U.S. Indexes Jump 1%, Gold Tumbles 5%

Bikram Pandey
24 Aug, 2011
New York City

U.S. indexes turned higher in the late afternoon as bargain hunters returned and gold dropped more than 5%. The yields on the U.S. Treasury bonds, Japanese bonds and German bonds traded near recent lows. European banks to cut 40,000 banking staff.

[R]4:00 PM New York – U.S. indexes turned higher in the late afternoon as bargain hunters returned and gold dropped more than 5%. The yields on the U.S. Treasury bonds, Japanese bonds and German bonds traded near recent lows.[/R]

The U.S. indexes struggled in the morning and reversed the course in the late afternoon trading to gain more than 1%. Durable goods orders improved more than anticipated in July but mortgage activity dropped 2.4%. Market indexes in Europe closed higher but in Asia dropped more than 1%.

In corporate news, Par Pharmaceutical agreed to acquire Anchen Pharmaceuticals for $410 million. American Eagle said second quarter net income soared 104% to $19.6 million. Avago third quarter net income increased to $144 million. CVS Caremark new share repurchase program for $4 billion. Toll Brothers third quarter net income increased to $42.1 million.

European indexes traded higher and German business sentiment deteriorated in August. Denmark unveiled $2.1 billion stimulus package. Glencore bid for remaining stake in Australia-based Minara Resources. Accor swung to first-half profit.

Six investment banks in Europe have announced the lay-off of 40,000 bankers in the last one month. HSBC is planning eliminate 30,000 staff, UBS looking to cut 3,500, Barclays is lowering the count by 3,000 and Royal Bank of Scotland and Credit Suisse Group AG announced to cut 2,000 jobs cuts each.

Euro-zone new industrial orders slumped, Hungarian retail sales fell, and Norway’s jobless rate remained flat in June. German business confidence fell more than estimated in August. Denmark lifted 2012 budget deficit forecast.

The UK indexes gained after mixed global economic data. Glencore offered A$0.87 a share in cash for remaining stake in Australia-based Minara Resources. BHP fiscal year net surged to record high on the revenues gain of 36% and a strong demand from China.

Stocks in Australia edged lower as metals and oil prices hovered near recent highs. BHP Billiton reported fiscal year revenues increased 36% and net soared 86% on a strong demand from Asian economies. Pacific Brands issued a cautious outlook. Qantas annual earnings were ahead of expectations.

Commodities, Bonds and Currencies

The 10-year U.S. bond yield increased to 2.27% and 30-year U.S. bond traded fell to 3.63%.

The U.S. dollar increased at $1.4426 to one euro and closed lower against the Japanese yen to 76.97 yen.

Immediate delivery futures of Texas crude oil decreased $0.49 to $84.95 a barrel and futures of natural gas decreased 0.07 cents to $3.92 per mbtu and gasoline price decreased 0.31 cents to 287.35 cents a gallon.

In metals trading, copper increased 1.10 cents to $4.025 per pound, gold decreased $98.20 to $1,763.10 per ounce and silver decreased $2.75 to $39.58.

Gold dropped more than 7% in a two-day sell-off, the most since March 2008. Gold had run up more than 15% in the last since August 15 and is still up 24% in the year.