MARKETS SNAPSHOT FOR 13/01/12
Saturday, 14 January 2012 | 00:00
DJ30 PointChange: -48.96 Level: 12422.06 NASDAQ PointChange: -14.03 Level: 2710.67 SP500 PointChange: -6.41 Level: 1289.09 NASDAQ-Adv:796 Dec: 1676 NYSE-Adv:1062 Dec: 1972
[BRIEFING.COM] Concerns about sovereign debt downgrades stirred sellers
on Friday, but stocks were able to cut losses. That ensured the broad
market a modest weekly gain of about 1%. Stocks slid to a loss in excess
of 1% this morning. The descent came in response to headlines that
downgrades could be in store for several eurozone countries. France
actually confirmed that analysts at S&P made a single-notch
downgrade to the country's credit rating. That decision contradicted
word earlier this week that analysts at Fitch expect France to keep its
top-notch credit rating in 2012.
Banking bellwether and Dow component JPMorgan Chase (JPM 35.84, -0.98)
reported disappointing quarterly results this morning. It made for a
lackluster follow-up to the unceremonious start that earnings season
made earlier this week when fellow blue chip Alcoa (AA 9.80, -0.13)
posted a mixed report. The financial sector suffered all session as most
other diversified banks and financial services stocks traded lower in
Not a single sector scored a gain on Friday, but shares of many
retailers were helped higher by the latest Consumer Sentiment Survey
from the University of Michigan. It improved from 69.9 in December to
74.0 in the preliminary reading for January. Not only did that best the
Briefing.com consensus call for a reading of 71.2, but it marked the
highest reading since May 2011.
The euro had a volatile week before it suffered a sharp slide on Friday.
The currency ended the day at $1.2681, which makes for a -1.1% loss.
Prior to Friday participants were dealt a sizable dose of data after
being deprived from such catalysts for a few days. Retail sales during
December increased 0.1%, while sales less autos fell 0.2%. Both came
short of what had been expected, but prior month sales were revised
upward. Economists noted that sales weakened while aggregate earnings
increased, likely since consumer debt remains a hindrance for current
Initial weekly jobless claims made an unexpected jump to 399,000 from
375,000, which is where many had expected them to remain. Initial claims
have steadily increased over the past few weeks, but the latest
increase is likely due to disappointing December retail sales resulting
in staffing cuts.
After the European Central Bank (ECB) and Bank of England opted to keep
interest rate targets at 1.00% and 0.5%, respectively, ECB President
Draghi offered a reminder of the substantial downside risks to regional
economic activity. Although the nature of the comments was unsurprising,
Draghi's words cast a pall over news that recent debt offerings from
both Spain and Italy were successful.
Midweek trade was mostly listless and lackluster, a consequence of
little news flow. The only economic item was the Fed's Beige Book. Once
again it made mention of a modest increase in economic activity, but did
nothing to assuage concerns about the pace of the economic recovery.
Tuesday saw stocks jump in response to robust gains staged by many of
the major averages abroad. Investors gained confidence from word that
analysts at Fitch believe both France and Germany will maintain their
top-notch credit ratings in 2012. Meanwhile, some believe that China
might ease monetary policy so as to hedge against disruptions to the
Trade on Monday was generally uneventful as market participants prepared
for the unofficial start of earnings season. It got going when Alcoa
(AA) announced quarterly results after the close. The Dow component
posted a strong top line, but its earnings came short of what Wall
Street had expected.
The pace of earnings announcements will pick up next week, but traders
will have to wait an extra day since U.S. markets will be closed on
Monday in observance of Martin Luther King, Jr. Day.
Treasury Auction recap:
Results from an auction of 3-year Notes featured a bid-to-cover of
3.73, dollar demand of $119.4 billion, and an indirect bidder rate of
38.5%. For comparison, the prior auction featured a bid-to-cover of
3.62, dollar demand of $115.8 billion, and an indirect bidder rate of
39.1%. An average of the past six auctions results in a bid-to-cover of
3.33, dollar demand of $106.6 billion, and an indirect bidder rate of
38.9%. An auction of 10-year Notes drew a bid-to-cover ratio of 3.29,
dollar demand of $69.1 billion, and an indirect bidder rate of 38.3%.
For comparison, an average of the past six auctions results in a
bid-to-cover of 3.08, dollar demand of $66.2 billion, and an indirect
bidder rate of 44.0%. An auction of 30-year Bonds drew a bid-to-cover of
2.60, dollar demand of $33.8 billion, and an indirect bidder
participation rate of 31.9%. For comparison, an average of the previous
six auctions results in a bid-to-cover of 2.69, dollar demand of $37.2
billion, and an indirect bidder rate of 29.8%.