Hello Newton! The Law of Gravity Catches Up With Apple

By Minyanville Staff  DEC 05, 2012 5:22 PM

Today's financial recap and tomorrow's financial outlook.



The main story today was the big rally in Chinese stocks, which have been beaten down this year. As the Chinese economy has slowed, Chinese stocks have fallen in sympathy. Today, however, the Chinese government announced that it was lifting the ban on insurance companies' investments in commercial lenders (read: banks), theoretically increasing their lending capacity. The beaten down Shanghai Composite Index rose 2.87% after falling 7.62% this year.

In US economic data, the ADP private payrolls report showed a monthly increase of 118,000 from last month, a bit lower than the 125,000 estimate and down from a gain of 157,000 last month. Also, the ISM non-manufacturing index rose to 54.7 from last month's 54.2, higher than the 53.5 estimated. This is significant because the ISM's manufacturing index fell to 49.5 from 51.7 earlier in the week. Lastly, US factory orders showed a monthly increase of 0.8%, ahead of estimates of an unchanged month, and down from 4.5% the prior month.

The UK Chancellor noted in his annual Autumn Statement that the UK's economy would continue to slump for an additional year. The UK government is now forecast to run a budget deficit into 2016 rather than the previously forecast 2013. Because of this, UK growth was lowered to 1.2% from the previous estimate of 2% for the coming year.

Apple (NASDAQ:AAPL) tumbled more than 5.5% today. One news story that contributed to the fall was a margin hike at COR Clearing from 30% to 60%, which was likely due to the increased volatility over the past month. Though this is only one clearing firm's actions, this likely shook out some of the weak hands that bought near $580.

Freeport-McMoRan (NYSE:FCX), the world's largest copper producer, bought Plains Exploration (NYSE:PXP) and McMoRan Exploration (NYSE:MMR) for $9 billion in a cash and stock deal. The stock fell more than 15% on the fear that profit margins would suffer as the company moved away from a solely metals business into oil and gas.

Tomorrow's Financial Outlook

Two additional jobs statistics will be released tomorrow. The weekly initial jobless claims, which have continued to trend down for three weeks following the disruptions from Hurricane Sandy, will be released in the morning. Earlier in the morning, the Challenger Job Cuts, or announced corporate layoffs, will be released.

Globally, Australia and Switzerland will release employment figures and the eurozone will release its first estimate of 3Q GDP. The latter is very important as eurozone retail sales released today showed a sharp month-to-month drop.

In earnings news, Smithfield Foods (NYSE:SFD), Smith & Wesson (NYSE:SWHC), and Palo Alto Networks (NASDAQ:PANW) will report.

Twitter: @Minyanville

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.