U.S. Inflation Rises 0.5%, Google Drops, BofA Net Falls 36%

Arthi Gupta
15 Apr, 2011
New York City

U.S. indexes traded sideways after consumer prices rose 0.5% in March and industrial production improved. Graco agreed to acquire finishing unit of Illinois Tool for $650 million. Bank of America net declined 36% on lower provision for credit losses.

[R]10:00 AM New York – U.S. indexes traded sideways after consumer prices rose 0.5% in March and industrial production improved. Graco agreed to acquire finishing unit of Illinois Tool for $650 million. Bank of America net declined 36% on lower provision for credit losses.[/R]

European markets traded sideways ahead of G-20 finance ministers meeting and a raft of economic data in the euro-zone. Germany revised higher its economic growth, France trimmed economic outlook and Italy’s trade deficit expanded.

Asian markets fell after the Chinese economy expanded more than expected in the first quarter, while at the same time inflation accelerated to a 32-month high in March.

China''s gross domestic product soared 9.7% on year in the first quarter of 2011, the National Bureau of Statistics said on Friday, down slightly from the 9.8% gain in the fourth quarter of 2010.

In March, consumer price inflation rose to 5.4%, the highest since August 2008, from 4.9% in February.

U.S. Consumer Prices Rise

The U.S. Labor Department said its consumer price index rose 0.5% in March, matching the 0.5% increase recorded in February, with the price growth largely due to another substantial increase in energy prices.

Excluding the jump in energy prices as well as an increase in food prices, the core consumer price index edged up 0.1% in March following a 0.2% increase in February.

In another report, the New York Fed said its general business conditions index rose to 21.7 in April from 17.5 in March, with a positive reading indicating an increase in regional manufacturing activity.

U.S. Industrial Production Improves

March industrial production rose 0.3% and at an annual rate increased 6.0% for the first quarter. Manufacturing production rose 0.7% and mining increased 0.6%. Utility output increased 1.7% and capacity utilization for total industry rose to 77.4%.

Walmart Settles Lawsuit

Wal-Mart Stores, Inc.''s wholesale chain store Sam''s Club reached a settlement on the U.S. Equal Employment Opportunity Commission''s lawsuit for harassment of Latinos at its stores. Sam''s Club agreed to pay $440,000 and furnish other relief to settle the national origin harassment lawsuit filed by EEOC.

Graco Acquires Finishing Unit of Illinois Tool

Graco Inc. agreed to buy finishing businesses operations of machinery major Illinois Tool Works Inc. for $650 million in cash.

Graco said the purchase broadens its product portfolio, expands geographical reach, and gives it a foothold in industrial powder paint equipment.

Assured Guaranty Reaches Settlement with BofA

Assured Guaranty Ltd., the bond insurer reached a $1.6 billion settlement with financial services firm Bank of America Corp. to resolve liabilities related to residential mortgage-backed securities insured by the firm.

The liability claims also relate to reimbursement for breaches of representations and warranties and historical loan servicing issues.

Toyota Continues Production

Toyota Motor Corp has decided to go ahead vehicle production in Japan at approximately 50% of normal from May 10 to June 3.

The recent 123jump.com survey of companies in the Tokyo area indicated that companies are expected to trim production between 5% and 15% in the next two months.

Earnings Review

Bank of America Corporation ((BAC)) reported first quarter total revenue fell 16% to $27.10 billion from prior year''s $32.29 billion. Net income in the quarter plunged 35.5% to $2.05 billion or 17 cents per diluted share compared to net income of $3.18 billion or 28 cents per share in the previous year.

Separately, the company announced the appointment of Bruce Thompson as chief financial officer, succeeding Chuck Noski. Thompson, who currently serves as chief risk officer, will continue in that role until a successor is named. Noski will become the vice chairman of the company.

Google Inc. ((GOOG)), the Internet search engine said first quarter revenues increased 27% to $8.58 billion from $6.77 billion in the same quarter last year. Net income in the quarter rose 17.3% to $2.30 billion or $7.04 per share compared to net income of $1.96 billion or $6.06 per share in the prior-year quarter.

Infosys Technologies Limited ((INFY)), the global technology services company reported fourth quarter revenues increased 23.6% to $1.602 billion from $1.296 billion in the year-ago period. Net income in the quarter rose 15.2% to $402 million from $349 million in the corresponding quarter of the preceding year.

Earnings per American Depositary Share was $0.70 for the quarter.

Valmont Industries, Inc. ((VMI)), the producer of fabricated metal products reported first quarter sales increased 55% to $567.95 million from $367.41 million last year. Net earnings in the quarter rose 56% to $25.61 million or 97 cents per diluted share compared to net earnings of $16.46 million or 62 cents per share in the first quarter of previous year.