Markets Mixed, Closing News 11/29/11

The DJIA and S&P closed up though off their highs and the Nasdaq closed down thanks to a better than expected consumer confidence reading and a successful Italian bond sale, shedding some light on the Euro zone’s efforts to solve their debt crisis.  Meanwhile, technology stocks lagged.


Consumer confidence came in higher than expected at 56.0 vs. the 44.0 estimate suggesting that Americans may be more hopeful about the outlook for jobs and wages – a correlation to the positive holiday spending numbers we’ve seen over the past few key days.  The consumer confidence number was stronger than what many had feared, but it seems tentative as we wait to see what plays out primarily in Europe – and the impact that has on the U.S.


Although Italy paid almost 8% to sell three-year bonds, strong demand boosted markets in Europe and the U.S.  However, the high rate calls into question the affordability to finance Italy’s huge public debt which in turn raises concerns over the resolution of that country’s debt crisis.  Euro zone leaders continue to work on their rescue fund plan even considering asking the IMF for more help.


According to S&P’s Case-Shiller index, home prices declined 0.57% from the prior month.  Home prices were down 3.9% year-over-year, but that decline was still an improvement from the 5.8% drop recorded in the second quarter.  A weak jobs market, continued foreclosures and stricter mortgage requirements keep a lid on the housing market’s recovery.


Last night, Fitch Ratings reaffirmed the AAA rating for the U.S. but downgraded the outlook to negative from stable.


The payroll tax fight is just beginning.  The Obama Administration believes that allowing the payroll tax cuts to expire would hurt the U.S. economy and further stem job growth.  Their plan suggests cutting the payroll tax in half for employees and for the first $5 million of employer payroll; his plan overall would cost $265 billion and would be funded by a surtax on $1 million+ incomes.  Conversely, Republicans prefer spending cuts, a tax system overhaul and a review of savings from overseas troops drawdowns.


Oil prices rose as concern continue in Iran where protestors attacked two British compounds in Tehran.  The attacks come at a time of rising diplomatic tension between Iran and Western nations who last week imposed fresh sanctions over Tehran's nuclear program, which they believe is aimed at achieving the capability of making an atomic bomb.


Financials were under pressure after S&P cut its credit ratings for 37 different banks, including all six of the Big Six.


Market Indices/Statistics:



  • Dow closed up 32.62 pts/+0.28% to 11,555.63

  • S&P closed up 2.64 pts/+0.22% to 1,195.19

  • Nasdaq closed down 11.83 pts/-0.47% to 2,515.51

  • 18 of the 30 Dow stocks closed higher

  • 7 of the 10 S&P 500 sectors closed up

  • Energy (+1.5%) was the biggest gainer; IT and Financials were the biggest laggards (-0.68% and -0.60%)

  • The VIX was down 1.49 to 30.64

  • Oil is up $1.47 to $99.68

  • Nat Gas is up $0.103 to $3.628

  • Gold is up $5.00 to $1,719.60

  • Euro vs. Dollar down $0.0002 to $1.3313

  • Dollar vs. Yen down $0.180 to $79.085

Companies in the News:


After being the sole major carrier to avoid bankruptcy, American Airlines, the third largest U.S. carrier, and its parent company, AMR Corporation (-$1.36/84% to $0.26), filed for Chapter 11 bankruptcy protection this morning after failing to win labor disputes and struggling under the pressure of higher fuel prices and decreased air travel demand.  AMR hopes bankruptcy will cut labor costs, but analysts question whether restructuring under Chapter 11 will address operational shortcomings and bolster revenue.  United Continental Holdings traded up $1.05/6.3% to $17.63 and Delta Air Lines traded up $0.37/5.0% to $7.80.


Nexen Inc. rose $0.69/+4.7% to $15.46 on the announcement that it will sell 40 percent of its British Columbia shale gas holdings to a group led by Japan's INPEX CORPORATION for C$700 million ($680 million) with a focus on advancing the company’s shale gas strategy by partnering with a strong, experienced international company.


Transocean shares were down $4.31/9.4% to $41.63 after proposing a share offering of 26.0 million shares.  The company intends to use the net proceeds from the share offering to partially refinance its acquisition of Aker Drilling ASA, which was initially financed through the use of available cash and the assumption of Aker's outstanding debt.


Research In Motion gained $0.86/+5.2% closing at $17.37 after the BlackBerry maker said it will launch a mobile software in the first quarter, which will allow corporate IT staff to set and monitor rules for passwords on a range of devices.


Earnings:


Tiffany & Co.'s shares declined $6.40/-8.7% to $67.22 after the company predicted earnings for the current quarter that missed what is expected by analysts despite reporting that its fiscal third-quarter earnings rose 63% on solid sales growth in each of the company's geographic regions.


Corning was under pressure today falling $1.59/-10.8% to $13.19 after slashing its fourth-quarter profit and volume growth estimates sharply as a major South Korean customer informed the company it does not plan to honor its contract for the rest of the quarter, contributing to a decision to cut its global glassmaking capacity by 25% by quarter's end.


Hillenbrand's fourth-quarter revenue rose 9% year-over-year, driven by its fastest-growing business platform, its process equipment group. The results for the company beat analysts' estimates, but shares closed lower down $0.16/-0.76 to $20.98.


Coming Wednesday:


Economic Reports:ADP Payroll (expected to be 125k) at 8:15 am, Productivity (Expected to be +2.6%) and Labor Costs (expected to be -2.3%) at 8:30, and Pending Home Sales (expected to be -0.5%) at 10:00 am Earnings from Aerpostale, American Eagle Outfitters, Express Inc., Guess? Inc., and Krispy Kreme Doughnuts