Fed in Focus, Republicans Gain in Elections

Arthi Gupta
03 Nov, 2010
New York City

U.S. stocks traded higher on optimism that the Fed will announce further monetary easing. U.S. private sector employment rose more than expected in October but refinancing declined despite low interest rates. Aetna net soars 53%. Electronic Arts Inc loss narrowed 49%.

[R]9:35 AM New York – U.S. stocks traded higher on optimism that the Fed will announce further monetary easing. U.S. private sector employment rose more than expected in October but refinancing declined despite low interest rates. Aetna net soars 53%. Electronic Arts Inc loss narrowed 49%.[/R]

World markets traded higher on the expectations of new stimulus measures from the U.S. Fed. Investors are expecting the Fed to announce as much as $500 billion in bond purchase program. The dollar continued to slide in European and New York trading after the Republican gain the control of the U.S. House.

Democrats retained control of the Senate despite losing seats to Republicans based on results declared on Tuesday. House Republicans captured at least 233 seats - a net gain of 66 seats compared to the 218 needed for majority, and, recording their biggest gains in more than 70 years.

Automatic Data Processing, Inc. released a report today showing that private sector employment increased by more than expected in October, with an increase in employment in the service sector offsetting a drop in employment in the manufacturing sector.

ADP said private-sector employment increased by 43,000 jobs in October following a revised decrease of 2,000 jobs in September.

According to housing industry data published today, attractive interest rates failed to compel homeowners to refinance existing mortgages last week, but demand for new home loans edged slightly higher.

The Mortgage Bankers Association''s Market Composite Index, a measure of mortgage loan application volume, decreased 5% on a seasonally adjusted basis from one week earlier. The four week moving average for the seasonally adjusted Market Index climbed 0.1%.

The Refinance Index declined for a third consecutive week, dropping 6.4%. The seasonally adjusted Purchase Index increased 1.4% from one week earlier. The refinance share of mortgage activity decreased to 81.3% of total applications from 82.3% the previous week.

The Organization for Economic Co-operation and Development said today that consumer prices in the OECD area rose 1.7% annually in September, compared to the 1.6% increase in August.

Inflation remained stable in the United Kingdom at 3.1%, in Italy at 1.6% and in the United States at 1.1%, while consumer prices rose in the other G7 countries.

Pride International, Inc., the oil and natural gas services company is considering strategic options, including a sale of the company, the Wall Street Journal said quoting people familiar with the matter. According to the report, Norway''s Seadrill Ltd., which has a small stake in Pride, and the UK''s Ensco Plc are interested in the Houston, Texas-based drilling contractor.

Carl Icahn, the activist investor raised his holding in Motorola, Inc. to 265.59 million shares, representing 11.30% stake. Icahn, through his affiliated entities bought 15.16 million shares in the last 60 days for aggregate purchase price of $120.9 million.

Biogen Idec Inc. announced a number of strategic, operational and organizational changes to increase focus and efficiency. As part of the initiatives, the company''s site in San Diego will be closed, and its sites in eastern Massachusetts will be consolidated into existing facilities in Cambridge and Weston. The company will also reduce its headcount by around 13%.

Lloyds Banking Group plc, the British bank appointed António Horta-Osório as new Group Chief Executive Officer. He succeeds Eric Daniels, who plans to retire in a year''s time. Horta-Osório will join the company in early 2011 and will take over the role of Chief Executive Officer on March 1, 2011.

Earnings Review

Aetna Inc. ((AET)), the diversified healthcare benefits company reported third quarter total revenues declined 2.1% to $8.54 billion from $8.72 billion in the previous year. Net income in the quarter surged 53% to $497.6 million or $1.19 per share, compared with net income of $326.2 million or 73 cents per share in the prior-year quarter, driven by higher commercial underwriting margin and a favorable prior-period reserve development.

CVS Caremark Corporation ((CVS)), the pharmacy health care provider stated third quarter net revenues slipped 3.1% to $23.9 billion from $24.6 billion reported in the same quarter of last year. Net income in the quarter slumped 21% to $809 million or 59 cents per diluted share, compared to net income of $1.02 billion or 71 cents per share in the year-ago quarter, reflecting weak performance at its Pharmacy Services segment.

Electronic Arts Inc. ((ERTS)), the video-game publisher said second quarter revenue fell 20% to $631 million from $788 million a year ago. Net loss in the quarter narrowed 49% to $201 million or 61 cents per diluted share, compared to a net loss of $391 million or $1.21 per share for the year-ago quarter, as lower costs and expenses offset a sharp drop in revenue.

Hertz Global Holdings, Inc. ((HTZ)), the car rental company said third quarter total revenues rose 7% to $2.19 billion from $2.04 billion in the same quarter last year. Net income in the quarter surged 143% to $156.6 million or 36 cents per diluted share, compared to net income of $64.5 million or 15 cents per share for the year-ago quarter, driven by strong growth in U.S. car rental revenue, solid performance by its European car rental unit and lower fleet costs.

Pitney Bowes Inc. ((PBI)), the mail processing equipment and integrated mail solutions provider said third quarter total revenue fell 1% to $1.35 billion from $1.36 billion in the same quarter last year. Net income in the quarter decreased 14% to $88.9 million or 43 cents per diluted share, compared to net income of $103.2 million or 50 cents per share for the year-ago quarter.

Pulte Group, Inc. ((PHM)), the home builder reported third quarter total revenues slipped 3% to $1.058 billion from last year''s $1.091 billion with declines in Homebuilding and Financial Services businesses. Net loss for the quarter widened 175% to $995.12 million or $2.63 per share from last year''s net loss of $361.39 million or $1.15 per share, hurt by charges related to goodwill impairment and insurance reserve adjustments.

Time Warner Inc. ((TWX)), the media and entertainment giant reported third quarter total revenues grew 2% to $6.38 billion from $6.26 billion in the same quarter last year. Net income in the quarter declined 21% to $522 million or 46 cents per diluted share, compared to net income of $662 million or 55 cents per share in the previous year.

Titanium Metals Corporation ((TIE)), the producer of titanium melted and mill products reported third quarter net sales rose 16% to $210.3 million compared to $181.4 million for the third quarter of 2009. Net income in the quarter surged 1,855% to $21.5 million or 12 cents per diluted share, compared to net income of $1.1 million or 1 cent per share in the same quarter last year, helped by continued demand for titanium products in the commercial aerospace sector and higher operating income.

Unum Group ((UNM)), the insurance company reported third quarter revenues rose 0.4% to $2.526 billion from $2.517 billion in the same quarter last year. Net income in the quarter fell 0.1% to $220.8 million or 68 cents per diluted share, compared to net income of $221.1 million or 66 cents per share last year due to a significant decline in investment gains.

WellPoint, Inc. ((WLP)), the health benefits company reported third quarter total operating revenues declined 6% to $14.33 billion from last year''s $15.21 billion. Net income in the quarter edged higher 1.2% to $739.1 million or $1.84 per share, compared to net income of $730.2 million or $1.53 per share last year.