U.S. Stocks Flat; German Orders Rise

Arthi Gupta, Mayank Mehta and Sanjay Barot
07 Jun, 2010
New York City

U.S. stocks rose after German factory orders increased in April. European markets cautiously traded higher as investors worry about Hungary''''s fiscal health. Spain-based Grifols agrees to acquire U.S.-based Talecris for $3.4 billion in cash.

[R]9:35 AM New York – U.S. stocks rose after German factory orders increased in April. European markets cautiously traded higher as investors worry about Hungary''s fiscal health. Spain-based Grifols agrees to acquire U.S.-based Talecris for $3.4 billion in cash.[/R]

U.S. stocks gain as German factory orders unexpectedly rose in April, European markets cautiously advance, and Asian market dropped at least 2%. German factory orders increased 2.8% in the month from March, according to the latest data by the Federal Ministry of Economics and Technology.

Jittery investors are afraid of a contagion effect spreading from the sovereign debt crisis after some Hungarian government officials said that the nation''s fiscal situation may be as bad as Greece''s.

Hungary''s Economy Minister Gyorgy Matolcsy said today the country has targeted 3.8% budget deficit target in agreement with international lenders through cuts in expenses. Matolcsy also told CNBC television that there were gaps in communication last week, but “it is blatant that Hungary is not Greece.”

European Commissioner for Economic and Monetary Affairs Olli Rehn said on Saturday the speculation of Hungary falling into default was “wildly exaggerated.” He noted that the country''s economy is on the way to recovery.

Speaking to reporters in Busan, South Korea at the G20 meetings, Rehn said Hungary has made serious progress in consolidating its public finances over past few years and the recent comparison between Hungary and Greece are “misleading.”

Euro-zone finance ministers are scheduled to meet later today in Luxembourg, as European Union President Herman Van Rompuy chairs the second meeting of the special task force formed to discuss the sovereign debt crisis.

Spanish healthcare company Grifols SA agreed to buy Talecris Biotherapeutics Holdings Corp. for $3.4 billion, or €2.8 billion in cash and stocks. The merger between the two companies will create a leader in plasma protein therapeutics and is expected to close in the second half of 2010.

Commodities, Currencies and Yields

Dollar edged lower against euro to $1.1978 and decreased against the Japanese yen to 91.86.

Crude oil decreased $0.10 to $71.41 a barrel for a front month contract, natural gas edged lower $0.04 cent to $4.76 per mBtu and gasoline increased 0.730 cents to 200.26 cents.

Gold decreased $2.30 in New York trading to close at $1,215.40 per ounce, silver closed higher $0.131 to $17.43 per ounce and copper for the front month delivery decreased 2.900 cents to $2.79 per pound.

Yields on 10-year U.S. bonds increased to 3.21% and on 30-year U.S. bonds traded at 4.14%.

Stock Movers

American International Group, Inc., the insurer fell 0.7%.

Ancestry.com Inc., the online provider of family histories dropped 5.4%.

Boston Private Financial Holdings, Inc. plunged 10.9%. The bank announced that it has filed a registration statement for a proposed underwritten public offering of up to $40 million of its common stock.

CenturyTel, Inc., the phone company fell 1.3%.

Emerson Electric Co., the electrical products maker fell 4.8%.

Furniture Brands International, Inc., the furniture retailer rose 1.1%.

Oracle Corporation, the software maker fell 3.1%.

Earnings Review

DynCorp International Inc. ((DCP)), the defense contractor said fourth quarter revenues rose 35.5% to $1.1 billion from $812.8 million a year ago. Net income in the quarter rose 27.6% to $24.5 million or 43 cents per diluted share compared to net income of $19.2 million or 34 cents per share a year ago.

Martek Biosciences Corporation ((MATK)), the maker of nutritional products from microbial sources said second quarter revenues rose 34% to $124.0 million from $92.4 million a year ago. Net income in the quarter rose 13.6% to $12.5 million or 37 cents per diluted share compared to net income of $11.0 million or 33 cents per share a year ago.

Ulta Salon, Cosmetics & Fragrance, Inc. ((ULTA)), the beauty products retailer said first quarter sales rose 19% to $320.2 million from $268.8 million a year ago. Net income in the quarter rose 174% to $13.7 million or 23 cents per diluted share compared to net income of $5.0 million or 8 cents per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 380.39 or 3.84% to 9,520.80, Hang Seng index in Hong Kong decreased 401.92 or 2.03% to 19,378.15 and CSI 300 index in China lower 48.68 or 1.77% to 2,695.72. ASX 200 index in Australia decreased 123.50 or 2.78% to 4,325.90. The FTSE Bursa KL Composite index in Malaysia closed lower 8.12 or 0.63% to 1,286.27.

The Kospi Index in South Korea decreased 26.16 or 1.57% to close at 1,637.97. SET index in Thailand closed lower 11.63 or 1.51% to 759.85 and JSE Index in Indonesia decreased 73.02 or 2.59% to 2,750.23. The Sensex index in India decreased 336.62 or 1.97% to 16,781.07.

Europe Markets Review

In London FTSE 100 Index closed lower 24.87 or 0.49% to 5,101.13, in Paris CAC 40 Index decreased 17.61 or 0.51% to 3,438.00 and in Frankfurt DAX index traded lower 14.05 or 0.24% to 5,924.83. In Zurich trading SMI increased 11.00 or 0.17% to 6,309.97.