U.S. Stocks Struggle; Google License Renewed

Arthi Gupta, Mayank Mehta and Sanjay Barot
09 Jul, 2010
New York City

U.S. stocks trade sideways on speculation of the earnings season next week. The IMF highlighted U.S. economic recovery is well established. The federal appeals court rejected government bid to reinstate drilling ban. Air Products raised Airgas offer to $63.50 a share. China renews license of Google.

[R]9:35 AM New York – U.S. stocks trade sideways on speculation of the earnings season next week. The IMF highlighted U.S. economic recovery is well established. The federal appeals court rejected government bid to reinstate drilling ban. Air Products raised Airgas offer to $63.50 a share. China renews license of Google.[/R]

U.S. stocks trade sideways on speculation of the earnings season next week. Asian markets extended gains for the second consecutive day and European markets too rose. The unexpected hike in interest rates by Bank of Korea boosted investor sentiment. The central bank of South Korea, after 17 months, revised the benchmark seven-day repo rate to 2.25% from 2.00%.

The economic recovery in the U.S. is increasingly “well established,” according to a statement from the International Monetary Fund on Thursday, although the organization noted that unemployment is likely to “remain elevated.”

The IMF said it welcomes the Obama administration''s commitment to halve the budget deficit by 2013 and its intention to stabilize public debt.

A federal appeals court on Thursday denied the U.S. government''s request to reinstate a six-month moratorium on deepwater drilling in the Gulf of Mexico even as the government appeals a lower court order that rejects the ban.

The U.S. Court of Appeals for the Fifth Circuit, based in New Orleans, ruled that Interior Secretary Kenneth Salazar failed to show the federal government would suffer ""irreparable injury"" if the moratorium is lifted while it appeals the trial court''s decision.

The Obama administration''s order halted 33 exploratory drilling projects and suspended new permits, but did not affect more than 3,000 platforms already in production. The Interior Department said the moratorium was necessary because of the uncertainties about the cause of the BP oil well blowout in April, a shortage of response equipment and a need to implement strict new drilling rules.

The U.S. government has demanded an immediate report from BP Plc detailing plans to improve its containment and clean-up efforts on the Gulf of Mexico oil spill.

U.S. Coast Guard Admiral Thad Allen, who is coordinating the government response to the Gulf oil spill, sent a letter on Thursday to BP’s Managing Director Bob Dudley asking the company to submit within 24 hours ""detailed plans and time-lines"" on containing the 80-day-old major oil leak.

The information is sought as the government is concerned over the risks involved in BP''s plans to change caps on the oil well.

Google Inc. in its blogspot announced that the Chinese government renewed its ICP license. The company noted that it looks forward to continuing to provide Web search and local products to its users in China.

""We are very pleased that the government has renewed our ICP (Internet content provider) license and we look forward to continuing to provide web search and local products to our users in China,"" said an e-mailed statement by Google''s top lawyer, David Drummond.

The standoff with China began in January, when Google said it would stop censoring search results on the principle of free access to information. Google disagrees with Chinese rules that require companies to limit public online access to information the government deems inappropriate.

Air Products & Chemicals Inc. said on Thursday that it has increased its fully financed offer to purchase all of the outstanding shares of Airgas, Inc. to $63.50 a share in cash. An increase of $3.50 per share over its initial offer of $60.00 per share and a premium of 46% over the closing price of Airgas'' shares on February 4, the day before Air Products announced its proposal.

At $63.50 per share, the acquisition is expected to be immediately accretive to Air Products'' earnings per share on both a GAAP and cash basis, excluding one-time costs.

The revised offer and withdrawal rights are scheduled to expire on August 13, unless extended. Except for the price increase, all other terms and conditions of the offer remain unchanged.

Commodities, Currencies and Yields

Dollar increased against euro to $1.2667 and increased against the Japanese yen to 88.56.

Crude oil increased $0.16 to $75.60 a barrel for a front month contract, natural gas edged lower $0.04 cents to $4.39 per mBtu and gasoline increased 0.950 cents to 206.06 cents.

Gold increased $0.70 in New York trading to close at $1,196.80 per ounce, silver closed higher $0.003 to $17.87 per ounce and copper for the front month delivery increased 2.700 cents to $3.04.

Yields on 10-year U.S. bonds increased to 3.05% and on 30-year U.S. bonds traded at 4.03%.

Stock Movers

ACE Limited added 4.8% or $2.53 to $54.75 after the company is scheduled to be added to the S&P 500 Index replacing Millipore Corp. as of July 15.

Airgas, Inc. rose 0.7% after the company said that its board of directors will review the revised offer of $63.50 a share from Air Products & Chemicals, Inc.

Conceptus, Inc. plunged 24.1% after the maker of a female-sterilization method slashed its second-quarter and full-year 2010 financial guidance. The company expects GAAP earnings per share loss in the range of 2 cents to 1 cent.

ScanSource, Inc. gained 8.4% after the maker of bar-code scanners announced late Thursday that sales results for its quarter ended June 30, 2010 are expected to be in the range of $573 million to $583 million, compared to $441 million for the same period one year ago.

Earnings Review

Chase Corporation ((CCF)), the manufacturer of sealants and coatings said third quarter revenues increased 58% to $39.6 million from $25.1 million a year ago. Net income in the quarter surged 410.4% to $4.4 million or 48 cents per diluted share compared to net income of $862,000 or 10 cents per share a year ago.

Lawson Software, Inc. ((LWSN)), the software maker said fourth quarter revenues rose 6% to $197.0 million from $186.2 million a year ago. Net income in the quarter fell 70% to $2.6 million or 2 cents per diluted share compared to net income of $8.6 million or 5 cents per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 49.58 or 0.52% to 9,585.32, Hang Seng index in Hong Kong increased 328.10 or 1.64% to 20,378.66 and CSI 300 index in China higher 71.18 or 2.76% to 2,647.10. ASX 200 index in Australia increased 39.60 or 0.91% to 4,396.30. The FTSE Bursa KL Composite index in Malaysia closed higher 8.28 or 0.63% to 1,324.31.

The Kospi Index in South Korea increased 24.37 or 1.43% to close at 1,723.01. SET index in Thailand closed higher 3.03 or 0.37% to 820.60 and JSE Index in Indonesia increased 27.99 or 0.96% to 2,943.90. The Sensex index in India increased 181.81 or 1.03% to 17,833.54.

Europe Markets Review

In London FTSE 100 Index closed higher 4.80 or 0.09% to 5,110.25, in Paris CAC 40 Index increased 14.64 or 0.41% to 3,552.89 and in Frankfurt DAX index traded higher 26.49 or 0.44% to 6,062.15. In Zurich trading SMI increased 28.52 or 0.46% to 6,184.24.