US Stocks Set for First Quarterly Drop Since Q1 2009

Depending on your point of view, it was either a great G20 summit or another sign of hopeless gridlock. It was a great summit if you are laissez-faire (they put off agreement on a global bank tax and did little else and dropped a 2012 deadline for stricter capital provisions); but it was also obvious how hopelessly split the leaders were, between those who wanted more spending and those who wanted less.

A commitment to cut their deficit in half by 2013 and to stabilize their debt-to-GDP ratios by 2016 was met with yawns by most traders this morning.

The Bank for International Settlements, the organization of central bankers, issued its annual report today and argued that governments should decisively address budget deficits.

European stocks, particularly banks, are trading up.

Meanwhile, how can you have a recovery with the 10-year yield at 3.06 percent?


1) The death of Sen. Robert Byrd has created some question about whether the Democrats can pass the Dodd-Frank bill, especially since two Democrats appear to be refusing to vote for it.

2) Arguably, the end of the quarter Wednesday may be as important this week as the June nonfarm payroll report on Friday.

3) Tesla Motors, slated to go public tonight, has increased the size of its offering, to 13.3 million shares, from 11.1 million. Price talk remains at $14-$16.

4) Noble rises 2 percent after announcing it will acquire privately-held driller Frontier Drilling for $2.2 billion in cash. The acquisition will give Noble six additional drilling units and increase its backlog by $2 billion. The deal should be accretive early next year, and is expected to close next month.

5) Isle of Capri Casinos announced a hefty 9 million share stock offering, equivalent to about 28 percent of the firm's current shares outstanding. The proceeds will help the casino company repay outstanding debt.

End of quarter approaching: with three trading days left in the quarter, US stocks are on pace for their first quarterly decline since Q1 2009, snapping 4 straight quarters of gains.

6) Thank heavens, the quarter ends on Wednesday. Not a memorable perforance.

Dow Industrials -6.57 percent

Dow Transports -3.05 percent

S&P 500 -7.92 percent

Nasdaq -7.28 percent

Russell 2000 -4.94 percent

The disappointing second quarter has eliminated all the gains for the markets this year too. But despite the losses year-to-date, U.S. markets have been a better investment when compared to overseas markets. So far this year, U.S. stocks have outperformed most major international indices, most notably China's Shanghai Composite, which has lost nearly a quarter of its value in 2010.

U.S. Outperforms International Markets This Year:

U.S. -3.44 percent

Hong Kong -5.24 percent

Brazil -5.49 percent

U.K. -6.73 percent

Japan -8.08 percent

France -9.60 percent

Australia -9.69 percent

China -22.64 percent

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