MARKET - REVIEW
* Consumer confidence unexpectedly falls in November
* Tiffany & Co rises after results, JA Solar falls
* Jos. A. Bank rallies after on offer to buy from Men's Wearhouse
* Data shows housing recovery unfazed by higher mortgage rates
After moving mostly higher over the course of the trading session on Tuesday, stocks pulled back rather sharply going into the close.
While the tech-heavy Nasdaq managed to remain firmly in positive territory, the Dow and the S&P 500 ended the day roughly flat.
The Nasdaq rose 23.18 points or 0.6 percent to 4,017.75, while the Dow inched up 0.26 points or less than a tenth of a percent to 16,072.80 and the S&P 500 crept up 0.27 points or less than a tenth of a percent to 1,802.75.
The Nasdaq composite finally reached 4000 and then blew past it, closing well above that milestone in trading Tuesday. The Nasdaq ended the day up 0.6% to 4017.75 -- its first close above 4000 since Sept. 7, 2000.
The S&P 500 has risen nearly 27 percent this year, primarily bolstered by expectations the Federal Reserve's stimulus will continue at least until the end of the year.
Economic data has indicated growth continues to be sluggish, but the Fed's program is expected to keep a floor under equities for as long as the central bank keeps its $85 billion per month in bond purchases in place.
Still, many investors have also expected a pullback in equities given the scope of the equity rally that has put the benchmark S&P index on track for its best yearly performance since 1998 and an unsteady economic recovery.
"Things are OK. They are not great, but we are starting to price in great here, and it's difficult to be a believer at these prices. You have to tread carefully," said Stephen Massocca, managing director at Wedbush Equity Management LLC in San Francisco.
"I'm not going to say stocks are ragingly expensive, but they are not cheap."
"This year's rally has been very broad-based," Chris Verrone, an analyst at Strategas Research Partners, said in a research note to clients.
Trading is expected to be light for the duration of the week as traders get a head start on the long Thanksgiving holiday weekend.
The strength seen for much of the day was partly in reaction to the release of better than expected reports on building permits and home prices.
Before the start of trading, the Commerce Department released a report showing that building permits jumped to a five-year high in October.
The report said building permits climbed 6.2 percent to an annual rate of 1.034 million in October from 974,000 in September. Economists had expected building permits to come in at an annual rate of 930,000.
The Commerce Department noted that the release of data on housing starts was once again delayed as a result of the recent government shutdown.
A separate report from Standard & Poor's showed that home prices in major U.S. metropolitan areas rose by slightly more than anticipated in the month of September.
However, the positive sentiment generated by the housing data was partly offset by a report from the Conference Board that unexpectedly showed a continued drop in consumer confidence in November.
The Conference Board said its consumer confidence index dipped to 70.4 in November from an upwardly revised 72.4 in October.
The decrease came as a surprise to economists, who had expected the index to climb to 72.9 from the 71.2 originally reported for the previous month.
The lack of conviction behind the upward move by stocks also came as some traders were away from their desks, getting a head start on the Thanksgiving Day holiday on Thursday.
U.S. stocks edged up on Tuesday after strong housing figures, retailer earnings and a proposed acquisition lifted those two industry sectors.
Tiffany & Co jumped 7.3 percent to $88.29 and was the S&P 500's best performer after the luxury retailer's third-quarter sales topped expectations and the company boosted its outlook for full-year profits. The S&P retail index advanced 0.9 percent.
Jos. A. Bank Clothiers Inc surged 11.2 percent to $56.24 after Men's Wearhouse offered to buy the company for $55 per share in cash. Men's Wearhouse jumped 9.9 percent to $51.73.
The PHLX Housing Index rose 2.5 percent after stronger-than-expected figures on building permits for October and a steady rise in housing prices. Ryland Group led the index, gaining 5.5 percent to $39.99 a share.
Permits for future U.S. home construction hit a 5-1/2 year high and an index of single-family home prices notched big gains in September, suggesting higher mortgage rates have not halted the housing recovery.
Investors remained cautious about placing new bets after the market's rally has sent indexes to record highs. The S&P 500 has risen nearly 27 percent this year, bolstered by expectations the Federal Reserve's stimulus will continue at least until the end of the year.
But low implied volatility, measured by the CBOE Volatility Index, has some investors concerned. The VIX was down 1.9 percent to 12.55 on Tuesday.
"The problem is that the VIX is so below average, and with the indexes at all-time highs ... you would think that there would be someone betting, 'Boy, there is a correction coming.' And no one is," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.
The Walt Disney Company led the Dow, with shares rising 1.7 percent to $70.91. The company announced better-than-expected earnings earlier in the month. 1/8ID: nL2N0IS2CK 3/8
Real estate news was better. The S&P/Case-Shiller 20-city home-price index rose 13.3% in September on a year-over-year basis. Similarly, building permits jumped 6.2% in October to seasonally adjusted rate of 1.03 million units, which is a five-year high.
Trading is expected to be light this week, likely amplifying volatility, with financial markets closed Thursday for the Thanksgiving holiday. Markets will also close early at 1 p.m. (1800 GMT) the following day, known as Black Friday, the unofficial start of the U.S. holiday shopping season.
On Monday, the Dow rose 0.1% to 16,072.54. The S&P 500 fell 0.1% to 1,802.48. But the Nasdaq rose as high as 4,007.09, a level it hasn't seen since Sept. 7, 2000, during the dot-com bubble. The index ended up 0.1% at 3,994.57.
In energy markets, benchmark crude for January delivery was up 46 cents at $94.55 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 75 cents to $94.09 on Monday.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index fell by 0.7 percent, while China's Shanghai Composite Index edged down by 0.1 percent.
The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index slid by 0.9 percent, the French CAC 40 Index dropped by 0.6 percent and the German DAX Index dipped by 0.1 percent.
In the bond market, treasuries moved notably higher, extending the upward trend seen over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.5 basis points to 2.696 percent.
While activity may be somewhat subdued on Wednesday ahead of the holiday, trading could be impacted by the release of a slew of economic data, including reports on weekly jobless claims, durable goods orders, and Chicago-area business activity.
Tech giant Hewlett-Packard (HPQ) is also likely to be in focus after releasing its fourth quarter results after the close of today's trading.
Canadian stocks were lingering in the red Tuesday morning even as commodities turned firm after analysts said the Iranian nuclear agreement with world powers on Sunday will not result in an immediate increase in shipments from the Islamic state.
Elsewhere, Asian markets ended mixed overnight and European stocks struggle for momentum as investors turned cautious amid a lack of fresh triggers and on concerns the markets have run ahead of fundamentals.
The S&P/TSX Composite Index lost 58.52 points or 0.43 percent to 13,413.70.
In the commodities market, the price of crude oil was moving higher Tuesday morning on value buying, with the US dollar ticking lower amid the release of today's macroeconomic data. Crude for January rose $0.05 to $94.14 a barrel.
In the oil patch, MEG Energy (MEG.TO), Husky Energy (HSE.TO) and Vermilion Energy (VET.TO) were down around 3 percent each.
Oil and gas exploration and development company Emperor Oil Ltd. (EM.V) announced that it had nominated Gregory Fedun as Chief Executive Officer and President. The stock was up over 5 percent.
After suffering losses in recent sessions, gold was recovering from its four-month low Tuesday morning on value buying, with the US dollar paring recent gains ahead of today's macroeconomic data. Gold for December added $3.90 to $1,245.10 an ounce.
Among gold plays, Royal Gold (RGL.TO), Barrick Gold (ABX.TO) and Goldcorp. (G.TO) lost around 2 percent each. Detour Gold (DGC.TO) was down over 7 percent, while Eldorado Gold (ELD.TO) losing 4 percent.
On the other hand, Scorpio Gold Corp. (SGN.V) rose about 4 percent after reporting lower third quarter net earnings of $0.80 million or breakeven per share compared to $3.3 million or $0.02 per share in the year ago quarter.
Meanwhile, Chorus Aviation (CHRB.TO) jumped nearly 30 percent after confirming successful outcome of benchmarking arbitration with Air Canada.
The majority of the European markets ended Tuesday's session in the red. The markets were broadly higher yesterday, due to the historic nuclear deal reached with Iran over the weekend. Investors were cautious ahead of a large number of U.S. economic reports that are due to be released before the Thanksgiving holiday on Thursday.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.24 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.66 percent.
The DAX of Germany dipped by 0.11 percent, but the CAC 40 of France fell by 0.57 percent. The FTSE 100 of the U.K. dropped by 0.87 percent and the SMI of Switzerland decreased by 0.78 percent.
In Frankfurt, Bayer finished lower by 0.28 percent. Norway-based Algeta confirmed that it received a preliminary acquisition proposal from Bayer. Algeta surged by 30.46 percent in Oslo.
Suedzucker fell by 2.02 percent. Goldman Sachs upgraded the stock to ''Sell'' from ''Conviction Sell.''
Department store chain Metro dipped by 0.27 percent. Commerzbank upgraded the stock to ''Buy'' from ''Hold.''
In Paris, R my Cointreau plunged by 8.50 percent. The drinks maker reported a decrease in first-half profit, reflecting decline in sales. Citing an unfavorable business environment, the company said full-year earnings would record a double-digit decline. Peer Pernod-Ricard is lost 2.60 percent. Diageo fell by 1.25 percent in London.
In London, water utility Severn Trent reported higher profit for the first half of the year, amid a marginal growth in turnover. However, underlying earnings fell. The stock dropped by 1.34 percent.
Rio Tinto decreased by 1.71 percent, after it scrapped plans to convert one of its refineries to run on natural gas.
De La Rue climbed by 9.44 percent, after its profit for the first half of the year increased by 19 percent.
Mitchells & Butlers increased by 3.50 percent, after the restaurants and pubs operator said its fiscal 2014 pre-tax profit nearly doubled.
Britvic gained 2.80 percent, after its full year profit report.
Spanish oil giant Repsol has reached a preliminary deal with Argentina for the 51 percent stake it had in YPF SA that was nationalized in 2012. The stock advanced by 0.93 percent in Madrid.
Luxottica Group fell by 0.83 percent in Milan, after Berenberg downgraded it to "Hold" from "Buy."
Asian stocks ended mixed on Tuesday, as investors treaded cautiously amid a lack of fresh triggers and on concerns the markets have run ahead of fundamentals. A flat finish on Wall Street overnight rendered investor mood somewhat cautious before a slew of US data on housing starts, home prices and consumer confidence slated for release later in the global day.
Japanese shares drifted lower from a six-month high reached yesterday as a pause in the weak yen triggered profit taking in shares of export related companies. The benchmark Nikkei fell 0.7 percent to 15,515. Among the prominent decliners, Mazda Motors, Sony, Honda Motor, Fanuc, Advantest and Fujitsu fell 2-3 percent. Battery maker GS Yuasa fell 1.2 percent on a brokerage downgrade.
Toshiba Corp. added half a percent. The electronics manufacturer announced that it would start mass production shipments of "T4K71", a 1080p, 1.12 m, CMOS image sensor with color noise reduction on December 2. Fujifilm Holdings soared 4.2 percent on a Nikkei report that the company would jointly develop cancer treatments with one of the world's leading cancer hospitals MD Anderson Cancer Center in the U.S.
Chinese shares fell for the fourth day on concerns a sharp rise in bond yields could hurt the economy. The benchmark Shanghai Composite index slipped 0.1 percent to 2,183. Market heavyweight Sinopec tumbled 2.7 percent to its lowest level in more than a week. Police in China detained nine people in connection with Friday's explosions on an oil pipeline in the coastal city of Qingdao that killed 55 people. Seven of them were from the nation's biggest oil refiner which owned the pipeline. Hong Kong's Hang Seng edged down marginally to 23,681.
Australian shares posted modest gains, led by banks. The benchmark S&P/ASX 200 rose 0.1 percent to 5,357, adding to Monday's 0.3 percent gain. ANZ, Commonwealth, NAB and Westpac rose between half a percent and 0.9 percent. Rio Tinto shed 0.6 percent as the mining giant said it is reviewing the future of its Gove alumina refinery.
Rival BHP Billiton eased 0.2 percent and Fortescue Metals Group lost 1.4 percent. Perseus Mining rallied 3.6 percent after gold prices rebounded from a four-and-a-half month low. Aristocrat Leisure tumbled nearly 3 percent despite the maker of slot machines posting a 17 percent rise in its annual profit.
Seoul shares rose for a third day, led by gains in defensive stocks such as SK Telecom. The Kospi average rose 0.3 percent to 2,023. POSCO slid half a percent on a rating downgrade by Moody's. Doosan Engineering & Construction slumped 15 percent on reports it plans to sell redeemable convertible preferred shares to repay matured debt. On the economic front, an index measuring consumer sentiment in South Korea came in with a score of 107.0 in November, the Bank of Korea said - up from 106.0 in October.
New Zealand shares fell after the kiwi dollar rose to a fresh five-year high against its Australian counterpart, hurting companies exposed to Australia. The benchmark NZX-50 dropped half a percent to 4,791, with 18 of its stocks retreating. Fletcher Building declined 1.4 percent, Mainfreight shed 1.7 percent and Ebos Group tumbled 2.6 percent.
Elsewhere, Singapore's Straits Times was down 0.2 percent, India's Sensex was losing 0.6 percent following the previous session's rally and Indonesia's Jakarta Composite was down nearly 2 percent, while the Taiwan Weighted average rose 0.7 percent and Malaysia's KLSE Composite was up 0.1 percent.
On Wall Street, stocks fluctuated before ending Monday's session on a flat note, as traders digested news of the historic agreement to halt Iran's nuclear program and disappointing economic data showing an unexpected drop in pending sales for the fifth consecutive month in October.
** Indian Shares Fall On Profit Taking After Rally
The Indian markets fell sharply on profit taking Tuesday as oil prices rebounded and analysts said the Iranian nuclear agreement with world powers on Sunday will not result in an immediate increase in shipments from the Islamic state. Also, traders adopted a cautious stance ahead of Thursday's F&O expiry and July-September GDP data slated for release on Friday.
The benchmark BSE Sensex fell 180.06 points or 0.87 percent to 20,425.02, while the broader Nifty index closed at 6,059.10, down 56.25 points or 0.92 percent from its previous close. Banking, oil/gas, FMCG and realty stocks bore the brunt of the selling, while auto and power stocks witnessed stock-specific buying.
State-owned oil companies fell sharply on profit taking following sharp gains the previous day. BPCL slumped 6.7 percent, HPCL tumbled nearly 5 percent and IOC lost over 2 percent.
Telecom major Bharti Airtel dropped 2.7 percent, private sector lender ICICI Bank retreated 2.6 percent, state-owned miner Coal India declined 2.5 percent and mortgage lender HDFC fell 1.6 percent.
Sun Pharma dropped 1.6 percent after its U.S. subsidiary Taro Pharmaceutical Industries commenced a modified "Dutch auction" tender offer to repurchase up to $200 million of its ordinary shares.
IT stocks lost ground as the Indian rupee traded in a tight range, extending gains for a third day. TCS and Wipro fell about half a percent each, while Infosys shed 0.6 percent. Bank of India, Canara Bank and Unitech plummeted 4-6 percent as MSCI changes took effect.
Gammon India tumbled 3 percent after its second-quarter net loss widened to Rs.261.54 crore from Rs.39.44 crore in the corresponding quarter of the preceding year. United Spirits declined 1.3 percent after British fair trade watchdog OFT said Diageo's acquisition of United Spirits is against competition.
IDBI Bank fell 1.5 percent after rating agency S&P cut its foreign currency issuer credit rating, citing weak asset quality of the public sector lender. Gail closed down 1.2 percent amid reports it plans to set up CNG outlets along highways to facilitate movement of gas-run automobiles in the western region.
BF Utilities and Shalimar Paints slumped 2-5 percent after the BSE and NSE said they would transfer stocks of several companies to the restricted trade category from Friday. Ballarpur Industries plunged 8.5 percent after Fitch Ratings downgraded its long-term issuer default ratings on the company.
Biocon ended largely unchanged after receiving regulatory approval for its biosimilar Trastuzumab for treating breast cancer. Bafna Pharma posted a modest 0.2 percent gain on stake sale reports.
HCL Technologies, Tata Motors, Hero MotoCorp, Hindustan Unilever, SesaSterlite, BHEL and Lupin rose 1-2 percent.
DIC India was locked at the 20 percent circuit limit for the second day running after its promoter, DIC Corporation of Japan, announced a voluntary delisting offer. Likewise, Aban Offshore extended Monday's gains to end 4 percent higher on expectations that a gradual loosening on sanctions on Iran will help increase its revenues from the Islamic state.
On the global front, the other Asian markets ended mixed and European stocks struggled for momentum in early trading as investors treaded cautiously amid a lack of fresh triggers and on concerns the markets have run ahead of fundamentals. Traders await a slew of U.S. data on housing starts, home prices and consumer confidence slated for release later in the global day for further direction.