U.S. Stocks Struggle as Government Shutdown Looms, World Markets Diverge

Bikram Pandey
05 Apr, 2011
New York City

U.S. stocks struggle as the U.S. lawmakers and President Obama haggle over 2011 budget cuts as the government shutdown looms. Fed officials appear divided in its latest meeting about the bond purchase program and noted underlying inflation remained subdued.

[R]4:10 PM New York – U.S. stocks struggle as the U.S. lawmakers and President Obama haggle over 2011 budget cuts as the government shutdown looms. Fed officials appear divided in its latest meeting about the bond purchase program and noted underlying inflation remained subdued.[/R]

U.S. stocks edge lower after China hiked bank reserve rate and investors in Europe sold bank stocks. Stocks struggle as U.S. lawmakers and President Barack Obama remain divided over 2011 budget cuts as the government shutdown looms this weekend.

Fed officials appear divided at its latest meeting on March 15 and discussed the plans to curtail the bond purchase program. The committee also noted the run-up in oil prices but in a statement said “long term expectations have remained stable, and measures of underlying inflation have been subdued.”

National Semiconductor agreed to be acquired by Texas Instruments for $6.5 billion and Procter & Gamble agreed to sell its Pringles unit to Diamond Foods for $2.35 billion.

KB Home first quarter revenues declined 25% and net loss widened to $114.5 million. Walgreen same store sales rose 3% in March.

European markets traded lower after Portugal debt drifted closer to external bailout. A rating agency downgraded Portugal debt. European retail sales eased 0.1% in February. Banks in Portugal, Spain and Germany declined.

UK stocks edged lower as investors focused on rising debt stress in Europe. Amlin Plc estimated claims linked to Japan, Australia and New Zealand of £275 million. Vedanta Resources gained after it inched closer to acquiring Cairn India stake.

Stocks in Japan declined as fresh worries arose concerning nuclear power plant. Fishery related stocks declined after Tepco dumped water with low radioactive contamination in Pacific Ocean. Automakers declined after Toyota joins Honda and Nissan in curtailing auto production.

Stocks in Mumbai recovered from the losses of near 1% and closed down a fraction. The cross currents of higher crude oil prices and the expectations of higher earnings played out in the market. Sesa Goa soared after the Supreme Court lifted exports ban.

Australian stocks edged higher after the Reserve Bank of Australia left rates on hold for the fifth month in a row. Australia recorded trade deficit of $205 million in February as coal and iron ore shipments were delayed. The Australian dollar closed at $1.03.

Commodities, Bonds and Currencies

The 10-year bond yield increased to 3.47% and 30-year bond gained to 4.50%.

The U.S. dollar decreased to $1.422 to a euro and rose against the Japanese yen to 84.67 yen.

Immediate delivery futures of Texas crude oil decreased $0.58 to $107.89 a barrel, of natural gas decreased 0.02 cents to $4.26 per mbtu and gasoline prices increased 2.15 cents to 319.05 cents a gallon.

In metals trading, copper prices decreased 0.55 cents to $4.26 per pound, gold increased $24.60 to $1,457.60 per ounce and silver increased $0.67 to $39.15.