Markets Mixed, Closing News 12/21/11

After hitting an intraday low of -104 the DJIA closed higher along with the S&P 500 on little macro news aside from support for the Eurozone debt crisis. The   Nasdaq closed down largely on Oracle’s disappointing earnings.

The European Central Bank offered 489.2 billion Euros ($643.8 billion) in an auction of three-year loans, much higher than the estimated 310 billion Euros, with a total of 523 bidders – one thing that is unclear is whether the record amount of borrowing will end up in the real economy spurring job growth and consumer demand.

The U.S. government standoff over extending a tax break for Americans continues even after President Barack Obama reached out to urge Republican House of Representatives Speaker John Boehner to pass a short-term extension and return to talks on a year-long deal in the New Year.  House Representatives have been holding out for a longer term extension on the payroll tax cut.

The National Association of Realtors reported that sales of previously owned homes increased 4 percent from October to an annual rate of 4.42 million units though this was less than the 5.05 million that was expected and the overall home sales results for 2007-2010 was lowered by 14%, signifying a worse housing crisis than initially thought.

Oil was up early on ECB loan optimism; Gold was down as investors favor US dollar over metal

Consumer Staples at an all time high; Utilities index at a 3-year high

Market Indices/Statistics:

  • Dow closed up 4.16 pts/+0.03% to 12,107.74

  • S&P closed up 2.42 pts/+0.19% to 1,243.72

  • Nasdaq closed down 25.76 pts/-7.71% to 2,577.97

  • 20 of the 30 Dow stocks closed higher

  • 9 of 10 S&P 500 sectors closed up

  • Utilities were the biggest gainers (+1.48%);  IT were the biggest decliners (-1.95%)

  • The VIX was up 1.79 to 21.43

  • Oil is up $1.68 to $98.92

  • Nat Gas is up $0.039 to $3.247

  • Gold is down $0.50 to $1,617.10

  • Euro vs. Dollar up $0.0001 to $1.3045

  • Dollar vs. Yen up $0.01 to $78.07

Companies in the News:

The Department of Justice filed its largest residential fair lending settlement in history, totaling $335 million, to resolve allegations that Countrywide Financial Corporation and its subsidiaries engaged in a widespread pattern or practice of discrimination against qualified African-American and Hispanic borrowers in their mortgage lending from 2004 through 2008.   Despite having acquired Countrywide, Bank of America shares closed up $0.06/+1.2% to $5.23.

Oracle (-$3.40/-11.7% to $25.77) dragged the whole tech sector down after announcing sales and revenue results that disappointed investors as concerns arose over global tech spending.  Recently other tech stocks, including Texas Instruments (-$0.83/-2.8% to $28.56), issued disappointing guidance.  IBM shares saw additional declines as well of $5.77/-3.1% to end the day at $181.47 after Oracle’s earnings report and on similar concerns over enterprise spending. 

After an incorrect rumor ran that the Department of Justice was going to block the expected $39 billion combination of Constellation Energy Group and Exelon Corp, CEG traded down 9% and triggered a VTP.  Shortly after the error, the official DOJ release was posted to its website and picked up by the wire services stating that the DOJ had actually approved the merger subject to certain division divestitures that were previously outlined in the merger details.  CEG closed up $1.10/+2.9% to $39.60; EXC shares closed up $1.05/+2.5% to $43.38.


KB Home's shares slid $0.52/-6.7% to $7.22 on disappointing Q4 earnings that were down 20% as weakness in the housing market overshadowed the home-building company's revenue growth.  The company did say that orders for new homes surged and home prices rose in another sign that the depressed housing market was gaining some traction.  KBH reported a profit of $0.18 per share vs. $0.23 from the year ago period.

Walgreen Co.'s closed down $0.13/-0.39 to $33.37 after reporting Q1 earnings that fell 4.5% on higher costs as the drugstore chain says an attempt to secure a contract agreement with Express Scripts Inc. (ESRX, $44.27, -$0.27, -0.61%) last week was unsuccessful. Shares dropped as earnings missed expectations.  EPS were $0.61 vs. analyst expectations of $0.67; sales were $18.2 billion close to estimates of $18.23 billion.

Coming Thursday:

Economic Reports:Chicago Fed Activity Index (-0.17 expected), Q3 GDP (+2.0% QoQ expected), Q3 Personal Consumption (+2.3% expected), Initial Jobless Claims (380k expected) at 8:30 a.m.; Nov. U. of Michigan Confidence (68.0 expected) at 9:55 a.m.; Leading Indicators (+0.3% expected), Oct. House Price Index (+0.2% expected)