U.S. Stocks Gyrate With Debt Talks Spin; Oil Nears $100

Bikram Pandey
22 Jul, 2011
New York City

The U.S. indexes struggled as debt talks meandered and an agreement on spending limits appeared far from certain. The euro-zone leaders struck a deal that will trim Greek government debt and share pain with banks and offered new loans at cheaper rates. Oil neared $100 and gold at $1,600.

[R]4:10 PM New York – The U.S. indexes struggled as debt talks meandered and an agreement on spending limits and debt ceiling appeared far from certain. However, the euro-zone leaders struck a deal that will trim Greek government debt and share pain with banks and offered new loans at cheaper rates. Oil neared $100 and gold at $1,603.[/R]

U.S. indexes struggled as debt talks stalled and lawmakers backtracked on some of the reported compromise struck earlier. The markets gained the euro-zone after leaders agreed on a new bailout package for Greece with private sector contributions of €50 billion. U.S. leading indicators index climbed in June.

The U.S. Senate rejected the debt plan passed by the House in a 51-46 vote as expected. The Senate Majority Leader Harry Reid said he will not present another plan to vote because President Barack Obama and House Speaker John Boehner are working on a plan to trim $3 trillion in expenses and raise taxes.

Caterpillar second quarter net income surged 44% to $1.01 billion. Dover second quarter net earnings rose to $249.8 million. General Electric second quarter net earnings climbed 22% to $3.7 billion. Microsoft fourth quarter net income surged 30% to $5.9 billion. McDonald’s quarterly net rose 15% to $1.41 billion.

European indexes traded higher after euro-zone leaders agreed on new bailout package for Greece of longer maturity and drastically lower interest rate. In addition, private sector will contribute €50 billion in the plan. Volvo net surged 62% on demand for its trucks.

Euro-zone industrial orders surged 3.6%, French leading index fell, and Greece swung to deficit in May. German confidence weakened more than anticipated in July.

The UK indexes traded higher after the euro-zone leaders agreed to support a second bailout program for Greece. Experian agreed to acquire Brazil-based Virid Interatividade Digital Ltda. Vodafone quarterly revenue grew 3.5% to £11.66 billion.

Stocks in Tokyo gained after global sentiment improved for the second day. Banks led the advance in Tokyo and in the region after the euro-zone ministers hammered out an agreement to offer new loans with relaxed conditions to Greece. The yen dropped below 79 to a dollar.

Stocks in Sydney surged after the euro-zone ministers agreed on Greek bailout conditions and the overnight reports suggested a progress in the U.S. debt talks. Resource stocks gained after oil inched towards $100. Austar plunged 16% after Foxtel’s $2.5 billion bid was rejected by the competition commission.

Commodities, Bonds and Currencies

The 10-year U.S. bond yield decreased to 2.97% and 30-year U.S. bond traded down to 4.27%.

The U.S. dollar decreased at $1.436 to one euro and fell against the Japanese yen to 78.42 yen.

Immediate delivery futures of Texas crude oil increased $0.69 to $99.82 a barrel and futures of natural gas increased 0.07 cents to $4.40 per mbtu and gasoline price increased 2.2 cents to 312.11 cents a gallon.

In metals trading, copper increased 1.45 cents to $4.39 per pound, gold added $16.00 to $1,603.70 per ounce and silver increased $0.99 to $39.94.