Wall Street Rally Advances; Sears, Infosys in Focus

Bikram Pandey
12 Jan, 2012
New York City

U.S. stocks extended gains for the fourth time in the last five days and oil prices declined 2%. Banks were in focus ahead of earnings from JP Morgan and Wells Fargo. European markets gained on strong bond offerings from Spain and Italy. Infosys tumbled 8% after it offered muted outlook.

[R]4:40 PM New York – U.S. stocks extended gains for the fourth time in the last five days and oil prices declined 2%. Banks were in focus ahead of earnings from JP Morgan and Wells Fargo. European markets gained on strong bond offerings from Spain and Italy. Infosys tumbled 8% after it offered muted outlook.[/R]

The U.S. indexes extended gains for the fourth time in five days after retail sales rose and foreclosure filings dropped to a 49-month low in December. Market sentiment was positive after Spanish and Italian yields tumbled in European bond markets.

Weekly U.S. jobless claims at the end of last week increased 24,000 to 399,000 and U.S. retail sales rose 0.1% in December, less than estimated by most economists.

Stocks have been turning higher ahead of bank’s earnings starting tomorrow and JP Morgan Chase and Wells Fargo are estimated meet or surpass expectations. Wells Fargo is estimated to report earnings of $15.3 billion in 2011 and JP Morgan Chase is expected to report earnings of $18.5 billion.

In U.S. corporate news, Regions Financial agreed to sell its brokerage unit to Raymond James for $1.2 billion. Chevron expects fourth-quarter earnings significantly below its previous outlook. Infosys third quarter net soared 15.4% to $458 million but offered muted outlook. Shaw Communications first quarter net surged to $202 million. Williams-Sonoma said revenues increased 4.2% to $901 million in the holiday period.

India based Infosys plunged 8% after revenues barely met the low end of revenues and it guided revenues growth for the fiscal year ending in March to 16% from the previous estimate of 17% to 19%. The company in the latest quarter added net 18 new clients and increased its employee staff by 3,266 to 145,088.

Sears Holdings Corp increased 3% to $34 but a private bill discounting firm CIT Group Inc halted vendor payment processing for the retailer citing uncertain company outlook and rising financial risks.

European markets edged higher after Spain raised double the target from the sale of its long term debt and Italy sold €12 billion of Treasury bills. Delhaize planned to slash 5,000 jobs.

The European Central Bank left its interest rates unchanged and OECD leading index eased and euro area output declined in November. German inflation eased in December and Greek jobless rate rose more than anticipated in October.

The UK indexes rose after successful bond auctions by Spain and Italy and the Bank of England left key rate and bond purchase program unchanged. The UK industrial output declined in November. RBS planned to cut 3,500 jobs over three years.

Stocks in Japan declined and current account surplus narrowed in Japan by 86% on weak exports and lower energy demands. The Nikkei declined 0.7% ahead of the European rate decision. The yen traded near 11-year high against the euro.

Australian stocks halted advances after rising two days. QBE Insurance plunged as much as 24% after the company warned 2011 net to drop between 40% and 50% on higher than expected losses linked to natural disasters.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond increased to 1.92% and 30-year bond closed up at 2.97%.

The U.S. dollar edged down 1% to $1.282 to one euro and traded lower against the Japanese yen to 76.77.

Immediate delivery futures of Texas crude oil decreased $2.04 to $98.83 a barrel and futures of natural gas fell 5 cents to $2.71 per mbtu and gasoline price declined 3.69 cent to 272.64 cents a gallon.

In metals trading, copper increased 9.9 cents to $3.64 per pound, gold increased $10.40 to $1,650.00 per ounce and silver increased $0.19 to $30.95.