Stock Market Update - Wednesday, November 10, 2010 Cautious Choppy Trend

Latest US Economic News Headlines:

USA EQUITY INDEXES: (NOV. 10, 4:15 PM EST)

Dow Jones 11,357.04 +10.29 (+0.09%)
S&P 500    1,218.71 +5.31  (+0.44%)
Nasdaq     2,578.78 +15.80 (+0.62%)



Dow Jones 12:NOON Averages: DJIA 11,332.03 DN 14.72
  30 INDUS     11,332.03 DN   14.72 OR    0.13%
  20 TRANSP     4,841.92 UP    5.14 OR    0.11%
  15 UTILS        403.50 DN    2.97 OR    0.73%
  65 STOCKS     3,921.29 DN    6.56 OR    0.17%

US COMMODITY PRICES: (NOV. 10, 4:15 PM EST)
Crude Oil     88.07     + 0.30%
Natural Gas     4.05     + 0.22%
Gasoline     2.24     - unchanged
Heating Oil     2.45  - unchanged
Gold     1403.17     + 0.69%
Silver     27.15     + 0.78%
Copper     3.98     - 1.44%

US DOLLAR FUTURES INDEX DXY: NOV. 10, 4:15 PM EST: 77.66  Up 0.21 (0.28%)

US Stocks Edge Higher

DOLLAR LOST SOME GAINS

As the dollar retreated, US Indexes climbed into positive territory for the first time this week. As of 2:00 p.m. EST all three indexes were positive.

The Dow Jones Industrial Average was recently down 6 points to 11353 in late trading, after spending the morning in negative territory. The Standard & Poor's 500-stock index added 3 points to 1217 while the Nasdaq Composite gained 12 points to 2575.

Energy stocks helped to lead the recovery as oil jumped to nearly $87.81 a barrel, a fresh two-year high. Chevron rose steadily throughout the day to add 1.7% on the day, making it one of the best-performing Dow components. Exxon Mobil gained 0.6%, as crude-oil prices rose to a fresh two-year high after government data showed a continuing decline in oil and fuel stockpiles.

Financial stocks were also strong, with Citigroup gaining 3.1%, Bank of America adding 1.8% and J.P. Morgan rising 1.4%.

Leading the Dow's decliners Wednesday was Boeing, which tumbled 3% after a Boeing 787 Dreamliner made an emergency landing in south Texas after the crew reported smoke in the cabin. The emergency is the latest setback for the Dreamliner, which is running nearly three years behind its original schedule.

Amid the mixed trading, Jay Wong, equity portfolio manager for Payden & Rygel, said he was impressed that the market was able to hold its ground after the Federal Reserve's decision last week to support the economy.

The market moves came after the number of U.S. workers filing new claims for jobless benefits last week fell by a greater-than-expected 24,000 to 435,000, the lowest level in four months. The four-week moving average, which aims to smooth volatility in the data, fell to its lowest point since Sept. 13, 2008--the weekend of the collapse of Lehman Brothers Holdings.

The jobless data, together with a sharp contraction in the U.S. trade deficit, painted a slightly better economic picture for the U.S., one week after the Fed said it would step in to help the economy, and one day after the biggest drop on the blue-chip Dow index in three weeks.

In morning trades, the Dow Jones Industrial Average was off 58 points, or 0.5%, to 11288 in recent trading, while the Standard & Poor's 500-stock index fell 5 points to 1208 and the Nasdaq Composite slipped 12 points to 2550.

The U.S. Dollar Index, which tracks the performance of the greenback against a basket of other major currencies, gained 0.2%. The yield on the benchmark 10-year note moved higher to 2.68%.

The moves came after the number of U.S. workers filing new claims for jobless benefits last week fell by a greater-than-expected 24,000 to 435,000, the lowest number in four months. The four-week moving average, which aims to smooth volatility in the data, fell to its lowest point since Sept. 13, 2008

Concerns over the effects of the U.S. trade deficit and the Federal Reserve's asset purchases as well as European sovereign debt kept the lid on stock index futures on Wednesday morning, while a stronger dollar and weaker commodity prices weighed on global equities. Gold and silver exchange-traded funds gained in pre-market trades.

US JOBLESS CLAIMS DROP
Initial jobless claims tumble to 435,000, 4-month low

435,000 more American's lost their jobs last week. The number of U.S. workers filing new claims for jobless benefits fell more than expected last week, the latest positive sign for a still weak American economy.

Jobless claims were reported today due to a Veteran's Day holiday Thursday.  The federal government offices will be closed Thursday. The jobless claims report moved up one day.


US Trade Deficit Declined in September

The U.S. trade deficit for September,released Wednesday, contracted a little from a month earlier.

The total U.S. deficit in international trade of goods and services shrank by 5.3% to $44.00 billion from an upwardly revised $46.48 billion the month before, the Commerce Department said Wednesday. The August trade gap was originally reported as $46.35 billion.

The deficit widened to $46.3 billion in August as import demand remained strong despite a weaker dollar.

IMPORTS DECLINED

Imports fell 1.0% to $198.10 billion from $200.07 billion in August. Falling oil and auto imports were big contributors to the improvement in the deficit, reflecting continued sluggish demand in the economy.

EQUITIES EARNINGS: 

Cisco, which reports Wednesday, is expected to post a sharp gain in sales as analysts note signs that the tech giant managed to regain its footing in an unpredictable market after a shaky start to the quarter.

Leading the declines were utilities and telecommunications companies, with AT&T and Verizon dropping 1.3% and 1.4% respectively. Cisco Systems was also off, falling 1% ahead of its earnings report, due after the market close.

Boeing, led the fall among Dow components, tumbling 3.4% after a Boeing 787 Dreamliner made an emergency landing in south Texas after the crew reported smoke in the cabin.

Macy's started off a wave of earnings reports from retailers, falling 0.6% despite a bounce back to profitability, while Polo Ralph Lauren gained 6.3% after reporting a 16% increase in quarterly earnings, topping analysts' expectations amid rising revenues. General Motors said it earned $2 billion in the third quarter as revenue rose 20%. 

Campbell Soup fell 3.7% after slashing its full-year earnings forecast as its soup sales stayed weak in the U.S. despite efforts to draw consumers with more promotions on store shelves.

CRUDE OIL:

U.S. Crude Oil: $88.07
OIL FUTURES: Nymex Crude Settles $1.09 Higher At $87.81/Bbl

OIL PRICE JUMPS
Oil futures hit a new two-year intraday high Wednesday after the U.S. Department of Energy reported oil and fuel stockpiles declined last week, continuing a nearly two-month slide from 27-year highs.

Light, sweet crude oil for December delivery was recently up $1.14, or 1.3%, at $87.86 a barrel on the New York Mercantile Exchange. The contract hit an intraday high of $88.02, the highest level since October 2008.

Front-month December reformulated gasoline blend-stock, or RBOB, recently traded up 1.99 cents, or 0.9%, at $2.2049 a gallon. December heating oil gained 1.86 cents, or 0.8%, at $2.4253 a gallon.

Brent crude oil on the ICE futures exchange added 83 cents, or 0.9%, to $89.16 a barrel.

DOE Reports US Oil Stockpiles declined little at 3.3 million barrels:
US Refineries Ran At 82.4%; Seen 82.10%
US Gasoline Stocks -1.917 Mln Bbl At 210.336 Mln Bbl
US Distillate Stocks -4.972 Mln Bbl At 159.902 Mln Bbl

U.S. inventories of crude oil, gasoline and distillates all showed minor declines last week, according to data released Wednesday by the U.S. Department of Energy.

Crude oil stockpiles declined by 3.3 million barrels to 364.9 million barrels for the week ended Nov. 5. Gasoline stockpiles fell by 1.9 million barrels to 210.3 million barrels. Distillate stocks, which include heating oil and diesel fuel, fell by nearly 5 million barrels to 159.9 million barrels. That compares to the 2-million-barrel decrease that analysts had anticipated.  

December crude oil contracts were up 0.7% at $87.28 a barrel in recent trading on the New York Mercantile Exchange. December contracts for benchmark gasoline futures rose 1% to $2.2061 a gallon and heating oil was up 0.6% at 42.4219 a gallon.

NATURAL GAS:

Natural Gas:$4.05
US GAS: US Inventories Hit Record High Of 3.840T Cubic Feet

US GAS: Futures Close Down 16.3c At $4.047/MMBtu

Futures Fall On New Storage Record

Domestic storage moved past the record of 3.837 trillion cubic feet set last November to an all-time high of 3.84 tcf.

Natural gas futures fell Wednesday as a new U.S. storage record was set. Natural gas for December delivery settled down 16.4 cents, or 3.9%, to $4.046 a million British thermal units on the New York Mercantile Exchange. The benchmark contract had reached an 11-week high of $4.21/MMBtu on Tuesday.

PRECIOUS METALS:

Gold:$ 1,403
Silver: $ 27.30

The most actively traded gold contract, for December delivery, was recently down $8.50, or 0.6%, at $1,401.60 an ounce on the Comex division of the New York Mercantile Exchange.

Silver for December delivery declined $1,84, or 6.3%, to $27.15 an ounce on the Comex division of the New York Mercantile Exchange. The CME Group Inc. which runs Comex, said late Tuesday it will raise margin requirements for silver futures.

Silver's trading volume on Comex hit a record level Tuesday. The iShares Silver Trust (SLV), an exchange-traded fund, reported an increase in its holdings Tuesday of 113 metric tons to 10,366 metric tons. The ETF more than tripled its previous one-day volume record on Tuesday as 149.1 million shares traded.

December palladium  fell 5.7% from 9-year highs, trading $40.40 lower at $700.20 an ounce. Platinum for January delivery  was off $65, or 3.6%, to $1,744.60 an ounce.

US TREASURYS/BONDS:.

U.S. Bond sales will be closed Thursday due to a Government holiday.

3 Month     0.11%     +0.01 (10.00%)
6 Month     0.15%     +0.01 (7.14%)
2 Year     0.46%     +0.02 (4.55%)
5 Year     1.27%     0.00 (0.00%)
10 Year     2.69%     -0.01 (-0.37%)
30 Year     4.26%     +0.01 (0.24%)

The U.S. Treasury Wednesday, sold $16 billion of 30-year bonds on a non-competitive bidding basis to foreign and international monetary authority accounts and other non-competitive sources.

The 30 year bonds drew a yield of 4.32 percent. The benchmark 10-year note yield rose eight basis points to 2.74 percent.

The Federal Reserve will buy $105 billion in Treasury securities over the next month, the Federal Reserve Bank of New York said Wednesday.

The New York Fed announced that over the course of the purchases 5%  would come in the 1.5- to 2.5-year range, whereas 20% of purchases would fall into both the 2.5- to four-year range and the four- to 5.5-year range.

The Fed would devote 23% of the purchases to the 5.5- to seven-year and seven- to 10-year range, and 2% to the 10- to 17-year part of the curve. The Fed will direct 4% of the buying to the 17- to 30-year range and 3% to the 1.5- to 30-year inflation index part of the Treasury market.

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Canadian Market:

Mixed Canadian Market Seen
The stock market was lower at midday Wednesday as G20 leaders convened in South Korea, putting the focus on global economic concerns and currencies.

At 11:45 a.m. EST, the S&P/TSX Composite Index was down 46.04 points, or 0.36%, at 12870.59. Decliners outweighed advancers 910 to 560. Trading volume was 273.6 million shares.  The S&P/TSX 60 Index was down 2.29 points, or 0.3%, to 738.03 points.

Canadian September Trade Deficit Widens

Canada's trade deficit widened to C$2.49 Billion.  Their deficit grew more than expected in September to the second-highest level on record, as import prices rose amid declining exports. 

The market had expected the deficit to grow to C$1.6 billion in September. The trade deficit for all of the quarter surged to a record C$6.5 billion, nearly triple the second quarter's deficit. The volume of exports dropping 4.8% in the third quarter, the first decline in five quarters. 

The trade deficit was C$2.49 billion (US$2.47 billion), up from C$1.49 billion in August, revised from the originally estimated C$1.35 billion, Statistics Canada said Wednesday. The trade deficit in July was a record-high C$2.51 billion.

Consumer goods exports declined 15.9% to C$1.36 billion, following a 27.3% gain in August, on fewer exports of medicinal and pharmaceutical products.

Exports of industrial goods and materials fell 2.3% to C$7.82 billion on lower volumes, with gains in nickel and alloy exports offset by declines in precious metals and copper ores.

Imports of industrial goods and materials rose 5.6% to C$7.56 billion, led by metals and metal ores, including record-high imports of precious metals, up 38.6% to C$1.0 billion.

Machinery and equipment imports rose 3.2% to C$10.21 billion led by aircraft, engines and parts, while automotive parts imports fell 4.8% to C$5.50 billion.

Toronto Indexes, Volume; 3 PM EST Composite Up 1.92

 S&P/TSX Composite   12918.55  up    1.92  or 0.0%
 S&P/TSX 60 Index      740.58  up    0.26  or 0.0%
 Financials            180.30  off   1.00  or 0.6%
 Materials             420.63  up    1.70  or 0.4%
 Energy                302.93  up    0.02  or 0.0%
 Industrials           106.89  up    0.49  or 0.5%
 IT                     30.55  up    0.46  or 1.5%

   Volume        Wednesday   Tuesday
   2-3                 59.8M      80.1M
   9:30-3             481.4M     648.7M



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South America Markets:

MEXICO:

Mexican stocks opened lower Wednesday as investors extended profit-taking from a record-setting rally into a second session.

The IPC index of 35 most-traded issues was down 0.5% around 10:30 a.m. EST at 36,025 points. Volume was 37.8 million shares worth 1.21 billion pesos ($98 million).

The peso was steady against the dollar, quoted in Mexico City at MXN12.2885 compared with MXN12.2930 at Tuesday's close, but had weakened from early trades.


CHILE:

Chile Stocks Close At  Record High

The Ipsa advanced 0.1% to finish at 5028.37

Chile's blue-chip Ipsa index ended barely higher Wednesday, at a third consecutive all-time high, as market attention focused on Molymet's (MOLYMET.SN) sale of a nearly 10% stake.
market volume rose to 303.6 billion pesos ($631.1 million) following the sale of 12.3 million new shares of Molymet and on high-volume trading in retail holding giant Cencosud (CENCOSUD.SN). Trading in both companies accounted for a combined 71% of volume. In the prior session, volume totaled CLP122.7 billion.

Molymet lost 9.1% on the day to CLP10,901.00, as the stake sale diluted its shares, although its closing price was 5.3% higher than the acquisition price of CLP10,350.00 per share.

Local investment bank Banco Penta has a 12-month target price of CLP12,383 on Molymet's shares.

Trading in Cencosud surged ahead of a dividend payment as investors shuffled portfolios between stocks eligible for dividends, on which capital-gains taxes are due, and those that aren't. Cencosud slipped 0.3% to CLP3,617.80.

Among gainers, shopping center developer Parque Arauco (PARAUCO.SN) rose 1.2% to a new 52-week high of CLP1,190.40. In the prior session, local investment bank Celfin Capital increased its 2011 year-end target price to CLP1,298 per share. Celfin Capital also upgraded Parque Arauco's recommendation from hold to buy.

Fuel and forestry conglomerate Copec (COPEC.SN), the heaviest-weighted share on the Ipsa, also rose to a 52-week high. Its shares grew 1.3% to CLP9,897.10 as participants predicted the company will report strong third-quarter earnings later this month on higher international pulp prices.

Telecommunications operator Entel (ENTEL.SN) again rose after posting better-than-anticipated third-quarter net profits in the prior session. Entel gained 1.3% to CLP8,230.30.

With the Ipsa having gained over 40% so far this year, far surpassing analysts' expectations, traders warn that a downward correction is likely.

"The Ipsa's rise at this rate isn't sustainable, we'll probably see a correction soon," a trader at a local investment bank said, adding that the index likely won't drop too much.

The peso ended weaker versus the dollar as sovereign debt concerns pulled the euro lower and international copper prices fell back below the $4-per-pound mark.

The peso ended at CLP481.20 to the dollar, versus Tuesday's close of CLP476.90, while trading in a range of CLP478.80 to CLP481.80.
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Asian Pacific Markets

JAPAN:
The Nikkei stock index gained 1.4%.

CHINA:

The Hong Kong's Hang Seng Index slipped 0.9%.

LARGE SURPLUS SEEN

China Trade Surplus Surges to $27 Billion
China's central bank raised lenders' reserve requirements as cash from October's larger-than expected $27.1 billion trade surplus threatened to add to the risk of asset bubbles and accelerating inflation.

China trade surplus was announced as G-20 leaders including Presidents Barack Obama and Hu Jintao gather to tackle global imbalances in spending and capital flows. The excess, China’s second biggest this year, compared with the $25 billion median estimate of 27 economists surveyed by Bloomberg News and September’s $16.9 billion.

The trade imbalance and currency curbs that have pushed China’s foreign-exchange reserves to $2.65 trillion will be discussed by Group of 20 leaders meeting in Seoul from tomorrow.

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WORLD FOREX CURRENCIES SNAPSHOT:
(WEDNESDAY, NOV 10, 2010 4:15 PM EST)

EUR/USD     1.3783     +0.0030 (0.22%)
USD/JPY     82.2800 +0.5600 (0.69%)
GBP/USD     1.6121     +0.0143 (0.90%)
CAD/USD     0.9991     +0.0082 (0.83%)
USD/HKD     7.7513     -0.0001 (0.00%)
USD/CNY     6.6335     -0.0089 (-0.13%)
AUD/USD     1.0053     +0.0040 (0.40%)

WORLD MARKETS SNAPSHOT:

(WEDNESDAY, NOV 10, 2010 4:15 PM EST)

Shanghai     3,115.36     -19.64 (-0.63%)
Nikkei 225     9,830.52     +136.03 (1.40%)
Hang Seng Index     24,500.61     -209.99 (-0.85%)
TSEC     8,450.63     +5.00 (0.06%)
FTSE 100     5,816.94     -58.25 (-0.99%)
DJ EURO STOXX 50     2,845.93     -44.71 (-1.55%)
CAC 40     3,888.45     -57.26 (-1.45%)
S&P TSX     12,942.64     +26.01 (0.20%)
S&P/ASX 200     4,699.80    
BSE Sensex     20,875.71     -56.77 (-0.27%)

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WEDNESDAY'S U.S. ECONOMIC CALENDAR:

7:00 a.m.
Nov 5 MBA Mortgage Applications Survey Market Composite Index (previous 787.3), Cur Chg (previous -5%), Purchase Index (S.A.) (previous 178.9), Cur Chg (previous +1.4%), Refinance Index (previous 4328.8), Cur Chg (previous -6.4%)

8:30 a.m.
Nov 6 Unemployment Insurance Claims Report - Initial Claims Weekly Jobless Claims (expected 448K), Weekly Jobless Claims Net Change (expected -9K), (prior week) (previous 4340000), Net Chg (prior week) (previous -42K)

8:30 a.m.
Oct Import & Export Price Indexes Import Prices (expected +1.3%), Non-Petroleum Prices (previous +0.3%), Petroleum Prices (previous -3.1%)

8:30 a.m.
Sept. International Trade in Goods & Services Deficit (expected -45B), Exports (previous 153.87B), Exports Percent Change (previous +0.2%), Imports (previous 200.22B), Imports Percent Change (previous +2.1%)

10:30 a.m.
Nov 6 EIA Petroleum Status Report Crude Oil Stocks (previous 368.16M), Crude Oil Stocks (Net Change) (expected +800K), Gasoline Stocks (previous 212.25M), (Net Change) (expected -1M), Distillate Stocks (previous 164.87M), (Net Change) (expected -2.1M), Refinery Usage (expected 82.1%)

12:00 p.m.
Nov 5 EIA Natural Gas Storage Report Total Working Gas in Storage (previous 3821B), (Net Change) (previous +67B)

2:00 p.m.
Oct Treasury Statement of Receipts & Outlays of the U.S. Govt (expected -140B)



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US STOCK MARKET SUMMARY, TUESDAY, NOV. 9, 2010:

Stocks:
The U.S. Dollar rebounded causing U.S. stocks to decline Tuesday. Many commodity prices continued rising to record matching highs. Investors sold out of equities as the grew concerned about the inflationary impacts of the Fed's plan and entered the food and grain futures markets in mass after the USDA announced
sharp declines in sugar, wheat, soy commodities. Soybean futures hit a 26-month high of $13.4475 a bushel. Copper traders sold futures up over the $4 per pound mark for the first time since July 2008.

Treasurys:
Treasury prices fell hard despite a well-bid $24 billion 10-year Treasury auction as investors remained especially guarded ahead of the government's sale of 30-year Treasurys on Wednesday. The 30-year Treasury has plummeted in price after the Fed last week said it would dedicate just 4% of the $600 billion it will buy in Treasurys to issues that are maturing in the next 17 to 30 years.

Forex:
The dollar staged an afternoon surge as investors pulled back from risk and embraced the safe-harbor greenback. "This is part of a broad dollar rally, with equities selling off, some nervousness in Treasurys going on, and an overall unsettled feeling ahead of G-20 meetings," said Andrew Busch, global foreign exchange strategist at BMO Capital Markets in Chicago.






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