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US: investor optimism rises by final bell

 Natalya Malykh, Leading Analyst, Global Markets (Finam)

 

On Wednesday, March 27, US equities landed marginally in the red. After an upturn the day before investors saw no reasons to extend buying, and under pressure from European news and housing market data US names retreated. However, there was no heavy pullback, and most of the losses were recouped by the closing bell.

As for economic data, the US index of pending home sales dropped more than expected to 104.8 in February. Apart from Cyprus, Italy was back in the European media spotlight. Demand for Italy’s government debt weakened at the latest debt auction. Rome managed to raise only EUR 6.91 bn of the planned EUR 7 bn, while the bid-to-cover ratio for 5- and 10-year bonds fell. Yields of Italian 10-year debt narrowed on the secondary market, and the euro weakened substantially against the dollar.

In Nicosia, in turn, authorities came out with a capital control package. Among other items, one-time cash withdrawals will not exceed EUR 300 and depositors can take no more than EUR 1,000 with them when leaving the country. Cypriot banks are to reopen today after nearly a two-week hiatus.

As for the indexes, the blue-chip benchmark Dow slipped 0.23% to 14,526.16, the broader market index S&P 500 edged down 0.06% to 1,562.85 and technology-heavy Nasdaq advanced 0.12% to settle at 3,256.52.

In commodities, NYMEX light, sweet crude for May delivery grew 24 cents or 0.2% to USD 96.58/bbl. COMEX gold futures for April delivery rose USD 10.50 or 0.7% to USD 1,606.20/oz.

Blue-chip stocks closed broadly in negative terrain. The day’s laggards were led by JPMorgan (-1.79%), Coca-Cola (-1.15%) and Verizon Communications (-1.09%).

Shares of mining giant Cliffs Natural Resources tanked 13.85% after Morgan Stanley downgraded its recommendation on the stock from Market Perform to Underperform as its analysts forecast oversupply of iron ore in the Great Lakes area over the next few years.

Agricultural equipment producer Lindsay reported higher-than-expected quarterly profit but guided for weaker demand for its products this year following a drop in agricultural prices. Lindsay shares pulled back 2.55% by the final bell.

Shares of IT firm SAIC surged 3.90% on quarterly numbers showing net profit increased more than forecast on higher sales to defense contractors.

Shares of drug maker Aastrom Biosciences crashed 38.25% on news the company intends to discontinue the Phase III study of its medicine to treat critical limb ischemia and is to lay off around a half of its workforce.