Friday, December 16, 2011

Markets higher led by successful IPO for Zynga

Dow gained 66, advancers over decliners 4-1 & NAZ was up 35.  Bank stocks are also higher, although a little below earlier highs.

S&P 500 Financials Sector Index

Value 170.85 One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change   2.40      (1.4%)

The MLP index was up 1+ to the 374s & the REIT index rose 3+ to 225.  Junk bond funds gained & Treasuries rose, taking yields to 10 week lows (with the 90 bill yield below zero).  Oil fluctuated as it headed for a 2nd straight weekly decline on concern that European economic growth will slow.  Gold rebounded after its fall of almost 10% in Dec.

AMZ   Alerian MLP Index

DJR   Dow Jones Equity REIT Index

Treasur yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLF12.NYM...Crude Oil Jan 12...94.28 .....Up 0.41  (0.4%)

GCZ11.CMX...Gold Dec 11....1,588.80 ...Up 14.20  (0.9%)

Get the latest market update below:

Italian Prime Minister Mario Monti

Photo:   Bloomberg

The Italian gov easily won a confidence vote on its package of austerity measures in the lower chamber of Parliament as more protest strikes hit the country.  Premier Monti called the vote to speed passage of the €30B ($39B) in extra taxes & pension reforms that he says are vital to save Italy from financial disaster.  About €10 B of those savings would be reinvested into growth.  The Senate is expected to vote on the measures in the next few days to complete approval.   As lawmakers voted, a one-day nationwide transportation strike caused chaos for commuters. Unions are incensed over pension reforms making Italians work more years & until an older age before being eligible for generous pension checks.  The gov softened the reforms slightly.  The wide majority of votes in favor of the package was expected, but that doesn't mean the main political parties are happy with all of it.

  • <p>A woman carries shopping bags at South Park mall in Charlotte, North Carolina November 25, 2011. REUTERS/Chris Keane</p>
Photo:    Yahoo

Consumer prices were flat in Nov as Americans paid less for cars & gas, a further sign of a cooldown in inflation.  The Labor Dept said the CPI was unchanged last month.  Prices rose 3.4% in the 12 months through Nov, off from the 3-year high of 3.9% clocked in Sep.  However, some of the data could give pause to policymakers still concerned about inflation.  Outside food & energy, prices climbed 0.2% & is up 2.2% in the 12 months.  But dragging down the overall index, gas fell 2.4% & prices for new vehicles were down 0.3%.  Prices for food rose 0.1% in Nov.  Within the core index, prices for apparel jumped 0.6%.  There are expectations that inflation slowing over the coming months, which could help prompt the Federal Reserve to do more to bring down the country's unemployment rate.

Consumer Prices in U.S. Stagnate as Gas Drops

Online game maker Zynga prices IPO at $10 a share

Photo:   Yahoo

Zynga raised $1B in its IPO, pricing the shares at the top of the market range. The developer of games such as “CityVille,” “FarmVille” & “Mafia Wars” sold 100M shares for $10 each after the company had offered the stock for $8.50-$10.  This is the biggest offering by a US internet company since Google (GOOG) raised $1.9B in 2004.  Its increasing ubiquity & expansion prospects appeal to investors.  Founded in 2007, ZNGA doubled sales to $829M in the first 9 months of 2011.  The IPO values ZNGA at $7B, or 6.8X revenue in the year through Sep 30, more than triple its rival Electronic Arts (ERTS). The stock has not begun trading yet. but probably will jump to a significant premium.

Zynga Raises $1 Billion in Pricing for Largest Technology IPO Since Google

An oversold market is higher with a lack of negative news from Europe & the IPO by ZNGA.  But zest is lacking from these gains.  Dow is still down 250 this week.  Markets are drifting in this semi holiday period, with bias is to the downside.  Trading should be light in the PM, while markets continue to drift.  Next week news from Europe will be the major market driver & it will be more of the same.

Dow Jones Industrial Average

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