U.S. Stocks Higher, European Markets Rebound

Arthi Gupta
01 Dec, 2010
New York City

U.S. stocks advanced after private sector employment expanded in November and productivity in the third quarter was revised higher. The euro rebounded and European markets traded higher after Portugal completed the sale of 500 million euros Treasury bills.

[R]9:35 AM New York – U.S. stocks advanced after private sector employment expanded in November and productivity in the third quarter was revised higher. The euro rebounded and European markets traded higher after Portugal completed the sale of 500 million euros Treasury bills.[/R]

U.S. stocks traded higher at opening after the private sector hired more people but markets sentiment was also supported after Portugal completed the sale of 500 million euros debt. U.S. productivity increase was also revised higher.

U.S. private companies added 93,000 new jobs in November after October job additions were revised to 82,000, according to the latest data released by the ADP Survey.

European markets strongly rebounded after the Portugal’s Debt Management Office completed the sale of 500 million euros of 12-month Treasury bills. The yield on the bills increased to 5.28% from 4.81% auction completed in November.

China''s manufacturing purchasing managers’ index rose to a seven-month high of 55.2 in November, from 54.7 in October, the China Federation of Logistics and Purchasing said on Wednesday, with strong growth in new orders and production.

Home Prices Rise; Consumer Confidence Improves

U.S. home prices rose but at a slower pace in September. The S&P/Case-Shiller 20-City Composite Home Price Index rose at an annual rate of 0.6% in September compared to the 1.7% growth in August but slower than anticipated rate of 1.1%.

The Conference Board said consumer confidence index rose more than expected in the month of November to reach a five-month high. The report showed that the consumer confidence index jumped to 54.1 in November from a downwardly revised 49.9 in October.

In another report, the Institute of Supply Management said its business barometer index rose to 62.5 in November from 60.6 in October. Acceleration in the pace of production and new orders growth contributed to the continued improvement in the region.

Mortgage Demand Declines; Refinancing Plunges

The Mortgage Bankers Association''s weekly mortgage applications survey for the week ending November 26 showed loan application volume in the U.S. decreased 16.5% on a seasonally adjusted basis from one week earlier. However, refinancing demand plunged 21.6% from the week before.

Applications for new home loans increased 1.1% from one week earlier and are at its highest level since the beginning of May.

Productivity Growth Increases in Q3

The Labor Department released a report on Wednesday showing an upward revision to the pace of U.S. productivity growth in the third quarter, with output increasing by more than previously estimated. But, the drop in unit labor costs was unrevised from the initial estimate.

The report showed that productivity increased 2.3% in the third quarter compared to the previous estimate of a 1.9% increase. Unit labor costs edged down 0.1% in the third quarter and unchanged from the previous estimate.

Motorola Approves Split

Motorola, Inc. announced that its board of directors approved the separation of Motorola Mobility Holdings, Inc. from Motorola, Inc. through a tax-free dividend involving the distribution of all Motorola Mobility common stock held by Motorola stockholders.

Motorola, Inc. announced the break-up into two separate companies will take place on January 4.

State Street Announces Multi-Year Program

State Street Corporation said it will cut 5% of its workforce, or 1,400 jobs, as part of a multi-year restructuring action. The company said it expects to recognize restructuring costs of about $400 million to $450 million over a period of four years, beginning in the fourth quarter of 2010.

Genesee & Wyoming Acquires FreightLink

Genesee & Wyoming Inc. completed acquisition of the assets of FreightLink Pty Ltd., Asia Pacific Transport Pty Ltd. and the other APT joint venture sellers for A$332 million, plus the assumption of debt with a carrying value of A$1.8 million.

Cisco Plans to Acquire LineSider

Cisco Systems, Inc., the computer networking gear maker stated its intention to buy privately held LineSider Technologies, Inc. Financial terms of the deal were not disclosed. According to Cisco, the acquisition of LineSider, that provides network management software, enhances its ability to rapidly provision network services.

Genzyme Sells Genetic Testing Business to LabCorp.

Genzyme Corp., the biotechnology company completed the sale of Genzyme Genetics to Laboratory Corp. of America Holdings for $925 million in cash.

Under the final terms of the agreement, LabCorp purchased substantially all of the assets of the Genzyme Genetics business, including testing services, technology, intellectual property rights, and the rights to continue operations at the unit’s nine genetic testing laboratories.

Earnings Review

Copart, Inc. ((CPRT)), the junk car auctioneer said first quarter total service revenues and vehicle sales rose 14.7% to $212.67 million from $185.46 million in the same quarter last year. Net income for the quarter increased 7% to $37.8 million or 45 cents per diluted share, compared to net income of $35.3 million or 42 cents per share for the year-ago quarter.

Jos. A Bank Clothiers, Inc. ((JOSB)), the men''s clothing and accessories designer reported third quarter total net sales increased 7.4% to $173.27 million from $161.31 million last year. Net income in the quarter grew 7.1% to $12.56 million or 45 cents per diluted share from prior year''s income of $11.73 million or 42 cents per share.

Microchip Technology Inc. ((MCHP)), the developer and manufacturer of semiconductor products estimates third quarter net sales to decline 3% to 7% sequentially, based on bookings and sales activities in October and November. On November 4 the company issued guidance of net sales to decline between 2% and 8% sequentially.

OmniVision Technologies, Inc. ((OVTI)), the digital imaging solutions provider said second quarter revenues rose 31% to $239.5 million from $183.3 million in the last year period. Net income in the quarter surged 257% to $28.9 million or 50 cents per diluted share, compared to net income of $8.1 million or 16 cents per share in the prior-year quarter.

Universal Technical Institute, Inc. ((UTI)), the post-secondary education provider reported fourth quarter revenues increased 19.8% to $119.24 million from $99.54 million a year ago, due to a 15% increase in average undergraduate full-time student enrollment and increase in tuition rates. Net income for the quarter edged lower 5% to $7.22 million or 29 cents per diluted share, compared to net income of $7.59 million or 32 cents per share in the previous year.