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Market Update

U.S. Bond Yields Rise, World Markets Fall and Rupee Plunge Continues

Author: Nichole Harper
Last Update: 1:13 PM ET August 19 2013

1:10 PM New York – U.S. indexes traded sideways in light trading and yields on U.S. Treasuries increased. Investors continued to pull money from emerging markets and added new capital to U.S. focused equity funds. European markets declined and rupee in India fell to a new low.

Stocks on Wall Street were in a holding pattern as most traders stayed away and investors awaited next Fed move at the next meeting in late September.

Federal Open Market Committee is scheduled to release minutes of its 2-day meeting ending on July 31 on Wednesday.

Most economists are anticipating a discussion on the central bank’s plan to trim bond buying and the Fed is expected to begin its so called tapering operation as early as Sept 17 meeting.

Emerging markets continued to see fund withdrawals as more investors prefer to allocate capital to U.S. stocks.

According to fund flows tracked by Index Universe, emerging markets saw withdrawals of funds at the fastest pace in five years and U.S. stocks based funds attracted close to $90 billion in new investments.

Yield on 10-year U.S. Treasury bonds increased to 2.86% and rates have been on the rise since May 2 since the Fed announcement of stimulus tapering.

U.S. Stocks in Review

Apple Inc (AAPL) added 1.9% and extended one-week gain to 13% as tech stocks gained. Separately, Intel (INTC) increased 3% after Piper Jaffray lifted its price target on the chip maker to $22 from $20.

Chesapeake Energy Co increased 1% after the company said second-largest investor Carl Icahn increased his stake to 9.98% from 8.97% at the end of second quarter.

Cobalt International Energy Inc dropped 12% after the oil explorer said its preliminary drilling found no commercial quantity of oil and gas deposits in the Gulf of Mexico.

Dollar General (DG) gained 3% after JP Morgan Chase revised its outlook on the stock increased the target price to $64 from $51 for the operator of deep discount store chain.

Edwards Group jumped 15% after the largest maker of air compressor Atlas Copco offered $10.50 a share or $1.2 billion for the British vacuum pump maker.

Zillow declined 4% after the operator of real estate web site said it plans to sell 2.5 million shares and agreed to acquire New York based StreetEasy for $50 million in cash.

International Markets

Market indexes in Japan closed higher after dropping for two days in a row and investors awaited more policy response from prime minister as early as next month.

The Nikkei index in Japan is still the best performing market among all developed markets as investors bid up stocks in anticipating of higher earnings on lower yen.

Market indexes in India extended losses to 10% from its peak in the year as the rupee drops 2% to 63.13 against one dollar and banks and industrial companies led the decliners as the government shifts focus to stabilize rupee.

Market indexes in Europe declined as mining companies led the indexes lower across the region.

FTSE 100 index declined 0.5%, DAX 30 index fell 0.3% and CAC 40 index in Paris fell 1%.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc