Marc Pado Comments: Stocks Rising, Reversing Earlier Losses
August 18, 2010, The Street.com
Stocks were trading solidly higher Wednesday, but struggling energy stocks capped a more extensive rally as a takeover bid in the agribusiness sector and recent retail earnings lifted market sentiment.
The Dow Jones Industrial Average was gaining 50 points, or 0.5%, to 10,456. The S&P 500 was trading 6 points higher, or 0.5%, at 1098, while the Nasdaq was ahead by 17 points, or 0.8%, at 2226.
U.S. stocks pared losses by the afternoon session, after taking a step back from Tuesday's strong gains earlier.
"We had some good news yesterday. I think seeing that PPI up was what really helped markets, especially since the prior week was all about deflationary fears," said Cantor Fitzgerald U.S. Market Strategist Marc Pado.
Also giving markets a boost was BHP Billiton's(BHP) unsolicited takeover offer for Potash(POT). After Potash spurned the $130-a-share offer, BHP vowed to go hostile with its bid by taking the offer directly to shareholders. Potash shares were gaining 3.1% to $147.65 while BHP's stock was down by 2.6% at $68.37.
"M&A is always good for the market but I think Potash's comments were also really well received by the market," Pado said, pointing to Potash's comments that BHP was taking advantage of the fact that the fertilizer company had just started to expand globally, putting them in a strong position for future growth. "Potash had something really positive to say both about themselves and also about global conditions and export possibilities."
Wednesday's session, which lacks any compelling economic news and falls during a week typified by light trading volumes, is likely to be quiet, according to Pado.
"We continue to be stuck in this political situation where nothing is going to get accomplished before November. The campaign on both sides is for more jobs, yet there's no proposal for a job stimulus bill on the table -- all they're talking about is extending the Bush tax cuts, which hasn't helped before and isn't going to help now, but you don't want to go into an election holding hands so they're not putting anything on the table that's actually going to help.
"I think that's a big deterrent to the market because if the market needs jobs to advance and politicians aren't putting anything out there, then there's nothing propelling the market forward," he said.
Overseas on Wednesday, Hong Kong's Hang Seng slipped 0.5% while Japan's Nikkei rose 0.9%. The FTSE in London lost 0.9%, and the DAX in Frankfurt shed 0.3%.
