STOCKS GO NOWHERE AND THE IMF OFFERS A PLAN: Here's What You Need To Know

SeeSaw

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Yesterday’s super committee failure, Q3’s GDP, November 2nd’s FOMC minutes…stocks traded on a lot of old news today and went nowhere.   Well, there was some news.First, the scoreboard:

Dow: -53.6 pts, -0.5%
S&P 500: -4.9 pts, -0.4%
NASDAQ: -1.9 pts, -0.1%

And now, the top stories:

  • Shortly after yesterday’s close, the U.S. super-committee officially announced that they failed to agree on a $1.2 trillion deficit reduction deal.  No surprise.  Most had been ready for this since Sunday.  All three major credit rating agencies sounded off right away.  S&P and Moody’s reaffirmed their current credit ratings.  However, Fitch said that it would review its rating and hopefully come to a decision by the end of the month.  Fitch had previously warned that failure by the super committee would likely result in a “negative rating action.”
  • Europe continues to be the more immediate problem.  Spain had a horrible bond auction this morning marked by sky-high borrowing costs.  Investors are also questioning France’s shaky AAA credit rating by sending their interests rates higher.  We also shouldn’t forget about Italy, which continues to be in the worst shape next to Greece.  Here Are All Of The Reasons Everyone Is Freaking Over France>
  • Before the markets opened, we learned Q3 GDP growth was revised down to 2% from the advanced reading of 2.5%.  The new reading was well below economists’ estimate of 2.4%.  Lower inventories were to blame.  Don’t Miss The 17 Hottest Economies In The World >
  • Markets popped at around noon after the IMF announced plans for a new credit line with the aim to “break the chain of contagion.”  However, many questions remain regarding the effectiveness of the proposed plan.  Also, the U.S. would have to approve it of it, which presents a high hurdle.
  • The minutes of the November 1-2 FOMC meeting were unexpectedly released 45 minutes early today.  The committee discussed improving communication, such as providing an explicit inflation target.  Some members favoured more easing. This latter item may have bolstered the stock markets, which were all positive at this point.
  • But the stock markets were jittery for the rest of the afternoon. Shares of Groupon dived 14.9% on no obvious news.
  • Netflix announced $400 million capital raise.  Specifically, it plans to sell $200 million worth of bonds convertible into shares at an $85.80 strike price.  Netflix has already sold $200 million worth of stock to T. Rowe Price.  Shares fell 5.4%.
  • Hewlett-Packard shed 0.8% today.  The tech company took $2 billion worth of charges on its failed Palm acquisition, and it also provided weak guidance.
  • Don’t Miss: Awesome Presentation On China And The European Debt Crisis

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