U.S. Stocks Pare Losses, Global Oil Reserves Tapped

Bikram Pandey
23 Jun, 2011
New York City

U.S. stocks turn negative and crude oil plunges nearly 5%. Weak jobs market report and new home sales dragged broader indexes in the U.S. and European markets fell as bond yields on peripheral nations rose near record high.

[R]4:10 PM New York – U.S. stocks turn negative and crude oil plunges nearly 5%. Weak jobs market report and new home sales dragged broader indexes in the U.S. and European markets fell as bond yields on peripheral nations rose near record high.[/R]

U.S. indexes slid after weekly jobless claims rose more than estimated to 429,000 and new home sales fell. The rising debt stress in the euro-zone also unnerved the markets and crude oil fell more than 4% after developed nations tap oil reserves.

Seasonally adjusted new home sales in May decreased 2.1% to 319,000 and increased 13.5% from a year ago. The median sale price of new homes sold in the month was $222,600 and average price was $266,400 with nine months of inventory.

International Energy Agency controlled by wealthiest nations of the world decided to release 60 million barrels in the world market to make up for the lost production from the NATO aggression in Libya. The U.S. will release 30 million barrel from its reserves as part of the IEA action.

European aircraft maker Airbus won orders worth $72 billion in Paris Air Show. Of the total orders, the orders for 418 planes worth $44 billion are firm orders and 312 orders worth $28.2 billion are pledges. Boeing received firm orders of $2.4 billion for 23 contracts. The combined firm orders of $46 billion are 86% higher than a year ago.

Maple Group raised bid offer for TMX Group to C$3.8 billion. UK based Aviva agreed to sell RAC to Carlyle Group for $1.60 billion.

Bed Bath first quarter net profit climbed 31%. ConAgra fourth quarter net income surged 184%. Discover Financial second quarter net soared to $593 million. Lennar second quarter net earnings in the quarter slumped 65%. Nissan estimates fiscal year net income of 270 billion yen.

The European indexes slumped after the Federal Reserve lowered its growth forecast for the U.S. economy. European leaders meet in Brussels today to discuss the bailout plan for Greece. Euro-zone private sector expanded at the slowest pace since October 2009.

Yields on the European bonds in the peripheral nations rose as European leaders start a two-day meeting to discuss the euro-zone sovereign debt stress. The European Central Bank President Jean-Claude Trichet said link between “debt problems” and banks is the most serious threat to financial stability in the European Union.”

Portuguese 2-year notes rose 70 points to 14.4%, two-year bond Greek bonds increased 38 points to 28.26% and the yield on the comparable Spanish 2-year securities increased to 3.6%. The yield on 10-year bund fell to 2.86%.

Euro-zone consumer confidence fell in June and private sector growth fell to a 20-month low. French factory sector growth slowed in June. Swiss trade surplus surged and Dutch jobless rate rose in May. Italian consumer sentiment declined.

The UK indexes slumped after comments from the U.S. Federal Reserve Chairman Ben Bernanke. UK high street sales growth was flat in June and mortgage approvals increased in May. Irish deficit narrowed and economy expanded in the first quarter.

The benchmark index in Japan declined on weaker than expected economic growth in the U.S. Nissan, Isuzu and Suzuki gained on higher than expected earnings outlook. Domestic production is expected to revive earlier than expected as supply chain worries ease.

Australian stocks closed lower after rallying for five days in a row. Telstra and National Broadband Network agreed to a historic agreement that will see the roll out of fiber optic network. NBN will pay $11 billion for the transfer of fixed line business.

The Australian government supported National Broadband Network agreed with Telstra to transfer its fixed-line business for $11 billion. The wholesale network operator also agreed with Optus to transfer its cable business for $800 million. The historic agreements paved the way for the rollout of the advanced fiber optic network across Australia.

Commodities, Bonds and Currencies

The 10-year bond yield decreased to 2.91% and 30-year bond traded down to 4.17%.

The U.S. dollar increased to $1.416 to one euro and rose against the Japanese yen to 80.47 yen.

Immediate delivery futures of Texas crude oil declined $3.60 to $91.78 a barrel and futures of natural gas fell 0.08 cents to $4.23 per mbtu and gasoline price decreased 11.66 cents to 285.67 cents a gallon.

In metals trading, copper fell 3.1 cents to $4.07 per pound, gold dropped $30.10 to $1,523.30 per ounce and silver decreased $1.46 to $35.29.