U.S. Stocks in 3-day Gains; Visa, MasterCard Soar

Bikram Pandey
29 Jun, 2011
New York City

U.S. indexes extended gains for the third day in a row as investors looked beyond Greek austerity vote. The euro gained and crude oil and metals advanced. Visa and MasterCard surged after the latest Fed proposal showed higher fees that retailers pay for debit card transactions.

[R]5:30 PM New York – U.S. indexes extended gains for the third day in a row as investors looked beyond Greek austerity vote. The euro gained and crude oil and metals advanced. Visa and MasterCard surged after the latest Fed proposal showed higher fees that retailers pay for debit card transactions.[/R]

U.S. indexes rose after the Greek parliament voted in favor of austerity measures. Bank of America agreed to pay $8.5 billion to settle claims on mortgage-backed securities. BJ's Wholesale agreed to a leveraged buyout for $2.8 billion.

Bank of America agreed to pay between $8.5 billion and $9.1 billion for losses linked to mortgage securities that were sold between 2004 and 2008. The bank also guided second quarter net income between $3.2 billion and $3.7 billion.

Visa Inc ((V)) and MasterCard ((MA)) soared 15% and 11% respectively after the latest draft proposal from the Federal Reserve indicated the payment of 23.9 cents to debit card network operators.

The current payment of 44 cents on average $38 transaction was expected to be cut to between 7cents and 12 cents in Fed’s earlier proposal in December.

News Corp agreed to sell its struggling social network site Myspace to Specific Media Inc for $35 million, much less than $100 million sought by its parent News Corp. and significantly below its purchase price of $580 million in 2005.

Once a leader in social networking, Myspace peaked with more than 400 million registered users and has seen a steady defection of users in the last three years as people migrated to Facebook and other networking sites.

BJ’s agreed to be acquired in a leveraged buyout of $2.8 billion.

On the earnings front, Family Dollar third quarter net income grew 6.5%. Monsanto third quarter net income soared to $680 million.

The European indexes traded higher ahead of austerity vote in the Greek parliament. The EU officials stepped up media campaign in the support of austerity measures. Euro-zone economic sentiment index fell to 105.1 in June. Philips agreed to acquire Indal. Japan-based Kyocera agreed to buy Unimerco.

In economic news, Euro area retail sales and sentiment fell in June. French GDP growth revised down in the first quarter. Spanish retail sales declined in May. Hungarian jobless rate declined in the three month period to May. Romania's central bank held key rate at 6.25%.

The UK indexes extended gains after the Greek parliament approved austerity measures. UK services index edged up in April. Mortgage approvals in the UK rose but M4 money supply declined in May. Irish unemployment increased to 14.2% in June.

The Nikkei index soared 1.5% and extended gains for the second day on the sharp recovering in domestic manufacturing and improving sentiment in the euro-zone. Retailers advanced for the third day in a row on improved retail outlook. Autos and electronics makers led the gainers.

Australian stocks rebounded ahead of Greek austerity vote. Resource stocks gained on the back of higher oil and metals. Transpacific Industries revised lower its annual outlook.

Commodities, Bonds and Currencies

The 10-year U.S. bond yield increased to 3.13% and 30-year U.S. bond traded increased 4.38%.

The U.S. dollar decreased to $1.442 to one euro and gained against the Japanese yen to 80.89 yen.

Immediate delivery futures of Texas crude oil increased $2.01 to $94.80 a barrel and futures of natural gas decreased 0.03 cents to $4.31 per mbtu and gasoline price increased 12.01 cents to 300.97 cents a gallon.

In metals trading, copper increased 12.00 cents to $4.22 per pound, gold added $8.90 to $1,509.10 per ounce and silver increased $1.10 to $34.76.