Stock Market Update - Monday, November 15, 2010 - Cautious Mixed Outlook

Stock Market Update

Monday, November 15, 2010

Latest US Economic News Headlines:

USA EQUITY INDEXES: (NOV. 15, 4:05 PM EST)


(MONDAY'S CLOSING INDEX NUMBERS)

Dow Jones 11,201.97 +9.39 (+0.08%)
S&P 500    1,197.75 -1.46 (-0.12%)
Nasdaq     2,513.82 -4.39 (-0.17%)

Dow Jones 3:30 PM Averages: DJIA 11,227.21 UP 34.63
  30 INDUS     11,227.21 UP   34.63 OR    0.31%
  20 TRANSP     4,837.28 UP   30.45 OR    0.63%
  15 UTILS        402.77 UP    1.71 OR    0.43%
  65 STOCKS     3,900.06 UP   16.62 OR    0.43%


US COMMODITY PRICES: (NOV. 15, 4:00 PM EST)
Crude Oil     84.69     - 0.22%
Natural Gas     3.85     + 0.26%
Gasoline     2.20     -
Heating Oil     2.37     -
Gold     1359.69     - 0.75%
Silver     25.50     - 2.11%
Copper     3.92     + 0.87%


US DOLLAR FUTURES INDEX DXY: NOV. 15, 3:45PM EST: 78.66  Up 0.60 (0.77%)

US Socks Mixed Dollar Gains
Stocks End Mixed.
As the dollar rose, commodities, energy and stocks declined in a mixed light trading day with also mixed economic data.

The Dow gained 9 pts Monday to close at 11201, while the S&P dropped 1 pt to 1197 and the Nasdaq fell 4 pts to 2513.


U.S. Stocks were mixed in early morning trades as the dollar held onto some gains, but bumps off resistance at index 78.58. The dollar index just below 79.50 resistance. 

World currencies are signaling major warning signs for a significant correction just ahead. Possibly starting today or Tuesday. The dollar is at near-term resistance. The U.S. Dollar Index, tracking the U.S. currency against a basket of six others, climbed 0.3%. The dollar index is trading at the January price points after consolidating for October and November between 75.50 support and 79.00 resistance. With the euro making up nearly 60% of its value, there seems to be a battle going on between revaluation of the dollar and the euro.

U.S. stocks rose Monday following better-than-expected retail sales. The Dow Jones Industrial Average climbed 49 points, or 0.4% to 11242, in early trading. The Nasdaq Composite advanced 0.6% to 2533. The Standard & Poor's 500 index added 0.5% to 1205, with all its sectors in positive territory.

In the U.S., data showed U.S. retail sales surged in October, topping expectations on robust car sales and solid spending for a broad array of merchandise going into the holiday shopping season. Retail sales rose 1.2% last month, the biggest rise since March and larger than the 0.8% increase that was expected. Excluding autos, all other retail sales rose 0.4%, just shy of the 0.5% gain that was expected.

The November reading of New York-area manufacturing activity from the New York Fed came in at negative 11.14, down from 15.73 in October and below economists' expectations for a reading of 13.00. Measures of new orders, employment and prices received all fell. 

EQUITY NEWS:
Alcoa was the measure's best performer, up 1.2%, while Johnson & Johnson was also strong with a 1.1% increase. General Motors plans to price shares in its initial public offering a few dollars above the ranges predicted earlier due to strong demand. A decision on the price is expected later Monday but isn't set to be made public until Wednesday. 

Just a few of the Dow's 30 components were in the red, led by Caterpillar. The heavy-equipment giant fell 1.3% after it announced it would buy mining company Bucyrus International for about $7.6 billion. Under the agreement, Caterpillar will pay $92 for each Bucyrus share--a 32% premium to Friday's closing price. Shares of Bucyrus, which is not a Dow stock, surged 29% to $90.

Among stocks in focus, BHP Billiton abandoned its US$39 billion bid for Canadian fertilizer company Potash Corp. of Saskatchewan (POT), raising questions about the growth prospects of the world's biggest miner amid increasing resistance from governments and global regulators to major takeovers. BHP edged up 1.9% while Potash fell 1.4%.   

HEDGE-FUND INFLOWS SURGED
Investors moved $18.4 billion into hedge funds in October, the largest inflow since November 2009, says HedgeFund.net. October's inflows are up from $12.2 billion in September.


US CREDIT-CARD DELINQUENCIES

Credit-Card Delinquencies Lower on $814 Billion in Revolving Credit

Monthly data released by several major credit-card issuers indicated delinquencies, a closely followed gauge of future losses, have decline to their lowest point so far this year. Losses from bad loans remain steep. 

Delinquency rates for U.S. issuers of credit cards fell in October although losses from souring loans remain steep. 

Monthly data released Monday by several major credit-card issuers, including Capital One Financial Corp. (COF), American Express Co. (AXP), Discover Financial Services (DFS), Bank of America Corp. (BAC) and J.P. Morgan Chase & Co. (JPM), indicated that their delinquencies declined to their lowest point so far this year.

Investors, looking beyond the signs of improving credit, are now keen to see issuers increase lending; the more that cardholders charge on their plastic, the more the companies earn by way of fees, so the amount customers spend is critical. Card-loan balances--and, as a result, revenue--have been falling as companies, stung by steep losses during the economic slump, scaled back on credit and toughened lending standards.

According to the Federal Reserve, revolving credit lines--mainly card balances--shrank by about $8.3 billion in September from August, or at an annualized rate of 12.1%. Since the end of 2008, those balances have been reduced by about $144 billion, to $814 billion.

Credit-card issuing banks are also facing restrictions on debit-card transaction fees that are a part of the recent sweeping legislation overhauling financial regulation. In addition, they are dealing with new rules implemented earlier this year that curb credit-card fees and interest-rate increases. 

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CRUDE OIL:
U.S. Crude Oil: $85.25 per barrel

OIL FUTURES: Nymex Crude Closes 2c Higher At $84.90/Bbl

Oil prices retreated from highs earlier in the session, hitting an intraday peak of $85.77 a barrel. Speculative interest in crude oil has pushed WTI values easily through $80 a barrel, and now has created a $75 to $95 trading channel that will replicate the moves in equities.

Light, sweet crude for December delivery settled down 2 cents at $84.86 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange recently gained 36 cents, or 0.4%, to $86.70.

Front-month December reformulated gasoline blend-stock, or RBOB, lost 1.3 cents, or 0.6%, to $2.1969 a gallon. December heating oil added 0.77 cent, or 0.3%, to $2.3709 a gallon.



NATURAL GAS:
Natural Gas: $3.81
US GAS: Futures Close Up 1.1% At $3.842/MMBtu


PRECIOUS METALS:
Gold:  $1,370
Silver:$ 26.22

In early trading,Comex gold futures were near steady Monday as a stronger dollar balanced out investor appetite for gold as an alternative currency.

The most actively traded contract, for December delivery, was recently up 0.3%, or $3.90, at $1,369.40 per troy ounce on the Comex division of the New York Mercantile Exchange. 

U.S. TREASURYS/BONDS:
Treasury prices declined Monday as Fed bond buying kicks into high gear. Today November 15th, $7-8 billion dollars are intended to be monetized as part of the $600 billion, that will hit the market over the next 6-8 months. Prices fell in early trading and the yield pushed up to levels last seen in early August.

The 10-year yield rose as high as 2.891%; the bond was recently down 20/32 to yield 2.858%. The five-year yield was off by 13/32 to 1.448% and the seven-year was down 17/32 to 2.079%.

3 Month     0.11%     0.00 (0.00%)
6 Month     0.17%     +0.01 (6.25%)
2 Year     0.53%     0.00 (0.00%)
5 Year     1.51%     +0.05 (3.42%)
10 Year     2.93%     +0.10 (3.53%)
30 Year     4.40%     +0.11 (2.56%)


BEFORE THE BELL:

US stock futures retained mild Monday gains after mixed economic reports showed retail sales rising 1.2% in October. The U.S. Dollar regained its upward position and commodities declined in over-night trading.

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US September Business Inventories Up

Inventories at U.S. businesses in September rose above expectations, a sign of confidence among companies in the economic recovery as the holiday shopping season grew nearer.

Inventories increased 0.9% from the prior month to a seasonally adjusted $1.403 trillion, the Commerce Department said Monday.

U.S. business sales accelerated in September, rising 0.5% to $1.101 trillion after an upwardly revised 0.3% gain in August.

The increases in inventories and sales were positive signs for the economy as companies prepared for the crucial holiday shopping season. Consumer spending is a large part of economic activity in the U.S. Government data released earlier Monday showed U.S. retail sales surged in October past expectations.

Monday's inventories report said that at the current sales pace, businesses had enough goods on hand in September to last 1.27 months, the same as the level in August and below 1.30 in September 2009.

U.S. companies cut inventories furiously during the recession, then built supplies back up as the economic recovery got under way. Now, firms are trying to keep stockpiles in line with demand. Department store operator Dillard's Inc.'s (DDS), for instance, attributed the surge in its fiscal third-quarter earnings to efforts made to effectively manage inventory and control expenses.

Wholesalers make up about 30% of all business stockpiles. Factories account for about 38%. Retailers make up the rest. Wholesale inventories rose 1.5% in September. Manufacturing inventories increased by 0.7%.

Retailers' inventory stocks of goods climbed 0.8%, driven partly by a 1.7% gain in  autos and parts. Excluding cars, other retail inventories increased 0.4%. Inventories at clothing stores were flat. Inventories at furniture stores rose 0.1%. Building materials inventories gained 0.7%. Food and beverage store inventories rose 0.3%. General merchandise store inventories increased 0.1%.

The Commerce Department data on business inventories can be found at:

http://www.census.gov/mtis/www/data/pdf/mtis_current.pdf

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 Retail Sales in US Increased by 1.2% in October
Consumers flocked to auto showrooms and made more purchases online. Sales for September and August were also revised higher. Excluding motor vehicles, retail sales rose 0.4% in October.

Economists had forecast total sales to rise by 0.7%, or 0.4% excluding the volatile automotive segment. Retail sales have risen at an annual rate of 6.3% over the past three months. Sales were revised to a 0.7% increase in September, compared to an original reading of 0.6%. August sales were revised up to 0.9% from 0.7%.

NEW YORK BUSINESS INDEX DECLINED
Business conditions in the New York area deteriorated in November, as the New York Fed's Empire State manufacturing survey plummeted 27 points to -11.1 due to a sharp drop in new orders. The release was far worse than economist expectations for a +15 reading and marks the first negative reading since July 2009. The shipments index also fell below zero.

CATERPILLAR TO BUY BUCYRUS FOR $7.6B
Caterpillar will pay $92 as share for mining giant Bucyrus, a 32% premium to Friday's closing price and an all-time high for the stock. Joy Global, which has been eclipsed by Bucyrus as the world's biggest mining-equipment maker, sees shares rise 7%.  

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Canadian Market:

Toronto Stocks Higher

Monday Toronto stocks gained as industrials and telecommunications stocks lead the way up after a mixed open.

Canada's monthly new motor vehicle sales increased 4.2% in September to 134,845 units, getting a boost from stronger truck sales, Statistics Canada said Monday. The federal statistics agency said preliminary industry data indicate vehicle sales were flat in October.

At 11:45 a.m. EDT (1645 GMT), the S&P/TSX Composite Index was up 41.67 points, or 0.33%, at 12790.91 and advances led declines 695 to 672. Trading volume was 194.20 million shares.The S&P/TSX 60 Index was up 2.44 points, or 0.33%, to 733.99 points.

Toronto Indexes, Volume; 3 PM EST Composite Up 19.62

 S&P/TSX Composite   12768.86  up   19.62  or 0.2%
 S&P/TSX 60 Index      732.39  up    0.84  or 0.1%
 Financials            178.54  up    1.29  or 0.7%
 Materials             412.72  off   4.60  or 1.1%
 Energy                298.25  off   0.33  or 0.1%
 Industrials           106.79  up    1.53  or 1.5%
 IT                     30.16  up    0.10  or 0.3%

   Volume        Monday    Friday
   2-3                46.1M     52.2M
   9:30-3            343.4M    444.3M

Market Note:
Tuesday, manufacturing data for September will be released. Economists expect that manufacturing sales declined by 0.9% in September from August after climbing by 2.0% that month.


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South American Markets:

ARGENTINA:
Argentina's Stocks Rise On Bank Rally; Bonds Dip

Argentine stocks kicked off the week on a strong note, with heavy buying in the banking sector leading the gains. Argentina's benchmark Merval stock index added 1.71% to close at 3270.78 points.

Banks were the focus of buying as many continue to report strong earnings during the third quarter.

Argentine mortgage bank Banco Hipotecario SA's (BCOHY, BHIP.BA) also outperformed the market, rising 4.59% to ARS3.19. Last week, Banco Hipotecario said its third-quarter net profit more than doubled on the year to ARS84 million thanks to a big increase in revenue from its lending and securities operations as well as a drop in loan loss provisions.

Bonds rallied following the death of former President Nestor Kirchner on Oct. 27. Investors bet it would lead his wife, current President Cristina Fernandez, to adopt more market-friendly policies. But expectations of a shift are fading as she has vowed to stick to the same policy tack.

The peso-denominated 2033 discount bond slipped 1.13% in price terms to ARS175, to yield 7.62%. The dollar-denominated 2015 Boden bond shed 0.67% to close at ARS370.50, with the yield at 9.12%.  The peso eased Monday, trading at ARS3.9725 to the dollar compared to ARS3.965.


PERU:

Peru's September GDP Expanded 10.41%
Peru's gross domestic product expanded 10.41% in September over the same month a year earlier, the government said. In the first nine months of the year GDP rose 8.72% over the same period a year earlier.

The National Statistics Institute, or INEI, said Monday that the construction sector expanded 22.97% in September, while activity in the manufacturing sector grew 16.68% in the same month. Finance sector activity increased 16.58%, while the retail sector rose 10.96%.

Electricity and water production increased 6.82%, while transportation and communications activity increased 5.43%. Farming sector activity increased 4.08%.

Production in Peru's mining and hydrocarbon sector fell 2.74% in September, while fishing sector production was down 36.13%.
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European Markets:

European stocks climbed in late trading, with the commodities declining against the dollars increase. European stock markets finished higher on Monday, as deal speculation and U.S. economic data, showing a rise in retail sales, buoyed sentiment.

The Stoxx Europe 600 index gained 0.8% to end at 272.36. The index closed down 0.7% last week.

The Financial Times reported Monday that officials held informal talks into Sunday evening to determine whether a bailout package was needed by the market open. Talks broke up, the newspaper said, without action.

A meeting of finance ministers in Brussels on Tuesday is expected to command extra attention, said analysts.

The European Union's statistics agency revised Greece's 2009 fiscal deficit to 15.4% of gross domestic product, up from a previous estimate of 13.6%. The Greek finance ministry forecast its 2010 deficit at 9.4% of GDP..  



LONDON:
The FTSE 100 index added 0.4% to end at 5,820.41, as shares of platinum producer Lonmin rose 4% following well-received financial results.

Shares of information-technology group Invensys PLC surged more than 9% on weekend press speculation that it could be a takeover target of China Southern Rail.

In a statement, Invensys denied it had received an approach or had any discussions regarding a possible offer for the company or about a strategic partner taking a minority stake.

Shares of Rolls-Royce Group PLC fell 2.3% on further worries about some of its engines.



GERMANY:
The DAX 30 index rose 0.8% to 6,790.17.

FRANCE:
France's CAC 40 index rose 0.9% to 3,864.24.

Shares of NicOx SA rallied 4.2% as the French drug maker said it and partner Bausch & Lomb began a Phase IIb clinical study of a drug candidate targeted at glaucoma and ocular hypertension.

IRELAND:
Shares of Allied Irish Banks PLC rallied 5.7% in Dublin, recovering from intraday losses, as the Irish ISEQ rose 0.7%.



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Asian Pacific Markets:

Asian Stocks Mixed, Dollar Uptrend Continues

The Nikkei 225 climbed more than 100 points marking a 1.06% rise at the close.
The Shanghai Composite rose 28.98 points, up (+0.97%), and the Hang Seng declined 195.40 points, or (-0.81%) . 

CHINA:

CHINA'S PMI CLIMBS
China's CFLP manufacturing and non-manufacturing PMIs for October came in better than I had expected. Although October tends to be a somewhat weaker month from a seasonal perspective, the manufacturing PMI rose to 54.7 from 53.8.The closely-watched ratio of new orders to stocks of finished goods remains elevated.  

The non-manufacturing PMI followed a trend similar to that of 2008 and registered 60.5 compared to 61.7 in September. The GDP-weighted PMI (manufacturing and non-manufacturing) is following a pattern similar to that of last year.

JAPAN:
The dollar traded near a six-month high versus the yen after better-than-expected Japanese growth figures were reported.

JAPAN GDP GROWS

The Japanese government reported that the real gross domestic product rose 3.9% during the July-to-September period, up from a revised 1.8% the previous quarter.

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WORLD FOREX CURRENCIES SNAPSHOT:
(MONDAY, NOV 15, 2010 4:00 PM EST)
EUR/USD     1.3600     -0.0094 (-0.69%)
USD/JPY     83.0300 +0.6000 (0.73%)
GBP/USD     1.6066     -0.0079 (-0.49%)
CAD/USD     0.9926     +0.0022 (0.22%)
USD/HKD     7.7522     +0.0014 (0.02%)
USD/CNY     6.6418     +0.0050 (0.08%)
AUD/USD     0.9879     +0.0024 (0.24%)



WORLD MARKETS SNAPSHOT:
(MONDAY, NOV 15, 2010 4:05PM EST)
Shanghai     3,014.41     +28.98 (0.97%)
Nikkei 225     9,827.51     +102.70 (1.06%)
Hang Seng Index     24,027.18     -195.40 (-0.81%)
TSEC     8,240.65     0.00 (0.00%)
FTSE 100     5,820.41     +23.54 (0.41%)
DJ EURO STOXX 50     2,848.45     +26.02 (0.92%)
CAC 40     3,864.24     +33.12 (0.86%)
S&P TSX     12,726.08     -23.16 (-0.18%)
S&P/ASX 200     4,688.00     -4.70 (-0.10%)
BSE Sensex     20,309.69     +152.80 (0.76%)



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MONDAY'S U.S. ECONOMIC CALENDAR:

8:30 a.m.
Oct Advance Monthly Sales for Retail & Food Services Overall Sales (previous +0.6%), Sales, Ex-Auto (previous +0.4%)

8:30 a.m.
Nov Empire State Manufacturing Survey Manufacturing Index (previous 15.73), Employment Index (previous 21.67), New Orders Index (previous 12.9), Prices Received Index (previous 8.33)

10:00 a.m.
Sept. Manufacturing & Trade: Inventories & Sales Total Inventories (previous +0.6%)


Financial Conferences:

Among the significant conferences this week are the Sidoti & Co. New York II Emerging Growth Institutional Investor Forum on Monday and Tuesday in New York; REITWorld: NAREIT's Annual Convention for All Things REIT from Monday through Wednesday in New York; Lazard Capital Markets Annual Healthcare Conference on Tuesday and Wednesday in New York; Morgan Stanley Consumer & Retail Conference on Tuesday and Wednesday in New York; Bank of America Merrill Lynch Credit Conference on Wednesday and Thursday in New York; and Deutsche Bank Securities Media and Telecommunications Conference on Wednesday and Thursday in Miami.

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US STOCK MARKET SUMMARY, FRIDAY, NOV. 12, 2010:

Stocks:
U.S. stocks and commodities slid amid continued European debt worries and concerns that China could be moving toward further tightening of its monetary policy. Commodities tumbled across the board Friday, part of a wider market selloff as the dollar regained just below the unchanged mark for the day.

Treasurys:
Treasurys dropped when many investors cashed out of the bond market as the Federal Reserve kicked off a program to buy $600 billion in government debt within the next eight months. Demand for safe-haven U.S. government bonds also wilted as concern over financing problems in Ireland eased. "You buy in anticipation of an event that is supposed to be good and sell it when the news occurs, because the good news is already priced in," said Ted Ake, head of Treasury and agency trading at Societe Generale.

Forex:
The euro clawed its way from a six-week low against the dollar as Ireland issued multiple denials it was on the verge of requesting an emergency European Union lifeline. An earlier statement from EU leaders doused some concerns that had flared in the region's smoldering sovereign-debt crisis, helping the common currency bounce strongly from its lowest levels since late September.



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