U.S. Stocks Fall on Bernanke Comments

Arthi Gupta
06 Dec, 2010
New York City

U.S. stocks and indexes were on the decline after comments from Fed Chairman were viewed negatively by the market observers. The dollar traded higher after European leaders haggled to increase the size of the bailout fund to

[R]9:35 AM New York – U.S. stocks and indexes were on the decline after comments from Fed Chairman were viewed negatively by the market observers. The dollar traded higher after European leaders haggled to increase the size of the bailout fund to €1 trillion. Sara Lee sold two businesses to Unilever for €1.21 billion.[/R]

U.S. stocks traded lower after comments from Fed Chairman on the weekend were interpreted negatively by the market watchers. Asian markets generally edged higher and European markets traded mixed in the early afternoon.

Bernanke Says More Stimulus “Possible”

The Federal Reserve Chairman Ben Bernanke told the CBS network in a televised interview that the Fed could expand its $600 billion quantitative easing program if the economy fails to revive as anticipated.

He stressed that depending on the effectiveness of the current quantitative easing program and the health of the economy and it is “possible” that additional stimulus may be needed.

He said the Fed''s policy easing was aimed at averting the U.S. economy falling into a deflationary spiral and lowering the stubborn unemployment.

ISM Service Sector Index Rises

The Institute for Supply Management said its index of activity in the U.S. service sector rose to 55.0 in November from 54.3 in October and the activity in the sector expanding for the eleventh consecutive month.

3M Acquires Winterthur Technologies AG

3M Inc reached an agreement for the acquisition of Winterthur Technologies AG for Sfr62.00 or $63.56 per share by way of a public tender offer with an aggregate value of around $448 million.

American Tower Forms JV with MTN Group

American Tower Corp., the communication tower sites operator entered into an agreement with Africa''s mobile operator MTN Group Ltd. to form a joint venture, TowerCo Ghana, in Ghana.

The transaction involves the sale of up to 1,876 of MTN Ghana''s existing sites to TowerCo Ghana for an agreed purchase price of up to around $428.3 million, of which American Tower will pay up to around $218.5 million for its 51% stake in the holding company.

Cerner Signs Agreement with Baxa

Cerner Corp., the healthcare devices provider said it signed a strategic reseller agreement with medical device company Baxa Corp. for the Baxa DoseEdge Pharmacy Workflow Manager. The agreement enables Cerner to market and resell the Baxa DoseEdge System as part of an integrated Cerner offering.

Cerner said that the partnership will allow health systems to improve their intravenous room automation by integrating DoseEdge technology with Cerner solutions to create a closed-loop system for medication preparation, management and delivery.

Sara Lee Sells Businesses to Unilever

Sara Lee Corp. completed the sale of its global body care and European detergents businesses to Unilever Plc for €1.21 billion. Sara Lee noted that the transaction is a part of its ongoing process of divesting its household and body care businesses.

Rolls-Royce Wins Contracts

Rolls-Royce Group plc, the defense and aerospace company said it won new contracts valued at over $110 million for energy projects in Europe, Africa, India and the Middle East. As part of these contracts, Rolls-Royce will deliver both power generation and pipeline transmission products and services.

Madoff Trustee Sues HSBC

The court-appointed trustee overseeing the liquidation of Bernard L Madoff Investment Securities LLC are seeking $9 billion in recoveries, and additional damages at a trial from financial services firm HSBC Holdings Plc and its related entities, feeder funds in Madoff Ponzi.

Irving Picard, the trustee, alleged 24 counts of financial fraud and misconduct against HSBC Holdings plc, HSBC Bank plc, and affiliated entities.

Pfizer Chief Resigns and Cites Exhaustion

Pfizer Inc., the biopharmaceutical company named Ian Read as the company''s President, Chief Executive Officer and Director. Read succeeds Jeffrey Kindler, who unexpectedly retired as CEO and Chairman after more than four years at the helm of the company.

LM Ericsson Telephone Co., the Swedish telecom equipment maker stated that Chairman Michael Treschow plans to resign from his position in 2011 or 2012.

Kraft Foods Inc., the company that manufactures and markets packaged food products said it is seeking a preliminary injunction in the U.S. District Court for the Southern District of New York against Starbucks Coffee Company for violating terms of the roast and ground coffee deal.

Kraft Foods stated that Starbucks is attempting to unilaterally end the strategic partnership that provides Kraft with the exclusive rights for the sales, marketing and distribution of Starbucks roast and ground coffee in grocery and other retail outlets.

Earnings Review

Blyth, Inc. ((BTH)), the home decorative items maker reported third quarter net sales dropped 3% to $215.47 million from $221.57 million in the earlier year. Net earnings generated in the quarter were $2.58 million or 31 cents per diluted share, compared to a loss of $0.97 million or 11 cents per share in the prior year.

Dollar General Corp. ((DG)), the discount retailer reported third quarter net sales grew 10% to $3.22 billion from $2.93 billion in the prior-year quarter. Same-store sales increased 4.2% in the 2010 quarter. Net income in the quarter surged 69% to $128.12 million or 37 cents per diluted share, compared with net income of $75.65 million or 24 cents per share last year.

LHC Group, Inc. ((LHCG)), the post-acute healthcare services provider lowered its earnings guidance for fiscal year 2010. The company currently estimates full-year earnings in the range of $2.65 to 2.75 per share, compared to its previous guidance in the range of $2.75 to $2.85 per share. Full-year net service revenue is still expected in the range of $625 million to $635 million.

MetLife, Inc. ((MET)), the provider of insurance and financial services estimates fourth quarter of 2010 net income to be between $170 million and $570 million or $0.17 to $0.56 per share and operating earnings between $1.1 billion and $1.2 billion or $1.04 to $1.14 per share. Premiums, fees and other revenues for the fourth quarter are expected to be between $9.5 billion and $9.9 billion.

Sonoco Products Company ((SON)), the manufacturer of industrial and consumer packaging products said it estimates base earnings per share for the fourth quarter and full-year 2010 to be within its prior announced guidance between $0.57 and $0.61 and $2.32 to $2.36, respectively.

The Bank of Nova Scotia ((BNS)), the Canadian financial services provider reported fourth quarter total revenue rose 5.5% to C$3.94 billion, from C$3.735 billion. Net income in the quarter soared 21% to C$1.09 billion or C$1.00 per share, compared with net income of C$902 million or C$0.83 per share in the year earlier quarter.