Afternoon Rally Lifts Wall Street Indexes; Swiss Central Bank Chief Resigns

Bikram Pandey
09 Jan, 2012
New York City

U.S. stocks traded retained mild positive tone ahead of the start of the earnings season and European leaders staged yet another round of meetings to discuss debt crisis in the region. Swiss central bank resigned after a public outcry over his private currency trades.

[R]4:00 PM New York – U.S. stocks traded retained mild positive tone ahead of the start of the earnings season and European leaders staged yet another round of meetings to discuss debt crisis in the region. Swiss central bank head resigned after a public outcry over his private currency trades.[/R]

The U.S. indexes traded sideways as European leaders meet one more time to advance the euro zone debt solution and rhetoric in the Middle East picks up.

Investors awaited the start of the earnings season after the close with moderate expectations for Alcoa earnings. Banks were in focus as fourth quarter earnings are expected to be the worst in the last six quarters on weak trading and ongoing housing market turmoil.

In corporate news, Bristol-Myers agreed to acquire Inhibitex for $2.5 billion. InfoSpace signed an agreement to acquire TaxACT for $287.5 million. After the close, Alcoa is expected to release fourth quarter earnings that are likely to be weaker.

In earnings news, Acuity Brands first quarter net increased 23% to $29.9 million. Bristol-Myers Squibb acquired Inhibitex for $26 per share. Motorola Mobility estimates fourth quarter sales of $3.4 billion. Schnitzer Steel said first quarter net tumbled to $7 million.

Across the Atlantic, the European indexes traded lower after Germany sold €3.9 billion of short term debt at negative yield and Italy and Spain are set to sell more in the week. German foreign trade surplus rose in November. BMW sales rose 14.2% in 2011. Banco Santander said it achieved a core capital ratio of 9%.

Swiss National Bank head Philipp Hildebrand resigned today ahead of a parliamentary committee inquiry in private trades in the Swiss franc that netted thousands of dollars in profits to him and his wife.

The central bank chief said he could not prove his innocence amid a public outcry over currency swap transactions that were conducted by his wife that may appear to raise conflict of interest. Philipp M. Hildebrand unexpectedly resigned and said “credibility is central banker’s most valuable asset.”

Euro area investor confidence improved in January after weakening for five months in a row. The French trade deficit narrowed and German industrial output dropped in November. Swiss jobless rate increased in December.

The UK indexes tracked lower on the weak market sentiment in Europe. Financial sector revenues grow at a record pace in since 2007. Royal Bank of Scotland planned to sell its global cash equities business.

Australian stocks and indexes closed flat after new home sales rose 6.8% in November and October sales increase was lowered to 2.8%. Retail sales in November were flat after rising for four months in a row. The dollar edged lower.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond decreased to 1.95% and 30-year bond closed unchanged at 3.02%.

The U.S. dollar edged down 0.4% to $1.276 to one euro and traded lower against the Japanese yen to 76.85.

Immediate delivery futures of Texas crude oil decreased $0.29 to $101.27 a barrel and futures of natural gas fell 0.04 cent to $3.01 per mbtu and gasoline price added 0.6 cents to 275.75 cents a gallon.

In metals trading, copper decreased 1.8 cents to $3.41 per pound, gold decreased $8.40 to $1,608.40 per ounce and silver increased $0.22 to $28.90.