Stocks Trade Higher; Bernanke Comments

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

U.S. stocks edged higher following positive comments from Fed Chairman Ben Bernanke. He also suggested that unemployment is likely to remain high for a while and the banking sector is still not fully healthy. McDonald

[R]10:25 AM New York – U.S. stocks edged higher following positive comments from Fed Chairman Ben Bernanke. He also suggested that unemployment is likely to remain high for a while and the banking sector is still not fully healthy. McDonald’s Corp said May same store sales increased 4.8%.[/R]

U.S. stocks edge higher after Fed Chairman Bernanke said the country''s recovery is likely to proceed at a moderate pace, Asian markets gained on bargain hunting at lower levels, and European markets trended lower in the afternoon as economic concerns dominate sentiment. Goldman Sachs subpoenaed by Financial Crisis Inquiry Commission.

U.S. Federal Reserve Chairman Ben Bernanke said on Monday the country''s recovery is likely to proceed at a moderate pace and is unlikely to bring down the unemployment rate quickly. ""My best guess is we''ll have a continued recovery, but it won''t feel terrific,"" he was quoted as saying in an interview with ABC News at the Woodrow Wilson Center.

Bernanke warned that high unemployment could depress consumer spending in the long run. He also mentioned tight lending standards as another factor which was suppressing the recovery.

Bernanke also discussed the sovereign debt crisis in Greece and expressed confidence that the European authorities could deal with the issue. He stated that the Fed was keeping a close eye on developments in Europe.

The Financial Crisis Inquiry Commission subpoenaed Goldman Sachs & Co. for failing to comply with a request for documents and interviews in a timely manner.

The commission noted that failure to comply with its request is viewed with the utmost seriousness, as it will not be deterred from getting desired information.

Switzerland power and automation technology company ABB Ltd. said UK-based power solutions provider Chloride Group Plc.''s board has agreed to its £860 million or $1.25 billion takeover offer. The all-cash offer of 325 pence per share will be implemented by the fourth quarter.

Commodities, Currencies and Yields

Dollar edged lower against euro to $1.1924 and increased against the Japanese yen to 91.56.

Crude oil decreased $0.32 to $71.12 a barrel for a front month contract, natural gas edged lower $0.04 cent to $4.88 per mBtu and gasoline decreased 1.290 cents to 198.20 cents.

Gold increased $9.10 in New York trading to close at $1,249.90 per ounce, silver closed higher $0.173 to $18.33 per ounce and copper for the front month delivery decreased 1.600 cents to $2.75 per pound.

Yields on 10-year U.S. bonds increased to 3.16% and on 30-year U.S. bonds traded at 4.10%.

Stock Movers

Biogen Idec Inc., the maker of medicines for multiple sclerosis fell 0.4%.

Depomed, Inc. surged 10.5% after the developer of a treatment for hot flashes announced that the New Drug Application for DM-1796 was accepted by the U.S. Food and Drug Administration for the management of postherpetic neuralgia (PHN), or pain after shingles.

Emulex Corporation fell 4.5%. The chipmaker today announced that it has signed an agreement to acquire ServerEngines Corporation, a privately held, semiconductor designer.

New York & Company, Inc., the women’s clothing retailer fell 7.0%.

Earnings Review

Dollar General Corporation ((DG)), the discount retailer reported first quarter sales rose 12% to $3.11 billion from $2.78 billion a year ago. Net income in the quarter rose 64% to $136.0 million or 39 cents per diluted share compared to net income of $83.0 million or 26 cents per share a year ago. Comparable same-store sales increased 6.7%.

The Pep Boys-Manny, Moe & Jack ((PBY)), the auto parts retailer said first quarter sales rose 2.7% to $510.0 million from $496.5 million a year ago. Net income in the quarter rose 9% to $12.0 million or 23 cents per diluted share compared to net income of $11.0 million or 21 cents per share a year ago.

The Talbots, Inc. ((TLB)), the specialty retailer and direct marketer of women’s apparel, accessories and shoes reported first quarter sales rose 4.7% to $320.7 million from $306.2 million a year ago. Net loss in the quarter was $4.4 million or 8 cents per diluted share compared to net loss of $23.6 million or 44 cents per share a year ago. Comparable same-store sales increased 2.4%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 17.14 or 0.18% to 9,537.94, Hang Seng index in Hong Kong increased 109.33 or 0.56% to 19,487.48 and CSI 300 index in China higher 3.62 or 0.13% to 2,699.34. ASX 200 index in Australia increased 55.30 or 1.28% to 4,381.20. The FTSE Bursa KL Composite index in Malaysia closed higher 1.91 or 0.15% to 1,288.18.

The Kospi Index in South Korea increased 13.51 or 0.82% to close at 1,651.48. SET index in Thailand closed lower 2.44 or 0.32% to 757.41 and JSE Index in Indonesia increased 29.75 or 1.08% to 2,779.98. The Sensex index in India decreased 163.97 or 0.98% to 16,617.10.

Europe Markets Review

In London FTSE 100 Index closed lower 47.07 or 0.93% to 5,021.99, in Paris CAC 40 Index decreased 35.76 or 1.05% to 3,377.96 and in Frankfurt DAX index traded lower 55.18 or 0.93% to 5,849.77. In Zurich trading SMI decreased 33.07 or 0.53% to 6,257.97.