Stocks shrug off Greek worries

Good economic news on bank lending and business in Texas helps investors get past fears that Greece won't cut a debt deal. Gold and oil dip. Pep Boys will go private. US Airways rises on takeover chatter.

By Charley Blaine Jan 30, 2012 2:20PM
Charley BlaineUpdated: 8:26 p.m. ET

Investors started the weekend assured that Greece and its bondholders would finish negotiations on their debt-restructuring agreement. Soon, the word was. Very soon.

Didn't happen, and a stock slump that began in Asia on Monday spread to Europe. The selling spread to the United States, where stocks sold off sharply right after the open.

Then, the good news came. Stocks recovered nearly all of those early declines. Partly, the averages recovered because strength in technology shares offset weakness in energy and financial shares. Exxon Mobil (XOM), which reports fourth-quarter results Tuesday, was down 34 cents to $85.49 after falling to as low as $84.59. Bank of America (BAC) fell 22 cents to $7.07 after Goldman Sachs cut its rating on the stock from "buy" to "neutral."

The slide also pushed gold (-GC) and crude oil (-CL) modestly lower.

The Dow Jones industrials ($INDU) closed down 7 points to 12,654; the blue chips had been down as many as 131 points early in the session. The Standard & Poor's 500 Index ($INX) slipped 3 points to 1,313, and the Nasdaq Composite Index ($COMPX) was off 5 points to 2,812.

Article continues below.
Two pieces of good economic news helped the market come back.

A Federal Demand for business loans increased in the fourth quarter as economic growth accelerated, according to a Federal Reserve survey of senior loan officers at banks.

Seventeen of 56 banks reported stronger demand among companies with $50 million in annual sales or more, according to the survey released today. Six reported weaker demand. Demand among small businesses for loans increased by the most in any quarter since 2005.

While business demand for borrowing increased, banks reported "little change in standards on commercial and industrial loans but a continued easing of pricing terms," the survey said.

Second, the Federal Reserve Bank of Dallas' monthly Manufacturing Outlook Index showed a big jump from -0.3 to 15.3 in its general business activity index. Most components in the index showed improvement.

The Dow's third straight loss

Today's decline was the third straight for the Dow and fifth decline in the last six sessions. The S&P 500 fell for the third day in a row as well and fourth time in six sessions. The Nasdaq's loss was its second in three sessions and third in the last six sessions.

The losses since the market's highs for the month are slight. From an intraday high of 12,778.30 on Thursday, the Dow has not even fallen 1%. The S&P 500's decline is 1.2%.

With one day left in January, the Dow is up 3.6%, with the S&P 500 up 4.4% and the Nasdaq up 7.9%. The Dow's and S&P 500's gains, if they hold, would be their best for a January since 1997. The Nasdaq's gain would be its best since January 2001.

Twelve of the 30 Dow stocks were higher Monday, led by Verizon Communications (VZ),  Microsoft (MSFT), IBM (IBM) and Merck (MRK). Three Dow stocks were unchanged: Hewlett-Packard (HPQ), McDonald's (MCD) and Cisco Systems (CSCO). (Microsoft publishes MSN Money.)

Thirty-seven stocks in the Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, were higher. The index closed up 4 points to 2,465, powered by gains for Apple (AAPL), Microsoft and Qualcomm (QCOM). The trio contributed 9 points to the index's gain.

In addition, 140 S&P 500 stocks were higher.

Energy prices -- New York close



Mon.

Fri.

Month chg.

YTD chg.
Crude oil (-CL)

$98.78

$99.56

-0.05%

-0.05%
(per barrel)











Heating oil (-HO)

$3.0378

$3.0593

4.24%

4.24%
(per gallon)











Natural gas (-NG)

$2.7130

$2.7560

-9.23%

-9.23%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.8727

$2.9234

8.10%

8.10%
(per gallon)











Brent crude 

$110.75

$111.46

3.14%

3.14%
(per barrel)











Retail gasoline

$3.4290

$3.4190

4.89%

4.89%
(per gallon; AAA)












A rising dollar weighs on commodities, interest rates
Crude oil was off 73 cents to $98.30 a barrel. Gold settled down $1.80 to $1,731 an ounce. Silver (-SI) dropped 26 cents to $33.53 an ounce, and copper (-HG) was off 6.3 cents to $3.8265 a pound.

The U.S. Dollar Index, which tracks the dollar against a basket of currencies, was higher.
The euro was down against the dollar as investors looked for safety from Europe.

The 10-year Treasury yield was down to 1.816% from Friday's 1.898%.

In addition to the declines in bank and energy shares, metals stocks were lower. Southern Copper (SCCO) fell $1.36 to $34.76. Freeport-McMoRan Copper & Gold (FCX) was off 3 cents to $46.10 after falling to as low as $45.08.

Greece resists a hostile takeover
The sticking point on the Greek negotiations may be this: German Chancellor Angela Merkel wants an external authority to take over the country's taxing and spending authorities.

The Greeks are resisting that demand.

Under a plan leaked on Sunday, European institutions would have direct control over Greece's budget decisions in what would amount to an extraordinary depletion of a member state's independence in conducting its own affairs.

A Greek official dismissed the idea as "absolutely laughable."

At the same time, Portugal finances appeared to be deteriorating. Yields on Portuguese 10-year bonds briefly topped 15% today, according to Tradeweb. The yield on 2-year Portuguese notes topped 21%.

But late Monday, 25 European countries, including 17 eurozone countries did agree to a fiscal pact that imposes tighter budget discipline on members and is aimed to prevent a repeat of the Greek debt disaster. Britain and the Czech Republic are the only two EU countries not to join.

The deal calls for the European Court of Justice to impose fines on countries running excessive deficits, The Wall Street Journal said. The fines will be capped at 0.1% of gross domestic product. For Italy, that could mean fines as high as $2 billion.


The pact will require governments to keep their budget deficits to an average of 0.5% of GDP over the economic cycle—and to reduce their total government debt toward 60% of GDP over time.


Pep Boys will go private
The day's big deal was Pep Boys Manny Moe and Jack (PBY), the automotive service and retail chain, which said it will be acquired by the Gores Group, an investment firm led by billionaire Alec Gores, for about $1 billion.

Pep Boys will be acquired for $15 a share in cash, a 24% premium over Friday's $12.08 closing price. The deal, which has been approved unanimously by the company's board, now goes to a vote by shareholders. Pep Boys closed up $2.85 to $14.93.

While the deal looks great, the company has struggled for some time. The stock peaked at $38.25 in 1996.

Will Delta Air bid for US Airways?
Delta Air Lines (DAL) is considering making a bid for US Airways (LCC), The Wall Street Journal reported over the weekend.

It's just the latest chatter about consolidation in the airline industry since AMR (AAMRQ),  the owner of America Airlines, filed for bankruptcy last year, Barron's noted Monday. Delta, the second-biggest airline in the country, is also reportedly considering a bid for AMR, as is US Airways. Private-equity firm TPG Capital has also reportedly been mulling an AMR deal.

Both Delta and US Airways shares were up about 3% after the merger news.

Any AMR deal could take awhile -- a year at least.

US Airways could be a better fit to join with AMR, at least from an antitrust perspective, analysts say.

Nabors leads the S&P 500; Staples slumps on a rating cut
Nabors Industries (NBR) gained 63 cents to $18.56. Its 3.5% gain was the best among S&P 500 stocks. Traders in the options market were betting the world’s largest land-drilling contractor may be a takeover candidate after 81-year-old Gene Isenberg stepped aside as CEO in October. Anthony Petrello is now the CEO.

Switzerland's ABB reached an agreement to buy electrical parts maker Thomas & Betts (TNB) for $3.9 billion. Thomas & Betts is being bought for $72 a share, a 24% premium to its closing price Friday of $57.95. Thomas & Betts was up $13.36 to $71.31.

Office-supply retailer Staples (SPLS) declined 78 cents to $15.23. The world's largest office products company was cut to "sell" from "neutral" by Goldman Sachs, which cited a tough outlook for the global printing segment.

Gannett (GCI), the big publisher of newspapers, including USA Today, tumbled $1.05 to $14.17. Revenue from the publishing division, the largest unit, declined 5.3% as advertising and circulation fell. The newspaper industry overall has continued to lose ad business to Internet companies such as Google (GOOG) and Facebook.

Wendy's (WEN) fell 20 cents to $5.01. The operator of fast-food restaurants forecast adjusted earnings before interest, taxes, depreciation and amortization in 2012 of $345 million at most. That compares with the average analyst estimate in a Bloomberg survey of $353.1 million.
 
Citigroup (C) Chairman Richard Parsons is considering stepping down after three years in the post, The Wall Street Journal reported. Parsons, 63, is expected to decide by early March, the newspaper said. The bank is expected to keep the posts of chairman and CEO separate. Citigroup was off 64 cents to $30.23.

Short hits from the markets -- New York close



Mon.

Fri.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0500%  0.040%

400.00%  400.00%
5-year Treasury note 

0.732%  0.752%

-11.81%  -11.81%
10-year Treasury note

1.837%  1.898%

-1.82%  -1.82%
30-year Treasury bond

2.983%  3.064%

3.25%  3.25%
Currencies











U.S. Dollar Index

79.302  79.011  -1.52%  -1.52%
British pound

1.5723  1.5716  1.19%  1.19%
(in U.S. $)

          
U.S. $ in pounds

£0.636  £0.636  -1.18%  -1.18%
Euro in dollars

$1.32  $1.31  1.54%  1.54%
(in U.S. $)

          
U.S. $ in euros

€ 0.760  € 0.761  -1.52%  -1.52%
U.S. $ in yen 

76.51  76.37  -0.77%   -0.77%
U.S. $ in Chinese

6.35  6.31  0.32%  0.32%
yuan

            
Canada dollar

$0.999  $1.002  1.85%  1.85%
(in U.S. $)

          
U.S. dollar 

$1.002  $1.002  -1.82%  -1.82%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,731.00

$1,732.20

10.48%

10.48%
(per troy ounce)











Copper (-HG)

$3.827

$3.889

11.36%

11.36%
(per pound)











Silver (-SI)

$33.5270

$33.7900

20.10%

20.10%
(per troy ounce)











Wheat (-ZW)

$6.4475

$6.4725

-1.23%

-1.23%
(per bushel)











Corn (-ZC)

$6.3175

$6.418

-2.28%

-2.28%
(per bushel)











Cotton 

$0.9487

0.9609

3.48%

3.48%
(per pound)











Coffee

$2.1945

2.202

-4.44%

-4.44%
(per pound)











Crude oil (-CL)

$98.78

$99.56

-0.05%

-0.05%
(per barrel)










 

82Comments
Jan 30, 2012 3:07PM
avatar

The Greek debt swap IS a default. It's a controlled, negotiated default, but a default none the less. The only question is how large is the default-40%,50%,60% or more?

 

The news should read "Greece defaults but investors trying to get some of their money back", instead of "Greece trying to avoid default".

 

Greece defaulted; they cannot pay back what they owe. All of the institutions that invested in Greece will now have less to reinvest and pay their obligations. Can you say Ripple effect.

avatar
What is the REAL reason why Europe and Greece in particular impacts the USA market so much?
Because the Federal Reserve has to bail out both the US,Japanese and now European governments. While the Chinese are dropping the dollar like a hot potato. 

A recipe for total disaster. 
Jan 30, 2012 3:42PM
avatar
I am now convinced that regardless of the negative economic news either here or abroad...nothing will cause this market to drop signifcantly short of Manhattan getting washed away by a tidal wave but even then investors would probably "cheer" on the rebuilding prospects!!!
Jan 30, 2012 4:00PM
avatar
Please, no more airline mergers.  Passengers are getting beat up as it is.  Less competition, less service, higher prices.
avatar
ROFL,

         The investors who are keeping the deal from going through are Hedge Fund Managers who brought the debt at 40 cents to the Euro. And they are complaining that if they are going to take a 50 percent hit on their money (which is really making 10 percent as they brought it at 40 cent to the Euro) and the interest rate is dropped from 10 percent to 4 percent that they can not make any money.

These guy are pure greed. Hope they crash and burn themselves into no money when Greece defaults.

I feel sorry for the mom and pop Greece and EU individuals who put money into a 401k plan or whatever they have over there and lost 60 percent when when their investors sold it for 40 cents on the Euro. 
Jan 30, 2012 3:25PM
avatar
just wait they publish the job report after they play with it ,so the numbers are the way they want.
Jan 30, 2012 4:05PM
avatar
The "real" reason Greece matters is that our friend Bernanke loaned the Euro folks 16 trillion USD.  If Greece just says "forget it" then the rest of europe will as well.  UH UH and then we will be on the hook for their 16 trillion as well as the 16 trillion here.  Understand!  The fed made Europe a full fledged stepchild with a 16 trillion USD credit card. We are screwed folks.  Get it now?
Jan 30, 2012 3:04PM
avatar

Ha Ha

              It seems the worse the news the bettter the market likes it.  Could it be the market knows if its bad news  the fed will step in to help?

Jan 30, 2012 3:36PM
avatar
What is the REAL reason why Europe and Greece in particular impacts the USA market so much? 
I think it has to do with the global financial system and also the securitization of bonds and the hedges place on these securities by the bond traders and buyers.  This is what caused the near collapse of the financial system in 2008 when some mortgage backed securities started to default.  Many of the leveraged bets and counter bets on the long term mortgage securities were being financed on the short term 'Repo' market.  When some of these securities started to default the market realized that there was no way of understanding the value of the existing securities and the 'Repo' market dried up putting the whole system in jeopardy.   A similar system has been built up around Greek and other debt and of course many US financial institutions are players.
Jan 30, 2012 4:26PM
avatar

LOL...

 

Now Obama wants to tax frequent flyer miles...  LOL...

 

This should be good... 

Jan 30, 2012 5:25PM
avatar
It's all smoke and mirrors. None of this real. Invest in your knowledge of how to live without all this nonsense. Stop believing everything the media, government, and corporations tell you. Snap out of the dream and start living.
Jan 30, 2012 3:52PM
avatar
Looks like it will be another 200 point "swing" day.  This market should be down based on the the negative news but as reported in another post...those in control will not let that happen.  The average investor is being played over and over again....
Jan 30, 2012 5:10PM
avatar
Don't worry...when Greece defaults it will have no ill effect on the market as the Wall Street Thieves  will not let the market drop. 
Jan 30, 2012 4:24PM
avatar
Nothing more than a total day of manipulation.
Jan 30, 2012 4:12PM
avatar

Looks like old Bendover Bernanke is shoveling a little POMO money into Wall Street to bring it back up before the bell.  Can't have old shadow trader Ben losing money now can we? 

 

All the hype and upswings this month are based on December numbers, lets see how the market reacts when the jobless rate increases, gasoline costs increases and personal income drops over the next few months.  We are looking at a replay of 2008 only worse when the dust clears.

Jan 30, 2012 6:21PM
avatar

These are possibly the 5 best sentences you'll ever read: Unfortunately, most voters don't know this.

1. You cannot legislate the poor into prosperity, by legislating the wealth out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it.

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them; and when the other half gets the idea that it does no good to work, because somebody else is going to get what they work for, that is the beginning of the end of any nation.

Jan 30, 2012 5:42PM
avatar

Headline:

 

"Market Still Undecided About World Ending.  TBD"

Jan 30, 2012 4:41PM
avatar
No  Greek Deal !!     Default is imminent !!   TAKE YOUR MONEY AND RUN !!
Jan 30, 2012 5:33PM
avatar
Yes, it could have been worse but it wasn't good at all either. The final numbers are a bit deceiving; scumbags had their way today. If we have as many manipulators tomorrow and the rest of t he week, it wont be pretty. We shall see.
Jan 30, 2012 3:12PM
avatar
Greek worries push stocks lower
The Dow drops 131 before trimming losses as fears build that Greece won't cut a debt deal. Gold and oil dip. Pep Boys will go private. US Airways rises on takeover chatter.

happy days are here again....buy buy buy

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