Intraday Market Update
Equities are finding little momentum on Monday as the there is a lack of conviction ahead of the FOMC announcement on Wednesday. Stocks are trading in a narrow range and oscillating between positive and negative territory. The DJIA is being lifted by a nearly +5% gain in Caterpillar after their favorable Q1 earnings report and raised guidance. Greece debt yields increased to a 12-year high as Germany continues its demands for further austerity measures before an aid package is granted. Portugal credit default swaps also rose to a record 318 bps, up from 279 bps on Friday, on concerns the sovereign debt crises will spread. However, France's Prime Minister said in an interview on CNBC to not be fooled and there will be an aid package for Greece.
In Washington financial services reform remains front and center. Reports indicate that the Senate could begin voting on a bill as early as today. Bloomberg reported that Senator Richard Shelby, the top Republican on the Senate Banking Committee, said Republicans will block Democrats' efforts to begin debate on the measure in a test vote today, saying the move would give them more leverage. In a speech at an Independent Community Bankers of America conference in Washington Shelby said "I believe that 41 Republicans are right now going to stand together."
Bank stocks are mostly lower led by Goldman Sachs and Morgan Stanly as talk picks up about a possible bank tax being added to a House regulation bill. The US Treasury Department announced that it may begin selling its stake in Citigroup. The Treasury owns 7.7 billion shares of Citi and has initially granted underwriter Morgan Stanley to sell 1.5 billion of the shares. One would think this will put pressure on Citi stock as the supply enters the market, but then again there may be someone out there willing to buy it. One thing is for certain: the timing by the government to unwind its stake in Citi and also pass a financial reform bill that will pressure bank profits seems all too uncanny.
In earnings news, Whirlpool reported strong results in the pre-market and the stock has surged more than +13% on the news, reaching an all-time high of $118.44. The company reported earnings of $2.13 compared to estimates of $1.30. Strong guidance and new home building contracts has helped lift the homebuilders ETF XHB. XHB has gained +12.5% in the last week alone.
Heading in the other direction are two financial names. Blackrock has dropped -7.5% after missing top line estimates. And mortgage insurer PMI is down about -6% after their results and announcing the sale of $600 million in securities.
Investment Bank Thomas Weisel Partners has exploded +65% after getting a takeover offer from rival Stifel. Car rental names are rallying after Hertz offered $41 per share in cash and stock for Dollar Thrifty Group. HTZ is up +13% while DTG is up +9%.
Commodities are mixed. Front month crude is down -1.35% to $84.00 per barrel. Natural gas and gold are flat, while silver is higher by +0.59%. Copper is relatively flat as well.
Stocks around the world were mostly higher on Monday. In the Asia-Pacific region gains were led by Japan (+2.30%), Hong Kong (+1.61%), and Korea (+0.87%). Declining markets were in China (-0.47%) and Australia (-0.53%).
All major European markets were higher led by gains in Germany (+1.16%), France (+1.17%), and London (+0.53%).
Core Sector List:
Overall reading: 11 sectors advancing, 5 sectors declining.
Strongest Sectors: Retail, Semiconductors, Insurance
Weakest Sectors: Internet, Banks, Healthcare
S&P 500 - Daily and 30-minute Intraday Charts:
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