U.S. Stocks Rise; Personal Income Rises

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

U.S. stocks rise after leaders at the G20 summit agreed to push the economic recovery while targeting significant reductions in deficit spending by 2013. U.S. personal income rises 0.4% and spending increases 0.2% in May.

[R]9:35 AM New York – U.S. stocks rise after leaders at the G20 summit agreed to push the economic recovery while targeting significant reductions in deficit spending by 2013. U.S. personal income rises 0.4% and spending increases 0.2% in May.[/R]

U.S. and European markets gain after G20 leaders pledge to reduce deficits but Asian stocks traded sideways amidst concerns that cutting stimulus spending too quickly could stall the global recovery.

At a summit in Toronto on Sunday, the leaders endorsed a flexible timeline for banks for building up higher levels of capital and liquidity in an effort to contain market disruption and a slowdown in economic recovery.

Canada persuaded the G20 to commit to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016, according to the leaked draft.

In agreeing to halve the budget deficit by 2013, the White House said that it is committed to putting US public finances on a ""sound and credible medium-term trajectory.""

The G20 acknowledged the need to ""accelerate the pace of consolidation"" as Europe and other nations were facing serious fiscal challenges.

Personal spending increased less than expected in the month of May, according to a report released by the Commerce Department today. The report showed that personal income increased by 0.4% in May following an upwardly revised 0.5% increase in April.

At the same time, the Commerce Department said that personal spending edged up by 0.2% in May after increasing by less than 0.1% in the previous month.

Commodities, Currencies and Yields

Dollar edged against euro to $1.2339 and increased against the Japanese yen to 89.30.

Crude oil decreased $0.79 to $78.07 a barrel for a front month contract, natural gas edged lower $0.05 cent to $4.81 per mBtu and gasoline decreased 2.450 cents to 214.33 cents.

Gold increased $2.50 in New York trading to close at $1,258.70 per ounce, silver closed higher $0.003 to $19.15 per ounce and copper for the front month delivery decreased 1.050 cents to $3.10 per pound.

Yields on 10-year U.S. bonds increased to 3.09% and on 30-year U.S. bonds traded at 4.05%.

Stock Movers

Auxilium Pharmaceuticals, Inc., the drug manufacturer advanced 0.7% or 18 cents to $24.79.

Delta Air Lines, Inc., the carrier dropped 2.5%.

Merck & Co., Inc., the pharmaceutical company rose 0.9%.

NYSE Euronext, the operator of financial markets rose 2.0%.

Universal Health Services, Inc. dropped 0.4%.

Earnings Review

AeroVironment, Inc. ((AVAV)), the aircraft maker for the military said fourth quarter revenues rose 31% to $99.4 million from $76.0 million a year ago. Net income in the quarter rose 169% to $15.6 million or 71 cents per diluted share compared to net income of $5.8 million or 27 cents per share a year ago.

Synnex Corporation ((SNX)), the technology distributor said second quarter revenues rose 13% to $2.03 billion from $1.80 billion a year ago. Net income in the quarter rose 33.3% to $24.8 million or 70 cents per diluted share compared to net income of $18.6 million or 55 cents per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 43.54 or 0.45% to 9,693.94, Hang Seng index in Hong Kong increased 35.89 or 0.17% to 20,726.68 and CSI 300 index in China lower 19.51 or 0.71% to 2,716.78. ASX 200 index in Australia decreased 28.50 or 0.65% to 4,384.50. The FTSE Bursa KL Composite index in Malaysia closed lower 0.91 or 0.07% to 1,325.54.

The Kospi Index in South Korea increased 2.19 or 0.13% to close at 1,732.03. SET index in Thailand closed higher 10.73 or 1.35% to 804.40 and JSE Index in Indonesia increased 8.71 or 0.30% to 2,955.73. The Sensex index in India increased 199.73 or 1.14% to 17,774.26.

Europe Markets Review

In London FTSE 100 Index closed higher 25.14 or 0.50% to 5,071.61, in Paris CAC 40 Index increased 33.49 or 0.95% to 3,553.22 and in Frankfurt DAX index traded higher 62.19 or 1.02% to 6,132.79. In Zurich trading SMI increased 36.30 or 0.58% to 6,311.65.