News Column

Daily Wrap: Dollar slides as stocks sit

June 27, 2014

By Jim Gallagher, St. Louis Post-Dispatch

June 27--TODAY'S INDEXES -- Dow Industrials 16852 + 6

S&P 500 1961 + 4

Nasdaq 4398 +19

THE BUCK TAKES A DIP: The U.S. dollar slid to a seven-week low today as lower Treasury yields sapped the buck's appeal for foreign investors. The Bloomberg Spot Dollar Index fell 0.3 percent to 1,004.94, the lowest since May 9.

Large-cap stocks barely budged, with the S&P 500 Index gaining .02 percent on the day, trimming its losses for the week to a mere 0.1 percent. The Dow Jones industrial average barely budged, gaining 0.03 percent, while the Nasdaq edged up 0.43 percent.

The yield on the benchmark 10-year Treasury bond was steady at 2.53, ending a week that saw that yield take its largest decline since May.

HEY AMEREN, READ THIS: Regulated electric utilities have attracted more than $50 billion in takeover offers this spring, according to Bloomberg. Low interest rates and low wholesale power prices have given investors a hankering for old-fashioned utilities that have their rates set by states based on return-on-investment rules. Ameren is now completely regulated, having ditched its Illinois merchant power plants.

"We're in an environment right now where utility investors are paying more for certainty in earnings and are paying more for regulated assets versus unregulated assets," aid Andrew Pusateri, analyst for Edward Jones in Des Peres, as quoted by Bloomberg.

VERY PUNNY: The Missouri Supreme Court recently ruled in favor of a baseball fan who was hit in the eye with a hot dog thrown by Sluggerrr, the Kansas City Royals mascot. "Wurst-case scenario comes true," commented Overlawyered, a Cato Institute website that complains about lawsuits.

MONSANTO GETS AN A-: Fitch, the rating agency, gave an A-minus rating to Monsanto's new bond issue as the firm goes to market with a $4.5 billion offering. The Creve Coeur seed company will use the money to buy back stock.

Fitch downgraded Monsanto's bonds based on its new debt level and its planned $10 billion share buyback. Debt would equal 1.5 times the company's earnings before interest, taxes, depreciation and amortization.

"Monsanto's credit profile is strong, marked by robust operating margins, significant free cash flow, moderate leverage and solid liquidity," the Fitch analysts wrote. "The rating is somewhat constrained by the company's growth-through-acquisition strategy and its sizable dividends and share buyback program."

LOCAL GAINER: Huttig Building Product's stock jumped 24 percent today as the firm was added to the Russell Microcap Index. That made Huttig attractive to mutual funds that try to track the index.

LOCAL INDEX: The Bloomberg St. Louis Index rose 3 to 914.


Huttig Building 23.58% Build-A-Bear -6.56%

Post Holdings 2.35% Allied Healthcare -5.24%

Perficient 2.3% Viasystems -5.03%

THE WEEK AHEAD: It will be a newsy week for investors, topped of by Friday's jobs report. Analysts expect that the nation added 221,000 jobs in June, down a little from May's 212,000. Prognosticators expect the unemployment rate to hold steady at 6.3 percent. Major surprises in the monthly jobs report can roil financial markets.

Monday will bring news on pending home sales, with analysts expecting a 1.3 percent monthly increase for May, seasonally adjusted, up from the 0.4 percent gain the previous month.

Tuesday brings news on domestic auto sales and analysts are expecting that vehicles sold at a 13 million annual rate in June, down from 13.1 million in May.

Economists are expecting to see a 0.3 percent decline when the report on manufacturing orders is released on Wednesday. Wednesday will also bring an early look at the jobs situation, as ADP releases its estimate of private-sector job change. Analysts expect it to show a 205,000 gain for June, following the prior month's 179,000 increase.

Jim Gallagher is a reporter for the Post-Dispatch


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Source: St. Louis Post-Dispatch (MO)

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