U.S., Global Stocks Decline; EU Worries

Arthi Gupta, Mayank Mehta and Sanjay Barot
11 May, 2010
New York City

Global and U.S. stocks decline amid doubts whether the plan proposed by the EU and the IMF will be sufficient to revive the European markets. The dollar gained against all major currencies and crude oil prices dipped below $76 a barrel. priceline.com quarterly profit surges.

[R]9:45 AM New York – Global and U.S. stocks decline amid doubts whether the plan proposed by the EU and the IMF will be sufficient to revive the European markets. The dollar gained against all major currencies and crude oil prices dipped below $76 a barrel. priceline.com quarterly profit surges.[/R]

Global and U.S. stocks decline amid doubts whether the plan proposed by the European Union and the International Monetary Fund for the debt crisis will be sufficient to revive the European markets.

The persisting uncertainty regarding government formation in the U.K. and speculation that China might take more stringent measures to cool-off its economy after monthly inflation surged to 2.9% also weighed on market sentiment.

European finance ministers agreed on Monday to put together a €500 billion plan to ensure stability in the euro zone and prevent the widening financial crisis in the region.

The International Monetary Fund said on Tuesday that while Greece''s public debt is sustainable over the medium term, persistent low growth, or even a moderate economic jolt, could set back the country.

Marek Belka, the director of the International Monetary Fund’s European department, yesterday said he doesn’t consider the European rescue package a “long-term solution.” The ECB council member Axel Weber said the bank’s purchase of government bonds poses “significant” risks, Germany’s Boersen-Zeitung reported.

Moody''s credit ratings agency also warned on Monday that it may downgrade Portugal''s debt rating and further cut Greece''s to junk status.

The European Central Bank Governing Council member Axel Weber said late on Monday that bond-buying by euro zone central banks would be limited in scope.

The price of crude oil slipped back below $76 as optimism over the huge aid package by the EU and the IMF waned. Also, worries over monetary tightening in China weighed on sentiment.

In the early trading, the U.S. dollar gained against the euro and the pound but declined against the yen. The euro fell to 4-day lows against the pound, the Swiss franc and the dollar. The euro weakened 0.7% against the dollar.

The Metropolitan Washington Airports Authority plans to sell $650 million of revenue bonds to help finance an extension of the U.S. capital’s passenger rail system to Washington Dulles International Airport.

The issue, backed by revenue from the Dulles Toll Road, a 14-mile or 22.5 kilometer highway to the airport, could begin selling as early as today, said Andrew Rountree, the authority’s acting chief financial officer.

Online travel company priceline.com Incorporated said that its first-quarter profit more than doubled from last year, boosted by higher revenues, and strong bookings.

Engineering and construction firm Fluor Corp. said that its first quarter profit fell 33% from last year, hurt by weakness in its oil & gas business unit. At the same time, the company reaffirmed its full year 2010 earnings outlook.

Commodities, Currencies and Yields

Dollar edged higher against euro to $1.2679 and decreased against the Japanese yen to 92.40.

Crude oil decreased $1.04 to $75.76 a barrel for a front month contract, natural gas edged lower $0.01 cent to $4.16 per mBtu and gasoline decreased 1.030 cents to 216.23 cents.

Gold increased $17.40 in New York trading to close at $1,218.20 per ounce, silver closed lower $0.042 to $18.51 per ounce and copper for the front month delivery decreased 9.600 cents to $3.13 per pound.

Yields on 10-year U.S. bonds increased to 3.48% and on 30-year U.S. bonds traded at 4.36%.

Stock Movers

American Dairy, Inc., the Chinese producer of infant formula and milk powder plunged 11.9%.

Priceline.com Incorporated, the online travel agency plunged 12.1%.

Valero Energy Corporation, the refiner gained 6.5%.

Zale Corporation, the jewelry chain surged 9.8%.

Earnings Review

Fluor Corporation ((FLR)), the construction and engineering company said first quarter revenues fell 15.5% to $4.9 billion from $5.8 billion a year ago. Net income in the quarter fell 33.3% to $136.6 million or 76 cents per diluted share compared to net income of $204.8 million or $1.12 per share a year ago.

LDK Solar Co. Ltd. ((LDK)), the maker of wafers for solar cells said first quarter sales rose 14% to $347.6 million from $304.6 million a year ago. Net income in the quarter was $7.2 million or 6 cents per ADS compared to net loss of $13.2 million or 12 cents per ADS a year ago.

Legg Mason, Inc. ((LM)), the asset management company said fourth quarter revenues rose 9% to $671.4 million from $617.2 million a year ago. Net income in the quarter was $63.6 million or 39 cents per diluted share compared to net loss of $330.2 million or $2.33 per share a year ago.

priceline.com Incorporated ((PCLN)), the online travel company reported first quarter sales rose 26.5% to $584.4 million from $462.1 million a year ago. Net income in the quarter rose 115.4% to $53.9 million or $1.06 per diluted share compared to net income of $25.0 million or 53 cents per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 119.60 or 1.14% to 10,411.10, Hang Seng index in Hong Kong decreased 280.13 or 1.37% to 20,146.51 and CSI 300 index in China lower 57.42 or 2.01% to 2,800.82. ASX 200 index in Australia decreased 51.80 or 1.13% to 4,548.00. The FTSE Bursa KL Composite index in Malaysia closed higher 6.75 or 0.51% to 1,340.72.

The Kospi Index in South Korea decreased 7.39 or 0.44% to close at 1,670.24. SET index in Thailand closed lower 6.97 or 0.89% to 772.09 and JSE Index in Indonesia decreased 37.54 or 1.32% to 2,812.89. The Sensex Index in India decreased 189.02 or 1.09% to 17,141.53.

Europe Markets Review

In London FTSE 100 Index traded lower 101.90 or 1.89% to 5,285.52, in Paris CAC 40 Index decreased 91.15 or 2.45% to 3,629.14 and in Frankfurt DAX index traded lower 77.10 or 1.28% to 5,940.81. In Zurich trading SMI decreased 54.92 or 0.85% to 6,427.03.