2012 Stock Predictions and Outlook
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Dow Jones Industrial Average lost 19 points, or 0.14%, to close at 13,326, closing more than 100 points below a high for the day of 13,428. The blue-chip index has now fallen in four straight sessions. Breadth within the Dow was negative with losers ahead of winners, 18 to 12. The biggest decliners among the blue chips were AT&T ( T), Home Depot ( HD), Verizon ( VZ), and Walt Disney ( DIS). Dow gainers included Bank of America ( BAC), JPMorgan Chase ( JPM), and UnitedHealth ( UNH). The big banks got a lift after Bloomberg reported the European Union is considering delaying the deadline for implementing more stringent Basel bank-capital rules. In addition, The Wall Street Journal reported Douglas Braunstein, JPMorgan's chief financial officer, may step down in the next two quarters. JPMorgan reports its fiscal third-quarter results before Friday's opening bell. Boeing ( BA) shares rose a little less than 1% following news that Alaska Air ( ALK) has agreed to buy 50 Boeing 737 aircraft with the ability to purchase an additional 62 aircraft through options and purchase rights. Shares of Walt Disney dropped 1.7%. Stan Lee Media has filed a lawsuit against the entertainment and media giant over the rights to Marvel characters such as Spider-Man and Iron Man. The S&P 500 rose less than a point, 0.02%, to close at 1433, breaking its four-day losing streak. The Nasdaq fell more than 2 points, or 0.08%, to settle at 3049. Most sectors finished in the green, led by energy, consumer cyclicals and basic materials. Technology, services and conglomerates all closed lower. Advancers outnumbered decliners by a ratio of 1.9-to-1 on the New York Stock Exchange and 1.5-to-1 on the Nasdaq. Volume totaled 3.66 billion on the Big Board and 1.59 billion on the Nasdaq.
Standard & Poor's two-notch downgrade of Spain's debt rating proved a positive, fostering investor optimism that the move may help speed up Spain's timeline on requesting financial aid. Moody's, which already has placed Spain on watch to be downgraded to junk status, likely will go next, according to Stephen Guilfoyle, U.S. economist at Meridian Equity Partners. "The perception ... is that this or these downgrades make it that much easier for Spain to ask for the help they need when their huge debt bill comes due in about 10 days," said Guilfoyle. "By Spain asking for help, the ESM can then purchase Spanish sovereign debt in the primary market, and the ECB can then activate their OMT program to buy said debt in the secondary market. The provided liquidity will take the pressure off of the throat of Spain, at least for now, kicking that proverbial can a much further ways down that road." Wall Street was greeted by another strong employment datapoint as the Labor Department said initial jobless claims in the week ended Oct. 6 fell 30,000 to 339,000 from the previous week's upwardly revised 369,000. The four-week moving average was 364,000, a decrease of 11,500 from the prior week's average of 375,500. Continuing claims for the week ended Sept. 29 were 3.273 million, a decrease of 15,000 from the preceding week's upwardly revised 3.288 million. Economists, on average, predicted initial jobless claims of 370,000 and continuing claims of 3.275 million. John Ryding and Conrad DeQuadros, the founders of research firm RDQ Economics, cautioned against reading too much into the drop in initial jobless claims. They "can be difficult to seasonally adjust in the first week of a quarter and the Labor Department noted that most of the decline in initial claims was due to filings in one state ... it will likely take a couple of weeks before we can assess the underlying level of claims." The Census Bureau reported that the U.S. trade deficit widened to $44.22 billion in August from $42.47 billion in July. Economists were expecting a U.S. trade deficit of $44 billion.
The Bureau of Labor Statistics said that U.S. import prices rose 1.1% in September versus 1.1% in August, and that export prices increased 0.8% in September compared with 1% in August. The FTSE 100 in London closed up 0.92% and the DAX in Germany finished up 1.06% Thursday as Italian bond yields eased following a warmer reception of an auction of three-year government bonds. The Nikkei Average in Tokyo closed down 0.58% and the Hang Seng in Hong Kong finished up 0.38%. November crude oil futures rose 82 cents to close at $92.07 a barrel. December gold futures settled up $5.50 at $1,770.60 an ounce. The benchmark 10-year Treasury was up 1/32, diluting the yield to 1.674%. The dollar was down 0.40%, according to the dollar index. In corporate news, Sprint ( S) confirmed that it is in talks with Softbank on a "potential substantial investment by Softbank" and that it does not intend to comment further "unless and until an agreement is reached." Earlier reports had said that Japan's Softbank is in talks to buy Sprint for more than 1.5 trillion yen ($19 billion). Sprint shares surged 14.3%. Precious metals royalty company Royal Gold ( RGLD) said it's planning an offering of 5.25 million shares of common stock. Shares fell 4.1%. Safeway ( SWY) shares were down 3.6% after the food and drug retailer said that its third-quarter profit margin declined amid expenses tied to the launch of its customer loyalty program. Earnings came in at 45 cents a share, beating the average analyst estimate of 43 cents a share. Revenues fell to $10.05 billion, falling short of the expected $10.24 billion, from $10.06 billion following the company's sale of the Genuardi's chain and negative currency effects.
--Written by Andrea Tse and Joe Deaux in New York. >To contact the writer of this article, click here: Andrea Tse. Follow @Commodity_Bull