Import Prices Up; Mortgages Applications Fall

Arthi Gupta
15 Sep, 2010
New York City

U.S. stocks traded lower after import prices rose 0.6% in August and mortgages applications fell for a second consecutive week. ACE agreed to acquire Rain and Hail for $1.1 billion. HealthSouth reaffirmed its annual earnings outlook.

[R]9:40 AM New York – U.S. stocks traded lower after import prices rose 0.6% in August and mortgages applications fell for a second consecutive week. ACE agreed to acquire Rain and Hail for $1.1 billion. Healthsouth reaffirmed its annual earnings outlook.[/R]

Asian markets gained but European markets declined.

U.S. mortgage applications dropped to their lowest since early August last week, as extraordinarily low interest rates failed to spark demand for home purchases, according to industry data published today.

The Mortgage Bankers Association''s Market Composite Index for the week ending September 10 decreased 8.9% on a seasonally adjusted basis from one week earlier, when mortgage apps slipped 1.5%.

Refinancing activity also declined. The Refinance Index decreased 10.8% from the previous week. The seasonally adjusted Purchase Index declined 0.4% from one week earlier.

The Labor Department released a report today showing moderate total import price growth with fuel import prices showing a notable increase in the month of August. The report also showed an increase in export prices following two monthly decreases.

The Labor Department said that import prices rose 0.6% in August after edging higher 0.1% in July. Excluding a 1.7% increase in fuel import prices, import prices increased 0.3%.

Export prices rose 0.8% in August, according to the report, with the increase following a 0.2% drop in July. A 4.2% increase in agricultural export prices contributed to the growth, although non-agricultural export prices still rose 0.5%.

The Japanese authorities intervened in the forex market in early Asian trading session to arrest the strengthening of the yen as the currency hovers near 15-year new high.

The Senate took a step towards passage of a bill designed to increase lending to small businesses. The bill is aimed to create a $30 billion fund to help banks increase lending to small businesses as well as provide $12 billion in tax breaks.

The 61 to 37 vote to limit debate on the bill sets up a final vote on the bill later this week. Republican Sens. George Voinovich, R-Ohio, and George LeMieux, R-Fla., joined with Democrats to vote in favor of invoking cloture.

ACE Ltd., the Switzerland-based property and casualty insurer agreed to acquire the 80% of outstanding common shares of crop insurer Rain And Hail Insurance Service Ltd. that it does not own, for about $1.1 billion in cash.

ACE, which currently holds 20% of Rain and Hail acquired through the acquisition of CIGNA P&C in 1999, serves as primary insurer of Rain and Hail''s business and has a seat on its board of directors.

Following the closure of the transaction, ACE will maintain Johnston, Iowa-based Rain and Hail''s current operations and brand, with its current management remaining in place.

Nokia Corp chairman Jorma Ollila, is considering stepping down in 2012, according to reports and the company launched three new smartphones at Nokia World in London.

AngloGold Ashanti announced the launch of concurrent equity offering and mandatory convertible subordinated bonds offering. The global offering comprises 15.77 million new ordinary shares, and up to an additional 2.36 million new ordinary shares pursuant to an over-allotment option that is expected to be granted to the underwriters.

Earnings Review

Cisco Systems, Inc. ((CSCO)), the networking equipment maker announced its intention to issue a dividend during the current fiscal year ending July 30, 2011 at its annual financial analyst conference. The company is likely to issue a dividend yield of 1% to 2%.

Dollarama Inc. ((DOL)), the Canadian dollar store operator reported second quarter sales grew 13.2% to C$343.53 million from C$303.40 million in the same quarter last year. Comparable store sales increased 7.8%. Net earnings in the quarter declined 23% to C$20.98 million or C$0.28 per share compared with net earnings of C$26.58 million or C$0.61 per share in the prior-year quarter.

DTE Energy Company ((DTE)), the utility company reiterated its outlook for fiscal year 2010 operating earnings in a range of $3.45 to $3.80 per share. The company also said it is executing plans to achieve long-term operating earnings per share growth in a range of 5% to 6%, combined with an attractive dividend yield.

Healthsouth Corp. ((HLS)) reaffirmed its adjusted income from continuing operations to be in the range of $1.66 to $1.74.

Nucor Corporation ((NUE)), the steel products manufacturer said it expects to report a profit for the third quarter, compared to a loss last year. The company estimates earnings per share to be in the range of $0.05 to $0.10 per share.

According to the company, projected third-quarter results include an estimated LIFO charge of $67 million compared to charges of $24 million and $67 million in the first and second quarters of 2010, respectively, and a credit of $120 million in the third quarter of 2009.

NuVasive, Inc. ((NUVA)), the medical device company updated its guidance for full year 2010, cutting the lower end of the previous guidance. Revenue for 2010 is anticipated to be between $485 million to $495 million; compared to previous guidance of $485 million to $500 million.

Pall Corporation ((PLL)), the filtration products maker said fourth quarter sales increased 4.1% to $678.61 million from $651.96 million in the same quarter last year. Net income in the quarter fell 21% to $55.0 million or 46 cents per diluted share, compared with net income of $69.5 million or 58 cents per share for the year-ago quarter.