U.S. equities slip in Dec. 10-14 trading week

Pessimism about negotiations to avert the fiscal cliff drove U.S. equity markets into negative territory with the Dow Jones Industrial Average slipping 0.32% or 4.49 points to close at 1,413.58, while the S&P 500 index lost 0.15% or 20.12 points to finish at 13,135.01. The Nasdaq was down 0.23% or 6.71 points at 2,971.33.

Shares of Freeport McMoRan Copper & Gold staged a comeback after plunging 31% the previous week due to the company’s unexpected acquisition of assets in the oil and gas sector. Freeport climbed US$2.08 to US$33.78 and was the most actively traded stock of the Dec. 10-14 trading week.

Molycorp’s replacement of president and chief executive Mark Smith with interim CEO Constantine Karayannopoulis, vice chairman and former head of Neo Material, sent the company’s shares up US$1.11 to US$10.05. According to some analysts, Smith lost credibility after the rare earths company failed to disclose a probe by the U.S. Securities and Exchange Commission when it reported its third-quarter earnings and held a conference call on Nov. 8. Molycorp disclosed the SEC investigation in a press release on Nov. 9.

Improving sentiment in the Chinese steel sector has helped lift iron ore prices and with it the fortunes of Cliff Natural Resources, which ended the week US$4.45 or 15% higher at US$33.96 per share. Iron ore prices have hit US$131 per metric tonne, up from US$118 per metric tonne at the beginning of December, as Chinese traders accumulate positions, New York investment bank Dahlman Rose & Co. wrote in a note to clients.

Peabody Energy provided guidance on first-quarter targets and investors rewarded the company with a US$0.80 per share uptick to US$27.68. The coal producer explained that first quarter 2013 results are expected to be impacted by a variety of factors including a 10% increase in Australian unit costs; lower realized metallurgical coal pricing compared with the fourth quarter of 2012; a decline of about 2 million tons in U.S. sales based on market-related demand; a decrease of about 5% in average realized pricing due to the expiration of higher-priced contracts; and higher depreciation, depletion and amortization expenses as recently completed capital projects fully begin operations and production increases from higher-cost reserves acquired in recent years. The company says the first quarter will mark trough earnings and expects results will get better as the year proceeds based on improving Australian production and margins. For 2013 Peabody is expecting capital expenditures will be about 50% lower than 2012 targets of US$1 to US$1.1 billion.