{+++}US Market Update
Dow +151 S&P +18 NASDAQ +35.7
– Equities and commodities are surging once again following and overwhelming return of investors’ risk appetite. Relatively thin holiday conditions, strong historical performance during the Thanksgiving week, and continued supportive Fed speak have emboldened the bulls. The euro surged just ahead of the European stocks open, gold is at fresh all-time highs above $1,170, front-month crude is back at the high end of its six-week range, testing $80. October existing home sales were +10% from September levels, adding fuel to the fire. Treasury markets are only slightly lower. The 2-year yield is up off of last week’s 14 months lows to trade at 0.73%. This afternoon $44B in 2-year notes kicks off crammed auction calendar ahead of the Thursday break.
– Tech Data is up 3% after solidly beating top- and bottom-line estimates. The firm noted that there are clear signs of an improving outlook for the company’s business. Tyson is more or less unchanged after a decent Q4 report and upbeat comments about 2010. Valspar Corp is off nearly 3% after missing revenue targets.
– In other news, Hershey is very close to launching a $17B friendly bid for Cadbury, topping Kraft’s $16.8B offer launched back in early September. The offer, which is not ready for prime time quite yet, would reportedly include $10B in cash. Cadbury is said to be much more agreeable to a Hershey offer. Kraft is reportedly ready to raise its bid in response.
– The greenback remained vulnerable throughout the New York morning but managed to stay below the 1.50 level despite continued strength in crude and gold. Comments supportive of the dollar continue to emanate from global officials, although they are having less and less impact on markets. ECB Chief Trichet may have reiterated yet again that he appreciate US support for a strong dollar, but the comments bounced right off EUR/USD. There was unconfirmed chatter that China was discussing a possible investment in Greek debt in the background. Dealers noted that rumors suggest that China might buy 25% of outstanding Greek debt; which if true could mean a €80B investment.
– Note that in gold the market remains fixated on a December gold option expiration with a $1200 strike price. Traders noted that options settle at 1:30pmET, although exchanges give traders the rest of the afternoon to manually exercise options even if they’re out of the money.