Stock exchange traded funds (ETFs) were mixed Tuesday as gold futures briefly touched $1,500 an ounce.
Here’s a rundown of the morning’s top stories and ETF performance:
- Nasdaq OMX and Intercontinental Exchange on Tuesday reportedly submitted a fresh takeover bid for the New York Stock Exchange’s parent company, including the offer of a $350 million fee if the deal runs into regulatory trouble. On April 10, the board of NYSE Euronext rejected an unsolicited $11.3 billion, or $42.50 per share, takeover offer from Nasdaq and IntercontinentalExchange while affirming its commitment to a previously-planned merger with Deutsche Boerse. NYSE Euronext Chairman Jan-Michiel Hessels has previously said that the Nasdaq-ICE’s “highly conditional” bid and that the breakup of NYSE Euronext was not in the exchange operator’s best interests. The NYSE hasn’t commented on the revised bid as yet. The Financial Select Sector SPDR ETF (NYSEArca: XLF) is trading flat early Tuesday.
- Asian shares fell Tuesday after Standard & Poor’s cut its outlook on U.S. government debt, highlighting fiscal challenges faced by the world’s largest economy and leading to a sell-off in global stock markets. Trading volumes were light ahead of upcoming Good Friday and Easter holidays in some regional markets, with some analysts also viewing the day’s sell-off as a temporary reaction. Peter Lai, director at DBS Vickers in Hong Kong, described the S&P move to lower its outlook on the U.S.’s AAA rating to negative from stable as “a symbolic action.” “Although it will not lead to an immediate downgrade, the move was a negative surprise and Japan also needs to be cautious since it’s a wake-up call on fiscal deficits,” said Yutaka Miura, a senior technical analyst at Mizuho Securities. The iShares MSCI All Country Asia ETF (NasdaqGM: AAXJ) is slightly higher so far today.
- Treasury prices recovered on Tuesday from slight pressure during the European trading session, leaving 10-year yields near the lowest in more than three weeks, as investors kept their eyes on developments in European peripheral debt. Yields on 10-year notes, which move inversely to prices, turned down by 1 basis point to 3.38%. A basis point is 1/100th of a percent. Yields on the benchmark securities fell to 3.37% during the session, near the lowest levels seen since late March. Yields on 2-year notes fell 1 basis point to 0.67%. Treasury prices slipped after a government report Tuesday showed U.S. housing starts rose more than expected in March, to an annualized rate of 549,000. The iShares Barclays 20+ Year Treasury Bond ETF (NYSEArca: TLT) is flat on Tuesday.
Here are the headlines from late Monday:
- Treasury prices turned back up in afternoon trading Monday, pushing long-term yields down to their lowest level in about three weeks, as sovereign-debt problems in Europe and stocks’ negative reaction to Standard & Poor’s lowered outlook on U.S. debt overshadowed the outlook revision itself. Long-term prices turned down significantly just after the S&P report was released, then recovered as falling stocks and oil showed investors selling riskier assets. The markets were rocked after S&P lowered its long-term outlook on the U.S. government’s AAA credit rating to negative from stable, citing the continued inability of policy makers to agree on a credible plan to reduce the federal deficit. The ability of short-term prices to hold on to their gains indicated that investors aren’t worried about any real credit problem for the U.S. for at least a few years. The iShares Barclays 20+ Year Treasury Bond ETF (NYSEArca: TLT) ended moderately higher on Monday.
- A bevy of issues are dogging the ailing housing industry: high unemployment, tighter bank lending standards and bigger required down-payments and fear home prices will fall further has kept many people from buying homes. That’s despite low mortgage rates and home prices that are the most affordable in a generation. The industry received a big boost in the first half of last year when the government offered tax credits to home-buyers. But once they expired in April, home sales plummeted. Economists expect home prices will hit bottom late this year before a modest recovery takes hold.
- Crude-oil futures fell nearly 3% Monday as investors fretted about the potential for diminished demand after debt-ratings company Standard & Poor’s cut its outlook on the U.S. government’s credit rating to negative and sparked a rush from stocks and growth-leveraged commodities. Benchmark light, sweet crude for May delivery fell $2.78, or 2.6%, to $106.82 a barrel on the New York Mercantile Exchange. Ahead of the report, oil had traded lower but above $108 a barrel as investors worried about softer demand due to the recent prices increases. Earlier Monday, Saudi Arabia announced it had cut output for March due to the weaker demand, according to news reports. Also, supply concerns eased related to violence in presidential elections in Nigeria, a major oil exporter, as several news organizations described the voting as largely peaceful. The Oil Services HOLDRs ETF (AMEX: OIH) closed down almost 1% on Monday.
Gregory A. Clay contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.