U.S. Indexes Ease; Mortgage Refi Applications Rebound

Arthi Gupta
07 Dec, 2011
New York City

The U.S. indexes turned lower ahead of the two-day euro area summit starting tomorrow in Brussels. U.S. mortgage applications rebounded. Citigroup announced to cut 4,500 jobs worldwide.

[R]10:15 AM New York – The U.S. indexes turned lower ahead of the two-day euro area summit starting tomorrow in Brussels. U.S. mortgage applications rebounded. Citigroup announced to cut 4,500 jobs worldwide.[/R]

U.S. indexes turned lower in a cautious trading ahead of the upcoming EU summit in Brussels tomorrow and hoped that the region’s leaders will offer concrete measures.

Euro-zone leaders are preparing to use two independent bailout funds with a larger support from the International Monetary Fund, according to sources close to the European Commission. The leaders are also looking for ways to accelerate the purchase of sovereign bonds by the European Central Bank.

IMF is expected to contribute as much as $50 billion in the second bailout fund, according to the sources in Washington, D.C.

Australia's gross domestic product expanded a seasonally adjusted 1% in the third quarter following the upwardly revised 1.4% gain in the second quarter, the Australian Bureau of Statistics said on Wednesday.

U.S. Mortgage Applications Soar

The Mortgage Bankers Association's seasonally adjusted index of mortgage application activity in the U.S. rose 12.8% in the week ending December 2 after declining more than 11% the week before.

Refinancing applications rose 15.3%, while the index measuring purchase applications gained 8.3%.

Fixed 30-year mortgage rates fell to 4.18% from 4.21% the week before.

S&P Downgrades North American Banks

Standard & Poor's reviewed its ratings on 31 North American regional banks and downgraded five more banks, including U.S. Bancorp, Northern Trust Corp., PNC Financial Services Group, BB&T Corp. and Commerce Bancshares Inc. and said outlooks for banks are “stable.”

Citigroup to Slash 4,500 Jobs

Citigroup announced in an analyst conference that it plans to cut 4,500 jobs or about 1.6% of its workforce over the next few quarters and take a charge of $400 million in its fourth quarter.

Icahn Makes Tender Offer for Commercial Metals

Icahn Enterprises Holdings LP, a subsidiary of Icahn Enterprises LP announced a direct buyout offer to the shareholders of Commercial Metals Co. at $15 per share. CMC's board rejected the $1.73 billion proposal on Monday, terming it undervalued and opportunistic.

CorpBanca to Acquire Stake in Banco Santander Colombia

Chile-based CorpBanca agreed to acquire 95% of Banco Santander Colombia SA from its parent Banco Santander SA for $1.16 billion.

The deal will establish the first Chilean bank with overseas branch network.

India Puts On Hold FDI in Retail Sector

The Indian government announced that it was putting on hold its recent decision to open up the country's retail sector to foreign direct investments by allowing global supermarket chains to invest up to 51% in multi-brand retail stores, following stiff opposition lawmakers and regional trade associations.

Earnings Review

Casey's General Stores, Inc. ((CASY)), the operator of convenience stores reported second quarter total revenues grew 32% to $1.78 billion from $1.35 billion in the comparable quarter last year. Net earnings in the quarter improved 73.3% to $37.6 million or 98 cents per diluted share compared to net earnings of $21.7 million or 51 cents per share in the prior-year quarter.

Dollarama Inc. ((DOL.TO)), the dollar store operator said third quarter sales increased 12.5% to C$400.3 million from C$355.7 million in the same quarter a year earlier on comparable store sales growth of 5.1%.

Net earnings in the quarter advanced 33.5% to C$41.8 million or C$0.55 per share compared to net earnings of C$31.3 million or C$0.42 per share reported a year ago.

SAIC, Inc. ((SAI)), the government contractor said third quarter revenues 0.4% fell to $2.811 billion from $2.821 billion last year. Net loss in the quarter was $89 million or 27 cents per diluted share compared to a net income of $173 million or 46 cents per share last year.

The Men's Wearhouse, Inc. ((MW)), the men's apparel retailer said third quarter total net sales rose 6.3% to $584.60 million from $550.10 million in the same quarter last year. Net income in the quarter surged 58% to $39.9 million or 77 cents per diluted share compared to net income of $25.3 million or 47 cents per share for the year-ago quarter.

Martha Stewart Living Omnimedia soared more than 33% after the retailer J.C. Penney said it will acquire a stake in the company for $38.5 million.

Monsanto Co. ((MON)) declined 1.5% to $71.25 after the agriculture chemical maker lifted first quarter earnings per share outlook.

Talbots ((TLB)) soared 63% to $2.53 after it received a buyout offer from a private equity firm Sycamore Partners.