Morning Commentary: Preferred stocks start week lower; oil prices wane, drag down sector shares

By Stephanie N. Rotondo

Phoenix, Sept. 28 – The preferred stock market was following the broader markets downward Monday, fueled by ongoing concerns about the global economy – particularly China.

Additionally, the markets remained worried about when – or if – the Federal Reserve intended to raise interest rates.

Adding fuel to the fire was the possibility of a government shutdown as Republicans and Democrats fight over the next fiscal year’s budget. Should a shutdown occur, “it will definitely put a damper on the economy,” a trader said.

Without any clear indication of how the various events would unfold, “we’re just going to have a sideways market,” the trader added.

The Wells Fargo Hybrid and Preferred Securities index was off 8 basis points at mid-morning.

Oil and gas names were taking a hit in early trading as domestic crude oil prices kicked off the week with a weaker tone.

West Texas Intermediate crude was off 1.58% at mid-morning.

“Oil was off again, so any natural gas or resource issues are going to be beat up again,” a trader said.

Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) were down 39 cents, or 2.29%, in early trading, at $16.66. Magnum Hunter Resources Corp.’s 8% series D cumulative preferreds (NYSE: MHRPD) were meantime down $3.10, or 34.07%, at $6.00.

And, Goodrich Petroleum Corp.’s 9.75% series D cumulative preferreds (NYSE: GDPPD) were down 10.5 cents, or 8.79%, at $1.09.

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