Stocks Waver Ahead of Election and Fed Meeting

Devan Biswas
01 Nov, 2010
New York City

U.S. stocks struggled as investors guessed the size of Fed stimulus this week. Commodities traded higher as the dollar traded volatile and China reported manufacturing expansion. Ambac Financial Group missed a bond payment and is seeking to file a bankruptcy.

[R]4:00 PM New York – U.S. stocks struggled as investors guessed the size of Fed stimulus this week. Commodities traded higher as the dollar traded volatile and China reported manufacturing expansion. Ambac Financial Group missed a bond payment and is seeking to file a bankruptcy.[/R]

U.S. stocks gained after manufacturing index in China rose to 6-month high. U.S. personal income unexpectedly fell 0.1% in September. AIG raised $20.5 billion through AIA IPO. McKesson agreed to acquire U.S. Oncology for $2.16 billion in cash.

Baker Hughes Inc rose more than 5% after earnings exceeded expectations. EXCO Resources Inc soared after chief executive offered to take company private. Fortinet Inc soared on the takeover speculation. Wilmington Trust plunges on a lower than expected buyout offer.

Ambac Financial Group Inc plunged after it missed a bond interest payment and said that it will file a pre-packaged bankruptcy and may take advantage of tax losses. The bond insurance company said that it has not been able to raise capital to avoid bankruptcy filings. The insurance company’s subsidiary is also restructured by Wisconsin insurance regulators.

Ambac has $1.6 billion in debt and miss interest debt payment on $75 million of 7.5% note maturing in 2023.

The European indexes traded sideways ahead of the rate decision in the U.S tomorrow. The IMF estimated economy in Poland to expand 3.5%. Swedish manufacturing growth slackened and Swiss industrial activity declined in October. ICBC agreed to buy U.S. brokerage firm from BNP Paribas.

The UK indexes advanced after manufacturing activity growth accelerated unexpectedly and home prices fell in October. Irish private sector credit growth slackened in September. BG Group sanctioned Queensland Curtis LNG project.

Stocks in Tokyo closed lower on the earnings worries and the prospect of the yen strengthening more. Currency traders are increasingly looking for the yen to strengthen another 7% before it stabilizes as the U.S. Fed is widely expected to stimulate the economy this week.

Stocks in Hong Kong and mainland China surged after the latest manufacturing report indicated sustained expansion. However, input prices gained at the fastest pace in October among all other sub indexes tracked. Resource stocks and banks led the gained. China Construction Bank Corp said net increased 31%.

Stocks in Mumbai traded sharply higher after the market leader Reliance Industries reported 28% increase in earnings. Resource stocks gained after China reported faster economic growth. The Reserve Bank of India is expected to announce a rate hike tomorrow.

Stock in Mumbai surged after market leader Reliance Industries, pharmaceuticals and banks report higher earnings. Hero Honda Motors fell 1.3% after net profit declined 15.33%. Reliance Industries fell 0.2%. The Shipping Corporation of India net surged six fold. TVS Motor surged 6.2% after total vehicle sales soared 48%.

Commodities, Currencies and Yields

Dollar edged down against euro to $1.38 and rose against the Japanese yen to 80.59. One UK pound fetched $1.60.

Crude oil increased $1.31 to $82.74 a barrel for a front month contract, natural gas edged lower 20 cent to $3.85 per mBtu and gasoline increased 2.70 cents to 208.64 cents.

Gold decreased $6.70 in New York trading to close at $1,350.90 per ounce, silver increased $0.03 to $24.60 per ounce and copper for the front month delivery increased 4.00 cents to $3.77 per pound.

Yield on 10-year U.S. bond increased to 2.62% and on 30-year U.S. bond yield increased to 4.01%.