U.S. Indexes Extend World Markets Rally; Home Prices Fall

Devan Biswas
27 Sep, 2011
New York City

U.S. stocks extended rally for the second day in a row and copper rebounded from a seven day decline. The euro advanced 0.5% after European leaders appear to agree on leveraging the rescue fund and Greece is set to approve more austerity measures.

[R]12:00 PM New York – U.S. stocks extended rally for the second day in a row and copper rebounded from a seven day decline. The euro advanced 0.5% after European leaders appear to agree on leveraging the rescue fund and Greece is set to approve more austerity measures.[/R]

U.S. stocks extended world markets gains after European leaders showed willingness to offer stronger response to the widening crisis rooted in Greek default. Stocks, euro and commodities soared.

The U.S. metropolitan home price index tracked by the S&P/Case Shiller index declined 4.1% in July from a year ago. Home prices in the largest cities continue to struggle as unemployment rate remain above 9% and banks restrain lending.

U.S. consumer confidence index tracked by the Conference Board increased to 45.4 in September from a revised 45.2 in August.

The U.S. Senate approved a stopgap measure to avoid a government shutdown. The vote by 79-12 approved spending through November 18 and also included federal disaster aid to the areas affected by the Hurricane Irene.

European markets surged between 3% and 5.5% after the European policymaker appear close to finalizing plans to expand the rescue fund and use the unlimited printing authority of the ECB to sell more bonds.

The plan includes leveraging 400 billion euros fund and use the unlimited money printing authority of the European Central Bank to issue the euro zone bonds guaranteed by all 17 member nations.

The Greek Prime Minister George Papandreou is visiting Berlin today, 2-day before German lawmakers are set to approve the final tranche of Greek bailout and expand the euro zone rescue fund.

The European Financial Stability Facility is close to getting approval from 9 of the 17 member nations and Finland and Greece are close to agreeing on the terms of the collateral. Only six member nations have approved the creation of the rescue fund.

Separately, the IMF chief Chrisitine Lagarde asked Greece to provide written guarantees of timetable for the new austerity measures and estimated government revenues.

Greek parliament later today is expected to approve a controversial property tax and new austerity measures that will cut government staff salary cuts by 20% on top of the 15% cuts proposed few months ago.

Italy completed the sale of 14.5 billion euros of bonds today and is expected to issue at least 85 billion euros of debt before the end of the year. The yield on 10-year bond declined to 5.6% but stayed 100 basis points above a level last seen a month ago.

Italy sold 8 billion euros of 182-day bills to yield 3.071%, higher than 2.14% yield in the last auction a month ago. The Treasury also sold 3.5 billion euros of 2013 bonds that yielded 4.511% and 3 billion euros of 76-day bills at 1.808% yield.

Stock Movers

American Greetings Corporation ((AM)) decreased 2.4% or 50 cents to $19.87 after the greeting cards maker said second quarter revenue increased to $368.8 million from $342.8 million in the quarter a year ago. Net income in the quarter soared 70% to $14.5 million or 35 cents per diluted share compared to $8.5 million or 21 cents per share a year ago.

Ennis, Inc. ((EBF)) fell 0.2% or 4 cents to $14.12 after the business forms maker said second quarter net sales decreased 8.8% to $130.4 million from $143.0 million in the same quarter last year. Net earnings in the quarter decreased to $9.7 million or 37 cents per diluted share compared to $12.1 million or 47 cents per share a year ago quarter.

Equity One, Inc ((EQY)) soared 9% to $17.21 after it agreed to sell 36 shopping centers located in Atlanta, Tampa and Orlando for $473 million to a Blackstone Group LP fund.

Walgreen Co. ((WAG)) slipped 3.8% or 1.33 cents to $34.70 after the drugstore operator reported fourth quarter net sales increased 6.5% to $18 billion from $16.9 billion in the same quarter last year. Total sales in comparable stores increased 4.4% and front-end comparable drugstore sales increased 4.6% for the same period of a year ago.

Net income in the quarter surged to $792 million or 87 cents per diluted share compared to $470 million or 49 cents per share a year ago period.

LyondellBasell Industries NV ((LYB)) increased 4% to $30.15 and it said its French refinery will start talks to shut down the 105,000 barrels a day operation as it failed to find a buyer.

Western Refining ((WNR)) increased 10 cents to $14.45 and said its banks agreed to amend and restate its credit agreement and increase the commitment by $1 billion and extend maturity to September 2016.

China based Renren Inc ((RENN)) increased 7% to $5.72 after it agreed to acquire video sharing website for $80 million. The company attracts the largest visitors in China among all social networking sites.