News Column

Daily Wrap: Stocks sit still; SunEdison soars

June 16, 2014

By Jim Gallagher, St. Louis Post-Dispatch

June 16--TODAY'S INDEXES -- Dow Industrials 16,781 +5

S&P 500 1938 +2

Nasdaq 4321 +0.24

STOCKS JUST SIT: On the one hand, American factories humming. On the other, the war in the Iraqi oil patch looks scary.

Faced with that mixed news, stock traders sat on their hands Monday. The Dow Jones Industrial Average gained a mere 0.03 percent, the S&P 500 gained 0.08 percent and the NASDAQ rose 0.24 percent.

Things were just as tame in Europe with the Euro Stoxx down 0.65 percent.

The good news was that industrial production rose a fast 0.6 percent in May, with gains in autos, business equipment and industrial supplies, according to the Federal Reserve.

Iraq produced more worries as President Obama pondered sending in a small number of special forces. On the oil markets, Brent crude gained 48 cents to $112.94. West Texas Intermediate crude gained a penny to $106.90.

BORING, BORING, BORING: Stocks just can't get a move on. The S&P 500 Index hasn't had a 1 percent daily gain or loss for 40 days, the longest stretch of tranquility since 1995, according to Bloomberg figures.

Some think the world's central banks have lulled the markets to sleep with their steps to keep economies growing and interest rates low.

"Central banks have a calming effect on the market," said Christina Hooper, strategest at Allianz Capital in a Bloomberg interview.

NO BOOM FOR US: The International Monetary Fund lowered its forecast for the U.S. economy. The agency now thinks America will grow 2 percent this year, down from its April estimate of 2.8 percent.

That means the Federal Reserve may hold rates low longer. "Policy rates could afford to stay at zero for longer than the mid-2015 date currently forseen by markets," the IMF said.

LABOR PEACE AT LAMBERT: American Airlines, the second largest carrier at Lambert Field, reached a tentative contract covering more than 11,000 machinists, ground worker sand others at merger partner U.S. Airways. The deal provides pay increases and better job security, the Machinists Union said.

ANALYST INSIGHTS: Analysts at Deutsche Bank upgraded SunEdison from hold to buy with a price target of $35. The stock jumped $2.13 Monday to $21.52.

"We are becoming increasingly constructive on the solar sector as we expect further tightening of the solar supply/demand balance and expect increased investor interest driving valuation multiple expansion," the analysts wrote, as quoted by Street Insider.

The analysts say they expect to see five or six new energy "yieldcos" formed in the next year to year and a half -- providing lots of cheap capital to chase solar projects. Yieldcos are companies formed to invest in an industry and direct profits back to shareholders.

SunEdison, based in O'Fallon, supplies the solar power industry.

LOCAL INDEX: The Bloomberg St. Louis Index was unchanged at 904.


SunEdison +10.9% Reliv International -4.3%

Stereotaxis +2.0% Build-A-Bear -2.0%

Viasystems +1.8% Arch Coal -1.6%

THE DAY AHEAD: We'll get the May inflation number Tuesday morning. Analysts expect to see a 0.2 percent monthly gain in the Consumer Price Index, down from 0.3 percent in April.

The housing industry is expecting a little bad news as the monthly home building report comes out. Analysts expect a 0.9 percent drop in home building activity for May, down from April's hot 8 percent gain.

Jim Gallagher is a reporter for the Post-Dispatch


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Source: St. Louis Post-Dispatch (MO)

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