U.S. Stocks Advance; House Passes $6.2 Trillion Deficit Plan

Bikram Pandey
15 Apr, 2011
New York City

U.S. stocks edged higher after commodities rebounded. The U.S. House passed budget cuts that will reduce $6.2 trillion in budget deficit over ten years but will leave the defense spending and taxes for corporate and rich people untouched.

[R]4:00 PM New York – U.S. stocks edged higher after commodities rebounded. The U.S. House passed budget cuts that will reduce $6.2 trillion in budget deficit over ten years but will leave the defense spending and taxes for corporate and rich people untouched.[/R]

U.S. indexes edged higher in the afternoon 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.

The U.S. House passed a Republican budget that is estimated to cut $6.2 trillion in government spending over ten years.

The Republican budget proposes to cut spending in student loans, food stamps and farm subsidies and including subsidized healthcare for middle class and poor. The Republican budget leaves the entire defense budget untouched and corporate income tax loopholes intact.

Bank of America first quarter net income fell to $2 billion. Google first quarter net income increased to $2.30 billion. Genuine Parts quarterly net income increased 26% to $126.5 million. Knoll first quarter net income soared 318.2% to $9.2 million. Charles Schwab first quarter net income surged 84% to $243 million.

Euro area inflation rose to 2.7% in March and trade deficit narrowed to €1.5 billion in February. Czech producer price inflation surged in March. Norway trade surplus rose in March and Italy''s trade deficit widened in February. Germany lifted its current year economic outlook to 2.6%.

The European indexes traded mixed after inflation rose more than estimated in March to 2.7%. Greece is likely to announce new austerity measures. Nestle first quarter sales declined 9% impacted by a stronger domestic currency.

The UK indexes traded volatile after Ireland''s sovereign ratings were cut by two levels. The Bank of England policymaker Andrew Sentence forecasted inflation may exceed 5%. SSE sold its 100% interest in three UK wind farms for £173.6 million.

Stocks in Japan declined on the worries that China may tighten lending conditions and weak U.S. employment data and rising worries of sovereign debt stress in Europe. Minister of economy clarified that the government expects Tepco to pay for the costs related to nuclear power plant and is not looking to nationalize the utility.

China reported faster than expected economic expansion in the first quarter and inflation gained in March to 5.4%, a month after Lunar Year holiday. Steelmakers and banks closed higher but Angang Steel plunged 5% after it estimated earnings fall of 95% in the first quarter. Real estate stocks in Hong Kong fell for the second day.

Stocks in Mumbai trading dropped after Infosys guided lower than expected growth in sales and revenues in the current quarter. The outsourcing company plunged as much as 10%. The latest read on wholesale inflation showed a decline to 11.40%.

Australian stocks declined as commodities fell after China reported faster than expected economic expansion in the first quarter. March inflation increased at the fastest pace in nearly three years. Miners and energy stocks declined.

Commodities, Bonds and Currencies

The 10-year bond yield decreased to 3.40% and 30-year bond unchanged to 4.40%.

The U.S. dollar increased to $1.4434 to a euro and rose against the Japanese yen to 83.12 yen.

Immediate delivery futures of Texas crude oil increased $1.20 to $109.32 a barrel, of natural gas increased 0.01 cents to $4.21 per mbtu and gasoline prices increased 4.90 cents to 328.37 cents a gallon.

In metals trading, copper prices decreased 2.6 cents to $4.27 per pound, gold increased $13.90 to $1,486.30 per ounce and silver increased $0.91 to $42.59.