Late Rally in U.S. Stocks, Gold Up

Bikram Pandey
16 Sep, 2010
New York City

U.S. stocks struggled but managed to close higher on low trading volume. Gold edged closer to record high. FedEx declined after it issued a cautious outlook for the second quarter and first quarter net doubled. European trade surplus surged and UK retail sales dropped.

[R]4:00 PM New York – U.S. stocks struggled but managed to close higher on low trading volume. Gold edged closer to record high. FedEx declined after it issued a cautious outlook for the second quarter and first quarter net doubled. European trade surplus surged and UK retail sales dropped.[/R]

U.S. stocks closed higher after weekly jobless claims fell 3,000 to 450,000. Producer prices increased 0.4% and foreclosure filings fell in August. The U.S. Senate approved a small business lending program of $30 billion and $12 billion in tax breaks.

FedEx net surged 110% to $380 million. IBM agreed to buy OpenPages. U.S. based OpenTable, Inc agreed to acquire UK based restaurant reservation and review company.

Pier 1 Imports Inc gained more than 4% after reporting higher than expected sales and profit. FedEx Corp declined after it reported lower than expected sales. Kraft Foods indicated 5% organic sales growth. Dress Barn net surged 64%.

GameStop Corp surged after it announced a plan to buy back stocks. Pier 1 Imports Inc gained more than 4% after reporting higher than expected sales and profit. FedEx Corp declined after it reported lower than expected sales.

The European indexes fell after euro area trade surplus surged in July. The EU proposed stringent measures to curb short selling. Private estimate of Swiss growth in 2010 was revised higher and Swiss central bank retained its key interest.

The UK indexes dropped after retail sales fell in August. Food stores fell 0.5% and non-food stores dipped 0.7% in August. The Confederation of British Industry estimated manufacturing growth in the next three months. Kesa Electricals plc four-month sales increased 8.2%.

The benchmark Tokyo index closed unchanged after the decline in domestic companies overwhelmed the rise in export stocks. Bank of Japan in a coordinated action conducted the sale of $16 billion of yen to fight the strengthening yen. Marubeni plans to acquire upstream energy assets in Australia.

Stocks in China region fell on loan curb concerns. U.S. asks WTO to probe into unfair trade practices by China. Anshan Iron & Steel, first Chinese company to build a steel mill in the U.S. China Mobile plans to introduce a 4G service that will increase data speed by a factor of ten.

Reserve Bank lifted rates as expected but showed its inability control rising inflation in the near future. The statement noted that inflation is likely to remain high for an extended period and recent volatile industrial production is also not desirable. Seven day rally in Sensex halted with a decline of 0.7%.

The index of stocks in Australia declined more than 1% after rallying for 3-day rally. Australian economy is increasingly linked with the Chinese economy according to a government report. Merchandise import drops in August. CNPC signs an agreement with Chevron to develop Wheatstone LPG project.

Commodities, Currencies and Yields

Dollar edged lower against euro to $1.30 and fell against the Japanese yen to 85.65.

Crude oil decreased $1.56 to $74.46 a barrel for a front month contract, natural gas edged higher 0.06 cent to $4.05 per mBtu and gasoline decreased 3.95 cents to 192.30 cents.

Gold increased $5.10 in New York trading to close at $1,273.80 per ounce, silver added $0.32 to $20.47 per ounce and copper for the front month delivery increased 2.65 cents to $3.49 per pound.

Yields on 10-year U.S. bonds increased to 2.76% and on 30-year U.S. bonds yields edged up 3.92%.