The day after the day after was likely affected by its predecessor, as investors shopped for bargains in the early going following yesterday's post election slide. Wednesday's losses amounted to -2.3% on the SPDR S&P 500 (SPY), -2.1% on the SPDR Dow Jones Industrial Average (DIA) and -2.4% on the PowerShares QQQ (QQQ). Stocks sank, I suppose, as a slew of Republicans shed risk on every fiscal and economic concern raised over the last two years of campaigning. Most of the day's other data was benign, leaving investors to realize that while it's true that nothing has changed, nothing truly has changed… Heading into the close, losses are once again mounting. This report covers the day's key economic trading factors, or as many as we could manage to cover.
EURO STOXX 50: Unch.
Hang Seng: -2.4%
FTSE 100: -0.3%
German DAX: -0.4%
S&P / ASX 200: -0.7%
Greece's Parliament followed its prescribed path, passing new austerity measures despite the protests burning across Athens this week. For as long as Greece can keep European and IMF funding support without falling into complete anarchy, order can be maintained in Europe and in global shares, but it's not the only way.
Despite after seeing economic forecasts for Europe slashed on Wednesday, the European Central Bank (ECB) kept interest rates steady Thursday. However, ECB Chief Mario Draghi raised concerns with his always frank discussion. Draghi said the economies of Europe continue to show very weak activity extending through the fourth quarter. Growth momentum is expected to remain weak next year as well, according to Draghi. In the U.K., the Bank of England (BOE) likewise left rates unchanged. That said, the ECB's most recent plan to purchase the debt of distressed sovereigns in a sterile manner was quite reassuring to markets, and was reiterated and reassured today.
Just a couple days after the U.S. democratic process determined President Obama would remain in office for another four years, the communists in China simply reshuffled their leadership unchallenged. Needless to say, markets were on edge, especially given the military exercises taking place between U.S. and Japanese naval forces in China's backyard. Of course, it wasn't either of these two important factors that drove Asian shares downward Thursday, but instead it was the lead of U.S. markets the day before.
U.S. Economic Data
New International Trade data was reported Thursday morning for the month of September. Economists expected the trade gap to expand to $45.4 billion, from $43.8 billion (revised from $44.2 billion) in August. Instead, it narrowed to $41.5 billion, as export growth outpaced imports. The best news is that each grew through the month, as close inspection of the trends shows that both export and import growth was near stalling on a year-to-year basis. This report provides some solid good news to the contrary.
Weekly Initial Jobless Claims for the week ending November 3 was expected to show significant disruption caused by Hurricane Sandy. Claims declined by 8,000 last week, to 355K, which was far short of the economists' consensus for 370K. However, the report showed the four-week moving average for claims increased by 3,250 to 370,500, probably due to the lapping of that suspect report of several weeks ago.
The Bloomberg Consumer Comfort Index improved slightly week-to-week, to -34.4 from -34.7. I expect consumer confidence to deteriorate following the re-election of President Obama, because of my view that confidence had improved due to some hope for a change. The shares of retailers have traded tumultuously since the election, and are down again this afternoon. Wal-Mart (WMT) for one is off 0.5% at this hour (at the time of writing).
The Energy Information Administration (EIA) reported that natural gas inventory in storage increased by 21 Bcf in the period ending November 2, to a level 244 Bcf more than the five-year average for this time of year. Natural gas stocks have been taking a hit on the Obama victory and the harder case against fracking and fossil fuel (over alternative energy) development that is a likely result. Chesapeake Energy (CHK) shares are down another 1.7% late Thursday.
The Day's Most Actives
DUSA Pharmaceuticals (DUSA) +38%
Catalyst Pharmaceutical (CPRX) -68%
Rosetta Stone (RST) +22%
BioCryst Pharmaceuticals (BCRX) -40%
FalconStor Software (FALC) +24%
Progenics (PGNX) -25%
Exetor Resource (XRA) +23%
Cobra Electronics (COBR) -26%
InterMune (ITMN) +17%
Kingtone Wirelessinfo (KONE) -23%
McDonalds (MCD) posted its first global monthly sales decline in nine years. Same-store sales fell 1.8% in October, and the company's shares are down 1.7% in late trading Thursday.
Companies meeting with analysts and investors today included Kellogg (K), 3M (MMM), Tenneco (TEN) and Netgear (NTGR). The earnings wire highlighted CareFusion (CFN), Dean Foods (DF), Duke Energy (DUK), FirstEnergy (FE), International Game Technology (IGT), Kohl's (KSS), Microchip Technology (MCHP), Molycorp (MCP), Nordstrom (JWN), NVIDIA ([NVDA), PPL Corp. (PPL), Vulcan Materials ([VMC), Walt Disney (DIS), Windstream (WIN), and more.