U.S. Stocks Higher; Trade Deficit Narrows

Arthi Gupta
11 Dec, 2010
New York City

U.S. stocks gained after U.S. trade deficit contracted in October but export prices surged in November. Beckman Coulter contemplated sale on buyout offers. Sinopec agreed to acquire Occidental Petroleum''''''''s Argentinean assets for $2.45 billion.

[R]9:35 AM December 10, New York – U.S. stocks gained after U.S. trade deficit contracted in October but export prices surged in November. Beckman Coulter contemplated sale on buyout offers. Sinopec agreed to acquire Occidental Petroleum's Argentinean assets for $2.45 billion.[/R]

World markets traded higher after China raised reserve requirement ratio and exports surged November 35%.

Dell proposed to acquire Compellent Technologies for $850 million. Community Health Systems offered to acquire Tenet Healthcare in a transaction valued at $7.3 billion. State Street sold $11 billion in mortgage securities.

China's central bank on Friday made a 50 basis points increase in commercial banks' reserve requirement ratio, the sixth hike this year and follows two increases in November.

The People's Bank of China said the new rates will be effective from December 20. The measure is intended to curb inflationary pressures arising from both commodity and property prices.

Chinese exports surged 34.9% in November from a year ago and from 22.9% increase in October, while imports climbed 37.7% to $22.9 billion for November from $27.2 billion in October, the General Administration of Customs said on Friday.

U.S. Trade Deficit Narrows, Export/Imp Prices Rise

U.S. trade deficit narrowed to $38.7 billion in October from a revised $44.6 billion in September as exports rose, according to a report released by the Commerce Department today. This is the smallest monthly deficit since January.

October exports increased by $4.9 billion and imports decreased by $0.9 billion. The goods deficit increased to $51.4 billion and service surplus increased to $12.7 billion.

U.S. import prices rose 1.3% in November following a 1.0% increase in October, according to a report released by the Labor Department, with the import prices increase driven by the rising fuel prices.

Export prices surged 1.5% in November after rising 0.8% in October.

U.S. wholesale inventories increased 1.9% in October following an upwardly revised 2.1% increase in September, according to a report released by the Commerce Department report on Thursday.

Oil Demand Forecast Revised Higher

The International Energy Agency upwardly revised its global oil demand forecast by 130,000 barrels per day to 87.40 millions of barrels a day in 2010 based on stronger data from OECD North America and non-OECD Asia.

The agency sees 2011 demand to grow by 260,000 barrels per day to 88.8 mbd.

In another report, the Organization for Petroleum Exporting Countries revised upwards the world oil demand growth forecast for 2010 by 0.2 mbd to 1.5 mbd. Releasing the monthly report for December 2010, the organization attributed stronger oil demand driven by stimulus-driven economic activities and cold winter climate across Europe as primary reasons for upward revision in growth forecasts.

For the year 2011, however, OPEC has retained the world oil demand growth forecast at 1.2 mbd, unchanged from its previous forecast.

Sinopec Acquires Occidental Petroleum's Argentinean Assets

China Petroleum & Chemical Corp., the Chinese oil refiner announced a deal to buy Occidental Petroleum Corp.'s oil and gas assets in Argentina for $2.45 billion, to increase overseas reserves to meet Chinese demand.

Sinopec said the acquisition is expected to raise its production by more than 51,000 barrels of oil equivalent a day. In addition, the transaction is anticipated to give access to proven and probable reserves totaling 393 million barrels.

Beckman Coulter Contemplates Sale

Beckman Coulter Inc., a maker of biomedical testing products, has put itself up for sale after it was approached by buyout firms, media reports said on Thursday. The company has retained Goldman Sachs to arrange the sale.

Community Health Systems Offers to Acquire Tenet Healthcare

Community Health Systems, Inc. made an offer to acquire Tenet Healthcare Corporation for $6.00 a share, including $5.00 per share in cash and $1.00 per share in common stock, a premium of 40% over Tenet's closing stock price today.

The total value of the transaction would be approximately $7.3 billion, including $3.3 billion of equity and approximately $4 billion of net debt.

Air Products Raises Offer To Acquire Airgas

Air Products increased its fully financed cash tender offer to acquire all of the outstanding shares of Airgas, Inc. to $70 per share from the previous offer price of $65.50 per share.

The new offer price provides a 61% premium to Airgas' closing price on February 4, the day before Air Products first announced its offer.

The company also stressed this was the “best and final offer” for Airgas and it would not increase its bid any further.

State Street Sells Mortgage Securities

State Street announced that it has taken actions to strategically reposition its investment portfolio by selling investment securities of approximately $11 billion. The primary asset classes and approximate amounts included in this transaction were U.S. non-agency mortgage-backed of $4.1 billion and asset-backed securities of $3.7 billion, as well as non-U.S. mortgage-backed of $2.5 billion and asset-backed securities of $0.6 billion.

Dell Announces Merger Talks

Dell, Inc., the personal computer maker announced on Thursday that it is in advanced talks to acquire all of the outstanding shares of data storage solutions provider Compellent Technologies, Inc. for $27.50 per share or about $850 million.

Earnings Review

Brown-Forman Corporation ((BF.B)), the alcoholic beverage manufacturer reported second quarter net sales rose 1.4% to $905.7 million from $892.9 million in the prior-year quarter. Net income in the quarter climbed 5% to $154.0 million or $1.05 per share, compared with net income of $147.3 million or 99 cents per share last year.

ConAgra Foods, Inc. ((CAG)), the packaged foods company estimates second quarter earnings per share of about $0.45 for the quarter as reported and on a comparable basis.

E. I. du Pont de Nemours and Company ((DD)), the chemicals giant reiterated its earnings outlook for fiscal year 2010 and indicated that sales growth for the year will be about 20%, double the 10% target set by the company one year ago.

Green Mountain Coffee Roasters Inc. ((GMCR)), the specialty coffee maker reported fourth quarter net sales surged 73% to $373.09 million from $215.96 million last year. Net income in the quarter soared 92% to $26.99 million or 20 cents per diluted share, compared to net income of $14.05 million or 11 cents per share in the previous year.

National Semiconductor Corporation ((NSM)), the chipmaker said second quarter net sales rose 13% to $412.0 million from $344.6 million in the same quarter last year. Net income in the quarter surged 78% to $83.5 million or 34 cents per diluted share, compared to net income of $47.0 million or 20 cents per share for the year-ago quarter.

Pall Corporation ((PLL)), the filtration products maker said first quarter sales increased 10.7% to $605.5 million from $547.0 million in the same quarter last year. Net earnings in the quarter rose 7% to $71.4 million or 61 cents per diluted share, compared with net earnings of $67.0 million or 56 cents per share in the prior-year quarter.