World Indexes Down; U.S. Consumer Prices Rise 0.2%

Arthi Gupta
15 Jun, 2011
New York City

U.S. and global indexes declined after European finance ministers failed to reach a consensus on resolving the bailout plan for Greece. U.S. consumer prices increased 0.2% in May and mortgage applications surged last week. Manufacturing declined in New York region.

[R]10:05 AM New York – U.S. and global indexes declined after European finance ministers failed to reach a consensus on resolving the bailout plan for Greece. U.S. consumer prices increased 0.2% in May and mortgage applications surged last week. Manufacturing declined in New York region.[/R]

U.S. stocks traded lower after a modest increase in inflation largely driven by food and energy prices. In addition, the regional economic report released by the New York branch of Federal Reserve showed a sharp decline in manufacturing activity.

World indexes traded lower after a lack of decision for a second bailout plan for Greece. Investors turned cautious after Moody''s placed the ratings of three French banks on review for a possible downgrade.

U.S. Consumer Prices Rise

Consumer prices unexpectedly showed a modest increase in the month of May, according to figures released by the U.S. Labor Department.

The Labor Department said its consumer price index rose 0.2% in May following a 0.4% increase in April. The energy index fell 1% and gasoline index decreased 2% in May.

U.S. Industrial Production Edged Up 0.1%

May industrial production rose 0.1% after little gain in April. Manufacturing production rose 0.4% and mining increased 0.5%. Utility output decreased 2.8% and capacity utilization for total industry flat at 76.7%.

New York Manufacturing Conditions Worsen

Conditions for New York manufacturers unexpectedly deteriorated in the month of June, according to a report released by the Federal Reserve Bank of New York today.

The New York Fed said its general business conditions index dropped to a negative 7.8 in June from a positive 11.9 in May.

U.S. Mortgage Activity Soars

U.S. mortgage applications rose sharply last week as long-term interest rates continued to fall, according to the latest data from the Mortgage Bankers Association.

The MBA said its seasonally adjusted index of mortgage application activity soared 13.0% in the week ended June 10, following last week''s decline of 0.4%.

Refinancing demand soared 16.5% and the MBA''s home purchase index rose 4.5%.

The average fixed 30-year mortgage rates were 4.51% in the week, down from 4.54% the previous week.

Reynolds Group Bids for Graham Packaging

New Zealand-based Reynolds Group Holdings Ltd. offered to acquire Graham Packaging Co. Inc. for $25 per share in cash at a total enterprise value, including net debt, of about $4.5 billion and is higher than an earlier bid by Silgan Holdings Inc. to acquire the company for about $19.56 per share or $4.1 billion.

Lockheed Martin Space Systems Cuts Jobs

Lockheed Martin Space Systems Co., a major business area of Lockheed Martin Corp. said on Tuesday it will cut around 1,200 jobs by the year-end to improve its competitiveness.

Google Gets DOJ Approval for Nortel Patents

The U.S. Department of Justice has given approval to Google Inc. to go ahead with its $900 million opening bid for the high-tech patent portfolio sold by Canadian telecommunications equipment maker Nortel Networks Corp.

The news was first reported by the Wall Street Journal on Tuesday, citing people familiar with the matter.

Google said it needs the patent portfolio to defend itself from lawsuits.

Breakwater Agrees To Be Acquired By Nyrstar

Breakwater Resources Ltd., the Canadian mineral resource company agreed to be acquired by Belgium-based zinc producer Nyrstar NV in a friendly deal valued at C$663 million.

Under the binding agreement entered into between both companies, the deal will be through a friendly take-over offer of C$7 in cash per each Breakwater share, or a total of approximately C$619 million. A special dividend of C$0.50 per share or about C$44 million in cash will also be paid to Breakwater shareholders.

Earnings Review

CLARCOR Inc. ((CLC)), the provider of filtration products reported second quarter net sales grew 12% to $288.5 million from $257.9 million last year. Net earnings for the quarter improved 37.2% to $32.8 million or 64 cents per diluted share compared to net earnings of $23.9 million or 47 cents per share last year.

Korn/Ferry International ((KFY)), the talent management solutions provider reported fourth quarter revenue grew 16% to $205.78 million from $176.91 million in the same quarter last year. Net income in the quarter surged 128% to $20.34 million or 43 cents per diluted share compared to net income of $8.92 million or 19 cents per share in the prior-year quarter.

The Scotts Miracle-Gro Company ((SMG)), the lawn and garden products company anticipates adjusted earnings of $3.10 to $3.20 per share for fiscal year 2011.