Market Recap: Stocks Gain Despite Financial Concerns
Tech and energy rally; Banks drop on AIG concerns.
Yahoo (YHOO) said this morning it would reject Microsoft's (MSFT) $31-a-share bid. Yahoo's board of directors concluded that the offer "massively undervalues" the company. Shares gained +2.60 to $29.95 with MSFT falling -1.23% to $28.20.
"I gave the Three Step Agenda for Yahoo in responding to Mister Softie," said Professor Jeff Macke, "Step 1: Say 'no' and bluff to save face. Step 2: Accept $33. Step 3: Clean out the desks. Today's Yahoo news works as Step 1."
The news helped give other tech stocks a lift with the high beta names leading the way. Apple (AAPL) shares gained +3.10% to $129.51 and Research In Motion (RIMM) added +4.08% to $93.41. Todd mentioned Apple in this morning's Monday Morning Quarterback.
Energy stocks also rallied with oil trading higher. Although there were numerous catalysts such as Venezuela's President Chavez threatening to cease oil shipments to the U.S, and a shutdown at Valero's (VLO) refinery in Delaware, traders couldn't point to a specific reason for the spike in oil price. Individual gainers included Exxon Mobil (XOM) adding +1.85% to $83.22. Chevron (CVX), which was added to the new Dow Jones Industrial Average, finished +1.48% to $80.43. And Murphy Oil (MUR) added +2.59% to $74.94. Professor Kevin Depew mentioned the new Dow 30 in today's Five Things You Need To Know.
The financial sector didn't participate in the rally, however, because AIG (AIG) frightened buyers away with more subprime scare. Bloomberg reports shares fell the most in 20 years after the company disclosed that its credit derivatives portfolio fell by $4.8 billion in October and November. The losses were four times more than what the company had previously disclosed. AIG shares plunged hitting a new 52-wk low settling -11.7% to $44.74.
Investors were already timid of the sector due to comments by Bank of Italy Governor Mario Draghi that the next 10 days to two weeks were crucial to Europe's banking sector because financial institutions in the region will have their first audited accounts.
"I agree with Mr. Draghi," said Minyan Peter. "While not taking anything away from the quarterly financial statement process, the rubber really meets the road with the annual audit. This morning's "material weakness" from AIG on its credit default swaps process is the first of what I expect to be several major accounting announcements that come from this year's audit process."
For context, read Minyanville's newest professor Rob Roy's article, Default Swaps Intensify Credit Crunch.
Commodities closed the day strong. Crude oil gained +1.86 to 93.63. Gold added +5.20 to 923.60. Silver was higher by ++0.445 to 17.555, and copper finished the day +1.05 to 354.50.
Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.
Some bullish trade or investment ideas: SPX, AAPL, LCC, AMR, NW, GOL, HAS, YHOO, BX, GIL, BRCM, GOOG, AAPL, XHB, FNM Q
Some bearish trade or investment ideas: LEH L
It wasn't all that bad today was it? Be sure to catch Minyanville Professor Quint Tatro on Fast Money. Have a great night!
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