S&P 500: +7.00 (+0.66%)
It appears that yesterday was just a pause because today markets resumed trekking higher. Meanwhile, the U.S. dollar weakened to nearly a 12-month low, which sent commodities and related investments higher.
A weaker U.S. dollar is great news for gold, commodities, resource-based economies (like Australia or Canada), basic material stocks, and U.S. large cap stocks with large proportions of revenue derived from overseas.
It’s worth making note of the first quick hit, which discusses the Fed’s use of reverse repurchase (repo) agreements. Repo agreements would involve the Fed issuing collateralized short-term debt that third-parties could purchase. The Fed hopes repo agreements will help soak up some of the excess liquidity in the system.
Peabody Energy (BTU) gained 5.34% following an upgrade from Citigroup. The upgrade came on the expectation for higher prices for coking coal (used in making steel) as global steel production rebounds and supply lags. Demand for U.S. thermal coal continues to wane due to demand for substitute forms of energy and a drop in industrialized power; however the Citigroup analyst anticipates an improvement in U.S. thermal coal demand in 2010. Other coal companies gained including Arch Coal (ACI) jumping 4.28%.
Quest Diagnostics finished 3.36% higher as Moody’s Investors sServices raised its rating outlook on the diagnostic-testing companies. Moody’s attributed the change to DGX’s better-than-expected results in recent quarters, as well as its higher margins and continued improvement of its financial leverage since its 2007 acquisition of AmeriPath. Quest’s ratings were also affected by its aggressive approach toward acquisitions and continued share repurchases.
Quick Hits
- Fed Is Said to Starts Talks With Dealers on Using Reverse Repo Agreements
- Budget Chief Orszag Sees Health-Care Legislation Passing Within Six Weeks
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Peter Lazaroff, Investment Analyst
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