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Bernanke Speech Causes Hiccup, Then Rally

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

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MINYANVILLE ORIGINAL The market maintained a slightly bearish bent today after two days of recovering from oversold conditions. S&P futures opened the day slightly lower and hovered around the breakeven point for much of the day. US housing starts rose to an annual rate of 894,000, up from 863,000 last month and well ahead of estimates of 840,000. The release showed solid growth in single family housing and new homes being built.

The highlight of the day was Federal Reserve Chairman Ben Bernanke's speech to the Econ Club of New York in the early afternoon. Because there was no specific mention of further easing actions, as there had been in past speeches to Econ Clubs, the market reacted negatively to the news, temporarily breaching the 200-day moving average. However, this mark was reclaimed shortly thereafter.

US Treasuries sold off heavier than normal today after remaining relatively quiet for the prior two days. While the S&P had risen 3.25% from its intraday low on Friday, the 10-year Treasury yield had only risen 6 basis points, a small move considering the equity rally. Today, however, the 10-year yield rose 5 basis points to finish at 1.66%.

In an early morning earnings report, Hewlett-Packard (NYSE:HPQ) admitted that its acquisition of enterprise software producer Autonomy had involved serious accounting fraud on the acquired company's part. This fraud cost HP $8.8 billion, including up to $20.4 billion in loss of intangible assets. With the admission, the responsibilities and oversight of CEO Meg Whitman and the prior CEO, Leo Apotheker, were questioned.

Tomorrow's Financial Outlook

While the market is open for a full day tomorrow, it is likely to be a quiet one as the Thanksgiving holiday approaches. Because the exchanges will be closed on Thursday, the weekly initial jobless claims will be released tomorrow morning instead of the normal release on Thursday. Because of disruptions due to Hurricane Sandy, economists are expecting 410,000 claims, still well above the 383,800 4-week moving average, but down from last week's 439,000. Also in economic data, the University of Michigan Consumer Confidence Index will be released tomorrow rather than on Friday as usual. The first estimate of the index earlier this month saw a jump to 84.9 from 82.6.

Global economic data will be on the quieter side. The Bank of England will release the minutes from its monthly monetary policy meeting and the UK will release public sector net borrowing information.

In earnings, Deere (NYSE:DE) will report before market open.

Twitter: @Minyanville

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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.

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