U.S. Indexes Rebound, Blue Coat Systems in $1.3 Billion Deal

Nichole Harper
09 Dec, 2011
New York City

Market indexes in New York rebounded after an agreement among the euro zone leaders and a rise in consumer sentiment. The positive sentiment lifted stocks of banks and industrials and the dollar held firm. Pall Corp soared on earnings and Blue Coat Systems agreed to go private for $1.3 billion.

[R]1:30 PM New York – Market indexes in New York rebounded after an agreement among the euro zone leaders and a rise in consumer sentiment. The positive sentiment lifted stocks of banks and industrials and the dollar held firm. Pall Corp soared on earnings and Blue Coat Systems agreed to go private for $1.3 billion.[/R]

Stocks in New York traded higher after the euro zone leaders agreed on a fiscal compact and consumer confidence increased in the U.S.

The preliminary confidence index of consumer sentiment increased to 67.7 from 64.1 at the end of November according to the data tracked by Thomson/Reuters and University of Michigan.

The consumer sentiment was bolstered after the gasoline price at pumps dropped to $3.27 a gallon, according to the largest automobile association. The latest decline in unemployment rate and a rise in stock market index also added to the improvement.

U.S. trade deficit shrank 1.6% to $43.5 billion from $44.2 billion in September according to the latest data from the Commerce Department.

U.S. lawmakers and President Barack Obama are haggling to put final touches to the year-end tax and spending plan that is expected to extend pay roll tax holiday and jobless benefits.

Euro Zone Leaders Agree to Limit Debts and Spending

The euro zone leaders agreed to a fiscal compact that will limit the budget deficits and debts a measure that was vetoed by the UK and three other nations said they will review details.

The newly agreed measures were acceptable to most nations in the European Union except Britain vetoed the proposal. Hungary was the lone supporter of the veto and two other nations Czech Republic and Sweden said they will consult their parliaments and parties.

The intergovernmental pact among the euro zone is expected to be approved by at least 23 nations as early March and by three more nations by June. UK is the lone standout against the deal.

The euro traded lower and then rebounded against the dollar and the yen in trading. One euro fetched $1.335 and British pound strengthened to $1.566 and the dollar decreased to 92.35 Swiss franc cents.

Comments from the European Central Bank President Mario Draghi did not provide any support to the sovereign bond markets. While Draghi welcomed the fiscal and financial integration he stopped short of increasing the size of bond purchases and officials confirmed that the weekly purchase program of €20 billion will stay for now.

The yield on 10-year bonds of Italian government increased 8 basis points to 6.51% and the yield on Spanish bonds added 9 basis points to 5.84%.

Herman Van Rompuy, president of the European Council said leaders agreed to provide €200 billion in additional resources to the IMF for emergency lending to the European nations.

The euro zone will provide €150 billion and non-euro zone member nations Sweden and Denmark agreed to additional funding of €50 billion for the IMF.

However, the summit of the leaders postponed till March to increase the size of its bailout fund of €440 billion that most economists believe needs to be leveraged to €1 trillion.

Asian Markets Cautious

The Cabinet Office of Japan today revised lower the economic growth in fiscal second quarter ending in September to 5.6% from the previous estimate of 6%. Quarterly growth estimate compared to previous quarter was lowered to 1.4% from the previous estimate of 1.5%.

The latest data from the government’s statistics bureau in China indicated industrial output growth declined to 12.4% from a year ago in November and inflation fell to 4.2%.

The central bank in South Korea lowered its 2012 growth outlook to 3.7% from the previous estimate of 4.6%.

Stock Movers

Blue Coat Systems Inc ((BCSI)) soared 44% to $25.18 after the Internet security software developer agreed to be acquired by Thoma Bravo LLC for $25.81 a share or $1.3 billion.

The deal team includes Ontario Teachers’ Pension Plan and the purchase price is 62% to its 60-day average and still 20% lower its high in January.

Flow International Corp ((FLOW)) surged 41% or $1 to $3.41 after the high pressure water jets maker said fiscal quarterly profit surged to 6 cents ahead of market consensus of less than 2 cents a share.

Pall Corp soared 9.4% to $57.41 after the maker of advanced filters reported fiscal first quarter adjusted earnings of 74 cents a share and revenues increased 16.5%.

Texas Instruments Inc ((TXN)) declined 1% or 29 cents to $29.63 after the second largest chip maker offered fourth quarter revenues estimate between $3.19 billion and $3.33 billion.