Wall St focused on rising bond yields
Wall St focused on rising bond yields
By Michael Mackenzie in New York
Copyright The Financial Times Limited 2007
Published: June 22 2007 13:56 | Last updated: June 22 2007 13:56
Wall Street was set for a lower start on Friday and faced the prospect of posting declines this week, as investors continued to monitor rising bond yields.
Global stocks were on the defensive after a 3 per cent fall in Chinese stocks. With no economic data due on Friday, US investors will likely watch oil prices, bond yields and credit spreads as a shake-out among mortgage hedge funds continues.
Attention will also focus on the NYSE debut for shares of Blackstone, the private equity firm which priced its initial public offering at $31 a share late on Thursday. Amid strong subscription, the IPO valued Blackstone at about $33.6bn.
Less than an hour before the opening bell, S&P 500 futures were down 5.6 points at 1,527.40 and were trading below fair value of 1,533.22.
Nasdaq futures were down 8.5 points at 1,957.2, below a fair value reading of 1,963.05.
Futures for the Dow Jones Industrial Average were down 50 points at 13,610.
The yield on the 10-year bond was 3 basis points higher at 5.20 per cent.
“The market is currently a little nerve-wracking for investors,” said Stuart Schweitzer, global market strategist at JP Morgan Private Bank. He said investors were worried that it was becoming harder for the economy to reflect a “goldlilocks mix”, whereby growth slows to stall inflation, but remains strong enough to keep corporate profits humming along.
Meanwhile, the most recent data from NYSE show that professional investors have become increasingly bearish on stocks. For the month of June, short interest - sales of stock that an investor does not own - on NYSE rose 6 per cent to 12.47bn shares, a record high.
“Just as stocks hit new highs in June, short interest rose right with it,” said analysts at Bespoke Investment Group. “While we contend that part of the increase in short interest is attributable to the gaining popularity of hedge funds over the last several years, the fact that it has risen by over 30 per cent since February makes this the largest four month gain since 1988.”
Another stock likely to stay in the news on Friday is Kraft Foods. Its shares jumped 6.6 per cent to $36.75 on Thursday, amid news that Nelson Peltz, the activist investor, has purchased a 3 per cent stake in the food company and planned to seek asset sales.
Stocks closed higher on Thursday, after a choppy opening. The S&P 500 index rose 0.6 per cent to close at 1,522.19 – rebounding from a low of 1,504.75 earlier in the day.
Technology led gains on Thursday, and the Nasdaq Composite rose 0.65 per cent to 2,616.96, boosted in part by a 2.8 per cent rally in the semiconductor sector.
Blue chips also rebounded from early losses and the Dow Jones Industrial Average rose 0.4 per cent to 13,545.84.
By Michael Mackenzie in New York
Copyright The Financial Times Limited 2007
Published: June 22 2007 13:56 | Last updated: June 22 2007 13:56
Wall Street was set for a lower start on Friday and faced the prospect of posting declines this week, as investors continued to monitor rising bond yields.
Global stocks were on the defensive after a 3 per cent fall in Chinese stocks. With no economic data due on Friday, US investors will likely watch oil prices, bond yields and credit spreads as a shake-out among mortgage hedge funds continues.
Attention will also focus on the NYSE debut for shares of Blackstone, the private equity firm which priced its initial public offering at $31 a share late on Thursday. Amid strong subscription, the IPO valued Blackstone at about $33.6bn.
Less than an hour before the opening bell, S&P 500 futures were down 5.6 points at 1,527.40 and were trading below fair value of 1,533.22.
Nasdaq futures were down 8.5 points at 1,957.2, below a fair value reading of 1,963.05.
Futures for the Dow Jones Industrial Average were down 50 points at 13,610.
The yield on the 10-year bond was 3 basis points higher at 5.20 per cent.
“The market is currently a little nerve-wracking for investors,” said Stuart Schweitzer, global market strategist at JP Morgan Private Bank. He said investors were worried that it was becoming harder for the economy to reflect a “goldlilocks mix”, whereby growth slows to stall inflation, but remains strong enough to keep corporate profits humming along.
Meanwhile, the most recent data from NYSE show that professional investors have become increasingly bearish on stocks. For the month of June, short interest - sales of stock that an investor does not own - on NYSE rose 6 per cent to 12.47bn shares, a record high.
“Just as stocks hit new highs in June, short interest rose right with it,” said analysts at Bespoke Investment Group. “While we contend that part of the increase in short interest is attributable to the gaining popularity of hedge funds over the last several years, the fact that it has risen by over 30 per cent since February makes this the largest four month gain since 1988.”
Another stock likely to stay in the news on Friday is Kraft Foods. Its shares jumped 6.6 per cent to $36.75 on Thursday, amid news that Nelson Peltz, the activist investor, has purchased a 3 per cent stake in the food company and planned to seek asset sales.
Stocks closed higher on Thursday, after a choppy opening. The S&P 500 index rose 0.6 per cent to close at 1,522.19 – rebounding from a low of 1,504.75 earlier in the day.
Technology led gains on Thursday, and the Nasdaq Composite rose 0.65 per cent to 2,616.96, boosted in part by a 2.8 per cent rally in the semiconductor sector.
Blue chips also rebounded from early losses and the Dow Jones Industrial Average rose 0.4 per cent to 13,545.84.
posted by Carlos T Mock @ 6:09 AM
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