U.S. Weekly Jobless Claims Decline; China Export Growth Slows

Nichole Harper
10 Nov, 2011
New York City

U.S. stocks gained on positive earnings and a sustained rise in Chinese trade. Market sentiment was bolstered at the opening after Italy completed the sale of

[R]12:20 PM New York – U.S. stocks gained on positive earnings and a sustained rise in Chinese trade. Market sentiment was bolstered at the opening after Italy completed the sale of €5 billion of bonds and the parliament is set to vote on economic bill this weekend. Cisco Systems results were ahead of expectations.[/R]

U.S. indexes opened higher a day after plunging more than 3%.

The international news from China and euro zone dominated trading and positive earnings from Cisco Systems also contributed to market sentiment. Weekly jobless claims declined to the lowest level in last seven months.

Cisco Systems gained more than 5% after it reported fiscal first quarter revenues and earnings higher than expected. The company also offered upbeat outlook for the rest of the year.

Market sentiment was also bolstered after the weekly unemployment claims last week declined 10,000 to 390,000, the lowest since April.

Italian Bond Yields Rise

European markets closed higher after Italian bond auction drew stronger than expected response and Greece appears to resolve its political differences. Italy is also expected to vote on the new economic bill that will cut cost as early as this weekend.

The euro rose in the early trading after Italy successfully completed the sale of €5 billion Treasury bonds that mature in 1 year at a yield of 6.09%. The auction drew enough demand and met the government target.

Yields on 10-year Italian bonds increased to 7% before falling back to 6.99% and the spread with the German bunds increased to 5.2%. German bunds declined 5 ticks to 1.75%.

The interest rate on the auction was the highest since September 1997 and was sharply higher compared to the previous auction on October 3 that yielded 3.57%.

Greece Selects New Prime Minister

Lucas Papademos, former vice president of the European Central Bank will head the new crisis coalition government according to the Greek president’s office.

Papademos reaffirmed the commitment to euro and euro zone and said new government’s responsibility is to implementing the EU bailout conditions and austerity measures and set the early elections. The elections are expected to be set as early as February next year.

China’s Exports Growth Slows

China’s exports rose at 15.9% to $157.5 billion in October from a year ago and surplus in the month was $17 billion, according to customs bureau. Imports increased 28.7%.

Export growth declined from 17.1% in the previous month and imports accelerated from 20.7% rate.

Export growth to European Union declined to 7.5% from a year ago and shipments to Italy declined 18% in the month. Imports from the region increased 28.2%.

Surplus in the month widened from $14.5 billion from $17 billion and exports growth in the European Union declined from 9.8% in the previous month. However, exports to the U.S. increased 13.9%, up from 11.6% in September.

Stock Movers

Advance Auto Parts, Inc. ((AAP)) gained 3.5% or $2.37 to $68.74 after the automotive parts retailer reported third quarter total sales increased 4.6% to $1.46 billion from $1.41 billion in the year-ago quarter.

Net income in the quarter surged to $105.5 million or $1.41 per diluted share compared to $87.6 million or $1.03 per share in the year ago period.

The auto parts retailer also lifted full-year outlook.

Cisco Systems, Inc. ((CSCO)) rose 5.6% or 99 cents to $18.60 after the communication equipment maker reported first quarter net revenue increased 4.7% to $11.26 billion from $10.75 billion in the year-ago quarter.

Net income in the quarter fell 7.9% to $1.8 billion or 33 cents per diluted share compared to $1.9 billion or 34 cents per share in the year ago.

Green Mountain Coffee Roasters, Inc. ((GMCR)) tumbled 38.3% or $25.68 to $41.34 after the specialty coffee maker reported fourth quarter total net sales surged 91% to $711.9 million from $373.1 million in the year-ago quarter.

Stocks tumbled after quarterly sales were lower than expected and company has faced a barrage of criticism in the last six from hedge funds investors.

Net income in the quarter soared 179% to $75.4 million or 47 cents per diluted share compared to $27.0 million or 20 cents per share in the year ago

Viacom Inc. ((VIA)) rose 0.7% or 37 cents to $49.65 after the entertainment content company reported fourth quarter revenue increased 22% to $4.05 billion from $3.33 billion in the year-ago quarter.

Net earnings in the quarter surged to $576 million or $1.00 per diluted share compared to $189 million or $0.31 per share in the year ago.

The media conglomerate also boosted its stock repurchase program to $10 billion from $4 billion.