U.S. Stocks Rise on Retail Sales Data; France, Japan GDP Weak

Arthi Gupta
12 Aug, 2011
New York City

U.S. indexes gained after retail sales rose 0.5% in July. France, Italy, Spain and Belgium banned short-selling of financial stocks. The French economy recorded zero growth in the second quarter. The EU/IMF approved

[R]9:50 AM New York – U.S. indexes gained after retail sales rose 0.5% in July. France, Italy, Spain and Belgium banned short-selling of financial stocks. The French economy recorded zero growth in the second quarter. The EU/IMF approved €11.5 billion aid to Portugal.[/R]

U.S. stocks traded higher in the morning after July retail sales were in-line with expectations. The nervous market has been bouncing up and down sharply with no conviction. Market has been swinging in either direction with the release of economic data but global economic backdrop has certainly worsened.

European markets traded higher after France reported flat economic growth and Hong Kong reported weaker than expected growth. Japan also lowered its economic outlook in the fiscal year.

European indexes edged higher after France, Italy, Spain and Belgium banned short-selling of financial stocks from today to prevent further declines in banking stocks’ share prices, the European Securities and Markets Authority said.

Traders are still worried that France may lose its highest credit rating and French banks may suffer more losses in its Italian, Greek and Spanish bonds holdings. However, the ratings agencies confirmed France''s AAA rating yesterday.

The French economy recorded zero growth in the second quarter largely due to a decline in consumer spending. Gross domestic product remained flat on a sequential basis in the second quarter after expanding 0.9% in the first quarter, the statistics office Insee said.

Swiss National Bank Vice President Thomas Jordan said yesterday a temporary peg to the euro is possible. The Swiss central bank is battling the steady rise in the Swiss franc and the currency soared to a record high against the euro and the dollar this week.

Industrial production in the euro area increased 2.9% on an annual basis in June, slower than the 4.4% growth recorded in May, which was revised up from 4%, according to data released by Eurostat today.

The European Commission, the European Central Bank and the International Monetary Fund agreed on Friday to endorse the disbursement of €11.5 billion to Portugal. The latest disbursement would take place in September.

Earlier, the EU and the IMF had announced a €78 billion three-year bailout package for Portugal.

Asian markets declined after Japan’s gross domestic product is now forecast to grow 0.5% in fiscal 2011, slower than the previously predicted 1.5%, according to a statement from the Cabinet Office.

The report also estimated economy to grow between 2.7% and 2.9% in next fiscal year on the rebound in production.

U.S. Retail Sales Rise

U.S. retail sales grew 0.5% to $390.4 billion in July, following an upwardly revised 0.3% increase in June, according to data released by the U.S. Commerce Department today.

Motor vehicle sales grew 0.4% in July compared to the revised 0.7% rate of growth in June. Excluding motor vehicle sales, retail sales grew 0.5% in July.

Florida, Virginia Sue BNY Mellon

Florida and Virginia on Thursday sued Bank of New York Mellon Corp., alleging that the custodial bank improperly charged the states'' pension funds for foreign exchange transactions.

Florida is seeking awarding treble damages and imposing a civil penalty of $11,000 for each false claims violation.

Virginia is said to be seeking over $811 million in civil penalties from BNY Mellon, along with triple damages totaling $120 million. BNY Mellon holds about $54 billion in funds for the Virginia Retirement System.

Earnings Review

Dillard''s, Inc. ((DDS)), the apparel retailer reported second quarter net sales grew 3.6% to $1.44 billion from $1.39 billion in the same quarter last year. Net income in the quarter surged 159% to $17.6 million or 32 cents per diluted share compared to net income of $6.8 million or 10 cents per share in the prior-year quarter.

J. C. Penney Company, Inc. ((JCP)), the retailer reported second quarter total net sales declined 0.8% to $3.91 billion from last year''s $3.94 billion, reflecting the company''s exit from its catalog business. Comparable store sales for the quarter rose 1.5%.

Net income in the quarter was $14 million, flat with the prior-year quarter. Earnings per diluted share rose to 7 cents from 6 cents a year ago.

Nordstrom, Inc. ((JWN)), the fashion specialty retailer said second quarter net sales increased 12.4% to $2.72 billion from $2.42 billion in the same quarter last year. Same-store sales grew 7.3% over a year earlier. Net earnings in the quarter rose 20% to $175 million or 80 cents per diluted share compared to net earnings of $146 million or 66 cents per share in the prior-year quarter.

Nvidia Corporation ((NVDA)), the provider of visual computing technologies said second quarter revenue rose 26% to $1.02 billion from $811.21 million in the same quarter last year. Net income generated in the quarter was $151.6 million or 25 cents per diluted share compared to a net loss of $141.0 million or 25 cents per share for the year-ago quarter.