Closing Recap 1:05PM EST

Wednesday, December 24, 14

Index

Up/Down

Last

DJ Industrials

6.29

0.03%

18,030

S&P 500

-0.15

0.001%

2,082

Nasdaq

8.05

0.17%

4,773

Russell 2000

5.82

0.48%

1,208

Equity Market Recap

U.S. equity markets end mostly higher on this abbreviated trading session ahead of the Christmas
Holiday tomorrow, with the DJ Industrials extending its recent winning streak to 6-days (S&P
turned negative in the final minutes to break its streak). The NASDAQ recovered after faltering
yesterday behind weakness in Biotech stocks (which also recovered today). After lagging other
indices, the Russell 2000 traded up near. Have a safe and Happy Christmas to you and your
families!

Economic Data
Weekly jobless claims fell 9K to 280K (vs. est. 290K), a 7-week low; the four-week average
declined 8,500 to 290,250. In the first 11 months of this year, employers have added 2.65 million
jobs. That already makes 2014 the best year for hiring since 1999

Commodities
Energy prices were broadly lower, failing to add to yesterdays momentum as long as OPEC
remains unphased by drop in oil, and unwilling to cut production to help support prices, prices
likely to remain stubbornly low (many analysts have lowered forecasts for oil, and individual
stocks given the outlook); WTI crude dropped back below $56 per barrel
Natural gas prices were lower on warmer weather forecasts and extended losses after the EIA
reported weekly natural gas inventories fell 49 bcf, less than the forecasted drawdown of 59 bcf;
Jan 15 futures were down more than 4%, around $3.03 mln btu
Crude fell further after bearish weekly inventory data by the Department of Energy which
showed crude oil inventories 7.27M build vs. consensus of -2.5M draw; also larger build in
gasoline with 4.08M build vs. consensus of 1.0M build and unexpected build in distillates 2.3M

Currencies
The dollar index (DXY) was down slightly, falling from than 8-year highs yesterday, trading back
below the 90 level on what was a quiet day in currencies. The ruble strengthened against the US
dollar, with the greenback dropping below 54 (remember it was a week ago that the ruble traded
near 80 level against the dollar in mass liquidation as oil prices were plunging). As oil prices have
stabilized, so has the ruble

Bond Market
Treasuries end little changed after weakness early; has been weaker following better economic
data this week, and some repositioning into year-end (bonds have been extremely strong for
years given FOMC easy monetary policy); the selling in bonds has lifted yields, with the 10-year at
2-week high today 2.29%, with the 2-yr up at 0.74%, and 5-yr trades 1.78% (all follows strong
GDP data yesterday)
The U.S. Treasury sold $29B in seven-year notes at yield of 2.125%, with bid to cover 2.39 (vs.
prior 2.63) the lowest since Nov 2013, and indirect bidders awarded 56.5% of auction highest
since Dec 2010; (the softer 7-yr auction follows yesterdays tepid 5-year auction)

Other Interesting tidbits

The Dow Jones Industrial Average closed above 18,000 for the first time Tuesday, just 120
sessions since it first closed above 17,000 on July 3. That makes it the fifth fastest 1,000-point rise
in the Dows history. It also marks the sixth time it closed above 1,000-point milestones twice in
one calendar year. Of the Dows 30 components, the biggest contributors to the indexs latest
1,000-point gain have been the shares of Visa Inc. (V) and Goldman Sachs (GS), which have added
about 313 points and 167 points, respectively, to the indexs price (into today)

Macro

Up/Down

Last

WTI Crude

-1.58

55.54

Brent

-1.51

60.18

Gold

-3.80

1,174.20

EUR/USD

0.0019

1.2191

JPY/USD

-0.22

120.47

+0.001

2.266%

10-Year Note

Sector News Breakdown

Consumer
Retailers mixed; group has been strong heading into Christmas week, seeing little profit taking
today in some apparel, department store, Broadline stocks; MKM said following checks, KSS,
FIVE, TJX, DLTR holiday customer traffic outpacing discount/off-price peers
Pharmacy retailer WAG advanced further after earnings yesterday; several analysts raised their
price targets this morning post earnings
Consumer Staples; CALM shares fell after Q2 EPS missed estimates by 10c on in-line revenues;
Cutrale-Safra extended its tender offer for CQB until January 5th; ANFI boosted its FY15 revenue
(to over 25% from prior 20%) and Ebitda guidance

Energy
Energy stocks lagged with drop in crude (bearish inventory data did not help sentiment); Dow
components CVX and XOM underperform early, but rally late; names leveraged to natural gas
have been hit the hardest this week given the tumble in those prices
Capital One with several rating changes in energy sector (leveraged to natural gas); upgraded
CHK and REI, but downgraded shares of GDP, HK, MHR, OAS, PVA, REXX, and UPL
MLPs mixed, as Alerian MLP Index (AMZ) little changed, despite the drop in crude. RW Baird said
regarding history of MLP distribution cuts, finds that universally unit prices collapse after a cut
and bottom about a month later. If oil prices remain low for long, some MLPs could be forced to
cut distributions
Financials
Financials were quiet as a whole, trending higher with the overall market. A few individual news
stories moved stocks, with ARCP receiving another waiver from lenders and an extension for
reporting its Q3 and FY 2014 results, and said will not pay a dividend until it delivers the
statements; OCN remains weak after Fitch cut its ratings; NY Federal Court orders MF Global to
pay $1.2B in restitution, $100M penalty
Healthcare
Biotech stocks bounce after near 5% decline in sector yesterday; GILD, which was down almost
20% over the last 2 trading days on losing out on deal with ESRX for its Hep C drugs, getting relief
bounce (several analysts have defended the stock over the last few days); several other biotech
stocks, which fell in reaction to price war concerns, are also recovering partially (IBB rises)
Stock movers; SNN rose overseas after people familiar with the matter said that SYK is planning a
takeover offer for the U.K. medical device maker that could happen in the coming weeks
http://goo.gl/tsgNbP; ADMS entitled to $30M milestone payment from ACT after Namzaric NDA
approved; ACHN bounces after falling over 20% yesterday on analyst downgrade (defended at
Piper today); BCRX received late yesterday FDA Orphan drug designation for its HAE treatment;
OVAS upgraded by one analyst
Industrials & Materials
Transports mostly higher; group getting a lift on lower energy prices (DAL, LUV, UAL); VA
initiated coverage by several analysts (4 with buy ratings); rails underperformed
Metals & Mining; FCX said successful production test at Highlander discovery indicated flow rate
of 43.5mmcf/d; gold miners with a move higher, led by NEM and GG
Other movers; MMM analyst downgrade on valuation; MON downgraded buy to neutral with
$122 tgt at Miller Tabak
Shipping; Baltic Dry Index Fell (-0.8%) to 782 points in London, extending its losing streak to 24
straight days (longest since Aug 2012); NVGS jumped after Jim Cramer touted the stock last night
on Mad Money

Technology, Media & Telecom

Tech stocks bounce after NASDAQ fell yesterday (though most of weakness related to Biotechs);
BABA bounces after sell-off yesterday; GPRO rises ahead of holiday; FB signed NFL video clip deal
Body camera makers DGLY and TASR advanced following news of a suburban St. Louis police
officer that shot and killed a man who pointed a gun at him at a gas station late Tuesday, in
Berkeley Missouri
Movers; CDNS rises as Northland said the company indicated that it signed the largest deal in five
years at a marquee global brand (Northland said did not specify customer, but firms checks
confirm that it is AAPL); JCOM made $15 cash tender offer for CARB
Media & Telco; SNE said The Interview will screen on 300 movie theatres; YouTube said it will
stream the movie as a rental, CNN reported

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