Fed Lifts Economic Estimate; Middle East Unrest Spreads to Libya, Oil Rises

Bikram Pandey
16 Feb, 2011
New York City

U.S. stocks traded higher on earnings and economic optimism. Dell net more than doubled and Societe Generale quarterly net soared four-fold. Cotton and agriculture commodities traded higher. Middle East unrest spreads to oil producing nation Libya and protest in Bahrain and Yemen continues.

[R]4:30 PM New York – U.S. stocks traded higher on earnings and economic optimism. Fed revised higher economic growth this year between 3.4% and 3.9%. Cotton gained and agriculture commodities traded higher. Middle East unrest spreads to oil producing nation Libya and protest in Bahrain and Yemen continue.[/R]

U.S. indexes rose after Dell net more than doubled and homebuilder confidence remained flat in February. Home starts rose in January from December and output at mines, factories and utilities declined.

Fed in its latest minutes of meeting revised its growth estimate for this year to between 3.4% and 3.9% from the previous estimate between 3% and 3.6%. However, the Fed left its assessment of the unemployment rate between 8.8% and 9%.

The committee was also unanimous in keeping the $600 billion bond purchase plan intact but the committee also saw declining risks of falling prices for an extended period of time.

Housing permits in January decreased 10.4% from December or fell 10.7% a year ago month to 562,000. Housing starts in January rose 14.6% from December. Housing completion increased 9.5% from December or fell 22.7% from a year ago month to 512,000.

Sanofi-Aventis acquired Genzyme in a $20.1 billion deal. Air Products withdrew its offer for Airgas and Borders Group Inc, second largest independent book retailer filed for bankruptcy protection.

The European indexes gained on earnings and two large deals. French leading economic index rose in December.

Sanofi-Aventis agreed to acquire Genzyme for $74 a share and Clariant purchased Süed-Chemie for $2.7 billion.

Pfeiffer Vacuum AG sales rise 21%. Eni SpA said quarterly sales rose 27% and net rose 40%. Heineken reported quarterly revenues rose 9.7% and net surged 41%. Societe Generale SA said quarterly net soared four-fold.

The UK indexes edged higher after consumer confidence plummeted and jobless claims rose in January. The Bank of England forecasted inflation to range between 4% and 5% in the near term. BAE Systems acquired Intelligence Services Group.

Stocks in Japan closed higher as foreign investors shift money to developed market. The yen strengthened. Daihatsu Motor will begin production of low-priced compact cars in Indonesia. Japan and India sign free trade agreement that will eliminate tariff on 94% of trade in ten years.

Stocks in Mumbai closed higher for the fourth day as investors bid up export sensitive stocks. The Sensex gained 0.1% and the rupee edged lower. India and Japan signed a free trade pact that will eliminate tariffs on 94% of trade and lift trade to $25 billion by 2015.

Australian stocks closed nearly unchanged and the dollar edged lower. BHP Billiton first half net soared 71.5% to $10.5 billion on 39% increase in sales. The blood plasma maker CSL net declined 19%. Gloucester Coal net soared 36%.

Commodities, Bonds and Currencies

Yield on 10-year bond increased at 3.62% and on 30-year bond rose at 4.67%.

The U.S. dollar decreased to $1.355 to a euro and rose against the Japanese yen to 83.65 yen.

Immediate futures prices of Texas crude oil increased $0.84 to $85.16 a barrel, for natural gas fell 0.02 cents to $3.95 per mbtu and gasoline prices increased 4.20 cents to 253.12 cents a gallon.

In metals trading, copper prices decreased 6.10 cents to $4.48 per pound, gold increased $0.10 to $1,374.20 per ounce and silver fell 8 cents to $30.62.