U.S. Consumer Spending Rises 0.1%, Durable Orders Climb 3.8%

Devan Biswas
23 Dec, 2011
New York City

U.S. stocks opened higher and extended gains for the fourth day and consumer spending rose and core business spending declined. The House is set to extend payroll cut by two more months. European markets traded higher after Italian lawmakers approved austerity package of

[R]12:25 PM New York – U.S. stocks opened higher and extended gains for the fourth day and consumer spending rose and core business spending declined. The House is set to extend payroll cut by two more months. European markets traded higher after Italian lawmakers approved austerity package of €33 billion.[/R]

U.S. stocks opened higher and extended gains for the fourth day after consumer confidence was ahead of expectations and following the gains in European markets. In addition, latest data on consumer spending and business spending also contributed to the market momentum.

Consumer spending rose 0.1% in November and income increased 0.1% according to the latest data released by the Commerce Department today. The monthly spending increase matched the rise in October but spending and income increased less than expected.

Spending on durable goods increased 0.8% and non-durable goods declined 0.3% in the month and spending on services that include rent and medical services increased 0.1%.

In a separate report the department said durable goods orders increased 3.8% in November. The monthly orders for October were revised to flat from the previous estimate of the decline.

Durable goods orders excluding defense capital goods and volatile aircraft orders declined 1.2% in November after declining 0.9% in October according to the Commerce Department. Orders excluding transportation rose 0.3%.

The dollar edged lower on the media speculation that the Federal Reserve will hold rates near zero till the end of 2014.

U.S. lawmakers are set to approve payroll tax cut extension by two months.

The House and Senate lawmakers are set to approve the extension this morning and President Obama is expected to sign it later today. Both Democrats and Republicans are at odds in how to pay for the tax cut and have not finalized how to pay for the deal.

Gogo IPO to Raise $100 Million

Gogo Inc, an in-flight Internet connectivity provider, filed with the Securities and Exchange Commission today to raise as much as $100 million in an initial public offering.

The company provides Internet services to Delta Air, U.S. Airways and Bombardier and expects to list its stock under the symbol ‘GOGO’.

The initial public offering is managed by JP Morgan Chase, UBS and Morgan Stanley.

Yanzhou Coal Offers $2.2 Billion for Australian Coal Miner

Gloucester Coal Limited soared 22% after China based Yanzhou Coal issued a merger proposal of A$3.20 a share in cash and stock valued as much as A$6.96 in a new company.

The complex merger values the company as much as A$2.2 billion and will provide cash to shareholders in two stages. After the completion of the merger agreement in six months shareholders will receive A$2.64 of cash held on the balance sheet and a special dividend of 56 cents a share in the next six months.

The merged entity of coal properties in China and in Australia will have 77% shares controlled by Yanzhou Coal and 23% controlled by existing Gloucester shareholders.

European Markets Rise After Italy Approves Austerity Plan

Stocks in European region traded higher and the benchmark indexes in Germany and France gained more than 1% after Italy’s lower house passed austerity measures of €33 billion.

Italian Chamber of Deputies approved the austerity measures that will increase retirement age for men to 66 years and for women to 62 years by 2012. The final approval on the measures also included reinstatement of a property tax on first homes and more taxes for several services.

The one month old technocratic government led by Mario Monti also sought and won confidence vote to avoid changes proposed by the large opposition party Northern League.

DAX 30 index increased 1.2% or 19.01 to 5,871.19 and CAC 40 index gained 36.44 or 1.2% to 3,108.24. The benchmark index in Milan rose 0.5%, in Madrid added 1.1%, in Stockholm advanced 0.7% and Zurich increased 0.7%.

Stock Movers

Fresenius Medical Care AG & Co. KGaA declined 15 cents to €51.44 after the dialysis services provider said it purchased eight privately controlled dialysis clinics in Ecuador and its local partner for Latin America and the two acquisitions will add $24.5 million in revenues.

Deutsche Bahn awarded an order for 90 new electric rail carriages for $648 million to Toronto based Bombardier. The carriages will be used by the railroad company for services in Frankfurt area.

Bombardier also won $248 million order to provide light rail vehicles and trams to Frankfurt transportation department.