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Stocks Turn Modestly Higher After Seeing Initial Weakness
Stocks have rebounded from a weak start and are modestly higher in mid-morning trading on Monday, as traders continue to mull over the impact of health care reform amid a cloudy economic outlook provided by recent data. The major averages are all in positive territory, building on last week's gains.
The healthcare sector is in the spotlight today after the House voted late Sunday night to enact a package of health reforms that passed the Senate just before Christmas and sent a package of technical changes to the Senate for approval.
A total of 219 Democrats voted to enact the Senate reform bill, with 212, a mixture of Democrats and Republicans, voting against it.
The package of fixes strips some controversial provisions from the bill and brings the total cost to $940 billion while reducing the deficit by more than $130 billion in the first 10 years. It passed with the support of only Democrats by a vote of 220 to 211.
A lack of resolution to the Greek debt crisis, an unexpected interest rate hike by the Reserve Bank of India and the looming threat of Chinese monetary policy tightening has also impacted market sentiment on a day lacking first-tier economic data.
In corporate news, Google Inc. (GOOG) is expected to officially announce its withdrawal from China today, after the company began claiming it has been the victim of hacking attacks in the country and said that it would no longer censor its search engine if the attacks continued.
The major averages have slowed their upward move in recent dealing and are hovering near their highs of the session. The Dow is up 36.58 points or 0.3 percent at 10,778.56, the Nasdaq is up 10.09 points or 0.4 percent at 2,384.50 and the S&P 500 is up 2.76 points or 0.2 percent at 1,162.66.
Sector News
Healthcare provider stocks are some of the day's best performers, with the Morgan Stanley Healthcare Provider Index up by 2.3 percent. The advance has lifted the index to a fresh historic intraday high following yesterday's landmark healthcare vote.
Significant strength has also emerged among health insurance stocks, as reflected by the 2 percent gain being shown by the Morgan Stanley Healthcare Payor Index. With the gain, the index has risen to its best intraday level in two years.
Airline stocks are posting seeing strong gains, driving the NYSE Arca Airline Index up by 1.8 percent, offsetting a part of Friday's pullback. The buying interest in airlines has come amid a decline in the price of oil, which has moved lower amid the dollar's climb against major currencies.
Semiconductor, electronic storage and computer hardware stocks have also moved to the upside, while gold stocks remain pressure. The NYSE Arca Gold Bugs Index is down by 1.4 percent, setting a three-week intraday low.
Energy stocks are also moving lower, with oil and natural gas stocks sliding on the day. The downward move by oil stocks comes as the price of oil for May delivery is currently down by $1.70 to $79.27 a barrel.
Stocks Driven By Analyst Comments
Franklin Street Properties (FSP) is moving higher after being upgraded at Stifel Nicolaus from Sell to Hold. The stock has gained 2.5 percent, jumping to its best intraday price in nearly three months.
Boeing (BA) is also advancing following an upgrade at Oppenheimer from Underperform to Outperform. Shares are currently up by 2.4 percent, and although they have not taken out Friday's intraday high are on pace for a twenty-one month closing high.
On the other hand, SunTrust Banks (STI) is moving lower after being downgraded by analysts at Janney Montgomery Scott from Buy to Neutral. The stock is down by 1.1 percent, falling further away from last week's more than one-year high. |
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Bay Street Stocks May Struggle For A Third Day
Bay Street stocks may continue to shed gains Monday morning on renewed worries over Greece debt-situation and amid falling commodities prices.
Friday's inflation data also raised speculation that the Bank of Canada might hike rates sooner-than-expected. A surprise interest rate hike by India late Friday, after two years, also fanned the speculation.
The U.S. stock futures also point to a lower opening.
On Friday, the S&P/TSX Composite Index lost 92.04 points or 0.76% to 11,947.98, after settling above the 12,000-mark in the previous five sessions.
The price of crude oil drifted below the $80-mark on concerns over demand growth, with crude oil for May surrendering $1.44 to $79.53 a barrel. Meanwhile, bullion retreated near the $1,100-mark, having shed around 2% Friday.
Energy stocks may be in play on falling oil prices. Earlier in the European market, Royal Dutch Shell shed over 1% after agreeing to buy Arrow Energy fro $3.2 billion from PetroChina.
Healthcare stocks may also be in focus after the U.S. House of Representatives voted late on Sunday to enact a package of health reforms.
Merchant banking company Pinetree Capital announced that it acquired ownership of 1.5 million common shares and 1.5 million common share purchase warrants of Kirrin Resources Inc.
Gold mining company Mundoro Capital posted full year net loss of $0.12 per share, wider than $0.03 per share in the prior year period.
Gold exploring company Nevada Exploration said that its Board has approved the steps necessary to amalgamate with its subsidiary 2107189 Ontario Inc.
Renewable energy products company Cleanfield Alternative Energy announced on Friday that it completed non-brokered private placement of C$230,000.
Bio pharmaceutical company Helix BioPharma said it has achieved last-patient-out in its Phase II trial of Topical Interferon Alpha-2b for the treatment of ano-genital warts.
Mineral explorer Bolero Resources has entered into an option agreement to acquire 100% interest in the Carbonatite Syndicate Rare Earth Claim Group, surrounding Spectrum Mining Corporation's recently reported "Wicheeda" rare earth discovery.
With no major economic news on tap today, movements in the prices of commodities will likely to guide trading in the resource heavy Bay Street. |
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Asian Markets End In Negative Territory On Economic Concerns
The markets across Asia, except Japan, ended in negative territory on Monday amid cautious trading after Wall Street stocks ended in negative territory on Friday, impacted partly by quadruple witching and partly by profit taking amid concerns about the pace of global economic recovery.
The Japanese market was closed for a holiday.
In Australia, the benchmark S&P/ASX 200 Index declined 42.00 points, or 0.86% to close at 4,830, while the All-Ordinaries Index ended at 4,847, representing a loss of 42.60 points, or 0.87%.
On the economic front, a report released by the Investment and Financial Services Association revealed that confidence among Australian Investors unexpectedly declined in the March quarter, following gains in the past three consecutive quarters. According to the report, the investor sentiment index slipped to 2.9 in the March Quarter from 7.4 in the December quarter.
A report released by the Australian Bureau of Statistics revealed that the total number of new motor vehicle sales in the country declined 1.9% in February compared to the previous month where sales declined 3.4%. Total sales during February stood at 85,035 vehicles, the report noted.
Light sweet crude oil futures for April delivery ended at $80.20 a barrel in electronic trading, down $0.48 per barrel from previous close at $80.68 a barrel in New York on Friday.
Banking stocks led the decline on global economic concerns. ANZ Bank fell 1.63%, Commonwealth Bank of Australia slipped 0.82%, National Australia Bank shed 0.71% and Westpac Banking Corp. lost 1.17%. Investment banking company Macquarie Group declined 0.40%.
Metals and mining stocks also ended weaker. BHP Billiton lost 1.41%, Fortescue Metals fell 2.06%, Gindalbie Metals plunged 3.60%, Iluka Resources shed 0.24%, Macarthur Coal slumped 3.97%, Mincor Resources slipped 0.54% and Oz Minerals declined 1.72%.
Rio Tinto was weaker by 1.52% after announcing that the Chinese Authorities have initiated trial against its executive on charge of taking bribes and infringing commercial secrets in relation to iron ore price talks last year.
Gold stocks also ended weaker on lower gold prices in the bullion market. Lihir Gold fell 1.25% and Newcrest Mining slipped 0.77%.
Oil related stocks also ended in negative territory. Woodside Petroleum declined 0.45%, Santos fell 1.19% and Oil Search slipped 0.85%. However, Origin Energy bucked the trend and ended in positive territory with a gain of 1.33%.
Arrow Energy, engaged in oil exploration and production, was a major loser, having declined 3.59% on huge volumes after the company advised the shareholders to accept a new, improved joint takeover bid from Royal Dutch Shell and PetroChina.
Mixed trading was witnessed among retailers. David Jones slipped 0.20%, Wesfarmers edged down 0.19% and Woolworths declined 1.22%. Harvey Norman remained unchanged from previous close, while JB Hi-Fi Ltd advanced 1.72% and Reject Shop gained 2.34%.
In Hong Kong, the Hang Seng Index ended in negative territory with a loss of 437.57 points, or 2.05%, at 20,933, on concerns about sustaining the pace of global economic recovery. Weak closing on Wall Street on Friday, the day of quadruple witching, on profit taking, holiday for Japanese market, and concerns about policy tightening measures in mainland China impacted market sentiment, as traders preferred to lock in gains from recent rally and move to the sidelines awaiting more cues about the global economy.
In South Korea, the KOSPI Index ended in negative territory with a loss of 13.44 points, or 0.80%, at 1,673, as traders, both foreign institutional investors and domestic investors turned net sellers, offloading steel and commodity stocks, on concerns about sustaining the pace of global economic development. Weak closing on Wall Street on Friday and cautious trading across other markets in the region also impacted market sentiment.
The Indian market ended sharply lower on Monday as investors digested Reserve Bank of India's unexpected rate hike. Global cues were negative, further dampening sentiment ahead of March series derivative contracts' expiry on Thursday. After moving in a range of 17.559-17,337, the 30-share BSE Sensex finished at 17,411, down 168 points or 0.95% while the 50-share Nifty closed at 5,205, down 58 points or 1.09%.
Among the other major markets, China's Shanghai Composite Index added 6.83 points, or 0.22%, to close at 3,075. However, Indonesia's Jakarta Composite Index declined 40.57 points, or 1.48%, to close at 2,702, Taiwan's Weighted Index lost 61.93 points, or 0.78% to close at 7,836, and Singapore's Strait Times Index fell 26.52 points , or 0.91%, to close at 2,889. |
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The major European markets are uniformly lower in Monday’s session, extending their declines for the third straight session. The French CAC 40 Index and the German DAX Index are moving down 1.38% and 0.86%, respectively, while the U.K.’s FTSE 100 Index is receding 0.95%.
U.S. Economic Reports
The unfolding week's economic calendar is relatively light, with only a handful of reports that possess the potential to move markets due to be released over the course of the week. Existing home sales and new home sales reports for February, the Commerce Department's durable good orders report for February, the weekly jobless claims report and the final Reuters/University of Michigan consumer sentiment report are among the prominent reports that may shed more light on the ongoing economic recovery.
Also on tap are the final fourth quarter GDP report and the Federal Housing Finance Agency's house price index for January. The Fed speeches scheduled to the delivered during the week and the results of the Treasury auctions of 1-year, 5-year and 7-year notes round up the other economic events of the week.
After showing notable weakness in December and January, existing home sales may have fallen further in February, as pending home sales showed a sharp decline in January. Existing home sales face the risk of falling below the 5 million mark for the first time since June 2009. Meanwhile, new home sales may fare relatively better, as the NAHB housing market index improved slightly in February. That said, weather played spoilsport and impacted the index in March. A sustainable improvement in the housing market is likely only when the employment picture turns healthy.
Durable goods orders look set to rise again in February, given the jump in Boeing's (BA) aircraft orders to 47 in February from 10 in January. However, economists expect auto production to act as a drag. The optimistic expectation stems from the fact that the Institute for Supply Management's manufacturing survey readings remain fairly upbeat. Despite the news orders index of the survey declining in February, it remains at an elevated level.
Atlanta Federal Reserve Bank President Dennis Lockhart is due to speak about the economic outlook at the Naples Council on World Affairs in Naples, Florida at 3:45 PM ET. He will repeat the speech at 7:00 p.m. |
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Consol Energy (CNX) is likely to be in focus after it announced that it has entered into an agreement with T. Rowe Price (TROW) to commence a tender offer by May 5th, 2010 to acquire all of the shares of CNX Gas (CXG) common stock that it does not currently own at a price of $38.25 in cash per share. T. Rowe Price noted it has agreed to tender its shares of CNX Gas common stock that its investment advisory clients own into the offer.
Separately, Consol Energy announced that it is commencing an offering of $1.75 billion of its common stock. The company said it plans to use the net proceeds of the offering to finance a portion of its $3.475 billion previously announced acquisition of Appalachian oil and gas exploration and production business of Dominion Resources (D).
Novell (NOVL) may also be in focus after it announced that its board has concluded after careful consideration that the unsolicited conditional proposal from Elliott Associates to acquire the company for $5.75 per share in cash is inadequate. The company also said its board has authorized a thorough review of various alternatives to enhance stockholder value.
Medtronic (MDT) is also likely to see activity after it said a FDA panel voted unanimously in favor of approval with conditions of the Revo MRI SureScan pacing system designed as MR Conditional or safe for use in Magnetic Resonance Imaging systems under specific conditions.
Pepsico. (PEP) could also be in focus after it said confirmed its 2010 core constant currency earnings per share growth guidance of 11%-13%. The company expects low-double-digit core constant currency earnings per share growth between 2011 and 2012. Analysts estimate earnings per share growth of 12.4% for 2010.
Kimberly-Clark (KMB) may also see some activity after it reconfirmed its 2010 adjusted earnings per share guidance of $4.80-$5 per share. The company made this announcement in connection with its Investor Day meeting. Analysts estimate earnings of $4.87 per share for the year.
Tiffany & Co. (TIF) is likely to move in reaction to its announcement that its fourth quarter net sales rose 17% year-over-year to $981.4 million. The company’s net earnings from continuing operations rose to $1.09 per share from 30 cents per share last year. The consensus estimates had called for earnings of $1.13 per share on revenues of $970.93 million. For 2010, the company estimates sales growth of 11% and net earnings from continuing operations of $2.45-$2.50 per share. Analysts estimate earnings of $2.43 per share on revenues of $2.93 billion.
Williams-Sonoma (WSM) may also be in focus after it reported that its fourth quarter net sales rose 8.1% to $1.090 billion. The company’s non-GAAP earnings rose to 86 cents per share from 31 cents per share last year. Analysts estimated earnings of 74 cents per share on revenues of $1.07 billion. The company also announced an 8.3% increase in its cash dividend. For 2010, the company expects revenues of $3.2 billion to $3.3 billion, exceeding the $3.19 billion consensus estimate. |