U.S. Stocks Up; 7 Banks Fail Test in Europe

123jump.com Staff
23 Jul, 2010
New York City

U.S. stocks traded higher and on positive earnings and optimism for the second half. McDonald

[R]400 PM New York – U.S. stocks traded higher and on positive earnings and optimism for the second half. McDonald’s Ford, Verizon and Honeywell reported better than expected earnings. General Electric raised its quarterly dividend by 20%. Only seven of the 91 banks in Europe fail stress test.[/R]

U.S. stocks trade higher after positive earnings momentum and global economic data. The House of Representatives approved the extension of the unemployment benefits. BP suspends relief well drilling operations as Tropical Storm Bonnie nears the Gulf of Mexico. Dell agrees to pay $100 million to settle SEC investigation.

AmeriCredit Corp. led gainers in the S&P 500 index with a rise of 2.6%. Microsoft tops views with 48% profit gain. American Express quarterly net income touches $1 billion. Amazon earnings jump 46% in second quarter. Capital One swings to quarterly net income $608 million.

General Electric increased quarterly dividend by 20% to 12 cents a share and extended stock buyback through 2013. GE cuts its dividend from 31 cents a share to 10 cents during the financial crisis in February in 2009, first dividend cut in eight decade since the Great Depression.

The European markets continued their fourth-day rally amidst encouraging economic data in the region. Moody’s contemplates downgrading Hungarian sovereign debt. French manufacturers expect bleak global demand outlook in the third quarter.

After the close of European markets, regulators and central banks in the region said only seven banks need additional capital to meet stringent capital needed in the face of severe decline in sovereign debt holdings.

Of the 91 banks tested only seven need additional capital of the total 3.5 billion euros. The Committee of European Banking Supervisors tested banks primarily for their losses and need of more capital in the event government bonds banks trade fall in value.

Hypo Real Estate Holding AG, Agriculture Bank of Greece SA and five banks in Spain including CajaSur, a financial group controlled by Caixa Catalunya, Banca Civica, Caja Duero-Caja Espana and Caixa Sabadell.

Four largest banks in France and UK passed the test and only one bank in Germany failed the test. BNP Paribas, Societe Generale SA, Credit Agricole SA and BPCE SA in France passed the test.

Hypo Real Estate was the only bank of the fourteen banks in Germany that failed the test.

The UK indexes decline ahead of the European bank stress test results. The UK GDP expands 1.1% in the second quarter, mortgage approvals drop in June, and service output sector rises in May. Irish trade surplus expanded in May. BP stalls relief well activities at MC252 well site due to adverse weather conditions.

Stocks in Japan gained after six days of decline on better than expected U.S. corporate earnings. Sumitomo’s Brazilian venture plans to increase output by 67%. Japan plans to talk to Russia for shipping uranium from its east coast. Mercedes Benz is likely to top Toyota made Lexus as the top rated luxury sedan in the U.S.

Stocks in China rallied and gained 6% for the week. PBOC wants to peg yuan to a basket of currencies. China Everbright Bank is planning a large IPO in Shanghai. China makes a three year currency swap agreement with Singapore. Real Estate online firm SouFun is planning a large U.S float.

Stocks in Mumbai traded higher. RBI allows refinancing of the rupee loans. Finance Minister says the successful implementation of GST will boost India’s economy to $2 trillion size. BHEL posts 41% rise in first quarter profit after tax.

Stocks in Australia gained after world markets surged and U.S. and European indexes gained at least 2%. NAB finds a buyer for North platform of Axa Asia Pacific. NSW plans to sell its waste water management unit. Cougar Energy lays off workers. Sandfire sells stake to Korea’s LS-Nikko Copper.

Commodities, Bonds and Currencies

Yields on 10-year bond increased to 2.99% and on 30-year bonds added to 4.01%.

The U.S. dollar increased to $1.2911 to a euro and against the Japanese yen rose to 87.33 yen.

Immediate futures prices of Texas crude oil decreased $0.26 to $79.04 a barrel, for natural gas decrease 7.9 cents to $4.56 per mbtu and gasoline prices decreased 2.49 cents to 205.38 cents a gallon.

In metals trading, copper prices rose 1.15 cents to $2.94 per pound, gold decreased $11.20 to $1,184.40 per ounce and silver decreased 1.9 cents to $18.01.