Market Commentary for December 12, 2007

The Federal Reserve on Wednesday announced joint actions with central banks around the world aimed at easing tight credit conditions in financial markets. The Fed said it would hold a series of auctions that would provide term funds to banks against a wide variety of collateral to secure loans at the discount window. The Fed plans to sell $40 billion in December and hold other auctions in January. "By allowing the Federal Reserve to inject term funds through a broader range of counterparties and against a broader range of collateral than open market operations, this facility could help promote the efficient dissemination of liquidity when the unsecured interbank markets are under stress," the Fed said in a statement. Today, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank are announcing measures designed to address elevated pressures in short-term funding markets. Federal Reserve Actions taken by the Federal Reserve include the establishment of a temporary Term Auction Facility (approved by the Board of Governors of the Federal Reserve System) and the establishment of foreign exchange swap lines with the European Central Bank and the Swiss National Bank (approved by the Federal Open Market Committee). Under the Term Auction Facility (TAF) program, the Federal Reserve will auction term funds to depository institutions against the wide variety of collateral that can be used to secure loans at the discount window. All depository institutions that are judged to be in generally sound financial condition by their local Reserve Bank and that are eligible to borrow under the primary credit discount window program will be eligible to participate in TAF auctions. All advances must be fully collateralized. By allowing the Federal Reserve to inject term funds through a broader range of counterparties and against a broader range of collateral than open market operations, this facility could help promote the efficient dissemination of liquidity when the unsecured interbank markets are under stress. Each TAF auction will be for a fixed amount, with the rate determined by the auction process (subject to a minimum bid rate). The first TAF auction of $20 billion is scheduled for Monday, December 17, with settlement on Thursday, December 20; this auction will provide 28-day term funds, maturing Thursday, January 17, 2008. The second auction of up to $20 billion is scheduled for Thursday, December 20, with settlement on Thursday, December 27; this auction will provide 35-day funds, maturing Thursday, January 31, 2008. The third and fourth auctions will be held on January 14 and 28, with settlement on the following Thursdays. The amounts of those auctions will be determined in January. The Federal Reserve may conduct additional auctions in subsequent months, depending in part on evolving market conditions. Depositories will submit bids through their local Reserve Banks. The minimum bid rate for the auctions will be established at the overnight indexed swap (OIS) rate corresponding to the maturity of the credit being auctioned. The OIS rate is a measure of market participants' expected average federal funds rate over the relevant term. The minimum rate for the December 17 auction along with other auction details will be announced on Friday, December 14. Noncompetitive tenders may be accepted beginning with the third auction. The results of the first auction will be announced at 10 a.m. Eastern Time on December 19. The schedule for releasing the results of later auctions will be determined subsequently. Detailed terms of the auction and summary auction results will be available at http://www.federalreserve.gov/. Experience gained under this temporary program will be helpful in assessing the potential usefulness of augmenting the Federal Reserve's current monetary policy tools--open market operations and the primary credit facility with a permanent facility for auctioning term discount window credit. The Board anticipates that it would seek public comment on any proposal for a permanent term auction facility. The Federal Open Market Committee has authorized temporary reciprocal currency arrangements (swap lines) with the European Central Bank (ECB) and the Swiss National Bank (SNB). These arrangements will provide dollars in amounts of up to $20 billion and $4 billion to the ECB and the SNB, respectively, for use in their jurisdictions. The FOMC approved these swap lines for a period of up to six months.

At the closing bell, here is how the major indices ended the session: the DOW (Dow Jones Industrial Average) posted a gain of 41.13 points on the day to end the session at 13,473.90; the NYSE (New York Stock Exchange) posted a gain of 83.38 points to end the session at 9,921.64; the NASDAQ posted a gain of 18.79 points for a close at 2,671.14; the S&P 500 moved higher by 8.94 points to end at 1,486.59 and the RUSSELL 2000 moved higher by 5.44 points to close at 771.71. The FTSE All-World Index ex-US (top Large/Mid Cap aggregate from over 2,700 stocks from the FTSE Global Equity Index Series (GEIS) which covers 90% of the world’s investable market capitalization) posted a gain of 0.97 points to close at 269.49 and the FTSE RAFI 1000 posted a gain of 18.93 points to close at 6,057.37.

On the NYSE today, advancers came in at 1,716; decliners totaled 1,477; unchanged came in at 90; new highs came in at 52 and new lows came in at 99.

Momentum stocks traded by active day traders on the NYSE today: MasterCard Incorporated (MA) shed 3.60 points with a high on the day of $225.25 a low of $212.18 for a closing price at $213.90; Rio Tinto plc (RTP) shed 1.19 points with a high of $469.05, a low of $450.57 for a closing price at $453.78; Petroleo Brasileiro (PBR) gained 8.69 points with a high on the day of $114.38, a low of $108.79 for a closing price at $111.97; CME Group Incorporated (CME) gained 7.02 points with a high on the day of $697.84, a low of $678.81 for a closing price at $688.17; Temple-Inland Incorporated (TIN) shed 0.28 points with a high on the day of $33.95, a low of $31.57 for a closing price at $32.85; Transocean Incorporated (RIG) gained 2.73 points with a high on the day of $139.50, a low of $136.27 for a closing price at $138.66; ITT Educational Services Incorporated (ESI) shed 4.46 points with a high on the day of $107.81, a low of $96.80 for a closing price at $100.32; Manitowoc Company Incorporated (MTW) gained 4.31 points with a high on the day of $48.00, a low of $46.39 for a closing price at $47.86; SLM Corporation (SLM) shed 3.45 points with a high on the day of $33.74, a low of $27.63 for a closing price at $28.49; Greenhill & Company Incorporated (GHL) shed 3.28 points with a high on the day of $76.93, a low of $68.68 for a closing price at $70.25 and United States Steel Corporation (X) gained 7.22 points with a high on the day of $113.73, a low of $108.00 for a closing price at $113.22.

On the NASDAQ today, advanced totaled 1,606; decliners totaled 1,434; unchanged came in at 132; new highs came in at 39 and new lows came in at 149.

Momentum stocks on the NASDAQ today: Baidu.com Incorporated (BIDU) gained 9.93 points with a high on the day of $395.18, a low of $374.60 for a closing price at $388.32; Apple Incorporated (AAPL) gained 2.86 points with a high of $194.48, a low of $185.76 for a closing price of $191.40; First Solar Incorporated (FSLR) gained 8.20 points with a high of $247.50 a low of $233.79 for a closing price of $244.50; Google Incorporated (GOOG) gained 0.09 points with a high on the day of $714.32, a low of $688.50 for a closing price at $699.30; Cynosure Incorporated (CYNO) shed 4.36 points with a high on the day of $33.25, a low of $26.86 for a closing price at $27.51; Intuitive Surgical Incorporated (ISRG) shed 0.86 points with a high on the day of $346.50, a low of $325.83 for a closing price at $335.24; Leap Wireless International Incorporated (LEAP) shed 2.47 points with a high of $40.74, a low of $34.00 for a closing price of $35.90; Energy Conversion Devices Incorporated (ENER) gained 3.28 points with a high on the day of $33.44, a low of $30.06 for a closing price at $33.10; Garmin Limited (GRMN) shed 3.18 points with a high on the day of $108.53, a low of $99.44 for a closing price at $101.60 and American Dental Partners Incorporated (ADPI) shed 5.75 points with a high on the day of $20.12, a low of $14.19 for a closing price at $13.95.

U.S. Import Prices rose 11.4% on the year to reach highest gain on record; U.S. November Import Price Gain was highest since October 1990; U.S. November Petroleum Import Prices rose 9.8%; U.S. November Non-Petroleum Import Prices rose 0.7% and U.S. November Import Prices rose 2.7% versus consensus of an increase by 2.2%.

Fed Aims to Boost Liquidity with New Auction Facility; Fed, BOE, ECB, SNB set up Forex Swap Lines for Six Months; Central Bank Forex Swap Lines total $24 Billion for ECB, SNB; First New Fed Auction Will Be $20 Billion 28-Day Funds Monday; 2nd Fed Term Auction Will Be $20 Billion December 20, 35-Day Funds and Two other Fed Term Auctions Scheduled for January 14, 28.

Department of Energy Oil inventories released today: U.S. Refineries ran at 88.8% capacity compared to expectations of an increase by 0.1 Pt at 89.5%; U.S. Distillate Stockpiles fell by 800,000 Barrels in the week compared to expectations of an increase by 300,000; U.S. Gasoline Stockpiles rose 1.6 Million Barrels in the week compared to expectations of an increase by 1.2 Million Barrels and U.S. Crude Oil Stockpiles fell 700,000 Barrels in the week compared to expectations of an increase by 100,000 Barrels.

Commodities Markets
The trend was higher across the board today for the Energy Sector: Light crude moved sharply higher today by $4.37 to close at $94.39 a barrel; Heating Oil moved higher today by $0.12 to close at $2.64 a gallon; Natural Gas moved higher today by $0.32 to close at $7.41 per million BTU and Unleaded Gas moved higher today by $0.12 to close at $2.41 a gallon.

Metals Market ended the session mixed across the board today: Gold moved higher today by $1.70 to close at $818.80 a Troy ounce; Silver moved lower by $0.04 today to close at $14.83 per Troy ounce; Platinum moved sharply higher today by $12.50 to close at $1,479.80 per Troy ounce and Copper moved lower by $0.05 today to close at $3.04 per pound.

On the Livestock and Meat Markets, the trend was lower across the board today: Lean Hogs ended the day lower by $1.28 to close at $61.75; Pork Bellies ended the day lower by $2.13 at $89.68; Live Cattle ended the day lower by $0.45 at $96.80 and Feeder Cattle ended the day lower by $0.78 at $105.20.

Other Commodities: Corn ended the day nicely higher by $9.25 at $433.00 and Soybeans moved nicely higher again today by $16.00 to end the session at $1,152.00.

Bonds were lower across the board today: 2 year bond moved lower by 10/32 at 100 2/32; 5 year bond moved lower by 17/32 at 99 25/32 today; 10 year bond moved lower by 24/32 at 101 17/32 and the 30 year bond moved lower by 24/32 at 107 29/32 for the day.

The e-mini Dow ended the session today at 13,518 with a gain of 68 points on the trading session. The total Dow Exchange Volume for the day came in at 224,584 which are comprised of Electronic, Open Auction and Cash Exchange. Traders should review workshops available at the CBOT (Chicago Board of Trade) Educational in-person seminars schedules available on CBOT (Chicago Board of Trade) website.

The end of day results for the CBOT (Chicago Board of Trade) which is comprised of the total Exchange Volume for Futures and Options (EVFO) including Electronic, Open Auction and Cash Exchange ended the day at 4,163,189; Open Interest for Futures moved higher by 42,327 points to close at 9,717,853; the Open Interest for Options moved higher by 114,112 points to close at 6,767,181 and the Cleared Only closed higher by 212 points to close at 16,502 for a total Open Interest on the day of 16,501,536 for a total Change on the day with a gain of 156,651 points.

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