U.S. Stocks Weak; Boeing Sales Drop 9.2%

Arthi Gupta
28 Jul, 2010
New York City

U.S. stocks trade lower amidst worries of a slowdown in global economic recovery. U.S. durable goods orders fall in June and mortgage demand slackens. Praxair and WellPoint report better-than-estimated second quarter earnings but Boeing sales and net declines.

[R]9:35 AM New York – U.S. stocks trade lower amidst worries of a slowdown in global economic recovery. U.S. durable goods orders fall in June and mortgage demand slackens. Praxair and WellPoint report better-than-estimated second quarter earnings but Boeing sales and net declines.[/R]

U.S. and European markets decline on concerns of sustained global economic recovery and Asian markets traded sideways.

Praxair, the industrial gases producer today posted higher profit for the second quarter, reflecting double-digit volume growth in all geographic regions, led by South America and Asia.

Quarterly sales increased 18% to $2.53 billion compared to $2.14 billion a year-ago quarter. Net income rose 24% to $371 million or $1.19 per share from $299 million or $0.96 per share earned a year ago.

In addition, the company''s board authorized a new share repurchase program for up to $1.5 billion of its common stock, reflecting the company''s strong balance sheet and free-cash-flow generation.

WellPoint Inc., the healthcare services provider second quarter net income rose from the prior year period, despite a decrease in revenues. The company also revised its fiscal year 2010 guidance.

Total revenues for the quarter declined 5.8% to $14.5 billion compared to $15.4 billion in the year-ago period. Net income rose 4.2% to $722.4 million or $1.71 per share compared to $693.5 million or $1.43 per share in the previous-year quarter.

Boeing Co. reported second-quarter revenue declined 9.2% to $15.573 billion compared to $17.154 billion in the prior-year quarter. Net earnings in the quarter fell 21% to $787 million or $1.06 per share from $998 million or $1.41 per share in the same quarter last year.

The company continues to expect that 2011 revenue will be higher than 2010, primarily driven by projected 787 and 747-8 deliveries.

The International Monetary Fund Deputy Managing Director John Lipsky said on Tuesday that the global recovery is expected to continue despite recent signs of slowing momentum. He stated while financial markets have improved somewhat in recent weeks, ongoing financial market strains have heightened uncertainty. He noted the overarching policy challenge was to sustain the recovery while restoring confidence.

Lipsky said the key goal is greater transparency regarding bank liabilities and their exposures to sovereign debt.

The IMF deputy further noted the recently completed European bank stress tests are receiving particular focus at present, and in general they have made a positive contribution to market sentiment.

He added the need for credible, medium-term fiscal consolidation plans to bolster confidence, while not choking off the recovery. He felt while most G-20 economies’ current fiscal plans appear to be appropriate, countries facing sovereign funding pressures still will require upfront measures to underpin confidence.

Orders for manufactured goods fell for the second consecutive month in June, according to a report released by the Commerce Department today. The decrease was partly due to a continued drop in orders for transportation equipment.

The report showed that orders for durable goods fell 1.0% in June as against a revised 0.8% decrease in May. Excluding a 2.4% decrease in orders for transportation equipment, durable goods orders fell 0.6% in June compared to a 1.2% increase in May.

U.S. mortgage activity slowed last week as rising interest rates made refinancing slightly less attractive, according the Mortgage Bankers Association report released today.

The Market Composite Index, a measure of overall mortgage loan application volume, decreased 4.4% on a seasonally adjusted basis from one week earlier. Purchase applications rose for a second consecutive week after hitting 13-year lows earlier this month.

Refinancing applications fell 5.9% from a 14-month high set the week before, while new purchase requests rose 2%.

The refinance share of mortgage activity decreased to 78.0% of total applications from 79.4% the previous week.