Dow in 7-day Rally; European Markets Surrender Gains

Bikram Pandey
08 Feb, 2011
New York City

U.S. indexes gaine and reache highs not seen in more than two years. The Dow extended gains for a seven session in a row. McDonald

[R]4:00 PM New York – U.S. indexes gain and reach highs not seen in more than two years. The Dow extended gains for a seven session in a row. McDonald’s same store sales in January 5.3%. Kindred Healthcare proposed to acquire RehabCare Group. Teva plunged 5%.[/R]

U.S. indexes inched higher. China lifted rates ahead of inflation report next week and European miners report sharply higher earnings. UBS AG reported first annual profit since 2006. The euro gained 0.5% to $1.365.

China increased benchmark interest rate for the third time since October as food prices increase and wage pressures build. China has increased 75 basis points in the last two years as global economies recover and inflation in Asia picks up momentum.

Avon revenue increased 1% and net income declined 15% to $229.5 million. Entergy revenue rose to $2.53 billion and net fell to $228.3 million.

Sara Lee revenue decreased 4% and net income rose to $880 million. Teva Pharmaceutical net sales rose 16% to $4.4 billion. McDonald’s rose nearly 3% after same store sales increased 5.3% in January.

Kindred Healthcare Inc rose as much as 9% and settled to 4% increase after it proposed to acquire acute-care service provider RehabCare Group Inc which soared 42%. The deal worth $900 million is based on $26 a share and 0.471 Kindred shares for each share of RehabCare.

ArcelorMittal stock traded at a six month high after the steel maker guided high profit in the current quarter and said it will increase output at its mines. Xstrata Plc, the largest coal exporter gained after it reported 86% increase in 2010 earnings but said growth will decline in the current year.

UK stocks edged higher and commodities traded mixed. UK retail sales rose at the fastest pace in ten months. Premier Foods agreed to sell its canned food business for £182 million to repay debt.

Stocks in Japan rose and the Nikkei index closed at a 9-month high on better than expected earnings. Toyota lifted its earnings outlook for the year and Japan Tobacco also made positive comments. Toyota said sales in China and emerging market are ahead of expectations. KDDI closed up 5.8%

The benchmark index in India dropped 1.4% as investors worry another round of rate hike. Mixed earnings and selling from foreign investors also weighed on investor sentiment. Adani Power and Mundra SEZ earnings rose but Punj Lloyd reported net loss.

Australian stocks gained after the merger fever in the U.S. and record copper prices. Higher earnings from National Australia Bank lifted bank stocks. Macquarie Group declined after it estimated lower earnings. Cochlear first half net increased 16%.

Commodities, Currencies and Yields

Dollar edged lower against euro to $1.364 and gained against the Japanese yen to 82.18. One UK pound fetched $1.61.

Crude oil decreased $0.67 to $86.81 a barrel for a front month contract, natural gas edged lower 0.05 cents to $4.05 per mBtu and gasoline increased 2.1 cents to 247.14 cents.

Gold increased $15.70 in New York trading to at $1,363.90 per ounce, silver increased $0.89 to $30.23 per ounce and copper for the front month delivery decreased 1.0 cents to $4.57 per pound.

Yield on 10-year U.S. bond increased to 3.69% and on 30-year U.S. bond yield rose to 4.73%.