U.S. Stock Rally Tripped Up by European Financial Woes; December Factory Orders In Focus

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The U.S. equity markets' assault on new multi-year highs has been put on hold after more Euro troubles emerged to scare investors and traders over the weekend. Also, today's U.S. December factory production data missed analyst expectations. Up until today, U.S. stock indexes had steadily surged, with the S&P index getting to near its all-time intraday high of 1,576.09. The Dow had soared above 14,000 points, its highest level since October 2007.

Markets appear to be reacting mainly to disturbing headlines out of Europe. In Spain, Prime Minister Mariano Rajoy is facing serious corruption allegations. Over the weekend both Rajoy and members of his political party were accused of accepting secret payments.

Meanwhile, in Italy, regulators are investigating derivative deals conducted by several financial concerns, including the world's oldest bank, Banca Monte dei Pasci di Siena, causing a precipitous slide in their stock prices, and triggering trading halts in several major financial issues.

Adding to the selling pressure, U.S. December factory orders rose only 1.8%, below the 2.4% increase expected by the Briefing.com consensus. The Euro-turmoil has led to a rally in the U.S. dollar, exacerbating the negative market tone, putting downward pressure on the open market price of gold as well.

European stocks were slumping on the bad news out of Spain and Italy, with all of the major bourses in the region suffering losses of 1.5% or greater. Asian markets traded in mixed fashion, posting modest gains or slight losses.

Commodity prices were mixed, with oil's ascent toward the $100 per barrel mark stymied, down $1.20 to $96.57 a barrel. Natural gas bucked the tide, rising $0.026 to $3.37 per million BTUs.

After slumping more than $10 per ounce in early trade, gold futures reversed course, adding $1.80 per ounce to $1,672.40, while silver was down $0.178 to $31.78 per ounce. Copper was down $0.045 to $3.78.

Here's where the markets stood at mid-day:

NYSE Composite down 94.76 (-1.06%) to 8,870.36

Dow Jones Industrial Average down 116 (-0.83%) to 13,893

S&P 500 down 13 (-0.87%) to 1,500

Nasdaq Composite Index down 35 (-1.10%) to 3,144

GLOBAL SENTIMENT

Nikkei 225 Index up 0.61%

Hang Seng Index down 0.16%

Shanghai China Composite Index up 0.37%

FTSE 100 Index down 1.53%

DAX down 2.25%

CAC 40 down 2.82%

NYSE SECTOR INDICES

NYSE Energy Sector Index (^NYE) down 190.28 (-1.41%) at 13,301.49

NYSE Financial Sector Index (^NYK) down 69.25 (-1.27%) to 5,383.42

NYSE Healthcare Sector Index (^NYP) down 71.41 (-0.84%) to 8,447.91

UPSIDE MOVERS:

(+) FTR (+1%) Weekend Barron's story said the telecom company, which sports a large dividend but troubled business model, could lure investors shifting into stocks from bonds, according to Marketwatch.com.

(+) PC (+11.5%) Company posted surprise Q3 net profit of 61 bln yen ($662 mln), versus analyst estimates for a loss of 17 bln yen. Sales fell 8% from the previous-year period to 1.8 trillion yen and also announced Friday that it is dissolving its alliance with Minebea Co.

(+) RMTI (+1%, but well off day highs) Shares hold on to gains after surging 25% pre-market when the company reported that its PRIME clinical study of Soluble Ferric Pyrophosphate the company's investigational iron-delivery drug currently in Phase 3 clinical studies for the treatment of iron deficiency in hemodialysis patients, has achieved its primary endpoint.

DOWNSIDE MOVERS:

(-) TS (-4.6%, but still at high end of 52 week range) Downgraded to Neutral from Buy by analysts at UBS.

(-) MCY (-5.9%)Shares fall to lower end of their 52-week range of $36.01 - $46.04, after the company said it lost $0.32 per share in Q4, net. On an operating basis, it lost $0.17 per share. Both are down from profits a year ago.

(-) HLF(- 4.5%) The New York Post reported the company is the subject of a Federal Trade Commission inquiry.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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