Stocks Advance on Wall Street, Calpers Decides Divest Hedge Funds Investments

Nichole Harper
16 Sep, 2014
New York City

Stocks on Wall Street advanced market indexes rebounded ahead of Fed policy statement tomorrow. The California Public Employees

[R]1:05 PM New York – Stocks on Wall Street advanced market indexes rebounded ahead of Fed policy statement tomorrow. The California Public Employees’ Retirement System decided to divest its entire $4 billion or 1.3% of total investment asset in hedge funds.[/R]

Stocks on Wall Street extended gains as investors are expecting Fed keep low interest and stay the course in trimming the bond purchase program as announced.

The Fed policy makers began two-day meeting today and are scheduled to issue a statement tomorrow. Investors are anticipating Fed’s view on interest rate outlook and indication of when rates are likely to rise and the pace of increase.

Tollbooth Index gained 0.4% or 41.10 to 9,452.90.

S&P 500 index increased 11.95 or 0.6% to 1,996.12 and the Nasdaq Composite Index rose 0.4% or 16.89 to 4,535.90.

The California Public Employees’ Retirement System decided to divest its entire $4 billion investment in hedge funds as returns lag. The pension fund’s market value reached $300 billion at the end of fiscal year ending in June.

The public pension fund said in a statement that it couldn’t expand program enough to justify costs and returns of selected funds have lagged market returns.

The California State Pension fund has set annual return target of 7.5% and hedge funds in the program has generated annual return over the last ten years of 4.8%.

Hedge fund industry has amassed $2.8 trillion in assets as institutional investors have increased allocation to alternative investments, according to a report by McKinsey & Co.

U.S. Movers

Apple Inc ((AAPL)) slumped 1.9% or $1.97 to $99.64 after Chinese newspapers reported the company did not finalized the agreements with the government that can permit iPhone 6 sale in China before the end of this year.

Yesterday the company said preorders for iPhone 6 and 6 Plus crossed four million on the first day, exceeding expectations. The phones will be available in stores starting Friday, September 19.

Humana Inc ((HUM)) climbed 2.7% or $3.48 to $131.14 after the health care company plans for share buyback of about $2 billion.

The new authorization replaced the previous program of $1 billion share repurchase.

European Markets

In London trading, FTSE 100 index fell 0.3% or 19.98 to 6,784.23 and in Frankfurt the DAX index dropped 0.5% or 45.27 to 9,614.36.

In Paris, CAC 40 index declined 0.6% or 28.02 to 4,400.61.

The U.K. based online apparel retailer ASOS plunged after issuing third profit warning.

Lafarge, France based cement maker divested its Russia-based cement plant to Buzzi Unicem for €104 million and complete its merger with the Switzerland based Holcim.

France based wireless telecom carrier Orange offered €3.4 billion to Spain-based broadband and fixed line carrier Jazztel.

Asian Markets

Stock in Tokyo closed lower and the broader Topix index declined from a six-year high after markets reopened after a three-day weekend.

The Nikkei 225 Stock Average slipped 36.76 or 0.2% to 15,911.53 and the broader Topix index fell 2.86 to 1,310.86.

The yen declined to close at 107.14 against one U.S. dollar.

Stocks in Shanghai declined and the benchmark index dropped 1.8%, the largest one day drop since March after foreign direct investment declined for the second month in a row in August.

Inward investment in fixed properties and businesses dropped 14% to $7.2 billion after falling 17% in July, Ministry of Commerce said on its website today.

In Mumbai trading, the Sensex Index declined 324.05 or 1.2% to close at 26,492.51 The CNX Nifty dropped 109.10 or 1.4% to 7,932.90.

Hindustan Unilever Ltd rose 0.5% to Rs 758.35 after the company is in talk with private equity fund Everstone Capital on partnership for its Modern Foods division.

JSW Steel Limited declined 4.4% to Rs 1,274.90 after the steel producer plans to acquire Italy-based Lucchini SpA for about $100 million.