U.S. Indexes Hold; Consumer Confidence, Home Prices Decline

Bikram Pandey
31 Jan, 2012
New York City

U.S. stocks were in a holding pattern after consumer confidence index dipped in January and home prices declined for the third month in a row in November. European leaders agreed for a fiscal pact and paved the way for the euro zone nations to tighter integration. The yen traded at a 3-month high.

[R]5:30 PM New York – U.S. stocks were in a holding pattern after consumer confidence index dipped in January and home prices declined for the third month in a row in November. European leaders agreed for a fiscal pact and paved the way for the euro zone nations to tighter integration. The yen traded at a 3-month high.[/R]

The U.S. indexes seesawed after a mixed earnings report and ongoing turmoil in the euro zone. At close, market indexes in New York traded lower after confidence index in January declined and an index on metropolitan homes prices indicated a weakness in November.

The S&P/Case Shiller Composite, the controversial index tracking metropolitan homes prices declined 0.7% in November and extended declines by the same amount in October and September. Separately, the Commerce Department said home ownership declined to 66% in the fourth quarter from the 66.3% in the third and hovered near the lowest level since 1998.

The weakness in the housing market was also reflected in the decline in the latest read on consumer confidence index which dipped to 61.1 in January from 64.8 in December, according to the index tracked by the Conference Board.

In merger news, McKesson agreed to acquire private label and drug franchise retail business of Canada based Katz Group for C$920 million. Germany based Thyssen Krupp agreed to sell its Finnish unit for €2.7 billion.

In earnings, Danaher fourth quarter net increased to $571 million. Eli Lilly fourth quarter net slumped 27% to $858 million and Pfizer fourth quarter net declined 50% to $1.44 billion. Tyco International first quarter net slumped to $333 million. United Parcel fourth quarter net slumped 29% to $725 million.

European leaders agreed on the fiscal compact that will pave the way for the European Central Bank involvement and all but two nations in the European Union agreed. Czech Republic and UK dissented.

Several local media reports also suggested that the European Central Bank may forgive its net gains in the Greek bond holdings to seal the pact between the private lenders and Greece. However, officials at the central bank denied the speculation.

Euro area jobless rate remain unchanged but stayed above 10% in December as Spanish jobless rate rose to 22.9% and Greek rate to 19.2%. German retail sales dropped and French consumer spending fell in December. Spanish inflation eased in January.

The UK indexes gained after consumer confidence improved in January and loan approvals for home purchase climbed in December. Essar Energy Plc ordered to pay $1.235 billion of sales tax deferment benefit, plus interest accrued by the State of Gujarat in India. The company said it will fight the request in the court. BSkyB first-half revenue increased 6%.

Japanese market indexes closed flat and gained 4.1% in January. Honda reported worse than expected decline in earnings and Sumitomo Mitsui Financial reaffirmed annual net income outlook. Canon president resigned and Fujifilm lowered its annual view.

Australian stocks edged lower today but surged in the month on the optimism that the euro zone will succeed in containing its debt crisis. For the month, the benchmark index added 5.1%. Woolworths comparable sales in December increased 4.1% and decided to put its electronics retailer Dick Smith on the block.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond decreased to 1.79% and 30-year bond closed down at 2.94%.

The U.S. dollar traded up 0.5% to $1.308 to one euro and traded lower against the Japanese yen to a 3-month low to 76.23.

Immediate delivery futures of Texas crude oil fell 33 cents to $98.45 a barrel and futures of natural gas declined 24 cents to $2.46 per mbtu and gasoline price increased 1.6 cents to 288.74 cents a gallon.

In metals trading, copper decreased 3.3 cents to $3.79 per pound, gold increased $7.50 to $1,741.90 per ounce and silver decreased 37 cents to $33.15.