Stock Market Update - Friday, November 12, 2010 - Cautious Lower Outlook

Stock Market Update

Friday, November 12, 2010

Latest US Economic News Headlines:

USA EQUITY INDEXES: (NOV. 12, 4:05 PM EST)

Dow Jones 11,192.58 -90.52 (-0.80%)
S&P 500    1,199.21 -14.33 (-1.18%)
Nasdaq     2,518.21 -37.31 (-1.46%)

Dow Jones 3:30 PM Averages: DJIA 11,181.83 DN 101.27
  30 INDUS     11,181.83 DN  101.27 OR    0.90%
  20 TRANSP     4,808.28 DN   48.56 OR    1.00%
  15 UTILS        401.29 DN    3.12 OR    0.77%
  65 STOCKS     3,882.28 DN   35.47 OR    0.91%

SECTOR SUMMARY:
Basic Materials -2.25%
Capital Goods     -1.99%
Conglomerates     -0.68%
Cons. Cyclical     -1.18%
Cons. Non-Cyclical-0.54%
Energy     -1.86%
Financial     -1.32%
Healthcare     -0.91%
Services     -1.01%
Technology     -1.23%
Transportation     -0.94%
Utilities     -0.82%

US COMMODITY PRICES: (NOV. 12, 4:10 PM EST)
Crude Oil     84.61     - 0.32%
Natural Gas     3.82     + 0.50%
Gasoline     2.21     -
Heating Oil     2.36     -
Gold     1368.60     - 2.85%
Silver     26.09     - 5.74%
Copper     3.90     - 2.94%

US DOLLAR FUTURES INDEX DXY: NOV. 12, 4:06PM EST: 78.10  Down 0.12 (0.15%)

US Dollar Regains -  Stocks Decline

Dollar climbing back up. At 10:30 the dollar declined from its earlier high.

U.S. stocks sank broadly Friday as shares of materials and energy companies tumbled on concerns that demand from China could slow.
Stocks and commodities slid, extending the biggest weekly slump in three months for U.S. benchmark indexes. Commodities dropped amid a regained dollar move upward, but not breaking above Thursdays closing numbers.

The Standard & Poor’s 500 Index plunged 1.3 percent to 1,197.68 at 2:21 p.m. in New York. The Thomson Reuters/ Jefferies CRB index of commodities fell the most in 18 months as oil and copper tumbled more than 3 percent.The S&P 500 was poised to halt a five-week string of gains, its longest since April. The S&P 500 has fallen about 2.3 percent over the past five days, its biggest drop since the second week of August.


Earlier, the Dow Jones Industrial Average had fallen 128 points. The measure's losses crept into triple digits as commodities prices sank. The Nasdaq Composite fell 1.7% to 2511. The Standard & Poor's 500-share index lost 1.4% to 1197.

As the Dollar struggles to regain its Thursday position, there is an opportunity to buy in to commodities and precious metal at the day's low.

U.S. stocks slid Friday morning, led by materials and energy sectors as the dollar approached resistance.The U.S. dollar weakened against the euro, which was trading recently at $1.3716, up from $1.3659 late Thursday. 

Worries resurfaced that monetary tightening from China could be on the way as the G20 meeting shared little tangible news of progress. The Dow Jones Industrial Average fell 59 points, or 0.5%, to 11224. American Express was the measure's worst performer, shedding 1.4%.

U.S. BANK FAILURES:

The FDIC Closed Banks Friday After Hours
The U.S. Government FDIC regulators closed several US Banks late Friday and seized all assets.The Federal Deposit Insurance Corp announced it closed additional banks. Friday's announcement brings the total failures for 2010 to 146. 

Copper Star Bank, Scottsdale, AZ., November 12, 2010
Darby Bank & Trust Co., Vidalia, GA., November 12, 2010
Tifton Banking Company, Tifton, GA., November 12, 2010


To see the complete list of failed banks and credit unions visit:

Online Consultancy Network™ Bank Failure List
http://ocnww.blogspot.com/2010/09/bank-failure-list-update-september-1.html



 G-20 Refuses To Back U.S. Push on China's Currency
Leaders of 20 major economies on Friday refused to back a U.S. push to make China boost its currency's value, keeping alive a dispute that raises fears of a global trade war amid criticism that cheap Chinese exports are costing American jobs.

A joint statement issued by the leaders including President Obama and China's Hu Jintao tried to recreate the unity that was evident when the Group of 20 rich and developing nations held its first summit two years ago during the global financial meltdown.

But deep divisions, especially over the U.S.-China currency dispute, left G-20 officials negotiating all night to draft a watered-down statement for the leaders to endorse.

The G-20's failure to adopt the U.S. stand has underlined Washington's reduced influence on the international stage, especially on economic matters. In another setback, Obama also failed to conclude a free trade agreement this week with South Korea.

The biggest disappointment for the United States was the pledge by the leaders to refrain from "competitive devaluation" of currencies. Such a statement is of little consequence since countries usually only devalue their currencies...

Read the breaking news at USA Today:
http://www.usatoday.com/money/economy/2010-11-12-g20-summit_N.htm?csp=34


OBAMA, HU STAKE POSITIONS ON YUAN
The U.S. and Chinese presidents, meeting on the sidelines of the G-20 summit, appeared far apart on matters ranging from currency valuation to intellectual-property rights.



SOFT COMMODITIES DECLINE:

U.S. agriculture commodities sold off as well. Soybeans futures recently traded 2.4% lower to $13.07 a bushel, while corn fell 2% to $5.53 a bushel at the Chicago Board of Trade on concerns the tightening of Chinese monetary policy would dilute the strength of export demand for U.S. crops. China is the leading importer of U.S. soybeans and off to a record pace for the current crop. Analysts also expect China to reemerge as a big buyer of U.S. corn this year.

The declines also spilled over into wheat and live cattle futures. Analysts expect the strong global demand that has driven agriculture commodity prices higher this year to continue. Soybean futures jumped to 26 month highs this week, while corn futures have rallied 70% since June.

BEFORE THE BELL:

The Dow Jones Industrial Average (DJIA) is headed for an opening loss of about 52 points, while the S&P 500 Index (SPX) is trading roughly 8.5 points below fair value. Fears of a Chinese interest rate hike and rumors of an Irish bailout have kicked off a wave of global selling

EQUITIES NEWS:

Aluminum maker Alcoa was the Dow's worst performer on Friday, sliding 3.4% on concerns over demand from China. Boeing was also weak, shedding 2.9% after Bernstein Research cut its investment rating on the company to "market perform" from "outperform," citing "greater margin risk" on the 787 aircraft.

Department store operator Dillard's surged 11% after its fiscal third-quarter earnings soared 80% on stronger margins, modestly lower sales and lower expenses.

AGILENT'S PROFIT RISE ABOVE VIEWS
Agilent Technologies 4Q earnings rise to $232 million, or 66c a share, topping the company's expectation, as it benefits from a broad-based increase in demand and as an acquisition adds to revenue. Shares gain 1%.

JC PENNEY PROFIT UP 63% ON BETTER SALES
Department-store operator's 3Q earnings climb to $44 million, or 19c a share, as it reports modestly improved sales and fewer charges than a year ago. Penney last week reported that total sales edged up 0.2% to $4.19 billion. Shares fall 2%.

CRUDE OIL:

OIL FUTURES: Nymex Crude Closes Down $2.93 At $84.88/ a barrel
US Crude Oil $ 84.93 per barrel

Oil Falls the Most in Three Weeks
Crude futures extends Losses, falling below $85/Barrel. Crude-oil prices slid more than 3.5% .  Earlier crude was down 2.8% at $85.35 a barrel on the New York Mercantile Exchange in early morning trades as the dollar showed a little more strength.
.

NATURAL GAS:

US GAS: Futures Close Down 3.3% At $3.799/MMBtu
Nat Gas $ 3.89

PRECIOUS METALS:

Gold: $ 1,364
Silver: $ 25.94

COMEX gold down $33.80 (-2.41%) to $1369.50, COMEX silver down $1.325 (-4.83%) to $26.080.  Gold futures dropped more than 3% as the dollar regained strength. The most-actively traded gold contract, for December delivery, was recently down $41.40, or 3%, at $1,361.90 a troy ounce on the Comex division of the New York Mercantile Exchange.  

At the opening bell the most-actively traded gold contract was recently down 1%, at $1,389 a troy ounce on the Comex division of the NYMEX

U.S. TREASURYS/BONDS:
The yield on the 10-year Treasury note increased eight basis points to 2.73 percent and the two-year yield gained six basis points, the most in 15 months, to 0.49 percent. Investments in non-marketable state and local government securities Wednesday totaled $1.12 billion, the U.S. Treasury said in a report. Redemptions of the securities known as "slugs" were $45 million.
 
3 Month     0.11%     0.00 (0.00%)
6 Month     0.15%     +0.01 (7.14%)
2 Year     0.50%     +0.02 (4.17%)
5 Year     1.35%     +0.07 (5.47%)
10 Year     2.74%     +0.06 (2.24%)
30 Year     4.27%     0.00 (0.00%)


CONSUMER'S STILL HAVE SOME HOPE
Consumer sentiment levels rose to their best reading since June as of the middle of November.

The Reuters/University of Michigan consumer sentiment index's preliminary reading for November rose to 69.3 from the October level of 67.7 and the 68.2 final reading in September. The mid-November current conditions index stood at 79.7, from 76.6 in October, while the expectations index came in at 62.7 compared with 61.9 in October.

Within the Michigan survey, the early November one-year inflation expectations reading stood at 3.0%, up from 2.7% the month before, while the five-year inflation reading was 2.8%, from 2.8%.

____________________________________________________________

Canadian Market:

Toronto Stocks Edge Lower

By mid-day most of Toronto listed stocks declined in a broad sell-off. TheTSX S&P dropped 266 points. In morning trading the materials, energy and financial all sectors declined. Commodity prices fell sharply.

At 11:45 a.m. EST (1645 GMT), the S&P/TSX Composite Index was down 167.59 points, or 1.3%, at 12767.15. Decliners more than tripled advancers 1064 to 325. Trading volume was 224.2 million shares. The S&P/TSX 60 Index was down 9.79 points, or 1.3%, to 732.07 points.

Toronto Indexes, Volume; 3 PM EST Composite Down 197.82

 S&P/TSX Composite   12736.92  off  197.82 or 1.5%
 S&P/TSX 60 Index      730.53  off   11.33 or 1.5%
 Financials            177.07  off    2.28 or 1.3%
 Materials             417.10  off    8.33 or 2.0%
 Energy                297.92  off    5.98 or 2.0%
 Industrials           105.23  off    1.33 or 1.2%
 IT                     30.11  off    0.27 or 0.9%

   Volume     Friday   Thursday
   2-3                52.2M     54.4M
   9:30-3            444.3M    396.5M


____________________________________________________________

South American Markets:

BRAZIL:

Brazil Stocks Close Lower
The Ibovespa stocks index fell 1.2% to 70367. The index is down 0.4% from the beginning of November.

Shares in Brazil's government-run oil company, Petroleo Brasileiro SA (PBR, PETR4.BR), or Petrobras, were hammered after the company's third-quarter results, published late Thursday, were disappointing and showed a rapid increase in costs. The company was also hurt by oil prices, which fell below $85 a barrel, along with many other major commodities. Its preferred shares were down 3.3% at BRL25.85.

The other main blue-chip stock, miner Vale SA (VALE, VALE5.BR), was down 1.8% at BRL49.11.

Brazilian airline GOL Linhas Aereas Inteligentes SA (GOL, GOLL4.BR) saw a rise in third-quarter net profit as a booming economy fueled demand for air travel, which send the share price higher. The company said Friday that third-quarter net profit increased to 110 million Brazilian reais ($64 million) from BRL77.9 million a year earlier. Preferred shares were up 1.6% at BRL28.50.

The world's largest beef producer, JBS SA (JBSAY, JBSS3.BR), will proceed with plans to sell shares in its U.S. subsidiary, but probably not until the third quarter of 2011, a senior executive said.  JBS reported third-quarter net revenue rose to BRL14.1 billion from BRL8.37 billion on strong sales of beef, pork and chicken, especially in the U.S.  JBS's shares were down 0.6% at BRL6.38.


Brazil Govt Celebrates G-20 Outcome

Brazilian government officials expressed contentment with the outcome of discussions on foreign-exchange rules at the meeting of Group of 20 member nations, Brazil's Estado news agency reported Friday.

Finance-ministry officials applauded the wording of a communique they said would clearly allow for some use, albeit limited, of currency-control mechanisms by emerging-market countries to impede excessively heavy flows of incoming foreign portfolio investment.

"This is absolutely unheard of," said Finance Minister Guido Mantega at a press conference following the talks.

Brazil's delegation reportedly brought pressure at the meeting to maintain the possibility of defensive measures against overvaluation of its currency, the real, and the formation of asset bubbles in local markets.

While the final communique from the meeting didn't use the expression "capital controls," it admitted use of "macro-prudential measures," which analysts said could amount to the same practice.

Brazil last month introduced sharp tax increases on incoming investment as a measure to discourage short-term capital inflows. The government raised its financial operations tax, or IOF, on fixed-income securities to 6% from 2% previously and also raised the tax for guarantees on local derivatives investments.

The currency has gained about 30% against the dollar since early 2009 as a result of heavy currency inflows. As a result, Brazilian industry officials have complained that the country's exports have become less competitive abroad and foreign imports have become more attractive locally.

The real gained about half a percentage point Friday to end at BRL1.723 to the dollar as investors reacted to the possibility of more local measures to control inflows.



CHILE:

Chile Stocks Finish Lower

Chile's blue-chip Ipsa index ended lower Friday as concerns about Chinese monetary policy and euro-zone debt weighed on the market and as investors continued to book profits.

The Ipsa lost 0.7% to close at 4977.95, while market volume grew to 105.1 billion Chilean pesos ($218.4 million) from CLP104.7 billion the previous session.

The day was highlighted by a China Trade Deligation visited with officials to discuss haveing Chile be a larger part of a foodstuffs supplier to China.

Following three straight record closings prior to Thursday's session, investors were keen to take profits.

Commodities-related companies, whose shares tend to react quickly to sharp upturns and downturns in global growth forecasts, were among the biggest decliners.

Fuel and forestry conglomerate Copec (COPEC.SN), the Ipsa's heaviest-weighted share, declined 1.3% to CLP9,676.40; pulp and paper producer CMPC (CMPC.SN) shed 1.7% to CLP26,848.00; integrated steel and iron-ore producer Cap (CAP.SN) dropped 1.1% to CLP25,751.00; and specialty chemical and fertilizer producer SQM's (SQM) more liquid B-series shares (SQM-B.SN) lost 1.4% to CLP24,513.00.

Retail holding giant Cencosud (CENCOSUD.SN) fell 2.3% to CLP3,544.60, after its third-quarter net profit of CLP51.1 billion came in "9% behind analysts' expectations," according to local investment bank Celfin Capital.

Chile's Peso ended weaker against the dollar as international copper prices dropped on fears China, the world's largest consumer of the industrial metal, will move to slow its economy.

The peso ended at CLP481.20 to the dollar, weaker than Thursday's close of CLP480.00, while trading in a range of CLP479.30 to CLP482.20.

In the bond market, yields on inflation-indexed Chilean central bank bonds, or BCUs, ended mixed in light over-the-counter trading.

The yield on five-year BCU bonds ended unchanged on the day at 2.68%, while the yield on 10-year BCUs closed at 3.05%, up from 3.03% the previous session.



____________________________________________________________

European Markets:

The Stoxx Europe 600 index dropped 0.4% to settle at 270.18, with mining stocks leading the decline. European stocks ended lower Friday after fresh worries over the Euro-zone economy and a possible Chinese rate hike sent shares tumbling in Shanghai, while bank stocks bounced back after European leaders sought to provide some reassurance to nervous sovereign debt holders.

In a joint statement, the finance ministers of France, Germany, Italy, Spain and the U.K. said there would be "no impact whatsoever" on existing sovereign bondholders if a new crisis-resolution process were introduced for struggling countries.

The euro-zone economy slowed in the third quarter, while large differences remained between the performance of stronger and weaker members. 


Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, the largest global banking group in the world, said Friday "there is so much money floating around that investors are buying every dip in the markets." That's created a situation in which markets have been "very overbought" for the last couple of months and means investors shouldn't rule out the possibility of a sharp downward correction, he said. "Things can turn quite ugly quite fast," Gijsels noted.

GERMANY:
The German DAX 30 index gained 0.2% to finish at 6,734.61. 

Deutsche Bank reports loss of 1.2bn euros

Germany's largest bank, Deutsche Bank, has reported a third-quarter loss linked to its planned purchase of Deutsche Postbank.

It reported a pre-tax loss of 1.2bn euros ($1.66bn; £1.05bn) in the quarter, hit by a 2.3bn-euro charge connected to the Postbank deal.

Excluding the Postbank costs, net profit for the quarter was 1.1bn euros.
Deutsche Bank owns a 30% stake in Postbank and wants to take full control by buying the remaining shares.

Read the entire article at the BBC News:
http://www.bbc.co.uk/news/business-11634666

LONDON:
The U.K.'s FTSE 100 settled 0.3% lower at 5,796.87.

The UK is entering into talks with three tax havens, as part of moves officials hope could help raise £10 billion for the Treasury by 2015. 

http://www.bbc.co.uk/news/business-11749085

U.K.'S CAMERON TO VISIT RUSSIA
U.K. Prime Minister Cameron said he had accepted an invitation to visit Russia from President Medvedev, marking a relaunch of relations.

Bank Stocks Turned Mostly Higher.

Royal Bank of Scotland Group, one of the stocks hit the hardest over the Ireland worries, gained 2.2%.

Rolls-Royce Group PLC climbed 4.6% after the company said it has identified the component that caused the failure last week of one of its Trent 900 engines on an Airbus A380 jet operated by Qantas Airways Ltd., the Australian carrier, prompting an emergency landing.

Rolls-Royce said it will begin a program to replace the affected components on all Trent 900 engines.  

BG Group traded down 1.8% in London.



   

IRELAND:

The Irish ISEQ added 0.3%, helped by a 16.3% jump in the highly volatile shares of Allied Irish Banks and a 6.8% rise for Bank of Ireland, which also issued a trading update. 

The cost of insuring Irish government debt against default fell, a reversal after repeatedly hitting fresh highs in recent days.

Irish Finance Minister Brian Lenihan, denied rumors that Dublin was set to ask for a bailout.

The Republic of Ireland's government has not formally denied it is in talks with the EU

Ireland 'In Preliminary Talks with EU on Bailout'
The Republic of Ireland is in preliminary talks with EU officials for financial support, the BBC has learned.

It is now no longer a matter of whether but when the Irish government formally approaches the European Financial Stability Fund (EFSF) for a bailout, correspondents say.

The provisional estimate for EFSF loans is believed to lie between 60bn and 80bn euros ($82-110bn; £51-68bn).

Dublin says there are no talks on an application for emergency EU funding. The European Commission would not formally comment on the matter.

Eurozone officials told the Reuters news agency on Friday that discussions were under way, with one saying that it was "very likely" Ireland would receive financial assistance.

The head of the International Monetary Fund (IMF), Dominique Strauss-Kahn, said on Saturday that it had not been asked for aid. The IMF and EU had to step in with a 110bn-euro bailout package for Greece in May, sparking a Europe-wide sovereign debt crisis.

BBC business correspondent Joe Lynam says any bailout would not be agreed this weekend, but might though come as early as next month.

A meeting of the Eurogroup, composed of the EU member states whose currency is the euro, is scheduled for 6 December.

The Economic and Financial Affairs Council (Ecofin) - comprising the economics and finance ministers of eurozone countries - will gather the following day.


Read the entire article at the BBC News:
http://www.bbc.co.uk/news/business-11750676



FRANCE:

The French CAC 40 index fell 0.9% to close at 3,831.2.

Total SA fell 3.3% in Paris

Shares of European Aeronautic Defence & Space Co. dropped 4.4% in Paris. The firm posted a third-quarter net profit, but cautioned that deliveries of Airbus A380 planes could be impacted because of issues with Rolls-Royce engines.Credit Agricole shares rose 1.7% and Natixis added 1%.  

PORTUGAL:
 Portugal's PSI 20 rose 0.5%.

____________________________________________________________

Asian Pacific Markets:

CHINA:
China's shares fall 5.2%, their biggest daily decline in more than 14 months, as mounting concerns over further monetary tightening measures in the near term and Europe's sovereign debt trigger a broad sell-off.

CHINA'S SAIC FINALIZING PLANS FOR GM STAKE

China's biggest auto maker is close to finalizing a plan to buy a stake in General Motors, which is preparing for an initial public offering next week. High investor demand could drive the IPO price to $30 or slightly above.


____________________________________________________________
WORLD FOREX CURRENCIES SNAPSHOT:
(FRIDAY, NOV 12, 2010 3:30 PM EST)

EUR/USD     1.3694     +0.0033 (0.24%)
USD/JPY     82.4300 -0.1200 (-0.15%)
GBP/USD     1.6145     +0.0024 (0.15%)
CAD/USD     0.9904     -0.0060 (-0.60%)
USD/HKD     7.7508     -0.0006 (-0.01%)
USD/CNY     6.6368     +0.0128 (0.19%)
AUD/USD     0.9855     -0.0109 (-1.09%)



WORLD MARKETS SNAPSHOT:
(FRIDAY, NOV 12, 2010 3:30 PM EST)

Shanghai     2,985.44     -162.31 (-5.16%)
Nikkei 225     9,724.81     -136.65 (-1.39%)
Hang Seng Index     24,222.58     -477.72 (-1.93%)
TSEC     8,316.05     -120.90 (-1.43%)
FTSE 100     5,796.87     -18.36 (-0.32%)
DJ EURO STOXX 50     2,822.43     -8.79 (-0.31%)
CAC 40     3,831.12     -36.23 (-0.94%)
S&P TSX     12,747.41     -187.33 (-1.45%)
S&P/ASX 200     4,692.70     -35.90 (-0.76%)
BSE Sensex     20,156.89     -432.20 (-2.10%)

____________________________________________________________
FRIDAY'S U.S. ECONOMIC CALENDAR:

8:30 a.m.
Federal Reserve Governor Daniel Tarullo at financial regulatory reform symposium

9:55 a.m.
Nov Thomson Reuters / University of Michigan Survey of Consumers - preliminary Sentiment Index Mid Month (expected 69), Expectations Index Mid Month (previous 64.6), Value (Current Period) Mid Month (previous 73)

4:30 p.m.
Nov 10 Foreign Central Bank Holdings Foreign US Debt Holdings (previous 3.33T), US Foreign Agency Holdings (previous 734.11B), Foreign Treasury Holdings (previous 2.59T)

4:30 p.m.
Nov 10 Federal Discount Window Borrowings Primary Credit Borrowings (previous 31M), W/E Daily Avg (previous 64M), Discount Window Borrowings (previous 47.17B), Discount Window Borrowings W/E Daily Avg (previous 47.15B)

4:30 p.m.
Nov 1 Money Stock Measures

4:35 p.m.
Federal Reserve Governor Sarah Bloom Raskin speech on mortgages


____________________________________________________________
US STOCK MARKET SUMMARY, THURSDAY, NOV. 11, 2010:

Stocks:
U.S. stocks fell amid a rising dollar. Nasdaq fell on disappointing outlook from Cisco Systems that hurt technology stocks, and fears that Ireland faces a sovereign-debt crunch. 

Treasurys:
The Treasury market was closed in observance of Veteran's Day. Treasury futures fell, following the lead of German bunds.

Forex:
The euro dropped to its lowest levels in more than a month against the dollar as concerns once again heated over the region's simmering issues of sovereign debt. Illustrating the increasing worry, the costs to insure against default on government debt issued by Portugal, Ireland and Spain hit record highs. Also leading investors away from higher-yielding assets was a higher-than-expected reading of Chinese inflation, triggering speculation China could tighten policy to put a brake on its growth.




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