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Friday, January 16, 2015

STOCKS SURGE TO END THE WEEK: Here's What You Need To Know

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January 16, 2015

Stocks rallied on the final day of what was an overall poor week of trading for US stocks, as the benchmark S&P 500 still lost about 1.5% and is down more than 2% this year.

First, the scoreboard:

Dow: 17,511.6, +190.8, (+1.1%)
S&P 500: 2,019.4, +26.7, (+1.3%)
Nasdaq: 4,634.4, +63.5, (+1.4%)

And now, the top stories on Friday:

1. It was still all about the Swiss franc on Friday, as the market continued to digest the shocking news out of the Swiss National Bank on Thursday that the SNB would be abandoning its currency peg against the euro. On Friday, a number of retail currency brokers were in distress, with UK-based Alapri announcing that it entered insolvency, while a report from CNBC said that FXCM, the largest retail currency broker in the US, reached a $300 million financing deal with Leucadia to keep operations going. Shares of FXCM were halted for most all of the day on Friday, but had been down as much as 90% in pre-market trading.

2. Retail trading platform Interactive Brokers also announced that it took a $120 million loss related to the rapid appreciation of the Swiss franc that happened after the SNB's surprise announcement.The currency markets were still unsettled on Friday, with the euro at one point falling to an 11-year low against the dollar, while the US dollar index rose to an 11-year high. In comments on Bloomberg Radio, Marc Chandler at Brown Brothers Harriman said that he expects the euro will reach parity, or a 1:1 value, against the dollar in 2016. On Friday, the euro briefly fell to below 1.15 against the dollar.

3. According to a report in The Wall Street Journal, Deutsche Bank lost $150 million on the franc's rapid move, with the Journal adding that Barclays lost "tens of millions."

4. The number of oil and gas rigs in operation in the US continues to plunge, with the total number of rigs in use falling by 74 last week to 1,676, the biggest weekly drop since January 2009. This is the lowest number of rigs in use since October 2010, and the biggest declines were seen in Texas, as the Permian basin saw 15 rigs shutter last week, while 12 rigs in the Eagle Ford basin were shut down.

5. In the US, consumer confidence rose to a ten-year high as the University of Michigan's preliminary read on confidence in January surged to 98.2. Economist Richard Curtin said the gains in employment and the decline is gas prices were cited by consumers as the primary drivers of this increased confidence, and Curtin added that, "More consumers spontaneously cited increases in their household incomes in early January than anytime in the past decade."

6. Consumer prices declined by the most in six years in December, falling 0.4% from the prior month as the decline in oil and gas prices brings down consumers prices. "Core" inflation, which strips out the more volatile cost of food and gas, was flat in December and rose 1.6% over last year, as housing and medical costs rose last month. Following the report, Ian Shepherdson said that the disappointing core numbers were partly attributable to the decline airfare, which fell 5% last month, and added that airline fares likely have "much further to fall."

7. Industrial production declined modestly in December, falling 0.1% against the prior month while capacity utilization also fell, which the Federal Reserve said, "reflected a sharp drop in the output of utilities, as warmer-than-usual temperatures reduced demand for heating."

8. Goldman Sachs was the latest big US bank to report earnings, with the bank beating on the bottom line as adjusted earnings per share came in at $4.61, topping expectations for $4.32. Revenue also beat expectations, coming in at $7.69 billion against estimates for $7.64 billion.

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