gained about 8 percent over that period.
Equities have been strong performers lately and many investors have used any declines in the market as opportunities to buy.
“Everyone wants to buy on a dip in this market, but if you’re on the sidelines right now, the decline we’re seeing today just isn’t the kind you would jump in on,” Kuby said.
President Barack Obama will describe his plan for spurring the economy in his State of the Union address on Tuesday. He is expected to offer proposals for investment in infrastructure, manufacturing, clean energy and education.
Opposition has grown to the $24.4 billion buyout of Dell Inc, the No. 3 personal computer maker, as three of the largest investors joined Southeastern Asset Management on Friday in raising objections. Dell said in a regulatory filing it had considered many strategic options before opting to go private in a buyout led by Chief Executive Michael Dell.
Dell shares hovered near $13.65, the buyout offer price.
Regeneron Pharmaceuticals Inc shares rose 2.7 percent at $170.35 after it said longtime drug development partner Sanofi plans to boost its stake.
Moody’s Corp was one of the strongest percentage gainers on the S&P 500, rising 4.9 percent to $45.49. Last week the stock plunged 22 percent after the U.S. government launched a civil lawsuit against the company. The sell-off marked the stock’s worst week since October 2008.
About 53 percent of stocks traded on the New York Stock Exchange closed lower while slightly more Nasdaq-listed stocks closed in negative territory.
The yen wallowed close to recent lows in Asian trading on Tuesday after a U.S. Treasury official implied tolerance of a weaker Japanese currency as a side-effect of efforts to whip deflation.
The dollar was buying 94.30 yen, slightly up from late North American trade on Monday when it rose as high as 94.465 yen on the EBS trading platform, its highest level since May 2010.
The euro was slightly lower at 126.28 yen after it jumped 2 percent against the Japanese unit on Monday, moving toward a 34-month high of 127.71 yen hit on Wednesday last week.
U.S. Treasury Undersecretary for International Affairs Lael Brainard said the United States supports Japanese efforts to end deflation and re-invigorate growth.
She also stressed that the Group of 20 nations needs to deliver on the commitment to move to market-determined exchange rates and refrain from competitive devaluation.
Her remarks came ahead of a meeting of euro zone finance ministers on Monday and the G20 meeting later in the week, which are likely to focus on whether some countries are deliberately trying to weaken their currencies.
Against a backdrop of rising rhetoric about a currency war, the Group of Seven nations are considering issuing a statement this week reaffirming their commitment to “market determined” exchange rates, two G20 officials said on Monday. France said on Monday that euro zone finance officials should discuss the rising strength of the euro, but several ministers played down the issue and the G7 was expected to call for “market-determined” exchange rates.
Japanese Finance Minister Taro Aso told a news conference after a cabinet meeting on Tuesday that Japan would tell the G20 that its monetary and economic policies are aimed at beating deflation.
The euro also benefited from comments from European Central Bank council member Jens Weidmann, who said discussions about an overvaluation of the euro are simply a diversion from governments’ task of sorting out their economies. He added that a currency policy aimed at weakening the euro would lead to higher inflation.
Against the dollar, the euro was slightly down North American levels, buying $1.3398, closer to its Feb. 8 low of $1.3353 than to its 15-month peak of $1.3711 set on Feb. 1.
The Bank of Japan will hold its regular meeting on Wednesday and Thursday, and is expected to keep monetary policy steady for now.
Still, markets are pricing in more easing to come as the government of Prime Minister Shinzo Abe has kept steady pressure on the central bank to take bold action to achieve its new 2 percent inflation target.
The Australian dollar was steady at 96.66 yen, in sight of its four-and-a-half year peak of 97.42 set a week ago.
Against the U.S. dollar, the Aussie was slightly higher, last buying $1.0258 after falling to a three-month low of $1.0249.
The People’s Bank of China has been a regular buyer of the Aussie, but with China closed for most of this week for the Lunar New Year holiday, it may be especially vulnerable to a selloff, said Boris Schlossberg, managing director of FX strategy at BK Asset Management
A break below $1.0250 suggests a bearish technical development and may open the path to a test of 1.0150, he said in a note to clients.
The information set out herein has been obtained from various public sources and is by way of information only. Broadgate Financial can accept no liability of any sort in relation thereto and readers should obtain their own verification of any statement before making any decision which may have any financial or other impact.
Neither the information nor the opinions herein constitute, or are they to be construed as, an offer or a solicitation of an offer to buy or sell investments.