Market Recap: Fannie, MBIA, Stocks Shake Off The Bad News
Stocks shook off bad news from Fannie Mae and MBIA. Investors focused on strong labor data. Dow gains almost 200 points.
Stocks fought off news from the financial sector. Last night after the closing bell Fannie Mae (FNM) said it planned to cut its dividend to 35 cents per share from 50 cents while raising $7 bln through a sale of preferred stock. The company also said in its sales pitch to investors that it was expecting more credit losses from bad loans in 2008 and that its mortgage investment portfolio fell approximately 1% in November compared to the prior month's return. Nonetheless, investors took the news in positive stride as the stock gained +2.70%.
Around midday, financials overcame another struggle as Moody's released a statement saying it viewed a capital shortfall at MBIA (MBI) as "somewhat likely." MBIA shares plunged to a new low, closing -16%, yet financials overcame the battle. Lehman Brothers (LEH) added +0.67%, Morgan Stanley (MS) added +0.20%, and Goldman Sachs (GS) added +1.41%. Bear Stearns (BSC) was the lone significant laggard, closing -1.08%. Professor Mish Shedlock first mentioned MBIA in his article last week Will Ambac And MBIA Survive? Also read Toddo's Answers I Really Wanna Know as he asks "Can the tape rally in the face of the credit crunch?"
In economic data, the Labor Department reported a gain of 6.3% while unit labor costs fell more than expected. The rise in worker productivity was the most since 2003.
ISM Services index fell to 54.1 from 55.8 the prior month. The figure was the lowest level since March; however readings above 50 signal growth. Factory Orders rose in October by 0.5%, reflecting a jump in commodity costs that is contributing to a slowdown in growth. The increase was lead by a 1.3% rise in shipments of non-durable goods. Also ADP figures helped give stocks a lift this morning as well. Companies nationwide added 189,000 jobs, almost three times the consensus estimate. October numbers were also revised up to 119k from 106k. Get more insight into these numbers in Professor Depew's Five Things You Need To Know.
In commodities, crude oil fell -1.03 to 87.29 a barrel. Gold futures fell -3.9 to 803.70 as well as Silver, down -0.005 to 14.46. Copper gained +2.0 to 304.00.
For more summaries, click on Minyanville's Buzz Bits.
Casey's General (CASY) reports $0.55 EPS vs. $0.46 cons on revs $1.189 bln vs. $1.194 bln cons.
G-III Apparel (GIII) reports $1.41 EPS vs. $1.39 cons on revs $271.20 mln vs. $276.10 mln cons.
Greif Brothers (GEF) reports $1.05 EPS vs. $0.97 cons on revs $882.30 mln vs. $940.66 mln cons.
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: CSIQ, ESLR, NBIX, MOS, CF, CIEN, HLIT, ARRS, CSCO, VZ, CHNR, CDS, MA, SIGM, PCLN, FCL, BTU, YHOO, ITRI, SPX, CME, AAPL, MA, FCSX
Some bearish trade or investment ideas: AMZN, CMCSA, VMW, UTHR, DNA, WYE
Hope you all had a great day. Join us for the Rollin' Bones tomorrow. Have a great night!
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