U.S. Indexes Rebound from Lows on Bank Earnings

Bikram Pandey
19 Apr, 2011
New York City

U.S. stocks managed to recover from the lows of the day after mixed earnings from Goldman Sachs, Peabody Energy and Johnson & Johnson and U.S. Bancorp. Markets in Europe rebounded but in Asia declined. Gold crossed $1,500 on the U.S. debt outlook worries.

[R]4:40 PM New York – U.S. stocks managed to recover from the lows of the day after mixed earnings from Goldman Sachs, Peabody Energy and Johnson & Johnson and U.S. Bancorp. Markets in Europe rebounded but in Asia declined. Gold crossed $1,500 on the U.S. debt outlook worries.[/R]

U.S. indexes traded higher after housing starts rose 7.2% in March. Earnings were in focus as more than 100 companies announced results.

Goldman Sachs first quarter net earnings tumbled 72% to $908 million. Gannett first quarter net income declined 23% to $90.5 million. Johnson & Johnson first quarter net earnings declined 23% to $3.48 billion.

Peabody first quarter net income rose to $176.5 million. U.S. Bancorp first quarter net income soared 56% to $1,046 million.

Seagate Technology entered into supply and cross-licensing agreement with Samsung Electronics.

Euro-zone private sector activity improved, current account deficit widened and consumer sentiment dipped. European car registrations fell in March. German private sector activity slowed in April. Austria wholesale Inflation rose to a 6-year high in February.

European indexes gained on upbeat economic data. Volvo Buses and China based SAIC Motors agreed to form a joint venture for new energy driveline systems. Novartis net dropped reflecting additional financing costs related to the acquisition of Alcon.

The UK indexes rose after strong global economic data. WPP agreed to buy Germany-based Commarco. Vedanta’s unit acquired 10.4% stake in Cairn India. Seagate agreed to buy Samsung''s hard disk drive unit in a $1.38 billion cash and stock deal.

Stocks in Tokyo were dragged lower on the rising uncertainty related to the massive U.S. debt and growing realization that peripheral nations in Europe will need debt restructuring. Yen gained and electronics and chipmakers declined after Texas Instruments cited supply chain problems in Japan.

Stocks in Mumbai wavered as sentiment reversed more than five times in trading. A drop in crude oil price helped to counter the weak international sentiment and a rise in gold and silver prices. Silver jumped 0.7% and hovered near a record price of Rs 67,000 a kilo.

Australian stocks faced a selling pressure on the international worries and the release of minutes of the latest RBA meeting. Woodside quarterly revenues declined 3% on production fall of 19% and indicated a delay in the start of Pluto oil field. Newcrest lowered its gold production outlook.

Commodities, Bonds and Currencies

The 10-year bond yield decreased to 3.36% and 30-year bond fell to 4.43%.

The U.S. dollar decreased to $1.433 to a euro and fell against the Japanese yen to 82.56 yen.

Immediate delivery futures of Texas crude oil increased $0.57 to $108.26 a barrel, of natural gas increased 0.13 cents to $4.27 per mbtu and gasoline prices decreased 2.15 cents to 323.12 cents a gallon.

In metals trading, copper prices increased 4.3 cents to $4.26 per pound, gold increased $4.30 to $1,497.20 per ounce and silver increased $1.05 to $44.01.