U.S. Debt-Talks Impasse Finally Catches Up With Markets

Bikram Pandey
27 Jul, 2011
New York City

U.S. stocks declined as markets finally began to digest to possible impact of the failure to increase debt ceiling by the deadline August 2. The indexes turned lower and dragged markets in Europe. Amazon sales soared 50% and Boeing lifted its earnings outlook.

[R]9:50 AM New York – U.S. stocks declined as markets finally began to digest to possible impact of the failure to increase debt ceiling by the deadline August 2. The indexes turned lower and dragged markets in Europe. Amazon sales soared 50% and Boeing lifted its earnings outlook.[/R]

U.S. indexes trended lower after the House of Representatives postponed a vote on debt ceiling plan until tomorrow. Several conservative members of the Republican Party are opposed to the plan proposed by the House Speaker John Boehner.

The party members voiced to preserve military spending and said that the proposal will do too little to cut spending and control federal outlay.

June durable goods orders decreased 2.1% or $4 billion to $192 billion, this follows two of last three monthly declines following 1.9% rise in May, according to the data released by the Commerce Department.

Orders excluding transportation increased 0.1% and defense fell 1.8%.

The European Central Bank said that bank lending in the euro-zone rose at a slower pace in June compared to a year ago as banks cut lending in Greece, Portugal and Spain and France.

German finance minister Wolfgang Schaeuble was quoted in the Stern magazine saying that the government is against a “carte blanche” to the rescue fund to buy the bonds of troubled nations.

He also added that Euro-zone integration must progress and the states needing financial assistance must be prepared to give up some of their sovereignty to the European Union.

The dollar gained against the euro but declined against the yen.

Stock Movers

Boeing Co. ((BA)) gained more than 2% after the plane maker lifted earnings outlook for the full year. The company raised its full year outlook for the second time to a range between $3.90 and $4.10 a share.

Boeing posted net income of $941 million or $1.25 a share compared to $787 million or $1.06 a share. Operating margins increased to 9.3% from 8.4%.

Amazon.com soared 5.5% after the on-line retailer reported better than expected earnings in the second quarter.

The online retailer reported second quarter earnings declined to 41 cents a share or $191 million compared to $207 million or 45 cents a share a year ago quarter. Revenues increased 55% to $9.9 billion. The operating margin fell to 2% from 4.1% in the period a year ago.


The online retailer also forecasted third quarter sales between $10.3 billion and $11.1 billion.

Juniper Networks ((JNPR)) plunged 18% after it reported second quarter and current quarter outlook below estimate.

Corning Inc ((GLW)) said quarterly revenues increased 17% to $2 billion and net income declined to $755 million or 47 cents a share compared to $913 million or 58 cents a share.