Confidence Data Lift U.S. Stocks; European Leaders Seek IMF, ECB Help

Bikram Pandey
29 Nov, 2011
New York City

Market sentiment was positive after consumer confidence improved in November. The second data economic data after strong retail sales during the holiday weekend lifted spirits on the Wall Street. European leaders struggled to arrange more financing for the rescue fund.

[R]5:10 PM New York – Market sentiment was positive after consumer confidence improved in November. The second data economic data after strong retail sales during the holiday weekend lifted spirits on the Wall Street. European leaders struggled to arrange more financing for the rescue fund.[/R]

The U.S. indexes gained after the latest consumer confidence data and on optimism that European leaders may find a solution to provide financing to struggling nations.

The consumer confidence index surged to 56 from a revised 40.9 in October. The second economic data in as many days indicated vibrant consumers in the U.S. and appear to be not worried about the growing problems in Europe.

Finance ministers in Europe struggled to find ways to leverage the rescue fund to €1 trillion and Luxembourg Finance Minister Luc Frieden said the rescue fund alone will not be enough to solve provide financing to struggling nations in the region. The rescue fund will need help from the IMF and from the European Central Bank.

Fitch affirmed its highest rating to the U.S. debt and the decision is questioned by many investors as the U.S. struggles to contain $15 trillion of debt, the largest in the world and annual budget deficit of more than $1 trillion.

In corporate news, AMR Corp., the parent of American Airlines filed voluntary petitions for Chapter 11 for bankruptcy. Copart’s fourth quarter net increased 8.8% to $41.1 million. Seagate forecasted higher sales for several quarters and Tiffany’s third quarter net surged 63% to $89.7 million.

European indexes edged higher ahead of a meeting of the euro area finance ministers today. Banking stocks declined after Moody''s placed on review for downgrade 87 European banks. Italy paid record yields in an auction of €7.5 billion of bonds.

The O.E.C.D. area annual inflation eased, French jobless claims increased to record 4.9%, and retail sales in Spain decreased in October. Euro area economic sentiment declined and Belgian inflation rose in November.

Greece suffered another blow as finance ministers in the region debated the fate of latest tranche of bailout.

Greek central bank said banks saw an outflow of €13 billion in two months to October. Greek central banks’ deposits totaled €183.2 billion at the end of September, according to George Provopoulos, the head of central bank.

Provoupoulos also said economic contraction in the current year is expected to be between 5.8% and 6%.

The UK indexes dropped after the growth forecast for the UK economy was lowered. The UK''s mortgage approvals for home purchases rose in October and home price growth accelerated in November.

Stocks in Japan closed higher for the second day in a row tracking the strength in international markets. The strength in yen continues to affect the jobs climate. October unemployment rate increased to 4.5% as more people join labor force. Shippers and steelmakers rebound but trade near the lows in the decade.

Australian stocks gained for the second day in a row and investors focused on the mid-year budget. The government hopes that the estimated deficit of $37 billion will turn to a surplus in the next year.

Commodities, Bonds and Currencies

U.S. bonds yield on 10-year U.S. bond closed up at 2.01% and 30-year bond increased to 2.97%.

The U.S. dollar rose 0.1% at $1.33 to one euro and closed lower against the Japanese yen to 77.88.

Immediate delivery futures of Texas crude oil increased $1.64 to $99.85 a barrel and futures of natural gas increased 10 cents to $3.63 per mbtu and gasoline prices increased 2.06 cents to 253.85 cents a gallon.

In metals trading, copper increased 3.9 cents to $3.41 per pound, gold added $5.80 to $1,721.70 per ounce and silver fell $0.24 to $32.00.