Wall Street Views on Banks Lift Sentiment; Bond Offerings Heat Up

Bikram Pandey
11 Jan, 2012
New York City

U.S. stocks advanced after the release of the regional economic review and earnings optimism. Banks and resources sectors led the gainers. U.S. sold $21 billion of 10-year notes at 1.9%. In Europe, Spain and Italy are set to sell

[R]4:40 PM New York – U.S. stocks advanced after the release of the regional economic review and earnings optimism. Banks and resources sectors led the gainers. U.S. sold $21 billion of 10-year notes at 1.9%. In Europe, Spain and Italy are set to sell €15 billion of bonds tomorrow following €3.2 billion bonds offering from Germany today.[/R]

Stocks in New York gained on the earnings optimism and a possible strength in the banks on the hopes that the recent rebound in the regional economies across the U.S. will continue. U.S. Treasury sold $21 billion of 10-year bonds in auction today as yields fell to 1.90%.

The S&P 500 index and the Nasdaq index extended gains deeper to five-month high for the second day in a row. European indexes also gained after Germany raised €3.2 billion 5-year bonds that yielded 0.74% and UK sold 3 billion pounds of September 2021 bonds.

Sovereign debt markets around the world were active in the second week and so far in the year Indonesia, South Africa, Brazil have sold dollar denominated sovereign bonds.

The U.S. indexes declined ahead of the regional economic report from the Fed and Germany sold €3.2 billion of 5-year debt. Israel-based Elbit agreed to sell 47 U.S. malls in a $1.43 billion deal.

In corporate news, BorgWarner expects 2012 earnings growth of 23% to 27% and Lennar Corp. fourth quarter net fell to $30.3 million. Supervalu third quarter net loss widened to $750 million and Tiffany net sales rose 7% to $952 million in the holiday period.

European markets edged lower after Germany sold €3.15 billion of 5-year treasury notes at lower yield. Three private research institutes in a joint report estimated euro zone economic contraction of 0.3% in last quarter and forecasted a decline of 0.2% in the current quarter to March.

Ifo, Insee and Istat said growth in the region will stagnate in the second quarter.

EU Economic Affairs Chief Olli Rehn was confident of a settlement on private sector involvement in Greece. On the debt sale calendar, Spain is expected to sell as much as €5 billion of bonds maturing in 2015 and 2016 tomorrow and Italy is scheduled to sell €12 billion of bonds tomorrow.

German economic growth stalled and Spanish output deteriorated for the third month in a row in November. The Italian budget deficit narrowed in the third quarter and Portuguese inflation eased in December.

The UK indexes declined on the mounting worries in the euro zone. The UK trade deficit widened in November and shop price inflation eased to 16-month low in December. BP and U.S.-based Sempra Energy planned $1 billion investment to develop wind farms.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond decreased to 1.90% and 30-year bond closed down at 2.96%.

The U.S. dollar edged up 0.6% to $1.27 to one euro and traded lower against the Japanese yen to 76.90.

Immediate delivery futures of Texas crude oil decreased $1.19 to $101.05 a barrel and futures of natural gas fell 16 cents to $2.77 per mbtu and gasoline price declined 0.13 cent to 277.15 cents a gallon.

In metals trading, copper increased 3.8 cents to $3.55 per pound, gold increased $10.90 to $1,642.40 per ounce and silver increased $0.14 to $29.95.