• US stock market, economy and companies update (September 28, 2015)

    Monday's equity losses come after two back-to-back weeks of stock market declines, and uncertainty remains the big theme. There was another unsettling Chinese datapoint out today, with August industrial profits down 8.8% y/y, for the biggest monthly decline since 2011. Biotech stocks continue to suffer, with the IBB off another 4%. WTI crude dipped back below $45, and commodities are broadly weaker. As of writing, the DJIA is down 1.27%, the S&P500 is off 1.26% and the Nasdaq is down 1.90%. The 10-year yield is off five basis points to trade 2.114%.

    In Europe, shares of Volkswagen and Glencore keep falling further, adding weight to broader equity markets. Glencore's stock fell 30% in London after analysts at Investec wrote that persistent, weak commodity prices could wipe out all of the company's equity value. Meanwhile, German prosecutors said that they have opened an investigation against former Volkswagen CEO Martin Winterkorn, to determine who is responsible for the manipulation of vehicle emissions data.

    Growth seen in the August personal income and personal spending data was pretty good, with the latter boosted by a strong month of auto and back-to-school buying. Inflation as gauged by the PCE price index was unchanged in August. The PCE index has risen 0.3% and Core PCE has risen 1.3% in the past 12 months, offering little evidence that inflation is about to surge close to the Fed's 2% target.

    In his interview with the WSJ's Fed watcher, Jon Hilsenrath, New York Fed Governor Dudley repeated Chair Yellen's pledge that rates would still rise this year. Much of the rest of the talk was a reiteration of familiar talking points, about the transitory nature of low inflation, China and other international developments as the main source of concern about the US outlook, and concern about financial market instability. Fed-funds futures are indicating a 14% likelihood of a rate increase at the October FOMC policy meeting, up from 11.5% on Friday, and a 41% chance of a hike at the December meeting, compared with 39% on Friday. Analysts are focusing on the leadership transition in the House, with an eye to gauging the chances for a debt ceiling or government shutdown crisis later this fall which would further stymie Fed hikes.

    Alcoa announced a plan to split the firm into two separate public companies. The upstream spinoff will include Alcoa's mining, alumina refining and aluminum production assets, while the downstream spinoff will aggregate its aluminum product manufacturing assets. The tax-free transaction is expected to be completed in the second half of 2016. Alcoa has struggled amid chronic oversupply in the aluminum markets. The price of the metal has fallen 16% this year as consumption in China slows while producers there try to export more metal. Shares of AA are up 4% on the news.

    Media General jumped 25% this morning after the firm received (and rejected) an unsolicited proposal from Nexstar. The offer was $14.50 per share in cash and stock, including $10.50 per share in cash and a fixed ratio of 0.0898 Nexstar shares per Media General share, for a total deal valued at $4.1 billion. Nexstar is looking to break up Media General's standing deal with Meredith, announced back in early September.

    Looking Ahead
    - 13:30 (US) Fed's Evans to speak
    - 16:00 (US) Weekly Crop Progress Report

    Economic Data
    - (TR) Turkey Sept Capacity Utilization: 75.9% v 74.8% prior
    - (US) Aug Personal Income: 0.3% v 0.1%e; Personal Spending: 0.4% v 0.3%e
    - (US) Aug PCE Deflator M/M: 0.0% v 0.0%e; Y/Y: 0.3% v 0.3% prior
    - (US) Aug PCE Core M/M: 0.1% v 0.1%e; Y/Y: 1.3% v 1.3%e
    - (MX) Mexico Aug Unemployment Rate: 4.7% v 4.7% prior; Unemployment Rate (Seasonally Adj): 4.3% v 4.3% prior
    - (US) Aug Pending Home Sales M/M: -1.4% v 0.4%e v 0.5% prior; Y/Y: 6.7% v 8.0%e
    - (US) Sept Dallas Fed Manufacturing Activity: -9.5 v -10.0e

    [I]Contributed by Trade The News[/I]
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