U.S. Stocks Rebound on Earnings

Bikram Pandey
20 Oct, 2010
New York City

Stocks rebounded after better than expected earnings from banks and industrial companies. Crude oil and metals rebounded. Federal Reserve regional survey indicated that U.S. economy is recovering at modest pace. UK government announced sharp budget cuts.

[R]4:00 PM New York – Stocks rebounded after better than expected earnings from banks and industrial companies. Crude oil and metals rebounded. Federal Reserve regional survey indicated that U.S. economy is recovering at modest pace. UK government announced sharp budget cuts as the nation struggles to lower budget deficit from more than 10% to near 2%.[/R]

U.S. stocks traded higher and mortgage applications and refinancing activities declined and better than expected earnings from Goldman Sachs, Wells Fargo, Boston Scientific and Parker-Hannifin. Fed reported in its regional survey that economy expanded in September at a moderate pace and companies are still reluctant to add staff. Business lending continues to remain weak and consumers are still struggling to get new loans.

U.S. Treasury announced plans to sell rest of its stake in Citigroup. Morgan Stanley revenues declined 20% and net slumped 67%. Boeing Company swung to quarterly profit. Yahoo third quarter earnings soared on asset sale.

Altera declined 2% after sales soared 84% and net soared nearly three-fold. Domino’s Pizza, Inc quarterly net increased 4.8%. Johnson & Johnson reported flat earnings. Intuitive Surgical, Inc sales increased 16% and net rose more than a third.

The European indexes gained after German PPI surged in September. Dutch consumer confidence unexpectedly improved in October. BASF SE lifted its 2010 sales outlook. Peugeot Citroen SA sales increased. Xstrata agreed to invest $710 million on ferrochrome complex expansion in SA.

The UK indexes traded sideways after Chancellor Osborne unveiled significant budget cuts and eliminate nearly half a million public sector jobs. The BoE policy makers were divided on quantitative easing in the latest meeting.

Japanese stocks fell sharply after China increased interest rates in a surprise move overnight. Chinese Premier plans to meet leaders of Japan and South Korea in Vietnam. Japan steps up monitoring of funds managed by securities industry.

Stocks in China rallied to pare earlier losses after China suddenly increased interest rates but Hong Kong stocks declined. China contradicted the U.S media reports and said exports of rate earth minerals will continue and may gain momentum. Morgan Stanley gets regulatory approval to sell its 34% stake in China International Capital.

Stocks in Mumbai closed lower tracking weak sentiment in the international markets after China raised rates. Coal India IPO received 1.71 times subscription on the second day and State Bank of India bond offerings attracted 17 times. Direct tax collections for the six months of the fiscal year soared 19%.

Bharat Petroleum increased 1% after government plans to pay subsidies of $2.2 billion for the six months in the current fiscal year. Bajaj Holdings & Investment Ltd second quarter net doubled. CEAT Limited quarterly net plunged 75%

Commodities, Bonds and Currencies

Yields on 10-year bond increased to 2.48% and on 30-year bonds declined to 3.89%.

The U.S. dollar advanced to $1.39 to a euro and fell against the Japanese yen to 81.15 yen.

Immediate futures prices of Texas crude oil increased $2.28 to $81.77 a barrel, for natural gas added 0.008 cents to $3.52 per mbtu and gasoline prices increased 3.62 cents to 208.45 cents a gallon.

In metals trading, copper prices increased 3.60 cents to $3.79 per pound, gold increased $9.80 to $1,345.00 per ounce and silver added 14 cents to $23.92.