The S&P 500 went into rebound mode, closing up 1.6 per cent at 1,315.99, its largest one-day gain in two months (Bloomberg). Shares in Apple rose 5.8 per cent, helping the Nasdaq along to its biggest rise in one day since December (Reuters).
Facebook drifted, pop-less, below its offering price of $38 a share. The shares eventually closed down 11 per cent at $34, having lacked full support from underwriting banks in contrast to last week’s IPO (Bloomberg). Morgan Stanley bought shares on Monday, but at a lower price than on Friday (Financial Times). Facebook and its banks have come under increasing fire over their estimates of investor demand for the IPO, with buyers claiming they received a much larger supply of shares than expected (Wall Street Journal). Friday’s glitch in opening Facebook trades at Nasdaq may have helped compound the problem. Nasdaq announced changes to its IPO procedures on Monday (Reuters).
JPMorgan will suspend stock buybacks. Jamie Dimon, JPMorgan’s chief executive, said the halt to the $15bn programme would help the bank preserve capital but did not signal worse losses than the $2bn hit from credit index trades which has already been revealed. JPMorgan’s market capitalisation has fallen by $30bn since the losses came to light (Financial Times). Although the bank will not reduce its dividend, the buyback move comes two months after Federal Reserve approval for plans to return capital to shareholders. Analysts have so far remained faithful to the bank’s stock; some 17 of 26 analysts tracked by FactSet maintain a price target of $50 or more — a level JPMorgan shares have not seen since 2007 (Wall Street Journal).
China is a direct bidder in Treasury auctions. The move, made in June 2011 but since revealed in Treasury documents, allows the country’s central bank to place orders without tipping off primary dealers, who may otherwise drive up bond prices in anticipation of China’s huge buying demand (Reuters).
Eaton Corp will buy Cooper Industries for $11.8bn — and relocate its incorporation to Ireland. Departing from Eaton’s Ohio base will save $160m in tax per year (Financial Times). Eaton said the deal for Cooper will produce synergies of $535m a year by 2016, and contribute to its earnings by 2014. The acquisition, which values Cooper at 11.5 times earnings, is planned to give Eaton an edge in the electrical products markets ahead of rivals (Reuters).
A pretty light day in US economic data… main thing to watch is existing home sales at 10am EST. Having fallen 2.6 per cent in March, they’re expected to rise 2.9 per cent in April according to the consensus forecast.
– Felix has a go at explaining greenshoe options.
– While the San Fran Fed has another go at testing QE effects.
– Congressional reading levels: higher than we thought.
– How Bill Ackman hires people…