Online Consultancy Network Financial Journal: Stock Market Update

Stock Market Update
Monday, 23, 2010

Market Summary:

Stocks:

US stocks remained somewhat unchanged Monday, erasing an earlier rally as investors returned their focus to economic weakness after excitement over a burst of deal activity faded.

Dow Jones	10,174.41	-39.21	(-0.38%)
S&P 500	1,067.37	-4.32	(-0.40%)
Nasdaq	2,159.63	-20.13	(-0.92%)

US stocks were headed higher Monday as talk about possible deals spurred optimism, but investors remained cautious after two weeks of rough trading. The Dow Jones industrial average jumped 35 points, or 0.3%, the S&P 500 ticked up 4 points.

Crude oil futures rose slightly and then declined Monday as concerns about weakening demand and rising inventories kept prices close to recent lows.

Light, sweet crude for October delivery recently traded 78 cents, or 1.1%, lower at $73.03 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 74 cents, or 1%, lower at $73.52 a barrel.

Economic Concerns that lead to further weakness on Wall Street stocks Friday are fading, indexes are mostly higher in mid-morning trading on Monday amid M&A activity. Lingering concerns about the economic outlook is on the back burner today as oil, stocks and news of mergers rise.

The too-big-to-fail policies that have propped up the nation's largest banks are calling into question the outlook for the nation's community banks, a top U.S. central bank official said Monday.

Eight US banks in four States failed Friday. Federal Reserve Bank of Kansas City President Thomas Hoenig is worried that community banks, which he believes are critical lenders to local communities, are at a disadvantage in the current environment. That's not good, because these banks are very important sources of credit in their areas, and are especially important in the area watched over by the Kansas City Fed.

"The decline in overall bank lending, particularly to small businesses, is a major concern," Hoenig said. But "data show that community banks have done a better job serving their local loan needs over the past year," he said, adding "community banks, as a whole, increased their total loans by about 2% as compared to a 6% decline for larger banks."

"Community banks have maintained a strong presence despite industry consolidation because their business model focuses on strong relationships with their customers and local communities," Hoenig said. "Larger banks are important to a firm as they grow and need more complicated financing, but in this region, most businesses are relatively small and their needs can be met by that local bank."

Canadian Market News:

Toronto Stocks Higher At Midday; Oils, Banks Gain

The stock market was slightly higher at midday Monday, with modest gains in the financials and energy sectors outweighing weakness elsewhere. At 11:45 a.m. EDT (1545 GMT), the S&P/TSX Composite Index was up 25.42 points, or 0.22%, at 11747.49. Advances led declines 619 to 615. Trading volume was 137.3 million shares. The S&P/TSX 60 Index was up 2.15 points, or 0.31%, to 684.86.

Euro-Zone Consumer Confidence Surged In August

Economic data released overseas Monday was less than encouraging. Both the region's manufacturing and services purchasing managers indexes slid in August, despite pickups in Germany and France, suggesting that other countries that are implementing strict fiscal plans to narrow large budget deficits have seen a sharper slowdown in their economies.

Aa report from Moody's Investors Service warned that growth throughout the euro zone may fall short of preventing credit rating agencies from downgrading some member countries if their economies begin to suffer in the face of tight austerity budgets.

The euro fell to $1.2674 against the US Dollar.

Consumers in the 16 countries that use the euro became significantly more upbeat about their prospects as concerns about the currency area's economic outlook eased in August.

the European Commission's preliminary estimate of consumer confidence rose to -11.7 from -14.0 in July The scale of the pickup in confidence was a surprise, since economists surveyed by Dow Jones Newswires last week had expected a more modest rise to -13.

EuroMTS Total Return Euro-Zone Govt Bond Index:

Name Index Dur MDur Convex Coupon Matur Yield
------ ------ ---- ---- ----- ------ ----- ------
1-3Y 155.98 1.90 1.87 5.84 4.39 1.98 1.62
3-5Y 168.78 3.79 3.71 18.36 4.00 4.09 2.14
5-7Y 177.21 5.40 5.26 35.07 3.77 6.02 2.65
7-10Y 179.95 7.10 6.88 59.44 4.28 8.33 3.16
10-15Y 183.24 9.34 8.99 104.28 4.80 12.10 3.85
15Y+ 198.83 14.63 14.10 288.57 5.12 23.56 3.74
15-25Y 198.31 12.99 12.53 217.34 5.59 19.85 3.71
25Y+ 198.46 17.40 16.77 409.11 4.33 29.84 3.77
Global 173.37 6.46 6.26 78.89 4.38 8.62 3.18

FTSE 100 Ends Up On M&A News; But US Stocks Weigh
FTSE 100 5234.84 +39.56 +0.76%
FTSE 250 9826.15 +65.00 +0.67%
DJ UK Smaller Companies 813.87 +5.53 +0.68%

There are no major UK data due Tuesday, so investors will look to the US, where existing home sales are at 1400 GMT.

LME Final Evening Evaluations

Metal Cash 3 Months 15 Months 27 Months

Copper 7235.00 7255.00 7254.00 7081.00
Lead 2021.50 2048.00 2066.50 2042.00
Zinc 2014.50 2044.00 2099.50 2091.00
Aluminum 2039.00 2040.00 2106.00 2161.00
Nickel 21139.50 21200.00 20956.00 20253.00
Tin 20505.00 20460.00 19805.00 (---)
Al. Alloy 2184.00 2075.00 2055.00 2110.00
NA Alloy 2012.25 2025.00 2077.00 2146.25

Greek household and business deposits for June fell 1.5% from the previous month, central bank data showed Monday. Since the start of the year, deposits have fallen by EUR21.4 billion.

South America:

Brazil's current account deficit narrowed.

Aided by a steep decline in overseas profit and dividend remittances, Brazil's current account deficit narrowed in July to $4.50 billion from $5.18 billion in June, the Brazilian Central Bank said Monday. The July deficit figure came in slightly narrower than market projections of around $4.6 billion.

Brazil Corporate Profits Jump 35% In 2Q; Banking Leads By Sector
Brazil's strong recovery from the global financial crisis and economic slowdown resulted in strong year-on-year growth in corporate net profits during the second quarter, according to a study by local consultancy Economatica.

The 321 companies measured by Economatica saw net profits rise 35% to 44.7 billion Brazilian reals ($25.4 billion), up from BRL33.1 billion in the second quarter of 2009.

The banking sector was the most profitable of the 23 sectors measured, Economatica said. The 25 financial institutions in the sector together generated net profit of BRL10.1 billion, up from BRL8.5 billion in the same period a year ago.

Mexican retail sales rose less than expected in June from a year earlier, and fell in seasonally adjusted terms from May, the National Institute of Statistics and Geography, or Inegi, said Monday.

Wholesale sales rose 5.3% from June 2009, and were up 0.23% seasonally adjusted from May.

World market snapshot:

Shanghai 2,639.37 -2.94 (-0.11%)
Nikkei 225 9,116.69 -62.69 (-0.68%)
Hang Seng Index 20,889.01 -92.81 (-0.44%)
TSEC 7,975.93 +48.62 (0.61%)
FTSE 100 5,247.49 +52.21 (1.00%)
DJ EURO STOXX 50 2,666.89 +22.91 (0.87%)
CAC 40 3,562.51 +36.39 (1.03%)
S&P TSX 11,761.54 +39.47 (0.34%)
S&P/ASX 200 4,429.00 -1.90 (-0.04%)
BSE Sensex 18,409.35 +7.53 (0.04%)

U.S. stocks pared losses in late Friday afternoon trading, but still posted their second straight week of losses amid light summer trading volumes. A weakening in the euro on Friday reminded investors of lingering sovereign-debt concerns and added to the week's push-and-pull between encouraging corporate news and weaker-than-expected economic data. A resurgence in deal activity to the highest levels since late 2009 clashed with persistent reminders of the struggling global economic recovery.

Treasurys:

The U.S. Treasury plans to auction $35 billion in reopened 21-day bills Wednesday. The debt will settle on Aug. 26, 2010 and will mature Sept. 16, 2010. The Federal Reserve holds $5.938 billion of maturing securities for its own account. Amounts bid by the Federal Reserve banks for their own account will be in addition to the public offering amount. Noncompetitive tenders for the 21-day bills, available in minimum denominations of $100, must be received by 11:00 AM Eastern Time Wednesday. Competitive tenders available in minimum denominations of $100, must be received by 11:30 AM Eastern Time.

Yields on U.S. Treasury bonds remained near record lows as the mostly downbeat economic news that trickled in much of the week gave investors more reasons to put money toward safer government debt. With nothing on the economic data calendar and with no Federal Reserve speakers on deck Friday, trade lacked much direction for most Treasury notes, but demand for 30-year bonds was robust.

Forex:

The U.S. Dollar Index, which tracks the U.S. currency against a basket of six others, edged up 0.2% on Monday morning.

The dollar rallied broadly, rising to a six-week high against the euro after a European Central Bank official suggested monetary policy should remain loose until next year, putting a spotlight on a still-nascent recovery propped by stimulus. A recent stream of weakening U.S. economic data also continued to reverberate through markets, sending currencies closely tied to the pace of global growth, such as the Australian and Canadian dollars, lower against the greenback, which investors sought for its perceived safety.

U.S. Gold Prices:
Engelhard Corp's base price for industrial gold bullion was $1228.73 per troy ounce, up $2.50 from previous. It's selling price for gold in fabricated form was $1320.89, up $2.69. Handy & Harman's base price for gold was $1226.00 per troy ounce, up $2.50. The fabricated form price was $1324.08, up $2.70.

Spot Silver is trending between $17.98 to $18.02 an ounce.

Commodities
Crude Oil	73.89	+ 0.10%
Natural Gas	4.08	- 0.92%
Gasoline	1.92	-
Heating Oil	1.98	+ 0.34%
Gold	1227.71	+ 0.03%
Silver	18.02	+ 0.28%
Copper	3.28	- 0.33%
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