S&P 500 Index Up 1%, Oil Falls 2.5%; Market Awaits Europe Details

Bikram Pandey
26 Oct, 2011
New York City

U.S. indexes gained more than 1% after better than expected durable goods orders and new home sales data. European leaders are still divided in how to restructure Greek debt and how to leverage the rescue fund. Italy struggles to make promises to cut its large deficit. Oil fell and metals gained.

[R]4:30 PM New York – U.S. indexes gained more than 1% after better than expected durable goods orders and new home sales data. European leaders are still divided in how to restructure Greek debt and how to leverage the rescue fund. Italy struggles to make promises to cut its large deficit. Oil complex declined but metals gained.[/R]

U.S. stocks traded higher after adjusted durable goods orders increased in September and new home sales rose after builders lowered prices. Investors were also heartened after German lawmakers approved the plan to leverage the rescue fund in Europe to $1.4 trillion.

Oil complex commodities closed lower with crude oil down 2.5%. Metals rebounded and gold added 1.2% and copper gained 2.6%.

In corporate earnings, Ford Motor earnings declined on commodities hedge losses. The auto maker increased market share in the quarter as Japanese makers struggled with the delivery. The company also guided weak outlook for the current year.

Boeing Co reported higher sales and earnings and assured it is on track to increase production of its latest large plane 787 and freighter plane for the military.

European markets closed fractionally higher ahead of the details of the bank rescue plans as leaders struggle to resolve Greek bond bailout conditions and leverage rescue fund. Investors focused on the details of the Greek bond restructuring.

The EU ministers are close to an agreement to ask banks to accept 50% reduction in its €206 billion debt and also ask banks to raise as much as €108 billion from investors.

The European leaders are also looking to raise capital from China, Japan and the Middle East to increase its rescue fund size from the current €440 billion.

Stocks in Japan declined as investors focused on the domestic earnings and rising flood waters in Bangkok. European leaders later in the day are expected to announce details of the bank recap plan. Hitachi Ltd reported earnings larger five times estimated.

Australian stocks gained a fraction after inflation in the September quarter edged lower on weaker food, beverage, drugs and electronics prices. The dollar fell on the hopes of a rate cut at the next meeting in December.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond closed up to 2.21% and 30-year bond rose to 3.22%.

The U.S. dollar decreased to $1.391 to one euro and closed lower against the Japanese yen to 76.24 yen.

Immediate delivery futures of Texas crude oil decreased $2.37 to $90.80 a barrel and futures of natural gas decreased 0.06 cents to $3.59 per mbtu and gasoline prices fell 3.88 cents to 266.10 cents a gallon.

In metals trading, copper increased 9.15 cents to $3.51 per pound, gold added $21.20 to $1,721.60 per ounce and silver rose $0.33 to $33.38.