Citi and Bank of America Lead Market Lower

[Excerpted from Bill Cara's Daily Report]

After reaching the session high late in the day, the US equity market suddenly slid downward to a closing loss. Financial names are also in the spotlight Wednesday with reports indicating that regulators have told Citigroup (C) and Bank of America (BAC) that they may need to raise more capital based on early results of the stress test. Both banks have objected to these findings and are expected to respond, and this has taken the Financial sector sharply lower Wednesday.

The Swine Flu pandemic continues to be the root of concern even though there is only speculation at this point with respect to potential economic impact. International trade could be greatly affected if fears continue to escalate and that could hamper a turnaround in the global economy.

At Tuesday’s close, the DJIA (8,016.95 -8.05 -0.10%), S&P 500 (855.16 -2.35 -0.27%), and NASDAQ Composite (1,673.81 -5.60 -0.33%) were weak across the board for the second day this week.

The Toronto Composite (9,348.03 -46.77 -0.50%) and the Toronto Venture Board (993.10 -9.88 -0.99%) also suffered a second day of losses.

Earlier Wednesday, however, trading in the major international equity markets showed higher prices in the East (except Australia) and Europe: Japan’s Nikkei 225 index (closed), India (11,403.3 +3.65%), Australia’s All Ordinaries (3,661.9 -0.27%), Hong Kong (14,957.0 +2.76%), and Shanghai (2,468.2 +2.78%).

In Europe, in the early afternoon, prices were strong, up over +1%: France (3,087.3 7:59AM ET +1.19%), Germany (4,645.9 7:44AM ET +0.84%) and UK (4,154.6 7:44AM +1.42%).

In NY Tuesday, the strongest sector was Consumer Staples (XLP +0.5%), while Financials (XLF -3.1%) were weakest. Banks ($BKX -2.9%) led the Financials south due to concerns over stress test results and implications for share dilution and possible management changes to come.

Goldminers were also weak ($XAU -3.4%), however that may soon move in reverse as the Euro soared (131.48 +1.21 +0.93%0 and the $USD fell (85.19 -0.45 -0.52%). Earlier today the Euro futures were strong also (1.3268 +0.93% 07:52am ET) and gold and silver were catching a bid. Tuesday, the Yen (103.72 +0.34 +0.33%), Pound (146.35 +0.04 +0.03%) and Cdn Loonie (81.97 +0.09 +0.11%) also lifted against the US Dollar.

For the Cara 100 companies, the winners were led by optionsXpress (OXPS +5.5%) based on strong order flow in March. The options market is booming. With a new product (OnDose) in the news, Myriad Genetics (MYGN +4.1%) finally saw some let-up in the selling, but mostly that was an early morning gain with selling continuing through the session. The worst of the losers were Whirlpool (WHR -6.0%) and Silver Wheaton (SLW -5.2%).

US Treasury yields lifted and bond prices pulled back. Traders are getting conscious of the issuance of debt to come to help capitalize the big banks and also support the US budget deficit. The 30-year (3.955 +1.17 +3.05%), 10-year (3.002 +.0.81 +2.77%), and 5-year (1.927 +0.80 +4.33%) yields lifted to the 4, 3 and 2 handles, and the long bond ($USB 123.81 -1.22 -0.97%) sank below the important 124 support. The T-Bill yield stayed at 13½ basis points.

Crude Oil ($WTIC 50.550 +1.27% 08:02am ET) was recovering Wednesday morning as capital started flowing into commodities. Oil yesterday had closed down a bit (49.92 -0.22 -0.44%).

$GOLD futures, which had been up +$29.90/oz in the last three days last week, and then knocked down (906.90 -6.10 -0.67%) on Monday, suffered an even bigger loss yesterday (893.40 -13.50 -1.49%). But, Wednesday morning the price seems to be lifting a bit, and may even rally if the $USD remains soft.

Spot (cash) market prices at about 8am ET were: Gold (896.60 +3.95 +0.44% 08:01am ET), Palladium (215.0 +2.0 +0.94% 07:58am ET), Platinum (1089 -7 -0.64% 07:58am ET), and Silver (12.560 +0.070 +0.56% 08:01am ET). The price held yesterday on technical support levels.

Stock futures were stronger this morning (8045 +78 +0.98% 07:52am ET). Twenty minutes later, it was up to +88.

Comments

[dok tari:]

Look up the word pandemic you idiot. Where did you get your journalism degree....wal mart.

Apr 29 10:24 AM

[User 404189:]

THIS IS OLD NEWS ABOUT YESTERDAY FINANCIAL SLIDE. THE SERVICES THAT KEEP POSTING THESE ARTICLES TO DRIVE DOWN THE STOCK PRICES OUGHT TO BE SENT TO GITMO. THEY ARE THE REAL CRIMINALS.

Apr 29 10:26 AM