Stocks Inch Closer to New Highs
Stocks are inching their way closer to new highs this morning as the S&P is less than 3 percent away from its April closing high of 1,217. S&P futures are pointed towards a higher after the weekend’s G-20 meeting of finance ministers produced few details and little concrete results, although the financed ministers promised to avoid any currency wars.
That pushed the dollar weaker overnight as the Euro broke above $1.40 again and the Aussie Dollar neared parity vs. the U.S. Dollar. The Aussie Dollar was also helped by a strong rise in produce prices in the last quarter (more than double estimates), giving traders hopes of an interest rate hike in that country in the near future.
The dollar’s decline is rallying most commodities and many commodity stocks 1 percent-3 percent in early trade. Of note, copper and the CRB Index are both hitting 2-year highs.
Some highlights in the news this morning:
RadioShack beat estimates ($0.37 vs. $0.35 consensus) after the electronics retailer saw its sales rise 6.2 percent. Sales were not only helped by continued strength of smartphones, but the retailer also saw improvements in sales non-wireless categories like accessories and power products.
Lorillard is up 4 percent after beating estimates ($1.81 vs. $1.64 consensus) as sales rose up a “smoking” 10 percent, higher than expectations. Shipments of its cigarettes in the U.S. rose 6 percent from the prior year as the cigarette maker gained market share. Its Newport brand saw 3 percent higher volumes, while shipments of its Maverick volumes jumped 31 percent.
Home Depot is downgraded to market perform at FBR after the analyst pointed to recent commentary from the home improvement retailer’s suppliers suggesting “flattish industry trends” going into the fourth quarter compounded by more difficult comps in the coming quarter.
Citigroup rises 3 percent after Goldman Sachs added the financial to its conviction buy list. The broker raised its price target on Citigroup to $5.50 from $4.60 as it believes that pressure on the shares will be reduced after the government completes the sale of its shares in the company likely in the first part of next year. It also noted that Citi faces limited risk related to the mortgage putbacks/loan repurchase issues that a number of other banks are facing.
European bottler Coca-Cola Enterprises sweetens its dividend 33 percent to 12 cents per share.
A big deal in the exchanges industry. The Singapore Exchange announced it is acquiring Australia’s ASX for $8.3 billion in cash and stock. The deal gives a 37 percent premium to ASX shareholders. The new company will be the 4th biggest exchange in Asia (and 5th largest in the world), and could help it better compete for market share against the big exchanges in Tokyo and Hong Kong as well as other alternative trading platforms, which have put much pressure on all exchanges around the world.
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