U.S. Stocks Sideways; Berlusconi Loses Key Vote

Nichole Harper
08 Nov, 2011
New York City

U.S. stocks traded sideways and commodities rose after positive earnings. McDonald

[R]11:50 AM New York – U.S. stocks traded sideways and commodities gained after positive domestic earnings. McDonald’s said U.S. comparable sales in October increased 5.2%. General Dynamics agreed to acquire Force Protection for $360 million. Italian turmoil deepened the political crisis in Europe after Berlusconi lost a key vote.[/R]

U.S. stocks traded sideways and commodities gained as investors focused on domestic earnings and deemed valuations are cheap on a historical level.

Turmoil in the euro zone continued to distract investors and the dollar strengthened after Italian Prime Minister Silvio Berlusconi lost a key vote in the parliament.

Greece is expected to have a new prime minister by the end of the day that will lead a coalition government before the election as early as February next year.

In the late evening state run NET TV said Lucas Papademos, former vice president of the European Central Bank will be the next prime minister of Greece. The state controlled network did not say where it got the information.

Yields on 10-year Italian bonds increased to 6.74% before falling back to 6.65% and the spread with the German bunds increased to 4.9%.

The bond market yield have risen sharply in the last three months as the shaky governing coalition lose members in Italy and neither dominant party wants to take on responsibility to implement tough austerity measures demanded by the international lenders.

German bunds declined 35 ticks to 1.81% after seasonally adjusted exports rose in September 0.9%.

In the late evening voting in the Italian parliament, Berlusconi controlled government lost a key vote to pass a budget measure for the second time. In a 321-to-308 vote the government coalition lost and Prime Minister Berlusconi will have to decide either to resign or seek a confidence vote as early as this week.

Just an hour ahead of the vote, Umberto Bossi, the leader of the Northern League and a key all in the center-right coalition publicly asked Prime Minister Silvio Berlusconi to resign for the good of the nation.

Stock Movers

General Dynamics Corporation ((GD)) fell 0.1% or 9 cents to $64.11 after the aerospace and defense products maker agreed to acquire Force Protection, Inc. ((FRPT)) for a price of $5.52 per share or for approximately $360 million.

International Flavors & Fragrances Inc. ((IFF)) dropped 8.7% or $5.35 to $55.96 after the flavor and fragrance products maker reported third quarter net sales rose 6% to $714 million from $674 million in the year-ago quarter.

Net income in the quarter increased 7% to $82.2 million or $1.00 per diluted share compared to $77 million or $0.95 per share in the year ago quarter.

McDonald''s Corporation ((MCD)) fell 0.2% or 24 cents $94.38 after the restaurants operator said comparable sales growth of 5.5% in October.

In the U.S., comparable sales rose 5.2%, Europe posted growth of 4.8% and Asia/Pacific, Middle East and Africa increased 6.1%.

Sotheby’s ((BID)) slumped 7.1% or $2.45 to $31.99 after the auctioneer company reported third quarter total revenues fell 4% to $58.2 million from $73.1 million in the year-ago quarter.

Net loss in the quarter widened to $29.7 million or 44 cents per diluted share compared to $19.4 million or 29 cents per share in the year ago quarter.

France based, Societe Generale SA soared 15% in Paris trading after the bank said third quarter net declined 31% to €662 million from €896 million a year ago. The earnings declined after the bank decided to write down the Greek sovereign bonds by €333 million.