U.S. Stocks in 4-day Rally; Central Banks Coordinate Dollar Liquidity

Bikram Pandey
15 Sep, 2011
New York City

U.S. extended gains for the fourth day in a row after four central banks offered dollar liquidity to European banks. Banks, energy and industrial companies led the gainers in New York and in Europe. The euro advanced. The euro zone unemployment rate was stable but Greek rate soared to 16.3%.

[R]4:10 PM New York – U.S. extended gains for the fourth day in a row after four central banks offered dollar liquidity to European banks. Banks, energy and industrial companies led the gainers in New York and in Europe. The euro advanced. The euro zone unemployment rate was stable but Greek rate soared to 16.3%.[/R]

U.S. indexes gained on the euro zone optimism after four central banks in a coordinated action provided dollar liquidity to European banks.

U.S. Fed, Bank of Japan and Swiss National Bank and Bank of England acted together to offer dollar liquidity to European banks as liquidity from U.S. banks and money market funds disappear.

In the economic news, new unemployment claims in the U.S. rose to 428,000. The consumer price index for the U.S. rose 0.4% in August and foreclosure filings increased in August.

In corporate news, Teradyne agreed to purchase LitePoint for $510 million. Clarcor third quarter income increased to $32.1 million. Fundtech received superior merger offer from GTCR. Netflix plunged after it trimmed its subscriber estimate by 1 million. Pier 1 second quarter net income rose 4.9% to $16.6 million.

The European indexes gained on optimism of a resolution to the sovereign debt crisis. Sarkozy and Merkel remained confident that Greece will remain in the euro-zone The Italian Parliament approved a watered down €54 billion-austerity plan. Spain sold €3.9 billion in bonds. UBS reported $2 billion in unauthorized trading losses.

Greek jobless rate rose to 16.3%. Euro area employment increased 0.3% in the second quarter but annual inflation remained stable at 2.5% in August. France estimated 2011 deficit at a record high of €75 billion and German manufacturing employment improved in July.

The UK indexes soared after France and Germany reaffirmed Greece’s place in the euro area. The UK retail sales declined but inflation expectations for the year ahead increased to 4.2% in August.

Stocks in Japan rebounded on the euro zone optimism and tracking higher Asian markets. Exporters, ship liners and steelmakers led the advance. Banks also closed higher. The euro edged lower from the record low against the yen.

Stocks in Australia rebounded on the optimism surrounding the euro zone. Myer, the department store estimated 10% decline in the current year earnings on flat sales. Rio Tinto announced new investment of $833 million in Pilbara region.

Commodities, Bonds and Currencies

The 10-year U.S. bond yield increased to 2.08% and 30-year U.S. bond added to 3.36%.

The U.S. dollar decreased at $1.3881 to one euro and closed lower against the Japanese yen to 76.63 yen.

Immediate delivery futures of Texas crude oil increased $0.40 to $89.31 a barrel and futures of natural gas decreased 0.16 cents to $3.88 per mbtu and gasoline price added 5.33 cents to 277.91 cents a gallon.

In metals trading, copper increased 6.45 cents to $3.96 per pound, gold fell $34.80 to $1,791.70 per ounce and silver fell $0.76 to $39.77.