U.S. Stocks Gain; GM to Buy AmeriCredit

Arthi Gupta
22 Jul, 2010
New York City

U.S. stocks rebounded after eBay profit soared 26%. Federal Reserve Chairman Ben Bernanke said that the outlook for the economy is ""unusually uncertain."" President Barack Obama signed into law the Financial Regulation Reform Bill. U.S. weekly jobless claims rise 37,000 to 464,000. GM agrees to acquire AmeriCredit for $3.5 billion.

[R]9:35 AM New York – U.S. stocks rebounded after eBay profit soared 26%. Federal Reserve Chairman Ben Bernanke said that the outlook for the economy is ""unusually uncertain."" President Barack Obama signed into law the Financial Regulation Reform Bill. U.S. weekly jobless claims rise 37,000 to 464,000. GM agrees to acquire AmeriCredit for $3.5 billion.[/R]

U.S. and European markets gained amidst positive earnings trends. Asian markets traded mixed.

eBay Inc. reported net revenue for the second quarter increased 6% to $2.22 billion from $2.10 billion in the prior year quarter. Net income rose 26% to $412 million or $0.31 per share for the second quarter, compared to $327 million or $0.25 per share in the prior year quarter.

The Federal Reserve Chairman Ben Bernanke told lawmakers that economy remains weak and the improvement in the jobs market is slower than anticipated.

Bernanke further stated in his testimony that most participants in policy committee expect real GDP growth between 3% and 3.5% in 2010 and between 3.5% to 4.5% in 2011 and 2012.

Most FOMC participants viewed uncertainty about the outlook for growth and unemployment as greater than normal, and the majority saw the risks to growth as weighted to the downside. Most participants projected that inflation will average only about 1% in 2010 and that it will remain low during 2011 and 2012, with the risks to the inflation outlook roughly balanced.

President Barack Obama on Wednesday signed into law a sweeping set of reforms to the nation''s financial regulatory structure stating that the reforms are a critical step in averting a future financial crisis.

""It was a crisis born of a failure of responsibility from certain corners of Wall Street to the halls of power in Washington,"" Obama said. ""For years, our financial sector was governed by antiquated and poorly enforced rules that allowed some to game the system and take risks that endangered the entire economy.""

""The fact is, the financial industry is central to our nation''s ability to grow, to prosper, to compete and to innovate,"" he said. ""This reform will help foster innovation, not hamper it. It is designed to make sure that everybody follows the same set of rules, so that firms compete on price and quality, not on tricks and not on traps.""

First time claims for unemployment benefits increased more than expected in the week ended July 17th, according to a report released by the Labor Department today. The report showed that jobless claims jumped to 464,000 from the previous week''s revised figure of 427,000.

General Motors agreed to acquire AmeriCredit Corp. in an all-cash deal valued at approximately $3.5 billion.

Under the terms of the agreement, which has been approved by both companies'' boards of directors, AmeriCredit shareholders would receive $24.50 in cash for each share of stock held as of the transaction closing date. The transaction is expected to close by the end of the fourth quarter of 2010.

Upon completion of the transaction, AmeriCredit plans to also re-enter the leasing business which would provide expanded leasing availability for all GM customers.