Top Stories: Stocks
2009-12-17 09:19:37.502 GMT
Dec. 17 (Bloomberg) -- The following are the day's top stories on
Stocks in U.S. Erase Advance as Bond Yields Rise on Interest-Rate
U.S. stocks erased most of their advance after yields on 10-year
Treasury notes rose on concern the Federal Reserve is preparing
investors for higher interest rates next year. Metal producers, energy
companies and financial institutions in the Standard & Poor's 500 Index
advanced more than 0.4 percent, the steepest gains among 10 industries.
Intel Corp. retreated 2.1 percent, leading the Dow Jones Industrial
Average's decline, after U.S. regulators accused the world's largest
computer-chip maker of illegally stifling competition. The Standard &
Poor's 500 Index added 0.1 percent to 1,109.18 at 4 p.m. in New York,
almost wiping out all of a 0.8 percent. The Dow average lost
10.88 points, or 0.1 percent, to 10,441.12. The yield on 10-year notes
touched 3.60 percent. ``When you see materials, financials and energy
leading, it means the market fears higher prices and inflation,'' said
Joseph Veranth, chief investment officer at Dana Investment Advisors in
Brookfield, Wisconsin, which manages $2.8 billion. In the S&P 500,
``Market participants are going to the sectors that will perform well
in that environment.''
Tudor Jones Turns Away Investors as Hedge-Fund Industry Outflows Persist
In a year when investors pulled an estimated $118 billion from
hedge funds through November, Paul Tudor Jones was one of at least six
managers who decided it was time to turn away cash. BVI Global Fund
Ltd., Jones's biggest, stopped taking new investments after bringing in
$1.3 billion from March to July, according to a person with knowledge
of the matter. Brookside Capital Partners LP and Woodbine Capital
Advisors LP also have closed or restricted inflows, said people
familiar with the firms, who asked not to be named because the funds
Institutions and wealthy individuals have sought out managers with
consistent long-term gains, especially those with funds previously
closed to new investors. After firms such as D.E.
Shaw & Co. and Polygon Investment Partners LLP froze or limited
redemptions, investors also gravitated to funds that avoided such steps
or eased restrictions quickly. ``Those managers that honored their
agreements and treated their investors as partners during the last 18
months of economic difficulties are being rewarded with additional
money this year,'' said Debra Pipines, founder of New York-based
Asperion Group LLC, which raises capital for hedge funds.
TPG's Kraton IPO Sells Below Purchase Price as Private-Equity Deals
TPG sold a stake in Kraton Performance Polymers Inc. in an initial
public offering for less than it paid to buy the chemical maker, as
investors extracted the third price cut from a private equity-led IPO
in two days. The maker of polymers used in adhesives and lubricants
raised $139 million at $13.50 a share yesterday, after buyers rejected
an offer of much as
$18 each, Bloomberg data show. The IPO price was a penny lower than
what TPG and JPMorgan Chase & Co.'s buyout arm spent on average for
Kraton, a Dec. 2 filing showed. A day earlier, Carlyle Group and
Goldman Sachs Group Inc. accepted 21 percent less than they sought for
Cobalt International Energy Inc., an oil explorer with no revenue or
profits, while investors extracted concessions from Blackstone Group LP
for its IPO of Team Health Holdings Inc. While owners have used the
biggest rally in the Standard & Poor's 500 Index since the Great
Depression to unload $12 billion in stock since September, companies
from AEI to HealthPort Inc. that were backed by private-equity funds
have postponed initial offerings.
Investors are demanding better terms as leveraged-buyout firms count
on IPOs to exit some of the $2 trillion in LBOs they made since the
start of 2004. ``The pendulum has swung toward the public-market
investors,'' said Giri Cherukuri, who helps manage $1.7 billion at
Oakbrook Investments in Lisle, Illinois.
``These private- equity firms ended up paying very high prices because
of cheap capital, and now they want to get any money they can out of
it. They just need money, so investors are taking advantage of their
position as buyers of capital.''
U.S. Treasury Delays Sale of Citigroup Stake as Shares Priced at
Citigroup Inc., the last of the four largest U.S. banks to seek
funds to exit a taxpayer bailout, raised $17 billion by selling stock
for a price so low that the U.S. delayed plans to shrink its one-third
stake in the lender. Citigroup sold 5.4 billion shares at $3.15 apiece,
less than the $3.25 the government paid when it acquired its stake in
September. The New York-based bank said the Treasury won't sell any of
its shares for at least 90 days. Investors demanded a bigger discount
from Citigroup than Bank of America Corp. or Wells Fargo & Co., which
together raised more than $31 billion this month to exit the Troubled
Asset Relief Program. Wells Fargo, which trumped Citigroup's bid to buy
Wachovia Corp. last year, leapfrogged its rival by completing a $12.25
billion share sale Dec. 15. JPMorgan Chase & Co. repaid $25 billion in
June. ``The market cast its vote and they're low down on the ballot,''
said Douglas Ciocca, a managing director at Renaissance Financial
Corp. in Leawood, Kansas. ``Citigroup needs to show steps to reinstall
the quality of the brand.''
Greenspan Says S&P 500 Rally Cuts Stimulus Needs as Household Wealth
The biggest stock market advance in seven decades is reducing the
need for additional government stimulus measures, according to former
Federal Reserve Chairman Alan Greenspan.
The Standard & Poor's 500 Index's 64 percent jump since March made
Americans richer by restoring $5.4 trillion to U.S.
equities and helped spur a 1.3 percent increase in retail sales last
month, data compiled by Bloomberg and the Commerce Department show.
``The stimulus is only a third spent, and its order of magnitude is not
large enough to compare with the strength and power of the remarkable
global equity increase that's occurred since early March,'' Greenspan,
83, said in a telephone interview yesterday from Washington. ``Capital
gains have proved a far greater stimulus than one can attribute to the
$787 billion program that has been only partially spent.''
Increasing spending beyond the $11.6 trillion already pledged may also
be unnecessary because higher stocks will help boost profits and make
loans easier to come by, Greenspan said.
Earnings among S&P 500 companies are forecast to rise 65 percent in
the fourth quarter, ending the longest series of declines since World
War II, data compiled by Bloomberg show.
European, Asian Shares Drop as Banks Fall; U.S. Stock-Index Futures Slip
European stocks fell for the first time in six days as the Federal
Reserve signaled it will remove most emergency measures and Standard &
Poor's cut its rating for Greece. Asian shares and U.S. futures
dropped. National Bank of Greece SA led European lenders lower. Bank of
Ireland Plc and Allied Irish Banks Plc declined at least 2.7 percent.
Westpac Banking Corp., Australia's second-largest bank by market value,
slid 1.1 percent in Sydney. Shire Plc retreated 1.8 percent after UBS
cut its recommendation on the shares. The Dow Jones Stoxx 600 Index
decreased 0.2 percent to 249.76 at 9:08 a.m. in London, snapping its
longest winning streak since September. The benchmark gauge for
European equities has rallied 58 percent since March 9, leaving it
valued at 56 times its companies'
reported earnings, near the highest level since 2003, weekly data
compiled by Bloomberg show. U.S. stocks erased most of their advance
yesterday after the Fed's policy statement.
Standard & Poor's 500 Index futures retreated 0.2 percent today, while
the MSCI Asia Pacific Index slid 0.8 percent.
FTSE 100 Drops as Fed Signals Stimulus Removal; Barclays, Antofagasta
U.K. stocks dropped, led by financial and raw-material shares,
after the Federal Reserve signaled it will remove more emergency
measures. Barclays Plc and Antofagasta Plc slid at least 1.2 percent
after a Fed statement yesterday said deterioration in the labor market
is abating, paving the way for it to rein in stimulus packages. JJB
Sports Plc, the unprofitable U.K. sporting goods retailer, sank 5.4
percent after reporting a slump in sales. The benchmark FTSE 100 Index
slid 27.04, or 0.5 percent, to 5,293.22 as of 8:21 a.m. in London. The
index has rebounded 51 percent since March and is heading for its
biggest annual gain since 1997 as central banks cut interest rates to
record lows and governments worldwide committed about $12 trillion to
revive the economy. The FTSE All-Share Index lost 0.5 percent today and
Ireland's ISEQ Index fell 0.7 percent. Barclays, Britain's
second-largest bank, slid
1.2 percent to 288.55 pence. Antofagasta declined 2 percent to
DAX Index Snaps Five-Day Advance as Bayer, Infineon Technologies Decline
German stocks dropped for the first time in six days, falling from
the highest level since September 2008, as the Federal Reserve signaled
it will remove most of its emergency aid and Standard & Poor's
downgraded Greece. The benchmark DAX Index declined 0.4 percent to
5,877.90 as of 9:46 a.m. in Frankfurt. The measure has rallied 60
percent since March 6 as Europe's largest economy exited recession,
fueled by government spending and a recovery in exports. The broader
HDAX Index also slipped 0.4 percent today. The Fed, after concluding a
two-day meeting yesterday, said most of its lending programs would
expire as scheduled Feb. 1 because of ``improvements in the functioning
of financial markets.'' Greece's credit rating was cut by Standard &
Poor's and the company threatened to take further action unless Prime
Minister George Papandreou tackles the European Union's largest budget
deficit. Germany said today it will sell 343 billion euros ($494
billion) of debt next year, according to the country's Federal Finance
Asian Stocks Decline, Led by Financial Companies, on Interest-Rate
Asian stocks fell, led by financial companies, on expectations the
U.S. Federal Reserve will raise interest rates next year and after Hong
Kong's central bank said the city is at risk of ``sharp corrections''
in asset prices. Westpac Banking Corp. dropped 1.1 percent in Sydney
and China Overseas Land & Investment Ltd. lost 2.1 percent in Hong
Kong. National Australia Bank Ltd. tumbled 4.7 percent after saying it
will sell stock to fund the purchase of AXA Asia Pacific Holdings Ltd.
FAW Car Co.'s 4.5 percent plunge led declines in Shanghai on concern a
flood of share sales will divert funds from existing equities. Rio
Tinto Group, the second-biggest producer of iron ore, advanced 1.2
percent as the Fed said the economy is improving. The MSCI Asia Pacific
Index dropped 0.9 percent to 118.53 as of 3:12 p.m. in Tokyo, erasing
an earlier 0.1 percent advance. The gauge has climbed 32 percent this
year on signs government spending and lower interest rates bolstered
economies. ``With the improving economic data, investors are looking at
the possibility that the stimulus packages will be pulled out earlier
than expected and that interest rate increases would follow,'' said
Marvin Fausto, who helps manage
$9.56 billion as chief investment officer at Banco de Oro Unibank Inc.
in Manila, the nation's largest bank by assets.
``An early exit and increase in interest rates can throw the ongoing
recovery off track.''
Japan Stocks Drop, Reversing Gains; Banks Lead Declines, Developers Fall
Japanese stocks fell as banks slid on investor concerns that
yesterday's gains were excessive. Commodity producers rose on higher
prices for oil and metals. Sumitomo Mitsui Financial Group Inc.,
Japan's second- biggest lender by market value, declined 1.5 percent
after a 14 percent surge yesterday after the Nikkei newspaper reported
banks will be given at least 10 years to implement stricter capital
rules. Mitsubishi UFJ Financial Group Inc., Japan's No. 1, lost 1.3
Mitsubishi Estate Co., a property developer, slumped 2.7 percent as
foreclosure auctions increased. Inpex Corp., Japan's largest energy
exploration company, advanced 3.6 percent after crude oil climbed the
most in a month. ``Yesterday's gains were excessive,'' said Takeshi
Osawa, a senior fund manager in Tokyo at Norinchukin Zenkyoren Asset
Management Co. ``It's difficult for long-position investors to keep
buying bank stocks without seeing growth strategies.'' The Nikkei 225
Stock Average fell
0.1 percent in the last seconds of trading to close at 10,163.80 in
Tokyo. It rose as much as 0.8 percent during the day. The broader Topix
index dropped 0.2 percent to 896.28 after changing directions at least
nine times in the afternoon session.
China Stocks Are World's Worst Performer as Shares Decline on IPO
China's stocks fell, making the benchmark index the world's worst
performer, on concern a flood of new share sales will divert funds from
existing equities and faster global economic growth will spur
interest-rate increases. Auto companies FAW Car Co. and Chongqing
Changan Automobile Co. led declines among consumer-discretionary stocks
on the prospect investors will sell this year's best-performing shares
to take part in initial public offerings. Shanghai Bailian Group Co.,
the listed unit of the biggest retailer, slid 4.2 percent on concern
that higher borrowing costs may damp consumer spending as growth
accelerates. ``Money is drying up and the pace of new share sales
hasn't shown any sign of slowing down,'' said Wu Kan, a Shanghai-based
fund manager at Dazhong Insurance Co., which manages about $285
million. ``The weak sentiment will carry on.'' The Shanghai Composite
Index dropped 76.14, or 2.3 percent, to 3,179.08 at the close, the
lowest since Nov. 27.
The index's three-day losing streak is the longest since the period
ended Sept. 29. It was also the world's worst performing index today
out of the 90 measures tracked by Bloomberg.
Stay `Constructive' on Stocks in 2010 as Economies Strengthen, Mowat
Investors should ``stay constructive'' on stocks next year as the
global economy recovers and other asset classes become more costly,
according to JPMorgan Chase & Co. Technology and bank shares may be the
best bets because of rising demand and improving financial markets,
Adrian Mowat, JPMorgan's chief Asian and emerging markets strategist,
said in a Bloomberg Television interview from Hong Kong. The global
recovery also means bond yields will rise and the attraction of gold
will lessen, he also said. ``The outlook for equities next year is
going to be very good, both in developed and emerging markets,'' Mowat
said. ``It's going to be a story about growth next year. It's also a
story where other asset classes are quite expensive.'' The MSCI AC
World Index, tracking both developed and developing markets, has gained
31 percent this year, rebounding from last year's record 44 percent
slump. Only six of the 90 benchmark stock indexes tracked by Bloomberg
worldwide have retreated this year.
For the complete stories summarized here, and for more of the day's
top news, see TOP <Go>.
-0- Dec/17/2009 9:19 GMT