27 Dec 2012 AMC

27 Dec 2012

Market Summary 

Defense Contracts

 Raytheon Co., Tucson, Ariz., is being awarded a $226,806,451 firm-fixed-price, multi-year contract (N00024-13-C-5409) for fiscal 2013, 2014 and 2015 Evolved Seasparrow Missiles production requirements.  This contract includes options which, if exercised, would bring the cumulative value of this contract to $259,881,975.  This contract combines purchases for the Navy (83.47 percent); the Governments of Australia (1.13 percent); Denmark (1.42 percent); Canada (2.87 percent); Germany (2.36 percent); Norway (0.60 percent); Greece (1.37 percent); Netherlands (2.29 percent); Spain (0.04 percent); Turkey (0.84 percent); as part of the NATO Seasparrow Consortium; Japan (0.08 percent); and Thailand (3.53 percent) as Foreign Military Sales.  Work will be performed in Tucson, Ariz. (19 percent); Norway (13 percent); Germany (11 percent); Australia (10 percent); Canada (9 percent); Andover, Mass. (7 percent); The Netherlands (6 percent); San Jose, Calif. (4 percent); Spain (4 percent); Greece (3 percent); Camden, Ark. (3 percent); McKinney, Texas (3 percent); Turkey (2 percent); Beverly, Mass. (1 percent); Minneapolis, Minn. (1 percent); Reston, Va. (1 percent); Cincinnati, Ohio (1 percent); Cheshire, Conn. (1 percent); and Denmark (1 percent) and is expected to be complete by September 2016.  Funding in the amount of $45,200,942 will be obligated at the time of award.  Contract funds in the amount of $139,772 will expire at the end of the current fiscal year.  This contract was not competitively procured in accordance with 10 U.S.C. 2304 (c)(1).  The Naval Sea Systems Command, Washington, D.C., is the contracting activity. 

            

Raytheon Co., Tucson, Ariz., is being awarded a $140,000,000 cost-plus-fixed-fee contract (N00024-13-C-5410) for calendar year 2013 Evolved Seasparrow Missile Design Agent, in-service support, technical engineering support services and Block 2 risk reduction support.  This contract includes options which, if exercised, would bring the cumulative value of this contract to $237,000,000.  This contract combines purchases for Evolved Seasparrow Design Agent Services for the Navy (77 percent); the Governments of Australia (19 percent); Denmark (4 percent); ESSM Block II Risk Reduction Support for the Navy (25 percent); the Governments of Australia (33 percent); Canada (22 percent); Norway (20 percent); In-Service Support and Technical Engineering Support Services for the Navy (32 percent); the Governments of Australia (17 percent); Canada (15 percent); Germany (11 percent); The Netherlands (6 percent); Norway (5 percent); Turkey (5 percent); Denmark (3 percent); Greece (4 percent); and Spain (2 percent).  Work will be performed in Tucson, Ariz. (90.65 percent); Germany (2.55 percent); Norway (2.11 percent); Australia (1.53 percent); The Netherlands (1.36 percent); Canada (.68 percent); Spain (.42 percent); Turkey (.30 percent); Denmark (.28 percent); and Greece (.12 percent) and is expected to be complete by December 2013.  Funding in the total amount of $13,027,010 will be obligated at time of award.  Contract funds will not expire at the end of the current fiscal year.  This contract was not competitively procured in accordance with 10 U.S.C. 2304 (c)(1).  The Naval Sea Systems Command, Washington, D.C., is the contracting activity. 

           

 Raytheon Co., Integrated Defense Systems, Tewksbury, Mass., is being awarded a not-to-exceed $26,628,000 contract modification to previously awarded cost-plus-award-fee letter contract (N00024-05-C-5346) for the development and execution of Phase II CVN 78 dual band radar test and evaluation at the Raytheon Software Development Laboratory and Wallops Island Engineering Test Center, Land-Based Test Site; and Dual Band Radar Software Interface Development for Battle Force Tactical Trainer, Surface Electronic Warfare Improvement Program, and TPX-42 radar.  Work will be performed in Sudbury, Mass. (80 percent), and Tewksbury, Mass. (20 percent), and is expected to be completed by June 2014.  Funding in the amount of $13,322,500 will be obligated at time of award.  Contract funds in the amount of $4,135,000 will expire at the end of this fiscal year.  The Naval Sea Systems Command, Washington, D.C., is the contracting activity.

Market Internals

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Stock Market Update 16:15 ET Dow -18.28 at 13096.31, Nasdaq -4.25 at 2985.91, S&P -1.74 at 1418.09 :[BRIEFING.COM] The S&P 500 ended the day with minor losses following a volatile session. Equities began the day on a positive note, but comments from Senate Majority Leader Harry Reid caused a quick change in sentiment. Speaking from the Senate floor, Senator Reid said that all signs suggest the country will go over the fiscal cliff. In addition, the senator said the House of Representatives is being run as a "dictatorship" by Speaker Boehner. The comments caused the major averages to fall to their respective lows. However, an afternoon report out of Washington indicated the House of Representatives will reconvene on Sunday, December 30 at 18:30 ET in hopes of approving a budget. In response, the major averages raced off their lows, ending the day little changed after seeing losses of more than 1.0%.  Financial stocks showed the most intraday sensitivity to the headlines, and the sector led the late-morning decline. However, the late-afternoon rally helped the sector recover the bulk of its losses. Among the majors, Bank of America (BAC 11.47, -0.07) shed 0.6% and JPMorgan Chase (JPM 43.63, -0.33) fell 0.8%.  The SPDR Materials Select Sector ETF (XLB 37.29, -0.13) lost 0.4%. Provider of construction materials Headwaters (HW 8.18, -0.31) slipped 3.7% despite being upgraded at Avondale to ‘Market Perform' with a $10 price target.  Elsewhere, steelmakers underperformed. Mechel Steel (MTL 6.72, -0.04) settled lower by 0.6% and United States Steel (X 23.64, -0.62) slid 2.6%. Also of note, AK Steel(AKS 4.38, -0.22) lost 4.8%, and was a notable laggard.  Gold miners saw strength after this morning's developments painted a bullish picture for the yellow metal. Newmont Mining (NEM 45.47, +0.39) and Royal Gold (RGLD 80.10, +1.58) settled higher by 0.9% and 2.0% respectively.  The Dow Jones Transportation Average shed 0.4% and 17 of 20 components declined. Shipping stocks outperformed and Matson (MATX 24.66, +0.07) added 0.3% after signing an agreement to acquire the assets of Reef Shipping in the South Pacific. Meanwhile, peer Kirby (KEX 61.10, +0.20) settled higher by 0.3%.  On the downside, airlines extended their recent weakness. JetBlue Airways (JBLU 5.68, -0.05) and Alaska Air (ALK 43.26, -0.22) declined for a fourth consecutive session and lost 0.9% and 0.5%, respectively.  European markets ended on a mixed note. Germany's DAX added 0.3%, France's CAC settled higher by 0.6%, and the United Kingdom's FTSE finished unchanged.  The United Kingdom's FTSE ended flat, and most stocks saw little change. However, miners outperformed after the Chinese government revealed plans to boost infrastructure spending. Anglo American rose by 2.1% and Eurasian Natural Resources gained 3.7%.  In Germany, financials and carmakers outperformed. Commerzbank gained 1.2% and Deutsche Bank added 0.6%. Among carmakers, BMW advanced 0.8% and Volkswagen finished higher by 0.4%. The two saw strength after Germany's Finance Minister Wolfgang Schaeuble said the country's economy will expand at a "decent" rate next year with exports as the main growth driver.  France's CAC was supported by industrials. Schneider Electric gained 2.3% and Vinci tacked on 1.6%. On the downside, STMicroelectronics lost 1.1%.  Today's economic news was mixed. The latest weekly initial jobless claims count totaled 350,000, which was better than the 375,000 that had been expected by the Briefing.com consensus. The tally was below the revised prior week count of 362,000. As for continuing claims, they fell to 3.206 million from 3.238 million.  The December consumer confidence came in at 65.1, while economists polled by Briefing.com expected a reading of 70.0. This follows the prior month's revised reading of 71.5.  Separately, new home sales in November hit an annualized rate of 377,000, which was up from October's revised rate of 361,000, and worse than the rate of 379,000 that had been broadly expected by the Briefing.com consensus.  Tomorrow, the December Chicago PMI will be reported at 9:45 ET and November pending home sales will be released at 10:00 ET. ..NYSE Adv/Dec 1367/1682. ..NASDAQ Adv/Dec 1066/1401.

Commodities

Treasuries

Next Day In View 




Jason's Commentaries


Last night was really volatile... all because of the talks that are going on in the white house. At the start of the day, market washed out until the last 2 hours and came back as the White House Representatives are looking to come to a deal on Sunday, ending flat for the day. The market sold off initially due to the fear that US will be going over the fiscal cliff coupled together with a weak new home sales, dragged the housing sector down together. Amongst the laggards are the financials and the materials that led the fall. The fiscal cliff deal will be causing a lot of volatility in the financial sector especially as they will be one affected most. While the defense industry were at their all time high once again, RTN again seals a total contract size of more than $300 million. 

Volumes yesterday were lower than average volumes which is expected, but I think that there were much participation in the market during this xmas season. The bulls fought back during the last 2 hours of the trading period ended the day flat. 

On the Technical side, All the indices were forming a upside crucifix which is pointing to a bullish 28 Dec. On top of that, they are also at a very nice support. Assuming if the data today don't suck, I believe we can end this week with a smaller loss. 

  

Market Call: UP

Date: 28 Dec 2012