Broadgate: Market News 19/9
19 September 2012
Stocks ended flat to slightly lower on Tuesday after bellwether FedEx cut its profit forecast and investors pulled back after last week’s rally on central bank stimulus.
Falling oil prices weighed on the market for a second day, with the S&P 500 energy index, down 0.7 percent, the day’s biggest decliner among the S&P’s sectors.
The Standard & Poor’s 500 remains up 5.3 percent since the end of July. The benchmark index reached levels not seen in nearly five years last Friday, a day after the Federal Reserve’s unveiling of its plan to undertake a third round of stimulus. The Fed’s announcement followed the European Central Bank’s statement that it would buy bonds to support struggling euro- zone economies.
“We’ve gotten to the point where price momentum was such the market averages were overextended at the end of last week,” said Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon. “Now we have this quiet period.”
Shares of FedEx Corp fell 3.1 percent to $86.55. The Dow Jones transportation average lost 1.1 percent. FedEx cut its profit forecast for its fiscal year 2013, saying that a weakening world economy had prompted customers to shift toward lower-priced shipping.
Estimates for the third-quarter S&P 500 companies’ profits have fallen sharply in recent months, and earnings now are expected to decline 2.2 percent from a year ago, according to Thomson Reuters data. It would be the first such decline in three years.
Apple Inc, which broke sales records with its new smartphone, provided some support to the market. Apple’s stock set another all-time high at $702.33 before ending at $701.91, up 0.3 percent.
The Dow Jones industrial average gained 11.54 points, or 0.09 percent, to end at 13,564.64. The Standard & Poor’s 500 Index dipped 1.87 points, or 0.13 percent, to finish at 1,459.32. The Nasdaq Composite Index edged down 0.87 of a point, or 0.03 percent, to end at 3,177.80.
Weighing on the tech sector were shares of Advanced Micro Devices Inc (AMD.N), which tumbled 9.7 percent to $3.62 a day after the company said its chief financial officer was leaving the struggling personal computer chipmaker. The PHLX semiconductor index lost 0.4 percent.
Economic data, however, offered a fresh sign of momentum for the housing market. U.S. homebuilder sentiment rose for the fifth month in a row in September to its highest level in over six years, the National Association of Home Builders said.
The PHLX housing sector index, however, was down 0.8 percent.
Aside from more economic reports on housing this week, investors will get readings on manufacturing. The Philadelphia Federal Reserve’s survey of activity in the mid-Atlantic region, as well as the Markit manufacturing purchasing manager’s index for September, are due on Thursday.
Data on Monday showed factory activity in New York state fell to its lowest level in nearly 3-1/2 years.
Volume was lower than average for a second straight day, with roughly 5.9 billion shares traded on the New York Stock Exchange, the Nasdaq and the Amex, compared with the year-to-date average daily closing volume of 6.5 billion. Many participants were out Monday and Tuesday for the observance of Rosh Hashana, the Jewish New Year.
Decliners outnumbered advancers on the NYSE by about 17 to 13, while on the Nasdaq, about 13 stocks fell for every 12 that rose.
U.S. crude edged up on Wednesday, snapping two days of falls, but remained under $96 a barrel as a renewed focus on a weak global economy and indications that the world’s top oil exporter Saudi Arabia is pumping more oil held back the market.
U.S. crude for October delivery rose 31 cents to $95.60 per barrel by 7.18 p.m. EDT. U.S. October crude which expires on Thursday, settled at $95.29 a barrel in the previous session, below the 200-day moving average of $95.57. U.S. November crude was up 29 cents at $95.91 a barrel.
London’s Brent crude for November delivery was down 24 cents at $111.70 a barrel.
Gold edged down on Wednesday as investors pulled back following last week’s rally on the U.S. Federal Reserve’s stimulus plan, but platinum bounced after falling more than 2 percent in the previous session as striking miners in South Africa agreed to return to work.
Spot gold had fallen $4.33 an ounce to $1,767.36 by 8.23 p.m. EDT, moving away from a near 7-month high of $1,777.51 hit on Friday, when the Fed’s latest move to spur the economy led to a rush for bullion.
U.S. gold for December delivery had barely moved at $1,769.70 an ounce.
Platinum added $2.34 to $1,619.74, after falling more than $50 within 10 minutes in response to news of the agreement at Lonmin’s (LONJ.J) Marikana mine on Tuesday.
The yen stayed on the backfoot against the dollar on Wednesday as speculation grew the Bank of Japan might ease monetary policy later in the session, while the euro and high-beta currencies took another step down from multi-month highs.
The dollar bought 78.77 yen, not far from a one-week high of 78.93 scaled on Monday. A break there could see the greenback retest the September 7 high of 79.03, then 79.66, its August peak.
The euro slipped to $1.3044, retreating from a four-month high around $1.3173 set on Monday when markets were still punishing the dollar following the Fed’s debt-buying announcement.
The Aussie fell prey to a bit of position adjustment as well, following its run-up to a six month high of $1.0625 on Friday. It last stood at $1.0449, the 38.2 percent retracement level of its September 6-14 rally.
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