News Column

Daily Wrap: Euro wizard levitates stocks

June 5, 2014

By Jim Gallagher, St. Louis Post-Dispatch

June 05--TODAY'S INDEXES -- Dow Industrials 16836 +99

S&P 500 1940 +13

Nasdaq 4296 +45

ECB CHEERS INVESTORS: Mario Draghi played wizard today, making the magic encantations that raised stock prices in Europe and America.

The European Central Bank, which Draghi heads, cut interest rates and took steps to get the continent's banks lending more money. The ECB says it will start charging banks that park money with it, hoping they'll lend it out instead.

That lifted stock prices both in Europe and the U.S. The Dow Jones industrial average gained 0.6 percent. The S&P 500 gained 0.65 percent. The Euro Stoxx Index gained 0.9 percent.

MAKING MONEY ON WEATHER: We may be in for a hot time weatherwise as El NiÑo makes another appearance this year. Those brave and frequently-disappointed folks who speculate on commodities may be wondering if they can cash in on the heat.

Probably not right away, according to data on eight previous NiÑos studied by analyst Jodie Gunzberg at S&P Dow Jones Indices. Spikes in agricultural commodity prices tend to lag the weather change by at least a year, although one spike occurs soon after that, she found.

"On average the first spike month has returned 16.6% with several possible high spikes following," she said, referring to the S&P GSCI Agriculture commodities index.

An exception to the delayed reaction rule occurred during the NiÑo of 1986 to 1988, when the Ag index jumped 22 percent. That's interesting, says Gunzberg, because the commodities cycle then was similar to today.

ANALYST'S INSIGHTS: JP Morgan says the time is ripe to buy stock in Express Scripts. The stock closed at $71.07 today, up 58 cents. It is nearly 10 percent off its high of March. The analysts' target price is $83.

"Valuations are very attractive, in our view, with shares trading at a discount to Rx channel peers," the bank's analysts wrote on Monday, when the stock was at $70.04. "The PBMs (pharmacy benefit managers) serve an important role in the channel and continue to create value for their customers by utilizing their scale and tools to drive down pharmacy and overall healthcare costs," says JP Morgan.

Express Scripts, based in north St. Louis County, is the nation's biggest PBM.

LOCAL INDEX: The Bloomberg St. Louis Index rose 8 to 908.

LOCAL GAINER: Arch Coal rose for a second day after taking a drubbing on Monday and Tuesday in the wake of the Obama administration's plans to cut emissions from power plants. The Creve Coeur-based company saw its price rise 3.18 percent on Thursday.


Brown Shoe +3.43% Mallinckrodt -2.24%

LMI Aerospace +3.34% SunEdison -1.79%

Arch Coal +3.18 Stereotaxis -1.72

THE DAY AHEAD: Traders will be transfixed by their tubes at 7:30 a.m. (Central) Friday morning as the government releases the monthly jobs report.

Analysts think America added 215,000 jobs last month, down from April's mighty 288,000. But they expect the unemployment rate to tick upward to 6.4 percent, from April's 6.3, as more workers join the job hunt.

Jim Gallagher is a reporter for the Post-Dispatch


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Source: St. Louis Post-Dispatch (MO)

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