S&P 500 Index Up 2%; Bank of America in Restructuring, Yahoo CEO Fired

Devan Biswas
07 Sep, 2011
New York City

Stocks in New York trading rose after a three-day of sell-off. Banks led the gainers after Bank of America replaced executives in its restructuring plan. Yahoo gained as much as 6% after its board replaced chief executive. Nvidia rose on positive outlook.

[R]12:20 PM New York – Stocks in New York trading rose after a three-day of sell-off. Banks led the gainers after Bank of America replaced executives in its restructuring plan. Yahoo gained as much as 6% after its board replaced chief executive. Nvidia rose on positive outlook.[/R]

U.S. indexes traded higher after banks gained and tech stocks participated in the rally. The three popular indexes gained more than 1% after two hours of trading. The 3-day sell-off dragged the markets indexes lower by 4%.

Bank of America jumped 3% after the bank ousted its head of wealth management unit Sallie Krawacheck and consumer banking division Joe Price. The bank as a part of restructuring also appointed Thomas Montag and David Darnell as co-chief operating officers.

Tech stocks traded higher after Yahoo Inc board fired its chief executive Carol Bartz and appointed chief financial officer Tim Morse as the interim chief.

Investors also began to digest the President Barack Obama’s plan to create more jobs. The plan is expected to be released on Thursday but the preliminary details indicated a stimulus between $300 billion and $400 billion in direct aid to state and local governments and payroll tax holidays and improving infrastructure.

The European market sentiment also improved after the highest court in Germany rejected the appeals challenging government authority to fund Greek bailout and participate in the European rescue fund.

On the economic front, German industrial production jumped 4% in July from June. The higher than expected increase in production also bolstered the confidence in the market.

Stocks were on the upswing after the court ruling and rebounded from a 3-day sell-off in the region but banks were under pressure again. BNP Paribas denied rumors of dollar liquidity problems.

Italian Prime Minister Silvio Berlusconi is expected to win the vote of confidence in the Senate later in the day. The austerity measures to be passed by the Senate will need a final approval from the lower house.

Italian austerity measures are expected to increase VAT by 1% and levy 3% tax on high income earners of more than 300,000 euros and cut various government spending and advance the increase in retirement age for women in private sector.

Italian, German and French bonds yields declined after the German Constitutional Court rejected the three appeals challenging the government authority to fund the bailout of smaller nations in the euro zone.

BNP Paribas confirmed on Wednesday that it has “excess” short term U.S. dollar liquidity.

The stock has been battered more than 50% in the last five weeks of trading as the U.S. based money market funds have cut their exposures to French banks for additional 10% after cutting by 30% in July.

The bank confirmed that it has access to a variety of sources for funds but the switch from the money market funds will increase the cost of funding.

The bank also denied the rumors that it lacks funding sources and has dollar liquidity problems and added that stock is trading at low valuation based on “unrealistically pessimistic” expectations.

Stock Movers

Nvidia Corporation (NVDA)) increased 6.3% or 85 cents to $14.03 after the visual computing technology provider anticipates revenue of $4.7 billion to $5 billion and margin expects of approximately 51% to 53%. The company anticipates GAAP operating expenses of $1.54 billion to $1.61 billion.

Sycamore Networks, Inc. ((SCMR)) increased 4.5% or 77 cents to $17.58 after the communications equipment maker reported fourth quarter revenues decreased to $13 million from $22.2 million in the same quarter last year. Net loss in the quarter was to $3.62 million or 13 cents per diluted share compared to $0.52 million or 2 cents per share a year ago quarter.

The Talbots, Inc. ((TLB)) advanced 8.3% or 21 cents to $2.74 after the specialty retailer said second quarter net sales decreased 9.9% to $271.1 million from $300.7 million last year. Comparable sales decreased 10.4%. Net loss for the quarter was to $37.3 million or 54 cents per diluted share compared to net income of $0.9 million or 1 cent per share last year.

The Pep Boys-Manny, Moe & Jack ((PBY)) increased 5.7% or 54 cents to $10.02 after the automotive service provider reported second quarter sales grew 3.5% to $522.6 million from $504.9 million last year. Comparable sales fell 2%. Net earnings for the quarter rose to $13.9 million or 26 cents per diluted share compared to $10.6 million or 20 cents per share last year.

VimpelCom Ltd. ((VIP)) decreased 2.7% or 30 cents to $10.57 after the Netherlands based communication service provider reported second quarter revenues surged 109% to $5.53 billion from $2.64 billion in the same quarter last year. Net income in the quarter declined 29% to $239 million or 16 cents per diluted share compared to $335 million or 28 cents per share a year ago earlier.

VeriFone Systems, Inc. ((PAY)) increased 3.3% or $1.18 to $36.22 after the electronic payment solution reported third quarter revenues increased 21.2% to $317 million from $261 million in the same quarter last year. Net income in the quarter soared 42.1% to $26.3 million or 28 cents per diluted share compared to $18.5 million or 21 cents per share a year ago.

Yahoo! Inc ((YHOO)) increased 3.6% to $13.35 after its board of directors fired the company’s chief executive Carol Bartz after a two year tumultuous tenure.