Closing Wrap-Up, Dec. 14
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December 14, 2009
Stocks gain ground to begin the week, leaving the major market indices at new 52-week highs. The Dow ($INDU) gained 29.55 points today to close at 10,501.05. The S&P 500 ($SPX) added 7.70 points to 1,114.11. The Nasdaq ($COMPQ) tacked on 21.79 points Monday, closing at 2,212.10. Volume remained light on the session with the NYSE turning over 1.08 billion shares and the Naz trading 1.89 billion shares. Market breadth was positive by a 23-to-8 and 19-to-9 margin on the Big Board and Naz respectively.
The big stories Monday came out of Dubai and in the energy sector. Traders were pleased to hear that Dubai's neighbor, Abu Dhabi, would provide $10 billion in aid Dubai to help them avoid defaulting on a payment. Though problems remain in Dubai, this news did ease some of these concerns. The dollar did lose ground against the euro and yen as oil prices moved below $70 a barrel.
Speaking of energy, Exxon Mobil (XOM) announced plans to buy natural gas provider XTO Energy (XTO) in a deal valued at $31 billion. XOM will issue 0.7098 common shares for each share of XTO, which was about a 25 percent premium above Friday's close for XTO. However, XOM shares fell 4.37 percent Monday to a price of $69.95, leaving XTO shares higher by 15.26 percent to $47.82. Overall, the Energy SPDRs (XLE) gained 1.03 percent to $56.10.
In other merger news, Sun Microsystems (JAVA) shares rallied 11 percent following positive talks with the European Union. Oracle (ORCL) announced it would buy JAVA for $7 billion several months ago, but the EU had problems with the resulting control the company would have over databases. Now it seems the EU is willing to work through the issue without the sell-off of assets and this pushed JAVA shares higher. The purchase price from ORCL is $9.50 a share, so JAVA still has some room to rise, closing Monday's session at $9.28.
Shares of Citigroup (C) fell 6.33 percent Monday to a price of $3.70. The bank is expected to close a deal to repay at least $10 billion in TARP funds back to the government. Citi is offering $17 billion in new stock and worries about dilution took a toll on the stock today. Citi shares are well off their 52-week high of $8.33, but are still nearly four times higher than the low reached below a dollar a share.
Tuesday's focus could turn to the economy with several economic reports on tap. Traders will get releases dealing with manufacturing when the industrial production report and Empire State Mfg. Survey are released. Tuesday also marks the start of the two-day FOMC meeting that will culminate with an interest rate decision and statement Wednesday afternoon.
Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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