U.S. Stocks Struggle; Dollar Gains

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

U.S. stocks trade cautiously as jobless claims fell and concerns about the the euro crisis ease. U.S. dollar soars to one-week high against the euro. April import price index rises 0.9% and export prices increase 1.2%. Weekly jobless claims decrease 4,000. SAP AG buys Sybase for $5.8 billion.

[R]9:45 AM New York – U.S. stocks trade cautiously as jobless claims fell and concerns about the EU debt crisis shows signs of easing. U.S. dollar soars to one-week high against the euro. April import price index rises 0.9% and export prices increase 1.2%. Weekly jobless claims decrease 4,000. SAP AG buys Sybase for $5.8 billion and Honeywell acquires Matrikon for $142 million.[/R]

U.S. stocks trade cautiously as jobless claims fell and concerns about the EU debt crisis show signs of easing and the dollar soars to one-week high against the euro. Net income at Cisco increased 63% and Kohl’s Corporation increased 47%.

The dollar rose to a one-week high of $1.2581 against the euro, a 2-day high against the UK pound to $1.4749 and moved lower against the Japanese yen to 92.88 yen.

Seasonally adjusted weekly U.S. jobless claims decreased 4,000 to 444,000 from the revised previous week claims of 448,000. The preliminary insured unemployment rate in the week ending May 1 was unchanged from the prior week''s unrevised rate of 3.6%.

April U.S. import price index increased 0.9% after a 0.5% rise in fuel prices last month. The index for export prices increased 1.2% after increasing 0.7% in March.

Foreclosure filings on U.S. properties in April declined from the previous year, and from March. In its U.S. Foreclosure Market Report for April, RealtyTrac said one in every 387 U.S. housing units received a foreclosure filing during the month.

SAP to Buy Sybase for $5.8 Billion

SAP AG, the world''s largest maker of business management software said that it has agreed to buy enterprise and mobile software maker Sybase, Inc. in a deal valued at about $5.8 billion.

Under the deal, Germany-based SAP''s U.S. subsidiary will make an all cash tender offer for all of the outstanding shares of Sybase at $65.00 per share, a 56% premium to Sybase''s closing stock price on Tuesday and a 44% premium to its average stock price over the past three months

SAP said the deal would be funded from the company''s cash on hand and a €2.75 billion loan facility arranged and underwritten by Barclays Capital and Deutsche Bank.

Sybase shares rose 15.11%, up 35.05% at $56.14. SAP shares closed at $44.90, down 47 cents or 1.04%.

Honeywell to Acquire Matrikon for About $142 Million

Honeywell International Inc. said it has signed an agreement valued at around $142 million or about C$145 million to acquire Matrikon Inc., a company specializing in software that helps industrial manufacturers operate their plants safely and reliably.

Commodities, Currencies and Yields

Dollar edged higher against euro to $1.2601 and decreased against the Japanese yen to 92.76.

Crude oil decreased $0.55 to $75.10 a barrel for a front month contract, natural gas edged higher $0.01 cent to $4.30 per mBtu and gasoline decreased 0.220 cents to 220.82 cents.

Gold decreased $7.80 in New York trading to close at $ 1,235.30 per ounce, silver closed lower $0.198 to $19.46 per ounce and copper for the front month delivery increased 0.700 cents to $3.19 per pound.

Yields on 10-year U.S. bonds increased to 3.57% and on 30-year U.S. bonds traded at 4.48%.

Stock Movers

Rock-Tenn Company, the maker of cardboard boxes and promotional displays added 2.7%.

Sybase, Inc. surged 14.6% after SAP AG agreed to acquire Sybase Inc. in a transaction valued at $5.8 billion to help it fend off competition from Oracle Corp.

Whole Foods Market, Inc., the organic-foods grocer increased 6.4%.

Earnings Review

Cisco Systems, Inc. ((CSCO)), the maker of routers and switches said third quarter sales rose 27% to $10.4 billion from $8.2 billion a year ago. Net income in the quarter rose 63% to $2.2 billion or 37 cents per diluted share compared to net income of $1.35 billion or 23 cents per share a year ago.

Kohl’s Corporation ((KSS)), the department store operator reported first quarter sales rose 11% to $4.04 billion from $3.64 billion a year ago. Net income in the quarter rose 45% to $199 million or 64 cents per diluted share compared to net income of $137 million or 45 cents per share a year ago. Comparable same-store sales increased 7.4%.

Whole Foods Market, Inc. ((WFMI)), the natural and organic grocery chain said second quarter sales rose 13.4% to $2.11 billion from $1.86 billion a year ago. Net income in the quarter rose 147.3% to $67.5 million or 39 cents per diluted share compared to net income of $27.3 million or 19 cents per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 226.52 or 2.18% to 10,620.55, Hang Seng index in Hong Kong increased 209.97 or 1.04% to 20,422.46 and CSI 300 index in China higher 68.75 or 2.44% to 2,886.91. ASX 200 index in Australia increased 79.80 or 1.75% to 4,652.80. The FTSE Bursa KL Composite index in Malaysia closed higher 2.82 or 0.21% to 1,346.92.

The Kospi Index in South Korea increased 31.55 or 1.90% to close at 1,694.58. SET index in Thailand closed lower 7.17 or 0.93% to 766.55. The Sensex index in India increased 70.06 or 0.41% to 17,265.87. The markets of Indonesia were closed today.

Europe Markets Review

In London FTSE 100 Index closed higher 36.30 or 0.67% to 5,419.75, in Paris CAC 40 Index increased 9.90 or 0.27% to close at 3,743.77, in Frankfurt DAX index higher 57.68 or 0.93% to close at 6,241.17. In Zurich trading SMI increased 66.05 or 1.01% to close at 6,575.05.