Morning Commentary: Preferred stocks rebound in early trading; Volkswagen ADRs stage rally

By Stephanie N. Rotondo

Phoenix, Sept. 23 – Preferred stocks were rebounding early Wednesday after selling off a touch on Tuesday.

The Wells Fargo Hybrid and Preferred Securities index was up 10 basis points at mid-morning. The index closed Tuesday down 2 bps, though it was off as much as 7 bps prior to the close.

But while the market was showing signs of strength, the Yom Kippur holiday was weighing on activity, as some market players were absent.

“There’s nothing happening,” a trader said.

The trader did note that Volkswagen AG’s euro-denominated preferreds had been “getting hammered” in the wake of the company’s emissions scandal. It was reported last week that the German automaker had installed software into its diesel cars that effectively misconstrued emissions data to meet U.S. environmental standards.

The company’s board of directors is meeting Wednesday with Martin Winterkorn, chief executive officer, to decide the executive’s fate. A full board meeting is slated for Friday.

Volkswagen does have an issue of American Depositary Shares linked to its preference shares that trade over-the-counter. That issue (OTCBB: VLKPY) dropped more than 19% in Tuesday trading but was also rebounding on Wednesday.

The shares were up 88 cents, or 3.65% at $24.85 in early trading. The paper opened the day at $25.45.

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