Tag Archives: S&P 500

U.S. Stocks Fluctuate Amid Confidence, Housing Reports

According to Bloomberg,

U.S. stocks fluctuated, after the Standard & Poor’s 500 Index fell from a record yesterday, as investors assessed reports showing higher home prices and an unexpected drop in consumer confidence.

Lennar Corp. and PulteGroup Inc. climbed at least 3.5 percent, leading a rally among homebuilders. Tiffany & Co. jumped 7.9 percent after profit topped analysts’ estimates and the jeweler boosted its forecast. Jos. A. Bank Clothiers Inc. surged 9.2 percent after Men’s Wearhouse Inc. offered to buy the apparel company for about $1.54 billion. Take-Two Interactive Software Inc. fell 3.5 percent as the gaming company said it bought back all 12 million shares held by Icahn Group.

The S&P 500 gained 0.1 percent to 1,804.59 at 11:29 a.m. in New York after falling as much as 0.1 percent earlier. The Dow Jones Industrial Average rose 22.99 points, or 0.1 percent, to 16,095.53. Trading in S&P 500 stocks was 18 percent below the 30-day average at this time of the day.

“We’re tending to move in a positive direction,” Kate Warne, a St. Louis-based investment strategist at Edward Jones & Co., said by phone. Her firm oversees $746 billion. “We’re getting data in a sweet spot. It’s positive but not so positive as to raise worries about the Fed moving sooner and yet it continues to show that the economy is gaining some traction.”

The S&P 500 fell 0.1 percent yesterday after closing Nov. 22 for the first time above 1,800 to cap seven straight weeks of gains.

Fed Stimulus

Home Prices See Highest Gains Since February 2006

Three rounds of Federal Reserve bond purchases have helped push the S&P 500 up 166 percent from a bear-market low in 2009. Four out of five investors expect the Fed to delay a decision to begin reducing the stimulus until March 2014 or later, according to a Bloomberg Global Poll on Nov. 19.

Policy makers have been scrutinizing data to determine whether the economy is strong enough to withstand a reduction in their $85 billion a month in bond purchases.

More applications for home construction were issued in October than at any time in the past five years, figures from the Commerce Department showed today. The agency postponed publishing housing-starts data, due today, to Dec. 18 because of a lapse in funding after a 16-day partial government shutdown last month.

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VIX Trader Betting $13 Million on 88% Jump in Fear Gauge

According to Bloomberg,

An investor bought $13 million in call options on the Chicago Board Options Exchange Volatility Index, betting the gauge will rally at least 88 percent in the next four months.

About 100,000 VIX March calls were purchased with a strike price of 23 for about $1.30 each, according to Trade Alert LLC. The contracts were among the five most-traded on U.S. options exchanges today, based on data compiled by Bloomberg.

Chicago Board Options Exchange

Chicago Board Options Exchange

 

 

 

 

 

 

 

 

In another transaction, a person spent $5.1 million in a bet that the Standard & Poor’s 500 Index will rise more than 10 percent in the next three months. The trade involved buying about 31,000 February calls for about $1.65 per contract with an exercise price of 1,975 on the U.S. equity benchmark, according to Trade Alert.

“The S&P 500 (SPX) trade looks like a melt-up trade and the VIX trade is the melt-down trade,” Justin Golden, a partner at Lake Hill Capital Management LLC, said in an e-mail. The New York-based hedge fund trades options on equity indexes and commodities. “Either way, in order for either of these to pay off you need significant movement in some direction.”

The two trades — one that makes money with higher volatility, the other profiting with equity gains — show seemingly opposing wagers on the direction of the stock market as investors gauge the prospect of continued monetary stimulus after a four-year bull market. The transactions may be used to speculate on the direction of the VIX (VIX) or S&P 500, or to hedge swings in other investments.

‘More Hopeful’

The S&P 500 is up 25 percent this year, putting it on track for the biggest annual gain since 2003, as the Federal Reserve maintained bond purchases to spur economic growth and corporate earnings topped analysts’ estimates. Investors may see political turmoil over the next three months as Congress’s self-imposed deadline to agree on a fiscal 2014 budget comes next month and the law now funding the government expires Jan. 15.

The S&P 500 fell 0.1 percent to 1,789.25 at 3:32 p.m. in New York. The VIX, which moves in opposite direction of the equity gauge about 80 percent of the time, gained 2.1 percent to 13.38. The VIX was about 12.9 when the calls were purchased this morning.

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Most U.S. Stocks Decline After Dow Briefly Reaches 16,000

According to Bloomberg,

Most U.S. stocks fell after the Dow Jones Industrial Average rose above 16,000 for the first time, spurring concern that equities have risen too far, too fast.

Consumer companies and commodity stocks led the retreat. Microsoft Corp. (MSFT) slid 1.7 percent after Bank of America Corp. cut its rating to underperform from neutral. Tyson Foods Inc., the largest U.S. meat processor, advanced 2.3 percent after reporting revenue above analysts’ estimates on a gain in prices and sales volumes for beef and chicken.

The Standard & Poor’s 500 Index (SPX) slipped 0.4 percent to 1,791.53 at 4 p.m. in New York. Earlier, it topped 1,800. About three stocks fell for each that rose in the gauge. The Dow average gained 14.32 points, or 0.1 percent, to 15,976.02. About 6 billion shares changed hands on U.S. exchanges, in line with the three-month average.

“We’ve moved pretty far pretty fast,” Kevin Caron, a Florham Park, New Jersey-based market strategist at Stifel Nicolaus & Co., which oversees about $150 billion. “Obviously there’s a potential for a little bit of a pullback.”

While four years of earnings growth and the Federal Reserve’s near-zero interest rate have led the S&P 500 on a 165 percent rally since March 2009, they have also driven valuations to a three-year high. Billionaire investor Carl Icahn, speaking at the Reuters Global Investment Outlook Summit, said he is “very cautious” on equities.

The S&P 500 trades at 17 times reported operating profit, a 20 percent increase from the beginning of 2013, according to data compiled by Bloomberg. Last week, the benchmark’s valuation reached the highest level since May 2010.

Continued Stimulus

“As we keep going and making new highs, we get into new territory and the air keeps getting thinner and thinner up here,” Tim Hartzell, who helps manage about $425 million as chief investment officer at Sequent Asset Management, said via phone from Houston. “Everybody is watching Yellen and feel comfortable that she’ll continue QE, maybe even put more into the system.”

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Is Hedge Fund the Best Investment to Beat the Market?

For those who take delight in the so-called “smart money” underperforming the “dumb money,” here are some enjoyable new data points that show hedge funds continue to be an overpriced, middling asset class.

Evidence suggest hedge funds may be expensive way to trail the market.

For those who take delight in the so-called “smart money” underperforming the “dumb money,” here are some enjoyable new data points that show hedge funds continue to be an overpriced, middling asset class, reports Nick Summers from Bloomberg.

Goldman Sachs’s quarterly report on the industry, which tracks 705 funds with a combined $1.5 trillion of bets on stocks, finds that hedge funds have returned an average of 5 percent in 2013, compared to a 15 percent gain in the Standard & Poor’s 500-stock index. Only 5 percent of the funds beat the S&P, while more than one in eight posted a loss. An added insult is that hedge funds charge their clients huge fees—typically, 2 percent of assets and 20 percent of any gains—for the privilege of investing their money and lagging the market.

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Goldman Sachs Reports: Poor Performance of Hedge Funds This Year

Goldman Sachs Reports: Poor Performance of Hedge Funds

Hedge Funds Struggling to Keep Up With the Market

The analysts at Goldman Sachs have just published their latest Hedge Fund Trend Monitor report, which tracks the equity investments of the world’s hedge funds.

One thing is clear: hedge funds are struggling to keep up with the market.

“The typical hedge fund generated a YTD return of 5% through May 10, compared with 15% gains for both the S&P 500 and the average large-cap core mutual fund,” wrote Goldman Sachs Amanda Schneider.  “Hedge funds returned an average of 3.5% in 1Q 2013, lagging the S&P 500 by 700 bp. Last year the average fund returned 8% vs. 16% for the S&P 500.”

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Wall Street shakes off factory data; S&P, Nasdaq rise

(Reuters) – Stocks edged higher on Monday, shaking off a surprise contraction in manufacturing, which some investors took as a signal the Federal Reserve will take more forceful actions to boost the economy.

The Institute for Supply Management’s manufacturing index came in at a lower reading than expected in June, registering a contraction in the sector for the first time since July 2009.

The S&P was lower for much of the session but closed slightly higher in late gains. Still, industrial shares were under pressure after the data, the latest in a string of indicators pointing to deteriorating economic conditions around the globe. Boeing Co (BA.N) lost 1.5 percent to $73.18 and Caterpillar Inc (CAT.N) was off 1.4 percent at $83.68.

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Euro Leaders Turn To Central Bank For Help To Tackle Crisis

European leaders turn to the European Central Bank this week, seeking assistance from monetary policy makers to reinforce gains following euro-area leaders’ moves to calm markets and accelerate the currency bloc’s integration.

The Frankfurt-based ECB may offer help on July 5, with economists expecting an interest rate cut. The bank has a track record of action following political progress, including bond purchases that followed bailout programs and unlimited three- year loans on the heels of pledges supporting fiscal discipline.

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