Equities Update: Stocks Finish Lower as Inflation Signs Emerge

by: Midnight Trader

4:23 PM, Dec 15, 2009 --

  • NYSE down 45 (0.6%) to 7,141.44.
  • DJIA down 49 (0.5%) to 10,452.
  • S&P 500 down 6 (0.6%)to 1,107.
  • Nasdaq down 11 (0.5%) to 2,201.


  • Hang Seng down 1.23%
  • Nikkei down 0.22%
  • FTSE down 0.44%


(+) WFC will pay back TARP, gets at least two analyst upgrades.

(+) NEXM closes acquisition of Bio-Quant.

(+) ARRY partners with Amgen on Type 2 diabetes.

(+) CHTP jumps as FDA OKs change to primary endpoint in Droxidopa study.

(+) LIMS continues sharp evening upside that followed company sale announcment.


(-) BBY lower despite earnings beat, mostly favorable guidance.

(-) RTK issues Q3 results below year-ago period.


Stocks end near the day's lows. Financials were the leaders on the downside after reports showed rising credit-card charge-offs. Stocks fell throughout the day after data showed rising wholesale prices and deteriorating manufacturing conditions. Energy share gains limited the broader market's downside. Big oil producers were helped by a rally in crude.

Crude oil snapped a string of nine losing sessions, closing above $70 a barrel after OPEC raised its production targets for 2010, citing increased demand.

Wholesale prices rose a larger-than-expected 1.8% in November after seasonal adjustments, with energy prices accounting for about three-fourths of the increase, MarketWatch reported. The producer price index has risen 2.4% in the past year, the government said. This is the first rise since November 2008.

In another government report, industrial production rose a better-than-expected 0.8% in November, a sign that businesses and consumers are spending more, clearing inventories and spurring factories to produce more goods. Economists expected overall industrial production to grow 0.5% last month. Industrial capacity in use rose to 71.3% in November, from 70.6% in October, a sign of possible recovery.

However, that was weighed against a report showing factories in the New York region expanded in December less than anticipated, indicating manufacturing will provide less of a thrust for the economy in coming months.

Meanwhile, the Fed began a two-day meeting that will conclude with a statement around 2:15 p.m. ET Wednesday. No change to record-low interest rates is expected and most analysts are guessing the Fed will be vague about the course for monetary policy heading into 2010. Members will both want flexibility to adjust to a still vulnerable recovery and are wary that currency and stock markets could react sharply to talk of a possible interest rate increase.

The dollar was stronger against the euro, as investor perception of U.S. bank health improved and Europe remained of concern. Today, further worries about Austrian institutions as well as Greek banks contributed to the bearish tone for the shared currency.

Banking shares and related funds remain active, trading mixed. Wells Fargo (NYSE:WFC) gained but pared its early gain after it won approval to repay $25 billion in government assistance. Deutsche Bank upped Wells Fargo to buy from hold on the move as well as expectations for a strong fourth quarter. KBW also upgraded the issue.

Fannie Mae (FNM) and Freddie Mac (FRE) were higher on a Bloomberg report saying the U.S. Federal Housing Finance Agency may ask the U.S Treasury before the end of the year for an increase in the $400 billion lifeline provided to the two companies.

Array BioPharma (NASDAQ:ARRY) gained on news it entered into a partnership with Amgen (NASDAQ:AMGN) that allows AMGN worldwide rights to ARRY's Type 2 diabetes treatment, currently undergoing an early-stage study. ARRY will receive an upfront payment of $60 million and have the option to co-promote in the U.S. while AMGN will pay for future clinical trials.

JA Solar (NASDAQ:JASO) was higher after announcing a $75 million ADR buyback. The company, late Monday, raised its shipments guidance.

Best Buy (NYSE:BBY) declined after it reports Q3 revs of $12.02 bln, better than the analyst mean of $11.98 bln on Thomson Reuters. Adjusted EPS was $0.53 per share, ahead of expectations of $0.43 per share.

For FY 2010, the company forecast enterprise revenue of $49 to $49.5 bln. Non-GAAP EPS are seen at $3.00 to $3.15 per share. The Street is at $48.5 bln in revs and earnings of $2.96 per share.

Rentech (NYSEMKT:RTK) lost ground after reporting late Monday that Q4 sales fell to $24.7 million from a year ago. Its net loss widened to $0.03 per share from a year earlier.

It also said it has corrected its accounting treatment of forward gas purchase
contracts and inventory valuation. This correction required restatements of
the annual and quarterly consolidated financial statements for fiscal year
2008, and for the first three quarters of fiscal year 2009.