US stocks barely budged after another day of low volume trading as shrinking economies in Europe and Japan overshadowed better-than-expected jobless claims on a banner day for M&A deals.
The US jobless claims fell by 27,000, the most in a month, to 341,000 in the week ended Feb 9, a Labor Department report showed; that is until it will be revised again to a much higher number.
However, international economic news was far from encouraging. Recession in the euro-area deepened as gross domestic product in the 17-member currency zone shrank 0.6 percent over the third quarter, and fell 0.9 percent over the same period in 2011, the European statistics agency Eurostats revealed today.
In Japan, real GDP shrank at an annualized clip of 0.4 percent in the October-December quarter amid a business-investment slump and falling exports.
Today also saw a slew of M&A news. Heinz vaulted 20 percent after Warren Buffet’s Berkshire Hathaway Inc and 3G Capital agreed to buy the ketchup-maker in a deal valued at about $23 billion.
Constellation Brands Inc soared 37 percent after Anheuser-Busch InBev agreed to give up full control of distribution for Corona Beer in an effort to settle antitrust issues related to its proposed $20 billion takeover of Mexican brewer Grupo Modelo.
American Airlines parent AMR and US Airways agreed to an $11 billion merger deal to create the world’s largest airline. AMR soared 63 percent while US Airways dropped 4.6 percent.
The Dow Jones Industrial Average (DJIA) slipped 10 points but the S&P 500 Index (SPX) added 1 meager point to finish at 1,521, its highest close since October 31, 2007. Energy stocks advanced the most while telecom firms performed the worst among its 10 business groups.
Treasuries rose Thursday, pushing yields on 30-year Treasury bonds lower for the first time in four days as a worse-than-expected slowdown in Europe spurred demand for US government debt.
The US dollar extended gains against the euro and most other rivals after data showed the euro-area economy shrank more than expected in the final quarter of 2012, heightening expectations of a rate cut by the European Central Bank.
The 17-member common currency, which traded at over $1.37 earlier this week, tumbled further to $1.3369.
Most European stocks finished lower after latest GDP numbers confirmed the region slipped deeper into recession while Japan’s economy also contracted in the fourth quarter, reminding investors of the lurking dangers ahead.
Spain’s troubled lender Bankia SA sank 12.4 percent after Spain’s bank bailout fund said the bank’s shareholders may have to absorb heavy losses as restructuring efforts may result in significant reduction in share values.
Germany’s DAX 30 index fell 1.1 percent in Frankfurt. Deutsche Bank gave back 1.1 percent as, weighed down by banks, the CAC 40 index slipped 0.8 percent in Paris.
The trading range of the major indexes remains tight, which is also reflected by the minuscule movement of our Trend Tracking Indexes (TTIs). The Domestic TTI ended +3.24% above its trend line while the International TTI closed the day at +11.34%.
For the latest charts and momentum numbers, please refer to the most recent StatSheet, which I will post shortly.Contact Ulli