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MIDDAY UPDATE: U.S. Equities Battle Back from Morning Downdraft: Eurozone Debt Fears Reemerge

By: MT Newswires
Posted: 6/11/2013 12:10:00 PM
Referenced Stocks: BCS;GS;JPM;SLXP

After opening markedly lower at mid-day, U.S. stocks have managed to pare most of their sharp losses from earlier in the morning. At one point the Dow reversed course from a triple-digit loss, entering slightly positive territory, before pulling back slightly in recent dealings. Investors were rattled by the Bank of Japan's decision to hold its monetary policy steady. Meanwhile, a German constitutional court began to consider the legality of the European Central Bank's plan to buy the government bonds of struggling Eurozone countries.

Asian markets tumbled after the Bank of Japan surprised investors with its decision to keep its monetary policy unchanged. Yesterday there was speculation that the bank would embark on further stimulus measures. The decision to not do so also sent the yen up about 2% compared to the U.S. dollar.

Stateside, before the open, the National Federation of Independent Business reported that small-business sentiment rose in May to the highest level in a year. The index rose 2.3 points to 94.4 in May, its second-highest level since the recession.

Two other domestic data points were reported after the opening bell--neither of which had any significant market-moving impact. April job openings dipped to 3.76 million, down from 3.88 million in March, while April wholesale inventories weighed in at +0.2%, in line with the consensus estimate.

European bourses were also weak at mid-day, responding to both the Bank of Japan news, and the beginning of a constitutional court hearing in Germany to consider the legality of the ECB's bond buying program. The hearing is focused on the legitimacy of the program, which the Bundesbank and several politicians say undermines central bank independence and infringes the prohibition of monetary financing.

European central bank President Mario Draghi also told German television on Monday that debt purchases will only be used to target prices that are out of line with fundamentals, Bloomberg reports. Some see that as another sign that easy monetary policy may be at a standstill for now.

Commodities lower at midday, with crude oil down $0.87 per barrel at $94.13, while natural gas continued its recent swoon, down $0.026 to $3.774 per million BTUs.

Gold was down $9.90 per ounce at $1,376.10, while silver was down $0.34 at $21.585. Copper was down $0.0535 at $3.1875.

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

NYSE Composite down 46.69 (-0.50%) to 9,311.30

Dow Jones Industrial Average down 14.39 (-0.09%) to 15,224.20

S&P 500 down 5.22 (-0.32%) to 1,637.59

Nasdaq Composite Index down 13.00 (-0.37%) to 3,460.77

GLOBAL SENTIMENT

Nikkei 225 Index down 1.45%.

Hang Seng Index down 1.20%.

Shanghai China Composite Index down 1.39%.

FTSE 100 down 1.38%.

DAX down 1.42%.

CAC 40 down 1.61%.

NYSE SECTOR INDICES

NYSE Energy Sector Index (^NYE) down 83.27 (-0.63%) at 13,220.89

NYSE Financial Sector Index (^NYK) down 48.41 (-0.83%) to 5,768.14

NYSE Healthcare Sector Index (^NYP) down 16.56 (-0.18%) to 9,296.53

UPSIDE MOVERS:

(+) DMND (+7.8%) Packaged food company reported late Monday that Q3 earnings of $0.05 per share, versus the Capital IQ consensus of $0.17 loss per share. Revenues were $184.9 million, versus the analyst estimate of $175.1 million. The company said it expects net sales are expected to decline more in the back half of the fiscal year than the first half as compared to the prior year, with Q4 sales anticipated to decline more than in Q3.

(+) TTWO (+3.5%) According to chatter on Twitter the company has canceled its investor meetings scheduled for today. According to investor relations, the move was not related to products or performance.

(+) PGNX (+25.4%) Company reported that it and partner Salix Pharmaceuticals ( SLXP ) announced that the FDA Advisory Committee is to review Salix's Supplemental New Drug Application (sNDA) for Relistor for subcutaneous injection, for opioid-induced constipation in patients with chronic pain.

DOWNSIDE MOVERS:

(-) XTXI (-0.30%) Company announced that it has priced its underwritten public offering of 7.2 million units at $20.33 per common unit. The offering is expected to close on or about June 14.

(-) BFAM (-2.7%) Company said Tuesday that Goldman, Sachs & Co. ( GS ), J.P. Morgan Securities LLC ( JPM ), and Barclays Capital Inc. ( BCS ), the lead book-running managers in the company's recent initial public offering of 11.6 million shares of the company's common stock, are waiving a lock-up restriction with respect to 103,000 shares of the company's common stock held by certain officers or directors of the company. The waiver will take effect on June 12, 2013, and the shares may be sold on or after such date.

(-) ENZ (- 5.3%) Company announced it has arranged an $8 million senior secured revolving line of credit with Healthcare Finance Group. Enzo said in its statement that the credit line may be increased to $12 million, with the credit line being used for working capital and growth purposes.