U.S. Stocks Struggle; Lorillard Net Falls

Arthi Gupta
26 Jul, 2010
New York City

U.S. stocks trade lower and better than expected bank stress test results in Europe. Obama urged the U.S. Senate for an early passage of the small business bill. BP provided an update on the Gulf of Mexico oil spill and the oil giant reiterated there were no potential changes to management.

[R]9:35 AM New York – U.S. stocks trade lower and better than expected bank stress test results in Europe. Obama urged the U.S. Senate for an early passage of the small business bill. BP provided an update on the Gulf of Mexico oil spill and the oil giant reiterated there were no potential changes to management.[/R]

U.S. stocks fluctuate after Lorillard second quarter net falls. Asian and European markets traded mixed.

Lorillard Inc., the cigarette maker reported second-quarter net sales rose marginally to $1.52 billion from $1.519 billion a year-ago quarter. Net income declined 8% to $263 million or $1.73 per diluted share versus $286 million or $1.71 per share last year.

The result of the European bank stress tests conducted by central banks and coordinated by the Committee of European Banking Supervisors was released on July 23.

A total of 91 banks, representing two-thirds of the region''s banking sector were tested to assess whether they would be able to withstand future adversities in the financial sector. Banks from 20 countries across the European Union, with nearly half of them from Spain and Germany were scrutinized.

The Committee of European Banking Supervisors revealed that only seven of the 91 European banks examined for their ability to withstand financial shocks failed the applied stress tests. They were five small Spanish banks, Germany''s Hypo Real Estate and Greece''s ATEbank.

Under the adverse scenario considered by the test, seven banks failed to meet required Tier 1 capital ratios 6%, with an overall shortfall of €3.5 billion.

The aggregate results suggest a rather strong resilience for the EU banking system as a whole and may appear reassuring for the banks in the exercise however several banks were able to pass the test on a partial support from government.

President Obama urged the U.S. Senate to advance a bill aimed at boosting small businesses around the country.

""Our goal is to make sure the people who are looking for a job can find a job,"" he said. ""That''s why it''s so important for the Senate to pass the additional steps that I''ve asked for to cut taxes and expand lending for America''s small businesses, our most important engine for hiring and for growth.""

One of the key aspects of the bill would be the $30 billion fund dedicated toward helping community banks offer loans to small businesses so they can grow and hire, Obama said.

Obama also sought to emphasize that the bill would be yet another step in an economic recovery and jobs package.

BP Plc issued a press release today amidst speculation over the weekend regarding potential changes to management and the charge for the costs of the Gulf of Mexico oil spill. The company confirmed that a final decision is yet to be made and a board meeting would be held on Monday evening ahead of the announcement of the second quarter results on July 27.

BP provided an update on developments to the MC252 oil well incident in the Gulf of Mexico.

The company stated that relief well activities at the MC252 well site were temporarily suspended because of potentially adverse weather associated with Tropical Storm Bonnie. Following improvements in the weather conditions, the DDIII drilling rig returned to the relief well site on July 24 and is taking steps necessary to reconnect with the well and resume drilling operations which are expected to take a number of days.

Further, the company noted the DDII drilling rig is moving back into position, and will take steps necessary to reconnect to the second relief well. However, work on the second relief well has been suspended so as not to interfere with the first. Moreover, the MC252 well has been successfully shut-in for integrity testing since July 15.