Friday, September 21, 2012

Trader's Highlight

DJI- NEW YORK, Sept 20 (Reuters) - The Dow industrials ended slightly higher on Thursday while the S&P 500 and the Nasdaq cut most of the day's losses in a sign that investor sentiment remains generally positive despite several weak manufacturing surveys from around the world.


Pockets of strength included housing, with an index of housing stocks up 0.8 percent, following Wednesday's gains on better-than-expected housing market data. The S&P energy index rose 0.4 percent, in sync with a rally in Brent crude oil prices after a three-day slide. The S&P utilities index also gained 0.4 percent.

"What’s happening in the market is ‘What’s next?'" said John De Clue, global investment strategist at U.S. Bank, in Minneapolis. "It’s a classic tug of war between indicators that things are improving and, on the other hand, some things appear to be a little more troubling."

Several economic indicators painted a sobering picture of the global economy. U.S. manufacturing closed out its weakest quarter in three years this month, and the number of Americans filing new claims for jobless benefits held near two-month highs last week. The U.S. data followed disappointing manufacturing reports from Europe and China.

In a bright spot for the market, Trulia Inc surged 41.2 percent to close at $24 in its market debut, as investors bet an improvement in the housing market would benefit the online real estate listing service. At its session high, Trulia's stock touched $25.20 - up 48.2 percent from its initial public offering price of $17.

The Dow Jones industrial average rose 18.97 points, or 0.14 percent, to close at 13,596.93. The Standard & Poor's 500 Index dipped 0.79 of a point, or 0.05 percent, to 1,460.26. The Nasdaq Composite Index fell 6.66 points, or 0.21 percent, to close at 3,175.96. After the bell, shares of Oracle Corp slipped 0.53 percent to $32.09 after the company reported that quarterly hardware sales tumbled 24 percent from a year earlier as the technology giant continued its struggle to turn around the computer division it acquired with its purchase of Sun Microsystems. In regular trading, Oracle closed at $32.26, down 1.6 percent on Nasdaq.

The benchmark Standard & Poor's 500 Index has gained 5.9 percent since the beginning of August, driven higher mostly by expectations of more stimulus from central banks. A week ago, the Federal Reserve announced its third round of stimulus or quantitative easing, known as QE3, helping push stocks up last Friday within reach of five-year highs.

In a sign of bullishness, UBS raised its target level for the S&P 500 by the end of 2012 to 1,525 from 1,375 on Thursday, saying equity markets will climb after aggressive monetary easing by central banks.

"Over the short run, we believe that the 'risk on' trade will continue, with a rotation into the most volatile and economically sensitive stocks," UBS' chief U.S. equity strategist Jonathan Golub wrote in a research note.
Transportation stocks, sensitive to the nation's economic fortunes, ranked among the worst performers, a day after railroad company Norfolk Southern Corp said its earnings would fall short of expectations. Norfolk shares slid 9.1 percent to $66.11.

The Dow Jones Transportation Average dropped 2.8 percent.

Boston Fed President Eric Rosengren said on Thursday that the Fed's actions last week "should result in stronger economic growth, and return us to full employment more quickly than would be the case, absent the policies." He was speaking to bankers and business leaders in the metropolitan Boston area.

Manufacturing in China contracted for an 11th straight month in September, according to a private-sector survey of factory managers; in the euro zone, a downturn in activity in the service sector steepened this month at the fastest pace since July 2009.

Retailers' shares also fell. Bed, Bath & Beyond tumbled 9.8 percent to $62.08 a day after the company posted quarterly results that narrowly missed Wall Street's estimates as the result of higher costs.

Fellow retailer J.C. Penney Co Inc slumped 11.2 percent to $25.83 after Chief Executive Ron Johnson said new shops within stores are doing much better than other parts of its department stores, but it was "way too early to draw conclusions" as the retailer is still rolling out the strategy.

The Morgan Stanley retail index slid 1.2 percent.

Facebook Inc's shares fell 3 percent to $22.59 after the company said it will start charging businesses to run promotional offers on its social network, turning a free service into a potential source of revenue.

Volume totalled about 6.15 billion shares traded on the New York Stock Exchange, the Nasdaq and the Amex, compared with the year-to-date average daily closing volume of 6.54 billion.

Decliners outnumbered advancers on the NYSE by a ratio of about 3 to 2, while on the Nasdaq, five stocks fell for every three that rose.

NYMEX- NEW YORK, Sept 20 (Reuters) - U.S. October crude futures dipped slightly after a choppy trading session on Thursday as the front-month contract headed to expiration, marking a fourth straight lower settlement, even as crude for November delivery managed a slight gain.

CBOT SOYBEAN-Soybean futures on the Chicago Board of Trade fell to a six-week 
low on technical selling including long liquidation, along with talk of U.S. crop yields that were not as bad as feared, traders
said.

* Sell-stops triggered as spot November soybeans fell below Tuesday's one-month low of $16.30-1/2 per bushel.
  • Additional pressure stemmed from worries about global growth. Disappointing data on U.S. manufacturing and jobless claims prompted investors to sell risky assets including commodities while the dollar rose on safe-haven buying.
  • Occasional light showers in the Midwest will cause only minor slowdowns in corn and soybean harvest, which has gotten off to a record fast start this year - meteorologist.
  • USDA reported export sales of U.S. soybeans in the latest week at 717,800 tonnes (712,300 for 2012/13), within a range of trade estimates for 550,000 to 750,000 tonnes.
  • USDA reported weekly export sales of U.S. soymeal at 234,500 tonnes (178,000 for 2012/13), above a range of estimates for 150,000 to 200,000 tonnes.
  • USDA reported weekly export sales of U.S. soyoil at 36,300 tonnes, above a range of trade estimates for 10,000 to 20,000.
  • Taiwan's Breakfast Soybean Procurement Association bought 60,000 tonnes of soybeans likely to be sourced from Argentina in a tender for the same volume.
  • South Korea's Major Feedmill Group bought 55,000 tonnes of soybean meal via a tender that closed late on Wednesday.
  • The busiest lock on the Mississippi River system reopened early Thursday after being closed for emergency repairs for nearly five days, resulting in a back-up of commercial shipping traffic and daily losses of up to $2.8 million, the U.S. Army Corps of Engineers said.

FCPO-SINGAPORE, Sept 20 (Reuters) - Malaysian palm oil futures dropped to their lowest this year on Thursday amid rising inventory levels, while data showing a continued contraction in manufacturing in China -- the world's second biggest edible oils buyer -- also weighed on prices.

Futures tumbled to 2,804 ringgit per tonne, the lowest since October 2011, as global oilseed supplies were expected to pick up on expectations for crop yields across a drought-stricken U.S. Midwest to exceed forecasts.

Also weighing on prices was data that showed manufacturing in China contracted for the 11th month in a row in September, indicating the world's second largest economy remains on track for a seventh quarter of slowing growth.

"There is excess palm oil at ports, storage tanks are full and production is doing well, so prices are under pressure," said a Singapore-based trader with a global commodities house. "On top of that, the overall external market is also weak."

At closing, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had lost 1.4 percent to 2,820 ringgit ($918) per tonne.

Total traded volume stood at 41,875 lots of 25 tonnes each, much higher than the usual 25,000 tonnes.

Exports remained strong according to latest cargo surveyor data, but traders said rising inventory levels that could surpass 2.2 million tonnes in September -- which would be the highest level for this year -- was weighing on the market.

"Compared to last month, exports should be better. But the major thing is stocks have to go down for the market to move higher," said a trader with a foreign commodities brokerage in Malaysia.

Cargo surveyor Intertek Testing said export shipments rose almost 15 percent during Sept. 1-20 over the same period a month ago, while another cargo surveyor, Societe Generale de Surveillance, reported an almost 13 percent increase from a month ago.

In a bearish sign for palm oil, Brent crude eased below $108 a barrel on Thursday after the China data weakened sentiment in a market that is already reeling from Saudi Arabia's pledge to keep global crude oil prices low.

In other vegetable oil markets, U.S. soyoil for December delivery dropped 1.3 percent. The most active January 2013 soyoil contract on the Dalian Commodity Exchange closed 0.3 percent lower.