SMF Notes Market Summary for Thursday, June 21, 2012

End of Day Market Summary for: Thursday, June 21, 2012
Dow 30 Industrials 12,573.57 -250.82 -1.96%
S&P 500 1,325.51 -30.18 -2.23%
Nasdaq 100 2,556.96 -66.37 -2.53%
Nasdaq Composite 2,859.09 -71.36 -2.44%
Russell 2000 764.83 -19.22 -2.45%
S&P Midcap 400 910.94 -25.61 -2.73%
S&P 100 607.42 -12.82 -2.07%

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Biotechnology
Symbol Last Change Volume Open High Low Percent Trade Date
HGSI 13.35 +0.05 2,471,587 13.26 13.37 13.18 +0.38% 2012-06-21
IBB 126.59 -1.80 872,938 128.50 128.72 126.16 -1.40% 2012-06-21
AMGN 71.65 -1.14 6,063,192 73.06 73.50 71.57 -1.57% 2012-06-21
CELG 59.44 -7.72 23,399,309 59.49 60.90 58.53 -11.49% 2012-06-21
GILD 49.92 -0.86 5,029,363 50.96 51.33 49.84 -1.69% 2012-06-21
VRTX 57.60 -1.55 1,267,756 59.19 59.37 57.39 -2.62% 2012-06-21
TEVA 37.74 -0.04 3,706,788 37.58 37.92 37.50 -0.11% 2012-06-21

SMF Notes Early Floor Talk: Mixed markets

S&P futures have seen some recent improvement and are now showing slight gains; S&P futures are now +1 vs. fair value. This follows a relatively flat close yesterday (-0.2% on a Fed day), and weakness overseas overnight. Yesterday, markets saw a back-and-forth response to the FOMC directive, which extended "operation twist" but didn't signal a move toward a new asset purchase program.

Overseas equity markets generally moved lower overnight, uninspired by the Fed and disappointed by contracting PMI data in several key regions. Asian stocks finished mixed (Nikkei +0.8%, Hang Seng -1.3%, Shanghai -1.4%), with weakness in China/Hong Kong on disappointing Chinese PMI data, while Japanese stocks rose as the yen weakened. HSBC's China flash PMI fell MoM to 48.1 and indicated contraction for the 8th straight month. European markets are showing modest weakness (DAX -0.3%, CAC -0.4%, FTSE -0.6%, IBEX +0.2%), despite another decline in Spanish bond yields ((10-year -18 bps at 6.48%). A disappointing German Manufacturing PMI reading of 44.7 vs. the 45.2 expectation weighed on markets. On the other hand, France managed to exceed its PMI expectations; as did the UK with its latest Retail Sales' data. The decline in Spanish yields follows a Spanish bond auction, which saw healthy demand at higher yields.

In U.S. corporate news, SUNH was acquired by Genesis HealthCare for $8.50/share in cash, representing a 38% premium. Peer assisted living stocks moving higher in sympathy include SKH (+15%), KND (traded +5% in after-hours)... ONXX is higher by 28% this morning after the FDA committee voted in favor of the co's Kyprolis drug for multiple myeloma. The final FDA approval decision is expected on 7/27. LGND, which is partnered with ONXX on the drug, is adding 2% to yesterday's 13% gain... On the other hand, CELG is -11% after announcing its application for new indication for Revlimid in newly-diagnosed and maintenance multiple myeloma has been withdrawn from CHMP.

In earnings news, RHT is -10% after reporting earnings and giving disappointing guidance on its conference call. BBBY is -11% after issuing disappointing guidance along with its above-consensus earnings. CAG is little changed on better-than-expected results.

Commodities are lower, with gold -20 at 1595 and crude oil -0.79 at 80.66.

There are several pieces of data on today's econ calendar, with Initial Jobless Claims data at 8:30 ET, followed by the June Philadelphia Fed reading and May Existing Home Sales, both at 10:00 ET. There are no earnings scheduled after today's close, and no econ data tomorrow.

SMF Notes Initial Claims Remain Elevated, Employment Situation on Shaky Ground

The initial claims level declined from an upwardly revised 389,000 (from 386,000) for the week ending June 9 to 387,000 for the week ending June 16. The Briefing.com consensus expected the initial claims level to fall to 380,000. There is no doubt that the labor market recovery has stalled. Instead of moving steadily lower, the initial claims level has held tight above 380,000 for the past several weeks. That level is enough to support minimal job growth, but not enough to support a decline in the unemployment rate. Quite simply, the data show that businesses have a cautious view of the economic outlook and demand picture. The continuing claims level remained at 3.299 mln for the week ending June 9. The consensus expected the continuing claims level to decline to 3.278 mln.

SMF Notes  Asian Markets Close: Nikkei +0.8%, Hang Seng -1.3%, Shanghai -1.4%

It was a sea of red across Asia as all but Japan's Nikkei (+0.8%) and India's Sensex (+0.8%) finished lower after China's HSBC Flash Manufacturing PMI printed 48.1 (48.4 previous), its lowest reading in seven months. Other data out in the region showed Hong Kong's CPI ease to 4.3% (4.7% previous). Looking at the currencies...USDCNY strengthened to 6.3655 while USDJPY is stronger at 80.05. In Japan, the Nikkei closed +0.8% climbed to a five-week high as the yen weakened. Exporters were strong on the softer yen as Honda Motor rallied 3.5% and Canon added 1.4%. Heavyweight telecom provider Softbank was also strong, adding 2.9%.

In Hong Kong, the Hang Seng finished -1.3% as financials and commodity names were weak. ICBC shed 1.6% and Bank of China Hong Kong dropped 0.6%. In the commodity space, Jiangxi Copper fell 4.3% and Cnooc gave up 3.2%. Elsewhere, Evergrande Real Estate tumbled 11.4% on reports of accounting irregularitie.

In China, the Shanghai Composite settled -1.4% as financials and automakers were weak. China Merchants Bank lost 1.2% and automaker SAIC Motor slipped 1.5%.

In India, the Sensex closed +0.8% even as the rupee sank to a record low 56.56 per dollar. Financials were strong with State Bank of India and ICICI Bank gaining 2.9% and 2.0% respectively. Meanwhile, heavyweight Reliance Industries fell 2.6% after its partner in KG D6, Niko Resources, slashed its reserve estimates by 80%.
08:20  COMDX Gold and silver are selling off and just hit new session lows (Gold $1586.10, Silver $27.47)

Aug gold is now -1.7% at $1588.80/oz and July silver is -3.1% at $27.52/oz.
08:20  SPY Daily & Weekly Floor Trader Pivot Point Levels For Cash SPX & SPY ETF For Thurs. Jun. 21: (135.48 )

SMF Notes  European Yields: 10-yr: +06/32..1.635%..USD/JPY: 80.09..EUR/USD: 1.2653

Spain sold EUR2.2 bln of 2-, 3-, and 5-yr bonds as yields rose from previous auctions' levels. The country will be in focus this morning as its bank stress tests will be released at 11:30 am ET. Spanish yields continue to ease drastically as the 10-yr is down another 17 bps to 6.48%. The key yield is now down close to 80 bps from Monday's high. Italy has also benefitted from the Spanish auction as its 10-yr is down another 5 bps today to 5.69%. PMI data in the region was on both sides of the spectrum as German numbers missed while French numbers beat and Eurozone numbers were mixed. Germany's Flash Services PMI (50.3) remained in expansion, but matched its lowest reading since September. The Eurozone current account balance was also released, and fell well short of estimates with a EUR4.6 bln surplus (EUR7.3 bln expected, EUR10.3 bln previous). Some money is moving back into German Bunds with buying of longer dated paper dropping the 10-yr yield 5 bps to 1.56%. A flat session in France has its 10-yr yield holding at 2.65%. Elsewhere, Britain's retail sales printed a better than expected 1.4% MoM (1.1% MoM expected). However, Gilt yields are easing as a modest bid has dropped the 10-yr 5 bps to 1.72%.

SMF Notes Existing Home Sales Decline as Investors Continue to Pull Out

Existing home sales declined 1.2% from 4.62 mln in April to 4.55 mln in May. The consensus expected home sales to fall to 4.56 mln. A shortage of available distressed properties has tempered investor purchases the past few months. That was no different in May. Distressed sales accounted for only 25% of sales in May, down from 28% in April and 31% in May 2011. The lack of distressed properties led to a significant drop in all-cash (investor) sales (from 20% in April to 17% in May). First-time buyers have not yet picked up the slack left behind from the pullback in investor demand. These buyers accounted for only 34% of purchases in May, down from 35% in April and 36% in May 2011. During normal periods, first-time homebuyers generally account for nearly 45% of all sales. The median home price increased 7.9% y/y in May to $182,600.

SMF Notes Market Internals

The Nasdaq finished down 71 points (-2.44%) at 2859, the S&P 500 closed down 30 (-2.23%) at 1326, and the Dow closed down 251 (-1.96%) at 12574. Action has came on slightly above average volume (NYSE 866 mln vs. avg. of 830; NASDAQ 1731 mln vs. avg. of 1721), with decliners outpacing advancers (NYSE 575/2495, NASDAQ 515/1973) and mixed new highs/lowslows (NYSE 64/39, NASDAQ 45/48).

Relative Strength:
Volatility-VXX +11.11%, Coffee-JO +3.64%, Natural Gas-UNG +2.29%, U.S. Dollar-UUP +1.07%, 20+ Year Treasuries-TLT +0.53%.

Relative Weakness:
Junior Gold Miners-GDXJ -7.73%, Eastern Europe-ESR -6.79%, Silver Miners-SIL -6.74%, Cotton-BAL -6.55%, Poland-EPOL -5.62%, Belgium-EWK -5.55%, Thailand-THD -5.42%, Oil and Gas Exploration-XOP -5.29%, Gold Miners-GDX -5.18%, Austria-EWO -5.13%.