Market Updates
U.S. Stocks Struggle; Boeing Wins Largest Order from Indonesia
Arthi Gupta
18 Nov, 2011
New York City
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U.S. stocks edged higher as bond yields in Europe declined a fraction. U.S. debt cutting commission members harden their position as deadline looms to cut expenditures. Boeing secured $21.7 billion worth order from Indonesia-based Lion Air for 230 737 aircraft.
[R]9:45 AM New York – U.S. stocks edged higher as bond yields in Europe declined a fraction. U.S. debt cutting commission members harden their position as deadline looms to cut expenditures. Boeing secured $21.7 billion worth order from Indonesia-based Lion Air for 230 737 aircraft.[/R]
U.S. indexes edged higher in early trading after yields on the Italian and Spanish governments bonds eased.
However, debt stress persisted and the French bond yields edged higher as the contagion reach to the core of the euro zone.
Spanish 10-year bonds fell to 6.71%, Italian yields moderated to 6.63% and French 10-year bonds inched up to 3.53% yield.
The European sovereign bond yields edged lower on the speculation that the European Central Bank will lend money to the International Monetary Fund to lend to the nations of the euro zone.
Sources in the ECB in Brussels, Belgium rejected the speculation and said such a move will violate the charter of the central bank.
European indexes extended losses on fears of a debt contagion spreading to the larger euro area nations. Spain joined France and urged the ECB to lend to struggling nations in the euro zone.
Spanish Prime Minister Jose Luis Rodriguez Zapatero made a direct demand on the ECB and said on Thursday that “we transferred power” to the central bank so that “it defends the common policy and its countries.”
Investors are increasingly factoring the role of the ECB in solving the current deadlock in the financial markets.
Rising yields in the bonds markets is making difficult for Spain, Greece and Italy to raise funds to fill budgetary holes or rollover debts, unless the central bank participates in supporting bonds of these nations.
Monti Wins Senate Confidence Vote
Italy''s new technocrat Prime Minister Mario Monti won a vote of confidence in the Senate, in a 281-to-25 vote on Thursday. The Northern League, however, voted against him.
The Monti government faces another confidence vote in the lower house of parliament, or the Chamber of Deputies on Friday.
In the last few days, Italy''s borrowing costs has risen above 7%, widely perceived as unsustainable.
The International Monetary Fund said that it will release the next tranche of the bailout fund due to Greece only if broad political support for the measures under Greece''s fiscal program is assured.
Greek opposition party leader Antonis Samaras has opposed to offering a written guarantee that Greece will implement the austerity measures and also work towards lowering its total debt regardless of who wins the next government.
The letter was demanded last week by the European Central Bank.
UBS Outlines Future Plans
UBS AG said it targets to reduce the current Sfr300 billion Basel 3 risk-weighted assets in the investment bank by about Sfr145 billion, or almost 50% and also, plans to eliminate around 2,000 jobs at the investment bank by the end of 2016.
Boeing Secures Indonesian Order
Boeing Co. said that Indonesia''s largest private airline Lion Air has committed to order 230 Boeing 737 aircraft, valued at $21.7 billion at list prices.
The deal when finalized will be the largest commercial airplane order ever in Boeing''s history in terms of dollar volume and total number of aircraft.
Lion Air will also include purchase rights for an additional 150 airplanes valued at more than $14 billion if exercised at list prices.
Earnings Review
H.J. Heinz Company ((HNZ)), the processed food maker reported third quarter sales grew 8.3% to $2.83 billion from $2.61 billion in the same quarter last year. Net income in the quarter fell 5.7% to $237.01 million or 73 cents per diluted share compared to net income of $251.44 million or 78 cents per share in the prior-year quarter.
Intuit Inc. ((INTU)), the personal financial management software provider reported first quarter revenues grew 12% to $594 million from $532 million in the year-ago quarter. Net loss in the quarter narrowed to $64 million or 21 cents per diluted share compared with a loss of $70 million or 22 cents per share in the year-ago quarter.
salesforce.com, Inc. ((CRM)), the online services provider said third quarter sales soared 36% to $584 million, from $429 million a year earlier. Net loss in the quarter was $3.76 million or 3 cents per diluted share compared with a profit of $21 million or 15 cents per share a year earlier.
The Gap Inc. ((GPS)), the apparel retailer said third quarter net sales declined 2% to $3.59 billion from $3.65 billion in the same quarter last year. Net income in the quarter slumped 36% to $193 million or 38 cents per diluted share compared to net income of $303 million or 48 cents per share for the year-ago quarter.
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