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Dow loses gains for the year; transports off 2%

8 Jun

It’s all been smoke and mirrors, folks!

3 Hours Ago

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U.S. stocks closed near session lows on Monday as investors weighed multi-month highs in bond yields amid greater expectations of tightening following Friday’s strong jobs report. (Tweet This)

The Dow Jones industrial average closed down about 80 points, posting losses of 0.32 percent year-to-date.

“I think everybody’s a little unsettled about the way U.S. and European bond markets sold off in the last week,” said David Kelly, chief global strategist at J.P. Morgan Funds.

Analysts noted relatively less volatility in bond and currency markets in Monday trade. The benchmark 10-year U.S. Treasury yield held slightly lower at 2.39 percent. The U.S. dollar pared recent gains, down about one percent against major world currencies with the euro rising to $1.1287. The stronger greenback has weighed on corporate earnings.

On Friday, a surge in bond yields to multi-month highs on a strong jobs report pressured equities, with U.S. stocks closing narrowly mixed.

Nonfarm payrolls for May beat expectations with the addition of 280,000 jobs. Analysts also cheered a greater-than-forecast 8 cent increase in hourly wages and a 5.5 percent unemployment rate. Signs of continued strength in the labor market strengthened the case for the Federal Reserve to begin raising short-term interest rates in September.

“I think the market’s trying to figure out if (Friday’s employment report) is going to move the Federal Reserve to act in September,” said Robert Pavlik, chief market strategist at Boston Private Wealth. He also cited weakness in the Dow transports as weighing on stocks.

The Dow transports, led by a decline in airlines, closed down 2.06 percent for its worst day since January 6. The index posted its first positive week in four last Friday.

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JetBlue closed down 7.2 percent for its worst day since Sept. 15, 2014. United Continental, American, Southwest and Delta held below their 50 and 200-day moving averages.

Read MoreGoldman: Market going nowhere, so do this…

Apple closed 0.66 percent lower after falling more than 1 percent during its highly anticipated Worldwide Developers Conference at which the iPhone maker announced its new Apple Music service.

The major indices extended recent losses, with the S&P 500 ending at 2,079, below its 100-day moving average of 2,084. Art Cashin, director of floor operations for UBS, said that level was one of support for the S&P, which faced resistance at 2,101.

“The technicals are deteriorating, and monetary conditions are deteriorating,” said Bruce Bittles, chief investment strategist at RW Baird. He is watching to see whether or not the S&P 500 can hold above 2,070.

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“The SPX is likely to reach oversold territory today for the first time since March, which we think will give way to improved short-term momentum during the latter half of the week,” BTIG Chief Technical Strategist Katie Stockton said in a morning note. “The financial sector appears positioned to exhibit upside leadership, which could be just what is needed to restore confidence in the market.”

Financials closed down 0.62 percent after failing to hold early gains. The S&P Regional Banking ETF (KRE) closed a touch higher. Morgan Stanley and KeyCorp briefly gained to levels not seen since September 2008. PNC Financial hit an all-time high.

Read MoreBond market volatility could rein in stocks

“Probably another listless session in the absence of any hard data,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. “Certainly the Greek saga continues.”

Luschini and other analysts are looking ahead to Thursday’s retail sales for insight on consumer spending, which has not picked up as much as many expected.

“We’re at a juncture where markets have to weigh whether good economic data is good for corporate earnings,” said Art Hogan, chief market strategist at Wunderlich Securities.

DJIA Dow Jones Industrial Average 17766.55 -82.91 -0.46%
S&P 500 S&P 500 Index 2079.28 -13.55 -0.65%
NASDAQ Nasdaq Composite Index 5021.63 -46.83 -0.92%

In the absence of major U.S. news and data releases on Monday, traders also kept an eye on overseas developments.

Turkey’s ruling AK Party failed to win an outright majority in a parliamentary election for the first time since it came to power more than a decade ago.

Turkish stocks fell more than 5 percent on Monday, while the Turkish lira slid to a record low of 2.8 to the greenback.

Germany’s DAX entered correction territory as European stocks declined on continuation of Greek debt negotiations. Last week, Athens postponed a payment deadline to the IMF.

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Greece’s creditors proposed extending the bailout to March 2016 in return for pension cuts, tax increases and other policy measures, the Wall Street Journal reported.

On Monday, European Central Bank governing council member Christian Noyer said if Greece had to leave the euro zone, it would not cause a problem for the currency bloc but rather for Greece itself.

The G-7 leaders also wrapped up a two-day summit in Bavaria, Germany.

The Dow Jones Industrial Average closed down 82.91 points, or 0.46 percent, at 17,766.55, with Intel leading decliners and Exxon Mobil the greatest advancer.

The S&P 500 closed down 13.55 points, or 0.65 percent, at 2,079.28, with information technology leading nine sectors lower and telecommunications the only advancer.

The Nasdaq closed down 46.83 points, or 0.92 percent, at 5,021.63.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 15.

About two stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 698 million and a composite volume of nearly 2.9 billion in the close.

Crude oil futures for July delivery settled down 1.67 percent at $58.14 a barrel on the New York Mercantile Exchange. Gold futures for August delivery settled up $5.50 at $1,173.60 an ounce.

Deutsche Bank closed up 4.96 percent after briefly leaping more than 5.5 percent on news of the appointment of John Cryan as co-CEO, effective July 1. Cryan replaces long-time executive Anshu Jain. Co-CEO Juergen Fitschen will remain in his position until next May, after which Cryan will become sole CEO.


Congressional Republicans consider using short-term funding bill to pressure Obama

15 Nov

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President Obama meets with congressional leaders at the White House on Nov. 7.

By Robert Costa November 14 at 9:53 PM

Congressional Republicans said Friday that they might create a series of showdowns over funding the government to try to force President Obama to back down on his expected plans to overhaul the nation’s immigration system.

Instead of passing a spending bill in the coming days that would fund the government through the end of the fiscal year, Republicans are considering a short-term measure that would expire early next year, according to more than a dozen top lawmakers and their aides who spoke on the condition of anonymity.

When Congress reconvenes in the new year, Republicans would then pass other short-term bills, each designed to create a forum to push back against the president and, possibly, gain concessions. Republicans also are planning to file a lawsuit against the president over his use of executive authority, according to the lawmakers and aides.

The efforts are seen by Republicans as ways to pressure Obama to relent and pull back his expected executive orders to change immigration policy, which are likely to include protecting millions from being deported.

Asked whether the threat of budget conflicts would have any effect on the president’s thinking, the White House referred to comments Obama made on immigration Friday in Burma, where he said Congress has had ample time to act on immigration reform.

President Obama, speaking at a news conference in Burma on Friday, said he would take action to reform U.S. immigration policy before the end of the year. (Reuters)

Obama said he stands by his statement that if Congress failed to act, “I would use all the lawful authority that I possess to try to make the system work better. And that’s going to happen. That’s going to happen before the end of the year.”

Republican leaders also see a short-term funding measure as a way to placate conservatives within their ranks, who have urged an aggressive response against what they see as an unconstitutional overreach by the president.

Rep. Steve King (R-Iowa), who has been a longtime critic of the House GOP leaders, encouraged them to pursue the short-term spending bills for as long as possible until the president changes course.


“We cannot allow this to be implemented,” King said. “I would like to do the minimum necessary and follow the Constitution. I would not take a shutdown off the table.”

King said House conservatives spent Friday “gathering together and having little meetings.” He expressed optimism that he could nudge them in his direction, much as he did over the summer when he worked with the leadership to rewrite a GOP bill on border policy at the eleventh hour.

King also told reporters that his staff is in contact with advisers to Sen. Ted Cruz (R-Tex.) and Sen. Jeff Sessions (R-Ala.) to present a united front to leaders in both chambers. Sessions, the incoming chairman of the Senate Budget Committee, has been leading the Senate bloc that has backed using the budget and other procedural means to dissent.

A succession of short-term spending bills would be a reversal from what House Speaker John A. Boehner (R-Ohio) and future Senate Majority Leader Mitch McConnell (R-Ky.) have said they planned to do.

House Speaker John A. Boehner (R-Ohio) said on Thursday that House Republicans will fight President Obama if he goes through with signing an executive order on immigration, saying his actions are “the wrong way to govern.” (AP)

Over the course of meetings in recent days — including a Thursday lunch over cold cuts in Boehner’s Capitol suite — House leaders have been unenthusiastic about the idea of a short-term spending plan and have not given up on a budget that runs through the end of the fiscal year in September.

But if Obama takes action on immigration and the politics surrounding that issue erupt, House leaders and their associates have begun to conclude that it will be difficult, if not impossible, to rally their caucus behind a long-term bill, given that conservatives see the budget process as their best leverage with the president.

pelosi, obama, reid

Determined not to shut down the government again, Republican leaders think short-term measures could be the best way to address both the ire within their caucus and their desire to show the American people they can govern.

When asked about the possibility of a short-term spending bill becoming the party line if the president acts, Rep. Harold Rogers (R-Ky.), the House Appropriations Committee chairman, said he would be “disappointed.” His office said he continues to meet with members, arguing about the necessity of passing long-term appropriation packages.

“At this point, we are talking with members and developing options in case President Obama takes unilateral executive action — action he himself has long argued exceeds his constitutional authority,” said Michael Steel, a Boehner spokesman.

On the Senate side, Don Stewart, a spokesman for McConnell, said that “legislation is still under development.”

By promising not to shut down the government, the GOP may be undercutting the strategy behind the use of short-term bills. The main leverage behind such maneuvers is the possibility of a shutdown. Removing that possibility could give Democrats little incentive to make a deal.

Boehner’s lieutenants inside the House said Friday that they worried that a spending confrontation could end up dividing Republican ranks, even if it wins initial applause.

If you don’t pass a long-term budget, “the question remains, ‘What’s the backup plan?’ ” Rep. Devin Nunes (R-Calif.) said. “If you can come up with a backup plan with some semblance of making any sense, that’s fine. But you take a big risk of being in a [short-term budget situation], which is what the Obama administration wants.”

Rep. Luis V. Gutierrez (D-Ill.), a leading advocate of the president using executive power to protect illegal immigrants, said Friday that regardless of what the Republicans are crafting as their rebuttal, he expects the president to follow through and ignore the calls from Republicans to stand down.

“We know it’s going to be before the end of the year,” he said. “It appears as if all the recommendations have been made. . . . They’re on his desk.”

Gutierrez added: “It is a question I have been told, by the best and highest sources, simply of scheduling.”

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Robert Costa is a national political reporter at The Washington Post.

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