Market Updates
U.S. Stock Futures Flat; Sears-Kmart to Close 100-120 Stores
Arthi Gupta
27 Dec, 2011
New York City
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The U.S. indexes traded lower after home prices declined 3.4% and consumer confidence rose to an eight month high. Italian bond jumped above 7% ahead of last debt auction this Friday. Sony agreed to sell its 50% stake in LCD joint venture to Samsung for $940 million.
[R]11:00 AM New York – The U.S. indexes traded lower after home prices declined 3.4% and consumer confidence rose to an eight month high. Italian bond jumped above 7% ahead of last debt auction this Friday. Sony agreed to sell its 50% stake in LCD joint venture to Samsung for $940 million.[/R]
U.S. indexes declined after home prices fell for the sixth month in a row and consumer confidence index surged. Trading volume is expected to be light as most traders stay away ahead of the New Year.
Metropolitan home prices declined for the sixth month in a row in October according to the latest S&P/Case Shiller index. The controversial index that tracks home prices in the largest 20 metropolitan areas declined 1.2% from September and fell 3.4% from a year ago month.
Last week, National Association of Realtors said U.S. home sales increased 4% in November from October to an annual rate of 4.42 million units.
U.S. consumer confidence index increased to 64.5 in December from the revised 55.2 in November. The index increased to an eight month high on the rising expectations in the jobs market.
The European indexes gained after a string of U.S. positive economic data last week and on the growing expectations that the latest central bank tender offer will help in dampening sovereign bonds yields.
The European Central Bank allotted €144.76 billion to banks for one week at a fixed rate of 1% and 171 banks were looking for the one week loan. The loan period is between December 28 and January 4.
Italian 10-year bond yields increased and traded at 7.08% in thin trading ahead of €8.5 billion debt auction on December 29.
Asian markets closed lower in light trading. The Bank of Japan in the minutes of its November meeting stated domestic economic growth may be impacted due to the sovereign debt crisis.
The troubled nuclear utility operator Tepco may face temporary nationalization to receive $8.8 billion in aid to pay compensation to the disaster victims.
Sony to Sell LCD JV Stake
Sony Corp., the Japanese consumer electronics giant agreed to sell its 50% stake in liquid-crystal displays panel manufacturing joint venture, S-LCD Corp, to South Korean conglomerate Samsung Electronics Co. Ltd. for about 1.08 trillion won, or nearly $940 million.
Raytheon Wins Contract
Raytheon Co. won a $122.5 million contract from the U.S. Missile Defense Agency for continued development of Standard Missile-3 Block IA and IB programs.
Earnings Review
Cal-Maine Foods, Inc. ((CALM)), the shell eggs producer reported second quarter net sales rose 24% to $290.37 million from $234.52 million in the same period last year. Net income in the quarter surged 53% to $23.26 million or 97 cents per diluted share compared to net income of $15.19 million or 63 cents per share in the year-ago period.
Sears Holdings Corporation ((SHLD)), the retail conglomerate reported total comparable store sales for the eight-week period ended December 25 fell 5.2% and down 2.6% for the year-to-date period.
Same store sales at Kmart declined 4.4% in the current quarter through Christmas Day and fell 6% at domestic stores of Sears.
The retailer also announced cost reduction actions and plans to close between 100 and 120 Kmart and Sears full-line stores. The company operates 2,177 U.S. stores branded Kmart and Sears and 500 stores in Canada.
The company also anticipates to take between $1.6 billion and $1.8 billion in non-cash charge related to a valuation allowance on certain deferred tax write offs.
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