Markets Lower, Closing News 11/21/11

Markets closed lower as debt concerns both domestically and abroad weighed on investors today.  The expected announcement that super committee could not reach a deal to cut the U.S. deficit and Moody’s warning that its outlook for France’s credit rating could be in doubt sent the Dow over 2% lower.  The silver lining to today’s red cloud is that markets finished well off their lows, the Dow was down as much as 342 points, following a statement from Sen. Max Baucus saying the committee was looking at a new idea.


The bipartisan “super committee” is expected to announce later today that it has failed to reach an agreement that would cut $1.2 trillion over ten years from the U.S. deficit, triggering automatic cuts across defense, Medicare, and other programs.  Senator Max Baucus, a member of the Super Committee, said this afternoon there is a new idea on the table and that the group is still moving forward, but did not provide any specifics.


Moody’s today warned that France is at risk of a downgrade to its credit outlook if its debt yields continue to climb an economic growth does not pick up.  The warning follows the announcement on October 17th saying France’s credit rating could be placed on negative watch if its efforts to bail out other Euro-zone economies with the EFSF weighed too heavily on growth.  The spread between the yield on French and German 10 year notes grew 0.054% to 1.547% in today’s trading.


The conservative People’s Party in Spain won the general election over the weekend, joining Italy and Greece in unseating the standing government parties in recent weeks.  The conservatives won 186 of the 350 seats in the legislature, up from 154 in the last election, while the incumbent Socialist Party representation fell to 110 seats, the lowest amount in history.  The election results did not calm the bond markets however as Spain’s ten-year yield reached 6.512% today, up from 6.345% on Friday.


I think I might have lucked out by missing the Giants’ game last night, as the Eagles beat the Giants at home (again) by the score of 17-10.


Market Indices/Statistics:



  • Dow closed down 248.85 pts/-2.11% to 11,547.31

  • S&P closed down 22.67 pts/-1.86% to 1,192.98

  • Nasdaq closed down 49.36 pts/-1.92% to 2,523.14

  • All 30 Dow stocks closed lower

  • All 10 S&P 500 sectors closed down

  • Financials was the worst performing sector (-2.50%)

  • The VIX was up 0.82 points to 32.84

  • Oil is down $0.20 to $97.46

  • Nat Gas is up $0.074 to $3.490

  • Gold is down $41.50 to $1,683.90

  • Euro vs. Dollar down $0.0008 to $1.3496

  • Dollar vs. Yen up $0.10 to $76.96

Companies in the News:


Shares of Transatlantic Holdings closed up 0.75% to $54.84 after announcing that it has  entered into a definitive agreement to combine with Alleghany Energy (-6.76% to $293.01) in a transaction valuing TRH at $3.4 billion.


American Apparel announced on Friday that its acting President Tom Casey resigned, not detailing the reason for the resignation.  Casey was appointed as President in October 2010 to work with key investors to validate the company’s strategy and optimize American Apparel’s capital structure.  Shares of APP traded lower (-4.00% to $0.72) in today’s session.


Jeffries Group Inc. traded higher (+0.39% to $10.20) after posting a letter from management on its website saying that it has reduced its exposure to troubled European debt by 50%, and disclosed a net short position of $134 million, 3.8% of shareholders’ equity, to bonds issued by Portugal, Ireland, Greece and Spain.  On November 3rd Egan-Jones put out a note saying it was concerned with Jeffries’ exposure to European debt.


Earnings:


Tyson Foods closed flat (+0.05% to $19.46) today after publishing their Q4 earnings report before the market opened this morning.  Tyson reported Q4 earnings per share of $0.26 on revenue of $8.4 billion vs. analysts’ consensus of $0.32 per share on revenue of $8.2 billion.  While earnings per share were lower than had been forecasted, shares were buoyed by the management forecast of FY revenues of over $34 billion, which is where analysts’ consensus estimate for FY revenue fell.


Shares of Chimera Investment Corp. fell (-2.23% to $2.63) in today’s session after reporting Q3 earnings per share of $0.06, missing analysts’ forecasts of $0.14 per share.


Coming Tuesday:


Economic Reports:  3Q GDP (expected to be 2.5%) and Personal Consumption (expected to be 2.4%) at 8:30 am and the Richmond Fed Manufacturing Index (expected to be -2) at 10:00 am  Earnings from Campbell’s Soup, DSW Inc., Guess?, Hormel Foods, and Pandora