Closing Market Summary: Technology Sector Leads Stocks HigherThe stock market avoided its second consecutive decline thanks to a Monday session that was underscored by daylong strength in the top-weighted technology sector (+0.6%). The S&P 500 added 0.2% while the Nasdaq Composite (+0.4%) outperformed throughout the day.
Investor sentiment soured during late afternoon action after it was reported that nine people were killed and at least 50 were injured after an assailant drove a truck into a crowd at the Christmas market in Berlin. This followed a morning report from Ankara, where the Russian Ambassador to Turkey was assassinated by an off-duty Turkish policeman. The two developments likely contributed to afternoon profit taking.
Equity indices began the day near their flat lines, but the largest sector by weight—technology (+0.6%)—climbed shortly after the opening bell, leading the overall market higher. The advance received assistance from other groups like industrials (+0.6%), telecom services (+1.1%), and real estate (+1.0%), but technology stood out, keeping the Nasdaq in the lead. High-beta chipmakers contributed to the strength with the PHLX Semiconductor Index climbing 1.0%. ASML (ASML 110.22, +3.98) and Lam Research (LRCX 106.99, +2.54) climbed 3.8% and 2.4%, respectively, after receiving upgrades.
Other cyclical sectors were mixed relative to the broader market as industrials (+0.6%) settled higher while energy (-0.5%) and financials (+0.1%) lagged.
The industrial sector received support from transport stocks as the Dow Jones Transportation Average gained 0.7% with all but two components ending in the green. Meanwhile, energy (-0.5%) struggled amid a volatile day in crude oil. WTI crude alternated between gains and losses before ending higher by 0.3% at $52.12/bbl.
For its part, the financial sector (+0.1%) held a modest loss into the afternoon, but spiked off its low after Fed Chair Janet Yellen made upbeat comments about the U.S. labor market. The comments were made during the commencement ceremony at the University of Baltimore, and they were met with an uptick in the dollar and a brief slip in Treasuries.
The U.S. Dollar Index (103.11, +0.16) climbed 0.2% as greenback strength against the euro (1.0400) and the pound (1.2400) overshadowed a decline against the yen (117.11).
Treasuries entered the day with gains and continued their advance into the afternoon. A temporary downtick took place in reaction to Ms. Yellen's comments, but the complex returned to highs by the close with the 10-yr yield sliding six basis points to 2.53%.
Investor participation was in-line with average as more than 900 million shares changed hands at the NYSE floor.
Today's session was free of economic data and investors will not receive any economic data tomorrow.
- Russell 2000 +20.8% YTD
- Dow Jones Industrial Average +14.1% YTD
- S&P 500 +10.7% YTD
- Nasdaq Composite +9.0% YTD
Exclusive: U.S. proposed $5-7 billion penalty for Credit Suisse on toxic debt - http://reut.rs/2i2qfHp
By Joshua Franklin, Oliver Hirt and Karen Freifeld | ZURICH/NEW YORK
The U.S. Department of Justice has asked Credit Suisse to pay between $5 billion and $7 billion to settle a probe over its sale of toxic mortgage securities in the run-up to the 2008 financial crisis, a source with knowledge of the matter said, but the bank has resisted settling for that amount.
The size of the suggested settlement indicates that the cost to the bank may be higher than analysts had expected and explains why Credit Suisse management has been pushing for a smaller penalty.
"Credit Suisse is confident of reaching a better solution," said the person with knowledge of the discussions. Should talks break down, U.S. legal authorities could sue the bank, prolonging the uncertainty.
In a sign that negotiations may be reaching their final stages, U.S. Attorney General Loretta Lynch last week talked with top management from Credit Suisse, another person familiar with the matter said, adding that a resolution could come as soon as this week.
None of the sources were authorized to speak publicly about the talks.
Credit Suisse and the Department of Justice declined to comment.
The penalty stems from a 2012 initiative launched by U.S. President Barack Obama to hold banks accountable for selling mortgage debt while misleading investors about the risks, a practice that helped cause the worst economic crisis since the 1930s.
The penalties, which for U.S. banks reached $46 billion, are set to deliver another setback to European lenders, many of which remain fragile, with scant capital, in the wake of the financial crash.
After record settlements were reached with U.S. banks such as Bank of America and JPMorgan, the focus has turned to Europe's Deutsche Bank, Royal Bank of Scotland, Credit Suisse, Barclays, UBS and HSBC.
News in September that the Justice Department made an initial demand of Deutsche of $14 billion to settle its case sent the German lender's stock plummeting and raised fears Credit Suisse could also face a stiffer penalty.
Just prior to Deutsche confirming that the Department of Justice was seeking $14 billion, JP Morgan analysts estimated Credit Suisse's fine at around $2 billion.
Deutsche Bank could this week agree its penalty over the sale of toxic mortgage debt, one person with direct knowledge of the matter said on Monday. The bank has said it expects to pay materially less than $14 billion.
Credit Suisse's litigation provisions at the end of 2015 totaled 1.605 billion Swiss francs ($1.56 billion). In November, the bank said it had upped litigation provisions by 357 million francs, mainly in connection with mortgage-related matters.
President-elect Donald Trump will take office
on Jan. 20, which means key government players involved in the negotiations would change, complicating the banks' efforts to reach settlements.
Vivendi to increase Mediaset stake up to 30%
Vivendi [EPA:VIV] announced on April 8, 2016 that it had concluded a strategic and industrial partnership with Mediaset [BIT:MS]. As a first step, Vivendi was to acquire 3.5% of Mediaset’s share capital and 100% of the share capital of the Mediaset Premium pay-television company, in exchange for 3.5% of Vivendi’s share capital. The envisaged Mediaset Premium acquisition unfortunately led to a lawsuit and Vivendi’s proposals aimed at finding an amicable solution to the dispute were not agreed by Mediaset and its shareholder Fininvest.
As Vivendi believes that the strategic interest of the industrial partnership announced on April 8, 2016 supersedes the stakes of the lawsuit, Vivendi decided to become Mediaset’s second largest industrial shareholder by acquiring, to begin with, 20% of the Mediaset share capital.
Following a meeting between Arnaud de Puyfontaine, Chairman of the Management Board, and Pier Silvio Berlusconi, Chief Executive Officer of Mediaset, on December 16, 2016, and the press release issued by Mediaset on December 17, 2016, and considering Fininvest’s recent positions, Vivendi’s Management Board met today and decided, with the Supervisory Board’s authorization, to increase its investment in Mediaset by acquiring additional shares depending on market conditions within the limits of 30% of the share capital and voting rights.
Vivendi reminds that its presence in the Mediaset equity is in line with the Group’s intention to develop its activities in Southern Europe and its strategic ambitions as a major international, European-based, media and content group.
Japan govt reportedly plans to review drug prices every year (v every two years) in effort to reduce costs - press (UPDATE)
- also will now review all drug prices, instead of a limited group of drugs that had been judged to be more expensive than similar drugs overseas
- aims to save ¥190B/year and cut gov spend by ¥48B
SoftBank invests $1bn in OneWeb satellite start-up
Founder Son says this is first step in commitment of $50bn and 50,000 jobs for US
The latest funding round, which also includes $200m from existing investors, will give OneWeb, which competes with Elon Musk’s SpaceX, fresh capital to launch a satellite network to provide affordable internet access to remote parts of the world.
Last year, the US venture raised $500m from a group of investors including US chipmaker Qualcomm, the European aerospace group Airbus, Sir Richard Branson’s Virgin, and Bharti, the Indian conglomerate.
SoftBank, which also owns US wireless carrier Sprint and British chip designer Arm Holdings, joins OneWeb’s investor list with a purchase of nearly a 40 per cent stake in the company.
In a statement, Masayoshi Son, the billionaire founder of the Japanese group, stressed that the deal was in line with a pledge he made to bring $50bn and 50,000 new jobs to the US over the next four years, in a meeting he held with the US president-elect earlier this month.
“This is the first step in that commitment,” Mr Son said.
The two companies said the $1.2bn investment would be used to construct a satellite production facility in Florida and was expected to generate nearly 3,000 jobs in the US by 2020.
“With this new round of funding and based on our rapid technical progress over the past year, we also announce a much larger goal: to fully bridge the digital divide by 2027, making internet access available and affordable for everyone,” Greg Wyler, OneWeb’s founder, wrote on the company’s homepage.
OneWeb’s new facility, which will begin production in 2018, will aim to build 15 satellites per week “at a fraction of the cost of what any satellite manufacturing facility in the world can produce today”, the company said.
For Mr Son, the deal fits into his ambition to position SoftBank for the next technological tide of the “Internet of Things”, with billions of connected devices. In July, the group agreed to acquire Arm, whose chip designs lie at the heart of almost every smartphone sold today, for $32bn.
In October, SoftBank also announced a technology fund, the SoftBank Vision Fund, which will invest as much as $100bn around the world, in partnership with Saudi Arabia’s sovereign wealth fund.
While the latest OneWeb deal is separate from the tech fund due to be launched next year, most of the promised $50bn investment in US start-ups is expected to be carried out through this fund.