Wall Street Recap: Wednesday, June 13th

by: The Value Investor

Equity markets closed with moderate losses on Thursday after yesterday's gains. The S&P 500 closed the day 0.70% lower at 1,314.88 points. The Dow Jones Industrial Average lost 0.62% while the Nasdaq ended 0.86% lower.


Markets ended on a mixed note in Europe. The Eurostxx 50 ended the day flat, closing with minimal gains of 0.01%. In Germany the DAX-30 closed with modest losses of 0.14%. The Eurocrisis continued to deepen as rating agency Moody's cut the rating for Spain and Cyprus. Despite the fresh downgrade the Spanish IBEX-35 managed to gain 1.42%.

It Italy, the MIB ended down 0.65% as investors speculate that Italy might be the next European country in need for a bailout. Structural low economic growth increases the country's relative debt burden. While total government debt is approaching 2 trillion euro, and stands over 120% of GDP, the country did not witness a housing bubble in recent years. Another positive factor is the relatively low debt position of Italian consumers. The bank of Italy today announced that the country increasingly relies on domestic banks for funding its national debt. The Italian banking sector held a record 295 billion euro in government debt.

Wall Street Opening

Equity markets opened with small losses after the Commerce Department said that retail sales fell by 0.2% in May. The decline in retail sales was partially the result of higher gasoline prices during the beginning of the month. Excluding gasoline sales, retail sales managed to increase a mere 0.1%.

Stocks quickly rebounded as Jamie Dimon held his testimony in Congress. The CEO of JP Morgan which came to explain why the bank had lost $2 billion in a hedging construction, did well in his hearing.

In the last two hours of trading shares started sliding, ending around their lows, as fears about the upcoming elections in Greece on Sunday led to a renewed risk-off sentiment.

Corporate News

JP Morgan (JPM) ended the day 1.6% higher, outperforming the wider market. CEO Jamie Dimon apologized for the bank's $2 billion loss. The trades initiated at the London division of the bank, started as a genuine hedge which would make a lot of money if a credit crisis hit, according to Dimon. Dimon once more used his public appearance to criticize the reforms in the financial sector. The Dodd-Frank rule will create a swarm of uncoordinated regulators, limiting the competitiveness of the financial sector in a global world.

Casey's General Stores (CASY) the operator of convenience stores lost 12.9% in today's trading session. The company reported disappointing fourth quarter results yesterday after the close. Strong sales in its retail stores were offset by lower gasoline margins. Investors were not happy and caused a sell-off in Casey's shares.

FirstSolar (FSLR) the manufacturer and distributor of solar modules fell 7.4% after double-digit percentage gains yesterday. Speculators took their profits and short stock sellers took a renewed chance to place bearish bets on the stock. Furthermore Jefferies Group said that European demand for solar panels has slowed, a statement contradictory to comments from FirstSolar yesterday saying that European demand has unexpectedly picked up.

Dendreon (DNDN) the biotechnology company focused on the discovery, development and commercialization of cancer treatment therapeutics rallied 13.8% in today's session. The company held its annual meeting today and investors were enthusiastic about the prospects of creating the first FDA approved drug which stimulates the immune system to fight cancer.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.