Bulls Recover From Thursday's Swiss Cheese Incident
Today's financial recap and tomorrow's financial outlook.
Foreign exchange broker FXCM's (FXCM) shares were halted in premarket trading after falling over 80% due to a significant negative impact from Thursday's spike in the Swiss franc. Late in the trading day, Leucadia National (LUK) announced it would provide $300 million in financing to FXCM, as had been rumored. The funds will allow FXCM to meet regulatory requirements and continue normal operations.
Online brokerage firm Interactive Brokers (IBKR) said it suffered a $120 million loss due to clients taking hits on Swiss franc trades.
Rumors also circulated that Citigroup (C), Barclays (BCS), and Deutsche Bank (DB) all took losses as well.
Some smaller firms, including Global Brokers NZ and Alpari UK, closed operations altogether.
Goldman Sachs (GS) fell 0.7% today despite reporting better-than-expected revenues and earnings as investors focused on the bank's significant drop in fixed income trading revenues. On its earning call, Goldman CFO Harvey Schwartz said the impact of the Swiss franc rally will be "immaterial" to future results.
The S&P 500 started the day off weak with a quick drop to 1988.12 as financial stocks lagged in the wake of Goldman's earnings report.
However, equities staged a steady before spiking into the close, with the S&P finishing at 2019.41, up 1.3%. Sentiment indicators like the McLellan Oscillator and ISE Sentiment Index showed that the market was at or approaching oversold territory on Thursday, setting up a relief rally Friday.
Energy was the best performing major sector. Crude oil rose almost 5% today after the International Energy Agency said non-OPEC production would increase at a rate slower than its previous forecasts assumed. Additionally, in the afternoon, the Baker Hughes (BHI) Gas & Oil Rig Count was released, indicating that more oil rigs are coming offline in reaction to recent price declines.
Elsewhere in commodities, gold and silver continued rallying as investors return to metals as a safe haven.
Small caps also outperformed, and housing and biotech stocks rallied nicely.
Intel (INTC) was a big earnings name, reporting fourth-quarter earnings that beat analysts' expectations. However, first-quarter revenue guidance was below consensus estimates and the stock initially skidded lower before squeezing higher to finish in the green.
Monday's Financial Outlook
The market will be closed on Monday in observance of Martin Luther King, Jr. Day.
Earnings season will continue heating up on Tuesday with reports from Allegheny Technologies (ATI), Baker Hughes (BHI), Halliburton (HAL), Morgan Stanley, and IBM (IBM), among many others.
These reports are likely to move the market. Baker Hughes and Halliburton, which incidentally are in the process of merging, should offer useful commentary on production cutbacks in the energy industry. And Morgan Stanley is likely to give additional color on the impact of the Swiss franc and financial market activity.
On the economics front, the November JOLTS Job Openings report will be issued at 10:00 a.m ET.
Overseas, England will release its December CPI.
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