Wall Street in 3-day Rally; European Markets Advance 1%

Bikram Pandey
22 Dec, 2011
New York City

Stocks in New York traded higher for the third day in a row after weekly jobless claims declined and added to a string of positive economic news. Third quarter estimate was revised lower to 1.8%. Market indexes in Europe gained after central bank offered more liquidity.

[R]4:25 PM New York – Stocks in New York traded higher for the third day in a row after weekly jobless claims declined and added to a string of positive economic news. Third quarter estimate was revised lower to 1.8%. Market indexes in Europe gained after central bank offered more liquidity and in Asia markets closed lower.[/R]

The U.S. indexes edged higher after weekly jobless claims fell to 364,000. The weekly initial claims were lowest since April 2008 and lifted hopes that the jobs market may be in a slow recovery.

But, economists warned that much of the decline in jobless claims is linked to people falling off the benefits and now living on savings or sharing with family members. However, the decline in the headline number lifted broader market indexes.

In addition, the third estimate of the U.S. gross domestic product was revised lower to 1.8% from the second estimate of 2% and first estimate of 2.5%. Weak exports and rising imports and higher commodities prices subtracted from the growth.

In corporate news, Akamai Technologies soared after it agreed to acquire cloud and Internet infrastructure provider for $268 million. Herman Miller, the furniture maker declined 9% after it estimated weaker third quarter sales. Bank of America agreed to pay $335 million to settle charges stemming from the alleged discriminatory lending practices at its subprime unit Countrywide.

WCA Waste agreed to a merger deal from a fund managed by Australia based Macquarie for $526 million. Mead Johnson dropped 8% after Wal-Mart pulled its powder milk and baby food formula from its 3,000 stores.

European markets advanced and yields rebounded a day after the European Central Bank offered half a trillion euros at cheap rate of 1%. Italian and Spanish bonds yields increased after falling for eight days in a row as banks used nearly 70% of the new cash to rollover their debts.

TeliaSonera raised stake in Kazakhstan based mobile carrier Kcell for $1.5 billion.

Lufthansa agreed to sell its stake in the UK based British Midland International or bmi for £172.5 million to the parent of British Air and Iberia. The purchase of loss making airline will increase British Airways’ share of slots at Heathrow to 53% and may face antitrust scrutiny from the European Commission regulators.

Virgin Atlantic, another contender for bmi and has a code-sharing agreement for 25% of its passenger feed to Heathrow, asked competition authority to block the deal.

Italian and Hungarian retail sales rose in October and unemployment in Poland increased to 12.1% in November. The Dutch gross domestic product fell in the third quarter by 0.2%.

The UK indexes traded higher after gross domestic product expanded 0.6% and the volatile current account deficit widened in the third quarter. Ireland's retail sales increased in November.

Stocks in Tokyo traded lower as the benchmark Nikkei index declined for the first time in three days. Japan’s largest automaker Toyota said global production in November decreased 3.4% from a year ago to 634,464 units.

Australian stocks edged lower after a weakness in resource stocks and retailers. Kathmandu, the outdoor apparel retailer dropped 23% after it said same store sales in the last five weeks are below a year ago period.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond decreased to 1.95% and 30-year bond inched down to 2.98%.

The U.S. dollar edged up 0.1% to $1.305 to one euro and traded higher against the Japanese yen to 78.14.

Immediate delivery futures of Texas crude oil increased $0.86 to $99.53 a barrel and futures of natural gas fell 1 cent to $3.15 per mbtu and gasoline price added 1.4 cents to 263.43 cents a gallon.

In metals trading, copper increased 2.5 cents to $3.42 per pound, gold decreased $7.60 to $1,606.50 per ounce and silver decreased $0.16 to $29.08.