U.S. Stocks Rise on Retail Sales Data

Arthi Gupta
14 Jun, 2011
New York City

U.S. indexes gained after producer prices rose 0.2% and retail sales dropped 0.2% in May. Graham Packaging confirmed unsolicited acquisition proposal. Avis Budget Group agreed to acquire Avis Europe for $1.0 billion. Ericsson agreed to buy Telcordia for $1.15 billion.

[R]10:30 AM New York – U.S. indexes gained after producer prices rose 0.2% and retail sales dropped 0.2% in May, first decline in eleven months. Graham Packaging confirmed unsolicited acquisition proposal. Avis Budget Group agreed to acquire Avis Europe for $1.0 billion. Ericsson agreed to buy Telcordia for $1.15 billion.[/R]

World indexes traded higher after strong industrial output data from China and markets in Europe edged higher as European leaders haggle on Greek bailout conditions.

European finance ministers are due to hold an emergency meeting in Brussels this afternoon to discuss the next phase in the bailout of Greece. The main focus will be a disagreement between the European Central Bank and Germany.

In Asia, Chinese industrial production rose 13.3% annually in May as against the 13.5% increase in April.

Separately, inflation rose to 5.5% in May from 5.3% in April, the National Statistics Bureau said. The inflation rate was the highest since July 2008.

However, the Chinese central bank announced a hike in reserve requirement ratio for the sixth time this year to contain inflation. The central bank lifted the reserve ratio by 50 basis points, effective from June 20.

The Bank of Japan decided to lend up to 500 billion yen to earth quake hit region wherein each financial institution could borrow up to 50 billion yen at an interest rate of 0.1% per annum for a maximum duration of four years.

Separately, data showed that industrial production in the country grew 1.6% on a monthly basis in April.

U.S. Secretary of State Hillary Rodham Clinton asked the African community to increase contact and support for Libya's National Transitional Council.

She said this during a speech at the African Union Commission headquarters in the Ethiopian capital Addis Ababa on Monday.

The United States urged all African countries to suspend the operations of the Qadhafi regime's embassies there and to expel pro-Qadhafi diplomats in an effort to step up pressure on Libyan leader Moammar Qadhafi to quit power.

Many members of African Union consider U.S.’s interference in Libya as unprovoked and unnecessary and prefer the U.S. to stop its aggression on the continent.

U.S. Producer Prices Rise

The U.S. Labor Department said producer prices for May increased at the slowest rate in ten months.

The Labor Department said producer price index edged higher 0.2% in May following a 0.8% increase in April.

Excluding food and energy prices, the core producer price index also rose 0.2% in May after rising 0.3% in each of the two previous months.

U.S. Retail Sales Drop

U.S. retail sales showed a modest decrease in the month of May, according to data released by the U.S. Commerce Department today. March sales were revised lower to increase of 0.8% and to 0.3% in April.

Retail sales adjusted for seasonality and calendar fell 0.2% to $387.1 billion from April and up 7.7% from a year ago. March to April revised retail sales rose 0.5%.

In the first five months, retail sales increased 8% compared to the same period a year ago.

The retail sales fell on a 2.9% drop in motor vehicle and parts sales. Excluding the automotive sector, retail sales rose 0.3%.

Graham Packaging Confirms Unsolicited Proposal

Graham Packaging Company Inc. confirmed that it received an unsolicited proposal from New Zealand’s private-investment firm Rank Group Ltd. to acquire Graham Packaging Co., Inc. for $25 per share in an all-cash transaction of about $1.64 billion.

Graham had agreed in April to be acquired by Silgan for about $4.1 billion, including debt.

Google Buys Admeld

Google Inc. said it agreed to acquire Admeld, a New York-based yield optimization firm, to expand in display advertising. The deal is reportedly valued at about $400 million though the financial terms were not disclosed.

Avis Budget Group Acquires Avis Europe

Avis Budget Group, Inc. and Avis Europe plc have announced that they have reached agreement on the terms of the acquisition by Avis Budget of all outstanding shares of Avis Europe in exchange for £3.15 in cash per Avis Europe share.

The terms of the transaction value Avis Europe's ordinary equity at approximately £635 million, or approximately $1.0 billion.

Ericsson Buys Telcordia

LM Ericsson Telephone Co. reached an agreement with Providence Equity Partners, LLC and Warburg Pincus to acquire 100% of the shares of Telcordia for $1.15 billion.

Bombardier Secures UK Contract

Bombardier Transportation, the rail equipment division of Canadian transport major Bombardier Inc. said it has been granted a contract worth about £354 million or nearly $577 million, for the Sub Surface Railway automatic train control signaling upgrade for London Underground in the UK.

Earnings Review

Casey's General Stores, Inc. ((CASY)), the convenience store operator reported fourth quarter revenues rose 31.4% to $1.55 billion, from $1.18 billion in the comparable quarter last year. Net profit in the quarter increased 4.1% to $22.8 million compared to net profit of $21.9 million last year.

On a per share basis, earnings edged higher to 60 cents compared with 43 cents last year, reflecting a lower share count for the quarter.

FactSet Research Systems Inc. ((FDS)), the provider of global financial and economic information reported third quarter revenues rose 14.6% to $183.65 million, from $160.30 million in the prior year. Net income in the quarter climbed 12% to $43.31 million or 92 cents per diluted share compared to net income of $38.66 million or 81 cents per share last year.

General Mills, Inc. ((GIS)), the global manufacturer and marketer of consumer foods reiterated its fiscal year 2011 earnings per share guidance of $2.46 to $2.48 excluding mark-to-market effects and a net gain related to certain tax items.

GT Solar International, Inc. ((SOLR)), the solar and LED equipment estimates earnings of about $0.30 per share for the first quarter of 2012, up from the previous estimate range of $0.08 to $0.11 per share.

Honda Motor Co., Ltd. ((HMC)) said it expects fiscal year 2012 net income of 195 billion yen on net sales and other operating revenue of 8.3 trillion yen.

Northland Power Inc. ((NPI.TO)), the unincorporated open-ended income trust reported first quarter sales surged 53% to C$96.3 million from C$63 million last year. Net income generated in the quarter was C$55 million compared to a net loss of C$61.4 million in the prior year.