U.S. Stocks Struggle; AOL Loss

Arthi Gupta
04 Aug, 2010
New York City

U.S. stocks trade lower as the worries on the economic recovery resurfaces. U.S. home purchase applications rise 1.3% but private sector employment increases by 42,000 in July. BP says leaking oil well in the Gulf of Mexico appears to have reached static condition.

[R]9:35 AM New York – U.S. stocks trade lower as the worries on the economic recovery resurfaces. U.S. home purchase applications rise 1.3% but private sector employment increases by 42,000 in July. BP says leaking oil well in the Gulf of Mexico appears to have reached static condition.[/R]

U.S. and European markets declined after reports indicated a slowdown in economic growth. Asian markets traded mixed.

BP Plc said that the ruptured oil well in the Gulf of Mexico well appears to have reached a static condition.

The demand for applications to purchase homes in the United States rose last week for the third consecutive week as interest rates remained low, according to industry data released today.

For the week ending July 30, the Mortgage Bankers Association''s Market Composite Index rose 1.3% on a seasonally adjusted basis from one week earlier.

Refinancing activity increased 1.3% from the previous week, a fifth weekly rise in the last eight weeks.

Private sector employment increased for the sixth consecutive month in July, according to a report released by payroll processor Automatic Data Processing, Inc. today. ADP said that non-farm private employment increased by 42,000 jobs in July following an upwardly revised increase of 19,000 jobs in June.

BP plc, the British oil giant said that the ruptured MC252 well appears to have reached a static condition and the well pressure was now controlled by the hydrostatic pressure of the drilling mud. The pumping of heavy drilling mud into the well from vessels was stopped after about eight hours.

The start of the static kill was based on the results of an injectivity test, which immediately preceded the static kill and lasted about two hours.

The company said the well is monitored per the agreed procedure to ensure it remains static, and depending on results observed during monitoring, further pumping of mud may or may not be required. Furthermore, the company will continue to work with the National Incident Commander and other government officials to determine the next course of action, which involves assessing whether to inject cement in the well via the same route.

The aim of these procedures is to assist with the strategy to kill and isolate the well, and will complement the upcoming relief well operation, which will continue as per plan, the company stated.

Earnings Review

AOL Inc., the Web services company said second-quarter total revenues declined 26.2% to $584.1 million from $791.5 million in the prior year quarter. Net loss in the quarter was $1.055 billion or $9.89 per share compared to net income of $90.7 million or 86 cents per share in the same quarter last year.

Quanta Services Inc., the energy infrastructure solutions provider reported a marginal decline in second-quarter profit, despite higher revenues. Revenues for the quarter rose 7.0% to $870.5 million from $813.4 million in the same quarter last year. Net income in the quarter was $33.0 million or 16 cents per share compared to $33.4 million or 17 cents per share in the year-ago quarter.

Qwest Communications International Inc., the provider of data, Internet, video and voice services reported second-quarter revenue declined 5.2% to $2.93 billion from $3.09 billion in the comparable period. Net income slumped 25.4% to $158 million or 9 cents per share from $212 million or 12 cents per share last year.

Spectra Energy Corp., the owner and operator of natural gas-related energy assets reported a rise in second-quarter profit, as revenue increased and the company benefited from expansion project earnings and improved commodity prices. Operating revenues for the quarter rose 13.4% to $1.063 billion from $937 million reported last year. Net income from controlling interests for the quarter increased 24.2% to $174 million or 27 cents per share compared to $140 million or 22 cents per share a year-ago quarter.

Time Warner Inc., the media and entertainment company reported second quarter revenues grew 8% to $6.4 billion from $6.0 billion in the prior-year quarter. Net income in the quarter rose 7.2% to $562 million or 49 cents per share compared to $524 million or 43 cents per share in the year-ago period.

The company estimates full-year 2010 adjusted earnings per share from continuing operations to be at least 20%, compared to its prior outlook for adjusted earnings per share growth of at least in the mid-teens.

Toyota Motor Corp., the Japanese automaker reported a profit for the first quarter of fiscal 2011, helped by 27% growth in revenues on the strength of Asian sales and demand-stimulus programs in Japan. The company raised its outlook for fiscal 2011, but expressed concerns about currency fluctuations.