U.S. Deficit Widens; JPMorgan Net Drops 23%

Arthi Gupta
13 Jan, 2012
New York City

The U.S. indexes fell after JPMorgan reported lower than expected earnings. The U.S. trade deficit widened in November and imports prices slid in December. Italy successfully sold

[R]9:35 AM New York – The U.S. indexes fell after JPMorgan reported lower than expected earnings. The U.S. trade deficit widened in November and imports prices slid in December. Italy successfully sold €4.75 billion of debt at a lower borrowing cost.[/R]

U.S. indexes traded sideways after November trade deficit increased 10.4%, import prices declined 0.1% and JP Morgan reported weaker than expected earnings.

The benchmark indexes in Europe traded higher after Italy successfully sold €4.75 billion of debt at lower borrowing cost.

For the week, the governments of Germany, Italy and Spain raised €30 billion in sovereign bonds sales at yields that were sharply lower than previous auctions. The yields fell after the European Central Bank offered nearly €480 billion in to banks just before the end of 2011.

The Italian Treasury sold €3 billion of 6% November 2014 bonds at a yield of 4.83%, less than 5.62% it paid at an auction on December 29. Demand was 1.22 times the offer, down from 1.36 in the previous sale.

The agency also placed €779 million of 4.25% July 2014 bonds to yield 4.29%, down from 4.93% in a previous auction in October. The bid-to-cover ratio rose to 2.28 from 1.35.

The country also sold €971 million of 4.5 percent August 2018 bonds at a yield of 5.75%. Demand was 1.61 times the offer.

Italian 10-year bond yields fell 16 basis points to 6.497%.

Asian markets closed mostly higher following the strength in the international markets but market indexes in Shanghai declined 1.3%.

U.S. Deficit Widens

The U.S. trade deficit widened in November, according to latest statistics released by the Commerce Department.

U.S. exports fell 0.9% to $177.8 billion while imports rose 1.3% to $225.6 billion, according to the report.

The trade deficit increased 10.4% to $47.8 billion from October''s revised deficit of $43.3 billion.

U.S. Import Prices Decline

The U.S. imports prices declined 0.1% in December after rising by an upwardly revised 0.8% in November, the U.S. Labor Department said. The drop was largely due to a 0.5% decrease in prices for fuel imports.

Export prices fell 0.5% in December following a 0.1% increase in November.

International Game Technology to Buy Double Down Interactive

International Game Technology agreed to buy Double Down Interactive, an online social gaming company.

The total consideration includes $250 million in cash, $85 million in retention payments over the next two years and up to $165 million in cash payable over the next three years subject to Double Down meeting certain financial performance targets.

Earnings Review

JDA Software Group, Inc. ((JDAS)), the provider of enterprise software solutions said it expects an unanticipated shortfall in software license sales in the U.S. with fourth quarter revenue are expected to increase in low single digit over last year.

JPMorgan Chase & Co. ((JPM)), the financial holding company said fourth quarter total net revenue dropped 17% to $22.2 billion from $26.72 billion in the comparable period a year ago.

Net income in the quarter declined 23% to $3.73 billion or 90 cents per diluted share compared to net income of $4.83 billion or $1.12 per share last year. The earnings were weak on the weak activities in the merger and acquisitions and federal regulatory limited the fees on overdraft and debit card transactions.

For the full year 2011, revenue fell 5% to $99.8 billion, from $104.8 billion last year. Net income grew 9% to $19 billion in 2011, from $17.4 billion a year earlier.