Stocks Waver; Republicans Set Debt Agenda With Pet Projects

Bikram Pandey
28 Jul, 2011
New York City

The Republican Party controlled U.S. House is expected to vote on the revised deficit bill as investors demand a plan for a loge term debt solution that needs cuts in military and increase taxes for wealthy. Stocks wavered and gold and commodities traded near recent highs.

[R]4:10 PM New York – The Republican Party controlled U.S. House is expected to vote on the revised deficit bill as investors demand a plan for a loge term debt solution that needs cuts in military and increase taxes for wealthy. Stocks wavered and gold and commodities traded near recent highs.[/R]

The U.S. indexes trended lower as the House prepares to vote on a revised spending plan however, it may already be too late to avert a rating downgrade as lawmakers fail to devise a framework to lower deficit in the long run.

U.S. weekly jobless claims fell below 400,000 and lifting hopes that the job engine may be revving up.

In the earnings news, Aflac second quarter net earnings declined 52%. CME second quarter net increased 8% to $293.7 million. Exxon Mobil second quarter net income surged 41% to $10.7 billion. E. I. du Pont second quarter net income rose 5% to $1.22 billion. Royal Dutch Shell second quarter net income surged 97% to $8.7 billion.

European markets turned lower for the third day in a row on a string of weak earnings and a decline in confidence index in the euro-zone. The indexes fell more than 1% in Germany, France, Greece, Switzerland and Sweden.

Stocks in Japan declined on the growing prospect of the U.S. default or a credit rating downgrade and the yen edged near a record high. Advantest dropped 7% on weaker than expected sales outlook and Hitachi Construction Machinery gained 4% on 91% rise in operating income.

Australian stocks dropped after the U.S. markets declined as much as 2% on the prospect of the debt default. Banks and resources linked companies traded lower as the U.S. lawmakers act recklessly with the debt negotiations and put global growth at risk. The Australian dollar traded at a new high.

Commodities, Bonds and Currencies

The 10-year U.S. bond yield decreased to 2.96% and 30-year U.S. bond closed down at 4.26%.

The U.S. dollar increased at $1.430 to one euro and fell against the Japanese yen to 77.74 yen.

Immediate delivery futures of Texas crude oil decreased $0.25 to $97.14 a barrel and futures of natural gas decreased 0.08 cents to $4.23 per mbtu and gasoline price decreased 2.47 cents to 311.89 cents a gallon.

In metals trading, copper increased 2.65 cents to $4.47 per pound, gold rose $0.10 to $1,617.40 per ounce and silver decreased $0.76 to $39.81.