U.S. Stocks, Oil Regain Losses; GM Reports $510 Million Profit

Bikram Pandey
24 Feb, 2011
New York City

U.S. stocks rebounded from the lows as crude oil gained as much as 2% before retreating while Libya burned. Saudi officials said that the nation is ready to meet any shortfall in oil from Libya. GM reported first annual profit in the last six years and new home sales declined 12.6%.

[R]4:00 PM New York – U.S. stocks rebounded from the lows as crude oil gained as much as 2% before retreating while Libya burned and protest continued in Bahrain. Saudi officials said that the nation is ready to meet any shortfall in oil from Libya. GM reported first annual profit in the last six years and new home sales declined 12.6%.[/R]

World indexes fell after violence in Libya continued and crude oil price surged 21% in thirty days and rose to 30-month peak.

The pledge from Saudi officials to increase the supply to meet any shortfall from Libya failed to arrest the oil price increase in the morning and traders speculated more price increase in the next two weeks. Crude oil futures in the late trading closed lower 1.8%.

However, investors are increasingly concerned with the impact of oil price on the broader economy and stock market took a note of it. The market indexes declined in the U.S. and in Europe and several emerging markets fell on the worries that higher oil prices will stoke inflation.

U.S. weekly jobless claims decline 22,000 and durable goods orders increased 2.7% on higher aircraft orders. Consumer confidence also increased in the latest survey taken before the recent oil price surge.

Seasonally adjusted U.S. new home sales in January dropped 12.6% to 284,000 and decreased 18.6% from a year ago. The median sale price of new homes sold in the month was $230,600 and average price was $260,300 with eight months of inventory.

General Motors Co., the largest U.S. automaker reported its first annual profit since 2004. The automaker reported revenue for the fourth quarter of $36.9 billion and net income $0.5 billion or 31 cents per diluted share.

Revenue for the calendar year was $135.6 billion and net income of $4.7 billion or $2.89 per diluted share.

Toyota Motor announced a recall of 2.2 million vehicles in the U.S. to fix trapped accelerator pedals as the U.S. government closed its investigation of sudden acceleration.

Across the Atlantic, the European indexes declined after unabated protests in Libya. Euro-area economic sentiment improved in February and German economy expanded in the fourth quarter. French consumer confidence remained unchanged in February. Italy retail sales rose in December.

Japan benchmark index declined for the third day in a row and nearly wiped out half the yearly gains as crude oil reached 30-month high. Overseas investors added Japan stocks for the 16th week in a row last week. Tobu, railroad operator plunged after it announced a plan to raise $1.1 billion.

Stocks in Hong Kong declined for the fourth day in a row and in Shanghai rose. Shipping and port related companies traded lower in Hong Kong and oil refiners declined after crude oil surged. Hong Kong dollar gained. Suning Appliance Co rose after the company plans to open 370 new stores in the year and increase the total to 1,700.

Stocks in Mumbai plunged sharply after the latest data showed a stubborn inflation. The Sensex dropped 2.8% and automakers, banks and capital goods makers led decliners. Tata Motors controlled Jaguar Land Rover may seek a London listing as the company looks to raise capital and lower debt.

Australian stocks closed lower tracking markets in Asia but the Australian dollar edged up after businesses investment is expected to increase 32% in the next financial year. Origin Energy declined after it lowered outlook. Pacific Brands fell 15% after it reported a loss. Transportation and logistics company, Toll Holdings gained on better than expected earnings.

Commodities, Bonds and Currencies

Yield on 10-year bond decreased at 3.42% and on 30-year bond fell to 4.53%.

The U.S. dollar increased to $1.37 to a euro and fell against the Japanese yen to 81.64 yen.

Immediate delivery futures of Texas crude oil decreased $1.81 to $96.20 a barrel, for natural gas fell 0.11 cents to $2.69 per mbtu and gasoline prices decreased 1.60 cents to 269.09 cents a gallon.

In metals trading, copper prices increased 6.05 cents to $4.35 per pound, gold decreased $17.30 to $1,396.70 per ounce and silver fell $1.50 to $31.75.