Europe in Crisis Drags Down U.S. Indexes 3%

Arthi Gupta
04 Oct, 2011
New York City

The U.S. and global indexes traded lower on the European debt crisis. U.S. construction spending rebounded in August. HP acquired control of Autonomy Corporation. State Street acquired Swiss-based Complementa Investment-Controlling.

[R]9:45 AM New York – The U.S. and global indexes traded lower on the European debt crisis. U.S. construction spending rebounded in August. HP acquired control of Autonomy Corporation. State Street acquired Swiss-based Complementa Investment-Controlling.[/R]

U.S. and global indexes declined after the euro-zone finance ministers decided to put off the decision on the next loan instalment for Greece, worth €8 billion, until the troika report on the country''s progress with the fiscal targets is ready.

Market indexes plunged nearly 3% in the early trading after the European leaders delayed the release of funds for Greek and the fears of debt contagion in the region dragged world markets lower.

Federal Reserve Chairman Ben Bernanke is scheduled to appear in front of lawmakers today.

Standard & Poor''s lowered its growth forecast for Europe and said that the risk of a double-dip recession has risen due to lower business confidence and an economic slowdown in the U.S.

The ratings agency lowered its euro-zone 2012 gross domestic product growth forecast to 1.1% in 2012 compared to the previous estimate of 1.5%.

Goldman Sachs cut its global 2012 economic growth forecast to 3.5% from 4.3% and predicted recessions in Germany and France.

The Reserve Bank of Australia decided to keep its official interest rate at 4.75% and the rates have been on hold for the eleventh month in a row.

Consumer price inflation in the Organization for Economic Cooperation and Development area increased for the second straight month in August, latest data showed.

Consumer prices in the United States rose 3.8% from a year ago in August compared to the 3.6% rise in July.

U.S. Construction Spending Recovers

U.S. construction spending rebounded in August, according to a report released on Monday by the U.S. Commerce Department.

The seasonally adjusted annual rate of construction spending for August was at $799.1 billion, a 1.4% increase from revised July figures.

The revised July figures showed a slightly larger 1.4%t decline compared to the 1.3% decrease initially reported.

HP Acquires Control of Autonomy Corporation

HP acquired control of Autonomy Corporation plc. HP said 213.4 million Autonomy shareholders, representing 87.3% of its share capital, accepted HP''s offer of £25.50 a Autonomy share.

U.S. Auto Sales Up

General Motors, Ford and Chrysler reported higher U.S. vehicle sales for the month of September on Monday, helped by strong demand for pickup trucks and sport-utility vehicles. However, Japanese automaker Toyota Motor Corp. reported a 17.5% drop in U.S. sales.

GM said its U.S. vehicle sales for September rose 19.6% to 207,145 units from 173,155 units in the same month last year.

Ford sold 175,199 vehicles in the U.S. in September, an increase of 8.9% from 160.873 vehicles sold in the same month last year.

Chrysler said its U.S. sales rose 27% to 127,334 vehicles in September from 100,077 vehicles last year.

Toyota Motor Corp. said its U.S. vehicle sales for September fell 17.5% to 121,451 units from 147,162 units in the same month a year earlier.

LKQ Buys Euro Car Parts

LKQ Corporation announced that it has acquired Euro Car Parts, the largest distributor of automotive aftermarket parts in the United Kingdom for £225 million or $347 million, with potential payments of up to £55 million pounds if Euro Car Parts meets certain growth targets in 2012 and 2013.

State Street Acquires Complementa Investment-Controlling

State Street Corp., the financial services provider acquired Swiss-based Complementa Investment-Controlling AG, a privately-held investment performance measurement and analytics firm. Further financial details of the transaction were not disclosed.

Earnings Review

Diamond Foods, Inc. ((DMND)), the packaged food company estimates fiscal year 2012 non-GAAP earnings of $3.05 to $3.15 per share and full-year sales are still forecast in the range of $1.85 billion to $1.95 billion.

Sonic Corporation ((SONC)), an operator of drive-in restaurants, said that fourth quarter same-store sales for the system declined 0.5%, while same-store sales for company drive-ins rose about 0.4%.