U.S. Stocks Struggle, Private Sector Adds 114,000

Darlington Musarurwa
03 Aug, 2011
New York City

The U.S. indexes gained after a decline for eight days in a row after private sector added 114,000 jobs in July. MasterCard, TimeWarner, Comcast and Clorox reported better than expected earnings. European markets struggled on the growing worries about Italy.

[R]10:20 AM New York – The U.S. indexes gained after a decline for eight days in a row after private sector added 114,000 jobs in July. MasterCard, TimeWarner, Comcast and Clorox reported better than expected earnings. European markets struggled on the growing worries about Italy.[/R]

The U.S. stocks gained after a decline for eight days in a row after the private sector added more than expected and earnings were ahead of expectations.

ADP Employer Services said private sector added 114,000 in July compared to estimate of 83,000 set by several economists.

In the earnings news, MasterCard, Clorox, Comcast and Time Warner reported better than expected earnings.

The European markets extended losses of 9% in ten days and dropped to 11-month low as the prospect of the U.S. sliding into recession and a rating downgrade were compounded by the rising bond yields in Spain and Italy.

The Swiss central bank today cut its interest rate target range to between zero and 0.25% from zero and 0.75%.

The central bank’s move, largely symbolic also indicated that the interest rate is likely to be near zero and is prepared to fight the rise in the Swiss franc.

Bond yields in Europe hovered near the recent highs as bond speculators target Italy and Spain. Italian finance minister held an emergency meeting with the Bank of Italy officials and at least for now sounded optimistic note.

Italian bonds the most widely held bonds in Europe after Germany and nearly 90 banks hold more than 325 billion euros of debt, according to the European Banking Authority.

In Spain, situation turned critical and forced Prime Minister Zapatero to cut his vacation for the second day in a row.

Spain is scheduled to raise as much as 3.5 billion euro tomorrow and the yields on 10-year bonds have shot up to 6.21% after rising as high as 6.45% on Tuesday.

European markets dropped between 0.5% and 1.3% and Swiss index gained after the rate cut. Markets in Asia tumbled 2% on the worries that the U.S. is sliding into a recession and may not be able to avert a rating downgrade.

Earnings in Review

MasterCard Inc ((MA)) said second quarter net income increased 33% to $608 million from $458 million and earnings per share increased to $4.76 from $3.49. Revenues increased 22% to $1.67 billion from $1.37 billion a year ago.

The payment processor said number of transactions handled increased 17% in the quarter.

Time Warner Inc ((TWX)) said second quarter net income increased 14% to $638 million or 59 cents from $562 million or 49 cents a share. Revenues increased 10% $7.03 billion from $6.38 billion a year ago quarter.

Harry Porter DVD sales lifted the sales of the video segment revenues 13% to $2.8 billion.

Clorox Co. ((CLX)) said fourth quarter net income declined 1% to $169 million or $1.26 a share from $171 million or $1.20 a share from a year ago quarter. The company also bought back $655 million worth of its shares in fiscal 2011.