Risk aversion, supported by crude oil prices that dropped -$1.73/bbl on the session, led to a gain of between +1 and +2-percent in US equity prices on Monday.
The DJIA (+130.4 +1.01% to 12876.3), S&P 500 (+15.3 +1.09% to 1403.58), NASDAQ Composite (+43 +1.73% to 2488.5) and the Russell 2000 small cap index (+13.5 +1.84% to 732.6) were all very strong.
The leading sectors were Basic Materials (XLB +2.1%) and Consumer Discretionary (XLY +2.1%) whereas the Energy sector (XLE -0.6%) both held the market in check and gave it some fuel.
In the industry groups, the Retailers ($RLX +2.7%) were very strong – 1-800-HELP in the form of “tax” rebates will do that. The REITS ($DJR) and Broker-Dealers ($XBD) each gained +2.5%.
Many of the Retailers had gains above +4%: Pacific Sunwear (PSS +17.3%), AnnTaylor (ANN +16.1%), Hot Topic (HOTT +7.4%), Bebe (BEBE +6.2%), Tween Brands (TWB +6.0%), The Limited (LTD +4.7%), Best Buy (BBY +4.2%) Bed, Bath & Beyond (BBBY +4.1%) and Ethan Allen (ETH +4.0%).
Among the Cara 100 stocks, Canada’s Research In Motion (RIMM +6.9%) and EnCana (ECA +6.7%) were strongest, while VIP (-3.1%) and YHOO (-2.6%) were down on the day.
On the earnings front, Japan's top telecommunications company Nippon Telegraph and Telephone (NTT) reported its FY 2007 group net profit surged +32%. Frances #2 bank, Societe Generale SA was a different story in that led to a -23$ decline in Q1 profits to $1.7 billion. This bank is still blaming a $7.18 billion trading loss to an individual “rogue” trader. Now (Cara 100) Wal-Mart has just reported a +6.9% profit increase, earning $3.02 billion ($0.76/share vs Analyst expectations of $0.75) vs $2.83 billion ($0.68/sh). Overall revenue of $95.30 billion compared to $86.41 billion for the prior year.
On the deals front, (Cara 100) Aussie-based Westpac Banking Corp (WBK) has made a $17.6 billion all-share bid for smaller rival St George Bank in a merger that would create Australia's biggest bank by market value. Also, Hewlett-Packard (HPQ) confirmed it is in talks to buy Electronic Data Systems (EDS).
On the economics front, the Chinese money supply grew at the Y/Y rate of +17% in April. The Greek Import Price Index grew +7.9% Y/Y in March, quicker than the +0.3% growth experienced in the previous year.
The US long bond ($USB was flat at $117.25. There was a pop of +6.1% in the T-Bill yield to 1.750.
Crude Oil ($WTIC) dropped -$1.73/bbl to 124.23. The June futures earlier today were down at 123.60.
$GOLD lost -$0.90/oz to 884.90 and like the other precious metals is marginally softer in the spot market this morning as the $USD has gained some moderate strength. But nothing remarkable.
Asia-Pacific equity markets were mixed overnight.
