Markets Higher, Closing News 8/29/11

Markets closed higher,with all three major indices up more than 2%. Markets were higher after Hurricane Irene caused less damage than was initially feared after hitting the east coast this weekend. Also supporting investor confidence was the merger of two of Greece’s largest banks, bullish comments by the ECB which contradicted comments from the new IMF chief Christine Legarde, saying that European banks need to raise more capital, and a good reading on consumer spending.

Two of Greece’s largest banks, Alpha and EFG Eurobank announced today that they have reached a merger agreement after receiving a capital injection from the Qatar Investment Authority. Pursuant to the deal, the new bank will offer €1.25 billion in rights and €500 million in convertible bonds. The Qatar investment company will maintain a 17% interest in the bank. The deal is expected to ease some capital fears in Europe and could lead to similar type mergers across the continent.

The European Central Bank declared that the European banks have taken sufficient steps to insure they have adequate capital, contradicting statements over the weekend from new IMF chief Christine Lagarde. Lagarde said the banks “need urgent recapitalization” and that they should seek private resources first, but could resort to public funds if necessary.

The Personal Income reading was reported in-line at +0.3%, but June’s reading was revised slightly higher. Personal spending beast economists’ forecasts, reported at +0.8% vs. 0.5% expected. Spending, which received a boost from increased demand for cars, posted its fifth straight month of increases.

Arsenal, the London-based English Premier League Soccer team, is offering free tickets to an away game for all fans who traveled to Manchester to watch the Gunners lose by a landslide margin of 8-2 to Manchester United. Maybe the Yankees can follow suit and offer free tickets to anyone who goes to a game that A.J. Burnett starts?

Market Indices/Statistics:

  • Dow closed up 254.71 pts/+2.26% to 11,539.25
  • S&P closed up 33.12 pts/+2.82% to 1,210.02
  • Nasdaq closed up 82.26 pts/+3.32% to 2,562.11
  • 29 of the 30 Dow stocks closed higher /HD closed lower
  • All 10 S&P 500 sectors closed higher
  • Financials was the best performing sector (up 3.98%)
  • The VIX was down 3.32 points to 32.27
  • Oil is up $0.11 to $85.44
  • Nat Gas is down $0.083 to $3.964
  • Gold is down $13.90 to $1,782.70
  • Euro vs. Dollar up $0.0012 to $1.4508
  • Dollar vs. Yen up $0.12 to $76.83

Companies in the News:

Insurance companies led the markets higher after Hurricane Irene caused less damage, especially in Manhattan, than was originally feared.  Travelers (+5.07% to $50.75), Allstate (+8.50% to $26.30), Metlife (+5.88% to $33.31) and Prudential (+5.47% to $50.16) all traded higher today.

Bank of America raised another $8.3 billion in cash after selling 13.1 billion common shares of China Construction Bank Corporation in a private transaction with a group of investors. Bank of America will retain a 5% stake in the company after the sale.  Shares of BAC traded 8.12% higher to $8.39 in today’s session.

Pfizer (+3.68% to $18.88) and Bristol Myers Squibb (+1.98% to $29.29) both traded higher after announcing a jointly created new blood thinner, Eliquis was superior to Warfarin for reducing deaths and preventing strokes in heart patients. 

Brinker International, parent company of restaurant franchises Chili’s and Maggiano’s Little Italy, traded higher (+2.04% to $23.02) after announcing the board of directors increased their quarterly dividend by 14% to $0.16 per share.

Shares of Venoco Inc. jumped higher today (+30.96% to $11.76) after announcing it has received a “going private” proposal from its CEO, Timothy Marquez.  Marquez holds approximately 50.3% of VQ’s outstanding stock, and has proposed to purchase the remaining outstanding shares for $12.50 per share in cash.

Earnings:

LDK Solar traded higher (+5.82% to $6.18) after announcing a Q2 loss of $0.62 on $499 million in revenue, wider than the $0.25 loss that analysts had forecasted. Shares were pushed higher today because the company expects gross margins in the second half to be 15-20%, significantly higher than the 2.2% gross margin reported in the second quarter.

Shares of Donaldson Inc. were also higher (+7.46% to $57.61) after beating analysts’ forecasts on both the top and bottom lines. DCI reported Q2 earnings per share of $0.84 on $625 million vs. estimates of $0.79 per share on $619 million.  Donaldson also announced it sees FY earnings per share to be $3.15-3.45 vs. estimated of $3.24 per share.

Coming Tuesday:

Economic Reports: Case Schiller Home Price Index (expected to be -8.30%) at 9:00 am and Consumer Confidence (expected to be 52.0) at 10:00 am; Earnings from Barnes & Noble, Dollar General, DSW Inc., and PVH Corp.