November 29, 2020

Wall Street Stocks Slip as Session Wears On

The three main indexes had initially rose as investors absorbed the announcement that Bin Laden had been killed in Pakistan.

“The Osama bin Laden situation really had a nice impact at the open,” Doug Roberts, the chief investment strategist for Channel Capital Research Institute, said. “It looks like a lot of that might have been short-covering.”

But the gains moderated and shares turned as the session wore on. At the close, the Dow Jones industrial average was 3.71 points lower, at 12,806.83 while the broader Standard Poor’s 500-stock index lost 2.04 points, or 0.18 percent, to 1,361.21. The technology heavy Nasdaq lost 9.46points or 0.3 percent at 2,864.08.

The Japanese and South Korean markets were already 1 percent higher before President Obama announced late Sunday that American forces had killed Bin Laden in Pakistan.

In Europe, the Euro Stoxx 50 index, a barometer of euro-zone blue chips, closed up less than a point. The CAC 40 in Paris rose 1.85 points and the DAX in Frankfurt rose 0.18 percent or 13.18 points. London markets were closed for a bank holiday.

Investors also took in latest earnings, corporate mergers and the economic reports, which showed that construction spending rose in March and that manufacturing in the United States continued to expand in April, but at a slower pace.

Among the mergers and acquisition, Teva Pharmaceutical Industries said that it had agreed to buy the biopharmaceutical company Cephalon for $6.8 billion, a deal unanimously approved by the boards of the two companies. Teva shares rose more than 3.5 percent, while Cephalon was up more than 4 percent.

The dollar was mixed. The euro rose to $1.4815 from $1.4806 late Friday, while the British pound slipped to $1.6693 from $1.6706. The dollar rose to 81.47 yen from 81.20 yen.

While the dollar had a slight recovery after President Obama’s announcement, the effect soon faded. The dollar has been weak across the board with United States interest rates low at a time when other central banks are tightening.

In addition, the debt limit negotiations in Congress were hurting the dollar, said Brian Dolan, the chief currency strategist at Forex.com.

“It is still a weak dollar environment,” Mr. Dolan said. Referring to news of Bin Laden’s death, he said: “It does not really alter the economic outlook for the global recovery.”

“That is the significant takeaway: the dollar downtrend is very much intact,” Mr. Dolan said.

While the political and psychological significance of Bin Laden’s death was still being felt, the stock market reaction was relatively mild.

“News of the death of Osama Bin Laden has had a limited impact on regional asset prices,” analysts at Royal Bank of Canada summed up in a note on Monday.

By the close the Nikkei 225 index had gained 1.6 percent and the Kospi by 1.7 percent. This took the Nikkei to 10,004,20 points, the first time it closed above the 10,000-point mark since the devastating earthquake and tsunami that struck the country on March 11.

The news about Bin Laden comes at the start of a week that culminates with the release of the latest retail sales numbers on Thurday and April’s employment report on Friday. Before the markets open, the Chrysler Group reported its first quarterly profit since going through bankruptcy reorganization in 2009, as the company sold more cars at higher prices. Chrysler said it earned $116 million in the quarter, after losing $197 million in the period a year ago. Revenue grew 35 percent, to $13.1 billion, while sales were up 18 percent.

On the economic front, the Institute for Supply Management, a trade group of purchasing executives, said its index of manufacturing activity dipped to 60.4 in April but remained above 60 for a fourth month. That was down from 61.2 in March and 61.4 in February, the fastest expansion in nearly seven years. A reading above 50 signals growth.

In addition, construction spending rose 1.4 percent in March, helped by an increase in spending on home-improvement projects.

In other news of deals, Arch Coal said that it would buy the International Coal Group in a cash deal worth $3.4 billion that will create one of the world’s largest coal producers. Arch was slightly lower, while International Coal rose more than 30 percent.

Dish Network and the EchoStar Corporation have agreed to pay TiVo $500 million to settle a patent infringement lawsuit involving TiVo’s video recording technology, putting an end to a long and costly legal battle. TiVo rose more than 5 percent.

Some of the sharpest reactions to the news of Bin Laden’s death were in the commodities markets.

Benchmark crude oil for June delivery declined 41 cents to settle at $113.52 a barrel in volatile trading in New York.

Many analysts cautioned, however, that bin Laden’s death could stoke, rather than ease, worries about oil supplies and global security in the longer run if it led to retaliatory attacks.

“This is a positive development in the campaign against terrorism,” Jonathan Ravelas, chief market strategist at Banco de Oro Unibank in Manila told Bloomberg News. “In the last 10 years, bin Laden’s presence has been a serious threat to global stability. The flip side is this could be followed by retaliation activities from his supporters.”

Gold, which also initially fell, also turned high in New York trading, rising $3.60 to $1,560 an ounce. The precious metal, which is seen as a safer investment and tends to rise during times of rising inflation and global unrest, has been hitting successive record highs in recent weeks.

Silver prices dropped more than 10 percent on Monday, a declined attributed to a decision by the CME Group, which is the parent of the Chicago Board of Trade, to increase the margins for futures trading on silver.

A commodities analyst at Commerzbank in Frankfurt, Carsten Fritsch, said the rule change, which took effect after business Friday, had made speculating in silver less attractive by requiring investors to tie up more capital while chasing the potential gains.

The price fell because with the higher margin requirement and a widespread sense that silver was overvalued, investors who bought early were selling to lock in gains while those who bought recently were selling to limit losses, Mr. Fritsch said. Silver is still up 45 percent on the spot market this year, the best performance of any commodity, he said.

In India, the Sensex index was 0.6 percent lower by midafternoon amid widespread expectations that the Indian central bank will once again raise interest rates on Tuesday in a bid to tame rising inflation. Most other stock markets in the region, including Singapore, Hong Kong and mainland China, were closed for a public holiday.

David Jolly contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=be029322f43a9991048134741f1c45c0

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