Wednesday (12/28/11) Mid-Day Market Report

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 Mid-Day Market Action


  • US:  Dow: 12171.47 (-0.98%), S&P 500: 1253.43 (-0.95%), NASDAQ: 2599.55 (-0.98%)
  • Europe: CAC: 3071.08 (-1.04%), DAX: 5771.27 (-2.05%), FTSE: 5507.40 (-0.10%).
  • Asia:Australia: 4088.80 (-1.25%),China: 2170.01 (0.18%),Hong Kong: 18518.67 (-0.60%),India: 4705.80 (-0.94%),Japan: 8423.62 (-0.20%),Korea: 1825.12 (-0.93%),Singapore: 2666.25 (-0.28%),
  • Metals: Gold: 1562.30 (-2.02 %), Silver: 27.28 (-5.08%), Copper: 3.36 (-1.39%)
  • Energy: Crude Oil: 99.55 (-1.77%), Natural Gas: 3.08 (-1.00%)
  • Agriculture: Corn: 6.42 (1.42%), Soya Bean: 11.99 (-0.08%), Wheat: 6.55 (1.51%).
  • Currency: EUR/USD: 1.2945 (-0.966%), GBP/USD: 1.5473 (-1.258%), USD/JPY: 77.963 (0.1072%)
  • 10 year US Treasury: 1.923% (-0.082)


Market News Update


 S&P 500 back in negative territory for 2011: U.S. stocks dropped Wednesday, sending the Standard & Poor’s 500-stock index back into the red for 2011, as the euro sank to an 11-month low and investors fretted about Italy’s long-term debt auction on Thursday. The Dow Jones Industrial Average shed 123 points, or 1%, to 12169, and the S&P 500 gave up 13 points, or 1.1%, to 1252 in afternoon trade. The S&P 500’s decline pushed the broad market measure back into negative territory for the year, with just two full days of trading remaining in the year. The technology-focused Nasdaq Composite fell 29 points, or 1.1%, to 2597.


Oil falls for first time in seven days: Oil declined for the first time in seven days as a surge in the European Central Bank’s balance sheet to a record highlighted the growing risks of the region’s debt crisis.


Euro falls below $1.30: Waning enthusiasm over Italy’s better-than-expected debt auction sent a broadly weaker euro to its lowest level in more than a decade against the yen and a new 11-month low against the dollar. With jitters over Europe’s debt crisis intensifying price action in holiday-thinned markets, the euro tumbled as low as ¥100.75, its lowest level since June 2001. The common currency also extended its losses against the dollar, falling to its deepest trough since mid-January versus the dollar at $1.2915.


Yield on 10-year Treasury below 2%: Interest in Treasury picked up as investors tidied their accounts into year-end. In morning trading, benchmark 10-year notes gained 7/32 in price to yield 1.982% and 30-year bonds rose 20/32 to yield 3.006%. Later today, theU.S. central bank plans to sell $8.0 billion to $8.75 billion notes due in 2014. This will be the final supply this year coming from the Fed for its so-called Operation Twist stimulus plan.


Gold heads for fifth straight daily loss: Gold fell on Wednesday, tracking industrial metals and equities lower, as concerns about global economic growth and Iran’s threat to stop the flow of oil kept investors on the sidelines.


Company News Update


  • Shares of Cavium (CAVM) were down Wednesday morning after the chipmaker lowered its revenue outlook late on Tuesday and faced a series of downgrades. The company said it expects fourth-quarter revenue to be in the range of $56 million to $57 million, which is below average analyst estimates in a Thomson Reuters poll of $61.1 million.
  • Two units of Actavis Group will pay $84 million to settle a lawsuit over drug pricing, Texas officials said, less than half the amount an Austin jury said the company should pay. The state accused Actavis Mid-Atlantic LLC and Actavis Elizabeth LLC, subsidiaries of the Iceland-based company’sU.S. division, of inflating billings to the Texas Medicaid program by falsely reporting drug prices. The state court jury in February ordered the units to pay the state $170 million.
  • U.S.regulators have spent today and yesterday inspecting a Mead Johnson Nutrition Co. (MJN) factory as part of an investigation into whether aMissouri child’s death this month was due to tainted infant formula.
  • Citigroup (C.N) has agreed to sell its retail business in Belgium to Credit Mutuel Nord Europe (CMNE), the French firm said in a statement on Wednesday.
  • The Google+ social network has topped 60 million users, according to founder Paul Allen, who also made the bold prediction late Tuesday that Google+ would reach 400 million users by the end of 2012.
  • Swiss refiner Petroplus may run out of crude stocks in days as traders said on Wednesday, they had stopped sales fearing non-payments and analysts predicted that the closure could bring a temporarily relief to Europe’s crippled refining sector.


Hedge Fund News Update


  • Some of the biggest hedge fund managers, including John Paulson, George Soros and David Einhorn, have incurred significant losses in 2011 on their misplaced bets on gold miners, despite the bullion being up 12% for the year to date. In sharp contrast to the rise in gold prices, shares of gold miners have fallen almost 16% this year amid investor concerns that mining costs are rising, and that governments around the world are becoming more aggressive in taxing resources companies.
  • Toronto Trust Management Ltd. in a press release announced that Friedberg Global Macro Hedge Fund  will accept net new investments (net of cash outflows for expenses and redemptions) in the Fund up to a maximum of US$75 million during the period beginning January 3, 2012 and ending January 23, 2012.
  • Billionaire hedge fund executive Steven Cohen has bought a 5.2 percent stake in Bermuda-based re-insurer Validus Re.
  • Stephen Diggle, who co-founded a hedge fund that made $2.7 billion in 2007 and 2008, plans to open his personal farmland portfolio to investors and start a fund that will trade life-sciences companies.
  • Fortress Investment Group LLC was among over 400 financial firms which provided advisory proposals to federal housing authorities about how to handle renting out homes that have been foreclosed. The Federal Housing Finance Agency asked firms for ideas as it tries to stabilize neighborhoods and recoup losses in the wake of the national housing crisis.
  • The Securities and Exchange Commision will widen the computer-powered scrutiny from just covering hedge funds, to include mutual funds and private equity funds, according to a report in The Wall Street Journal.

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