Reports » US

US stock market daily report (January 14, 2013, Monday)

Nasdaq OMX Group Inc. (NDAQ) plans to offer high-technology services typically handled by securities brokers, according to a regulatory filing, were blocked by U.S. market regulators. In a filing dated Friday, the Securities and Exchange Commission ruled against a months-long effort by Nasdaq OMX to roll out a suite of algorithms designed to strategically trade stocks. Nasdaq OMX was extending efforts to expand its scope of technology and investor services which were on a three-year slump in stock trading activity. Due to the slump in business, Nasdaq was forced to reduce expenses and expand into other avenues for additional sources of income. In May 2012, Nasdaq OMX proposed to introduce its own lineup of trading algorithms which would have consisted of automated programs for trading securities at the best possible price for a transaction. Scrutiny from regulators and some of the biggest customers of the exchange put a stop to the plan as they warned that the service offering from Nasdaq OMX would create unfair advantages over similar services sold by brokers because exchanges enjoy certain legal protections from liability under U.S. securities law. Nasdaq OMX could be shielded from having to cover losses because of exchanges' legal protections if a Nasdaq OMX algorithm went awry. In a filing from the SEC, officials disapproved Nasdaq OMX plan because they failed to prove that its trading services would not carry such a built-in advantage.

President Barack Obama urged Congress on Monday to increase the debt ceiling, saying that failure to act could 'roil' financial markets. "Investors around the world will ask if the United States of America is in fact a safe bet, markets could go haywire, interest rates would spike," Obama said during the final press conference of his first-term. Obama referred to the last fight over the debt limit in the summer of 2011 a "fiasco" that hurt the economy and actually raised the deficit. The President said that raising the debt ceiling does not authorize new spending.

On Monday, Treasury Secretary Timothy Geithner said the debt ceiling would be reached sometime between mid-February and early March unless Congress acts to raise it, before that time is reached. In December, the Treasury took several accounting moves to delay the U.S. hitting the debt limit. In a letter to Congressional leaders, Geithner estimates that the extraordinary measures would delay the debt ceiling for two months but a more targeted estimate would be provided at a later date. He said there remains a lot of uncertainty given the tax filing system.

According to a report Monday from CoreLogic, U.S. home sales increased 6% during 2012 for the first annual increase since 2005. Per the report, there were 4.2 million homes sold in 2012, up from 3.9 million homes sold during 2011. Non-distressed home sales increased 11% to 3.2 million for 2012. The seriously delinquent rate was down to 6.9% in 2012 from 7.4% in 2011 after serious delinquencies declined by nearly 300,000 loans in 2012. Short-sales rose 23% to 370,000 units in 2012, striking the highest level seen since the real estate downturn began. In 2011, the real estate market saw 302,000 short-sales. In 2010 the real estate market saw 274,000 short-sales. CoreLogic projects another 6% rise in home prices for 2013 "due to greater affordability fueling steady demand."

Governor Andrew Cuomo, D., N.Y., and legislative leaders are close to a deal to expand the ban on assault weapons in New York state, as part of a package of changes. The move would be the first gun control law in the U.S. following the shooting death of 20 children last month at Sandy Hook Elementary School in Newtown, Conn. N.Y. The law if passed would cut the legal capacity of gun magazines to seven rounds from 10.

Some hawkish Fed officials and investors feel that the Fed's bond-buying program will lead to higher inflation or future asset bubbles in the future; Federal Reserve Board Chairman Ben Bernanke downplayed those fears. "I don't believe significant inflation is going to be the result of any of this," Bernanke said in an appearance at the University of Michigan. Whether Fed policy will lead to asset bubbles in the future is "a difficult question," Bernanke said. The Fed is monitoring markets and tightening supervision to guard against financial instability, the Fed Boss said. The worst thing for the Fed to do would be "to raise interest rates prematurely," he said.