U.S. Stocks Trade Sideways; Boeing Rises, Ford Drops

Devan Biswas
26 Oct, 2011
New York City

U.S. stocks opened higher after adjusted durable goods orders increased in September and new home sales rose after builders lowered prices. Ford Motor earnings were lower on commodities hedge losses and Boeing third quarter net rose.

[R]12:15 AM New York – U.S. stocks opened higher after adjusted durable goods orders increased in September and new home sales rose after builders lowered prices. Ford Motor earnings were lower on commodities hedge losses and Boeing third quarter net rose.[/R]

U.S. stocks rallied at the opening after durable goods orders rose more than expected and new home sales increased in September on price reductions.

Durable goods orders in September decreased 0.8% after falling 0.1% in August. The orders excluding transportation orders rose 1.7% from the revised decline of 0.4% in August, according to the Commerce Department.

Transportation orders declined 7.5%, the largest fall since April and orders for auto parts and vehicles declined 2.7%. Civilian aircraft orders bookings declined 25%.

Unfilled orders in the month increased 0.8% and inventories rose a fraction.

New Home Sales Rise 5.7%

The Commerce Department said new home sales in September increased 5.7% to a seasonally adjusted 313,000 homes. The median sale price declined 3.1% to $204,400, the lowest since October 2010.

New homes inventory was unchanged at 163,000, record low since the record keeping began in late sixties.

Monthly sales in South increased 11.2% and in West gained 9.7% but fell 4.2% in the Northeast and 12.2% in the Midwest.

Home builders broke ground at the fastest pace in 17 years but most of the projects were for apartment construction. Single family home construction in the month rose a fraction, which represent nearly 70% of all home construction.

Greece Demands 50% Debt Cut

European indexes traded higher in anticipation of final details on the Greek bailout plan.

Greek finance minister has demanded higher cut in the debt that originally agreed in July. The latest discussion between Greek finance minister Evangelos Venizelos and banks and insurers suggest that lenders will ask to take 50% cut in the loans.

To make the plan palatable to the bankers, Greece will pay €15 in cash and exchange €35 of 30-year bond that will yield 6% for every €100 of debt held.

German Lawmakers Approve Leverage

German Bundestag lower house approved the motion to leverage the rescue fund EFSF. The approval gives the mandate to Chancellor Angela Merkel to negotiate ways to leverage the rescue fund at a meeting in Brussels later today.

Lawmakers approved the vote with 503 in favour, 89 against and 4 abstaining.

Stock Movers

Ford Motor Company ((F)) declined 5.4% to $11.79 after it reported third quarter revenues increased 14% to $33.1 billion and earnings per share of 46 cents, excluding one-time items.

The automaker said North American market share increased to 16.3% from 15.9% last year in the same quarter and automotive operating profit increased by $45 million to $1.3 billion.

Commodities hedges for copper and aluminium forced Ford to take losses of $350 million. The company also said margin may fall this year to 5.7% from 6.1% last year.

The automaker produced 656,000 vehicles in North America and estimated production in the region of 660,000 in the fourth quarter.

The company also said its capital spending in the current year will be $4.6 billion, lower than its previous estimate between $5 billion and $5.5 billion.

Brinker International Inc ((EAT)) dropped 1.5% to $22.57 after operator of casual dining restaurants said revenues increased 2.1% to $668.4 million and net income increased to $23.6 million from $21.4 million.

Earnings per share increased to 28 cents from 21 cents from a year ago quarter. Comparable restaurant sales increased 1.7% Chili’s and 3.5% at Maggiano’s.

Operating margin improved to 15.8% from 15% in the quarter a year ago.

Boeing Co ((BA)) increased 4.7% to $66.69 after the plane maker said third quarter profit increased to $1.1 billion or $1.46 a share from $837 million or $1.12 a share.

Third quarter revenues increased 4% from a year ago to $17.7 billion and order backlog increased to $332 billion from $323 billion at the end of the last quarter.

The aircraft maker narrowed 2011 revenues forecast to between $68 billion and $70 billion from $68 billion from $71 billion.