Equities Update: Finish in Red Barely Nicks 7%-12% September Gains

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Includes: AIG.PA, DIA, EA, IFNNY, PRU, QCOM, QQQ, SPY, UBS, WMT
by: Midnight Trader

Sept. 30, 2010 --

  • NYSE down 14.18 (-0.3%) to 7,280.92
  • DJIA down 47.5 (-0.4%) to 10,788
  • S&P 500 down 3.56 (-0.3%) to 1,141
  • Nasdaq down 7.9 (-0.3%) to 2,369

GLOBAL SENTIMENT

  • Hang Seng down 0.09%
  • Nikkei down 1.99%
  • FTSE down 0.37%

UPSIDE MOVERS

(+) AIG selling Japanese units, inks bailout exit plan with Treasury.

(+) IRE gains as Irish central bank says further funding need unlikely.

(+) CSIQ upgraded.

(+) HYC rejects $5.25 per share offer from VeriFone (NYSE:PAY).

(+) RAD gains after modest same-store sales drop.

(+) DYAX gets upfront payment for Japan deal.

(+) NOK says N8 ships.

DOWNSIDE MOVERS

(-) AIB reportedly needs more government funds

(-) MO downgraded.

(-) FUQI gets delisting notice.

MARKET DIRECTION

Stocks had muscled their way back to the even line before slipping back into the red late, as a volatile session ends the best September performance for the DJIA since the late 1930s and for the broader S&P 500 since the 1950s.

The blue-chip DJIA ends September up 7.7%; the S&P 500 is up 8.8% for the month; the Nasdaq jumps 12% for the month.

Stocks began the day up firmly, with Wall Street energized by a report showing a drop in jobless claims and better-than-expected revision to Q2 GDP data, which has shown the economy slowed dramatically from the first three months of the year. A third report showed a rise in a measure of Chicago-area business sentiment.

But investors opted to pocket some of the day's strong performance, content with a robust September bounce. Big tech stocks like Dell (NASDAQ:DELL), Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG), all fell around 1%, as they've been among the best performers of late.

European stocks improved with U.S. averages but concerns from Europe initially looked likely to hold back stock trading. Spain's credit rating was cut by another agency and Ireland announced plans for a sweeping bank bailout program. Some of the news had been priced in, analysts said.

On the economic front, Q2 GDP in the U.S. slowed to an upwardly revised 1.7% compared to 3.7% in the first quarter, slightly better than Q2's first reading of 1.6% and the Street's estimate for no change in the updated report. At the same time, weekly jobless claims fell 16,000 to a still-elevated 453,000 in the latest week.

Also, Germany's labor market continued to strengthen in September, with the seasonally-adjusted number of unemployed workers declining by a steeper-than-expected 40,000, according to the Federal Labor Office.

Commodities, which have also performed strongly this month, finished trading in mixed fashion. Gold futures backed off a steady week-long advance while crude surged in commodities trading.

Crude oil for November delivery closed up 2.7%, or $2.11, to settle at $79.97 a barrel. In other energy futures, heating oil was up $0.05 to $2.24 a gallon while natural gas fell 2.55%, to $3.86 per million British thermal units.

Meanwhile, gold bulls took a breather as bullion futures closed lower for the day. Gold for December delivery closed down $0.70 to $1,309.60 an ounce. In other metal futures, silver was down $0.13 to $21.82 a troy ounce while copper fell $0.01 to $3.65 a pound.

In company-specific updates, American International Group Inc (NYSE:AIG) was higher after it said it will sell two of its Japanese life insurance units to Prudential Financial Inc (NYSE:PRU) for $4.8 billion. The insurance group is also moving ahead with plans to pay back bailout money it received from the government in 2008. Specifically, Treasury will convert about $49 billion in AIG preferred shares into AIG common stock, with Treasury receiving about 1.655 billion shares of common stock, or 92% of total common stock.

Wal-Mart Stores (NYSE:WMT) is planning to increase its workforce by 36% over the next five years, reports Bloomberg, citing a human resources executive with the retail giant. The new employees will be hired mostly outside of the United States, said Susan Chambers, executive vice president for human resources, as quoted by Bloomberg.

Qualcomm Inc (NASDAQ:QCOM) was up on speculation that it will get a contract from Apple Inc (AAPL) to provide chips for the second-generation iPads and fifth generation iPhones. Apple currently uses chips from Infineon Technologies AG (OTCQX:IFNNY), but some industry analysts argue that Apple may want to switch to Qualcomm as it begins to use dual-switch baseband chips that would make its products compatible with CDMA networks used by Sprint and Verizon.

Electronic Arts Inc (ERTS) was up after the video game maker reported strong pre-release orders of its upcoming game "Medal of Honor." The latest version of the first-person shooter franchise will be set in Afghanistan. Players are warriors under the National Command Authority and take on missions no one else can handle.

Google's (GOOG) YouTube unit inked a deal with the French music-rights collection agency to pay artists for use of their works, Bloomberg reported. Under the deal, YouTube will pay content creators represented by Sacem, a Paris-based organization that collect royalties on behalf of more than 100,00 members, the report said.

UBS AG (NYSE:UBS) will resume dividend payments in 2013 or 2014, depending on new Swiss capital requirements due to be released in four days, reported Bloomberg, citing the firm's chief financial officer. The Swiss commission on issues related to too-big-to-fail institutions will likely announce stricter capital requirements for UBS, the report said.