Global Data Lift U.S. Indexes; Profits at Wells Fargo, Citi Diverge

Arthi Gupta
17 Jan, 2012
New York City

The U.S. indexes traded higher on upbeat global economic data and New York manufacturing activity improved in January. Citigroup quarterly net fell 11% and revenues declined 7%. Wells Fargo revenues fell 4% and net surged 20%.

[R]9:35 AM New York – The U.S. indexes traded higher on upbeat global economic data and New York manufacturing activity improved in January. Citigroup quarterly net fell 11% and revenues declined 7%. Wells Fargo revenues fell 4% and net surged 20%.[/R]

U.S. indexes edged higher after China reported faster than expected economic expansion, German confidence rebounded and New York manufacturing activity improved in January.

European markets surged after Spain, Belgium and Greece successfully placed bonds amid strong demands. Investors focused on the busy earnings season and economic data from the region and China.

Standard & Poor lowered its credit opinion on the European rescue fund, EFSF. The views of credit review agencies are increasingly ignored and questioned by investors after the S&P and the Moody’s awarded their highest views on the worthless mortgage securities in the U.S.

European Council President Herman Van Rompuy noted that the European Union will agree on the new fiscal compact treaty at the end of this month and is expected to be signed in the early March.

The European Financial Stability Facility raised €1.501 billion from the sale of its new six-month bills, according to data from the Bundesbank.

The Spanish Treasury raised €4.88 billion from the 12-and 18-month treasury bills sale on Tuesday versus its target of between €4 billion and €5 billion.

The Greek Public Debt Management Agency sold €1.625 billion of 13-weeks paper versus the €1.25 billion on offer. The sale attracted bids totaling €3.630 billion. Belgium sold €2.96 billion of treasury bills today.

The major Asian markets rose after better-than-estimated Chinese economic data.

The Chinese economy expanded at the slowest pace in more than two years in the fourth quarter of 2011, according to data released from the National Bureau of Statistics today. The GDP report showed that the Chinese economy expanded 8.9% from a year ago in the fourth quarter of 2011, down from 9.1% in the third quarter.

In fiscal year 2011, the economy grew 9.2% from 10.4% in 2010.

Separately, the statistics office also reported that China''s industrial output growth accelerated to 12.8% from a year ago in December from 12.4% in November.

Retail sales in China grew 18.1% annually in December following a 17.3% rise in November 2011.

New York Manufacturing Activity Improves

New York manufacturing activity improved in January, according to a report released by the Federal Reserve Bank of New York today.

The New York Fed said its general business conditions index climbed to 13.5 in January from a revised 8.2 in December,

Kennametal to Acquire Deloro Stellite

Kennametal Inc., a supplier of tooling, engineered components and advanced materials agreed to purchase Deloro Stellite Group from UK-based private equity firm Duke Street Capital for approximately €277 million.

Blackbaud to Buy Convio

Blackbaud, Inc. entered into a merger agreement with Convio, Inc. to acquire all outstanding shares of common stock of Convio for $16.00 per share, representing a premium of 49% compared to Convio''s recent closing price and an enterprise value of approximately $275 million.

Earnings Review

Akorn, Inc. ((AKRX)), the niche specialty pharmaceutical company estimated GAAP net income of $34 million to $37 million for the full year 2012.

Citigroup Inc. ((C)), the global diversified financial services holding company said fourth quarter total revenues dropped 7% to $17.17 billion, as against $18.37 billion in the comparable period a year ago. Net income in the quarter slid 11% to $1.16 billion or 38 cents per diluted share compared with net income of $1.3 billion, or 43 cents per share last year.

For the year 2011 revenues declined to $78.4 billion compared to $86.6 billion in 2010 driven by $6.4 billion decline in Citi holdings revenues. For the year, the bank reported earnings of $11.3 billion, up 6% from $10.6 billion in 2010.

R.R. Donnelley & Sons Company ((RRD)), the communications solutions provider estimated fiscal year 2011 revenues to be $10.6 billion, moderately down from its prior projection for revenues between $10.7 billion and $10.8 billion.

TD Ameritrade Holding Corp. ((AMTD)), the brokerage services provider reported first quarter net revenues fell 0.4% to $653.39 million compared with $656.19 million in the earlier year period. Net income in the quarter rose 5% to $151.96 million or 27 cents per diluted share versus net income of $145.04 million or 25 cents per share last year.

Wells Fargo & Company ((WFC)), the diversified financial services company reported fourth quarter revenue fell 4.1% to $20.61 billion, from $21.49 billion in third quarter 2011. Net income in the quarter climbed 20.1% to $4.1 billion or 73 cents per diluted share compared to net income of $3.41 billion or 61 cents per share, for fourth quarter 2010.

Full year 2011 revenue declined to $80.9 billion from $85.2 in 2010. For the year, net income was $15.9 billion, or $2.82 per share, up 28% from 2010.