U.S. Rally Fizzles; S&P 26-month High

Bikram Pandey
07 Dec, 2010
New York City

U.S. stocks rally fizzled and U.S. lawmakers and President Obama agree on a tax cut plan. Gold falls from the record high and oil edges lower. European finance minister agree to not increase the current bailout fund size. German factor orders surge and home prices in Shanghai stay near recent peak.

[R]4:00 PM New York – U.S. stocks rally fizzled and U.S. lawmakers and President Obama agree on a tax cut plan. Gold falls from the record high and oil edges lower. European finance minister agree to not increase the current bailout fund size. German factor orders surge and home prices in Shanghai stay near recent peak.[/R]

U.S. stocks lost most of the gains at close after President Obama agreed with bipartisan lawmakers to extend tax cuts. U.S. Treasury sold its remaining stake in Citigroup of 2.4 billion shares at $4.35 a share and realized the gain of $12 billion in overall investment.

GE formed a venture with China-based railroad company CSR Corp. Aetna agreed to buy Medicity for $500 million. AGL acquired Nicor in $2.4 billion cash and stock.

AutoZone, first quarter net sales grew 13% to $1.79 billion. BMO Financial fourth quarter net climbed 14.2% on rising of consumer lending. The Pep Boys third quarter revenues increased 5%. The Toro fourth quarter net sales increased 17%.

The European indexes soared after President Obama announced extension of tax cuts and German factory orders surged in October. Swiss jobless rate rose in November. Czech retail sales declined in October. Iceland economy expanded in the third quarter.

The UK indexes rose after manufacturing output expanded in October. Rolls-Royce secured order worth over £20 million from Tidewater and GlaxoSmithKline agreed to buy China-based MeiRui Pharma for $70 million. Xstrata approved $1.36 billion investment to develop a coal mine in Australia.

Tokyo stocks lost as the yen rose to a three-week high. Otsuka Holdings, the largest healthcare offering since 2006 priced near the bottom of its filing price range. Foreign Exchange reserves declined for the first time in six months to $1.101 trillion.

Stocks in Shanghai and Hong Kong closed higher as new home price index in Shanghai stayed above average for the third week in a row. Dalian Port surged 39% on first day of trading in Shanghai.

Stocks in Mumbai in a choppy trading closed lower. French Prime Minister Sarkozy’s business delegation committed to invest 10 billion euros by 2012 in India. BSNL will need more funds to complete private fiber optic network for the armed forces.

Stock in Mumbai fell. Hindustan Construction signed two agreements with France based Vinci Construction. Kingfisher Airlines said BPCL file petition to claim jet fuel dues worth $45 million. Maruti Suzuki plans to hike prices from January 1.

Australia left its key lending rate on hold and the Reserve Bank of Australia highlighted low inflation expectations for next several quarters. Stocks rise. Heavy rains damage wheat crops and halt to some of QR National’s railroad facilities. Construction activity stayed weak in November.

Commodities, Currencies and Yields

Dollar edged up against euro to $1.33 and rose against the Japanese yen to 83.65. One UK pound fetched $1.575.

Crude oil decreased $0.84 to $88.54 a barrel for a front month contract, natural gas edged lower 9 cents to $4.39 per mBtu and gasoline decreased 2.07 cents to 232.10 cents.

Gold decreased $10.70 in New York trading to close at $1,405.40 per ounce, silver increased $0.02 to $29.75 per ounce and copper for the front month delivery increased 3.95 cents to $4.04 per pound.

Yield on 10-year U.S. bond increased to 3.15% and on 30-year U.S. bond yield increased to 4.39%.