U.S. Housing Starts Decline, IMF Lifts Growth Outlook

Arthi Gupta
17 Apr, 2012
New York City

U.S. indexes gained after the IMF lifted global growth outlook for this year and housing starts fell in March. IBM agreed to sell Retail Store Solutions business to Toshiba for about $850 million. Fanatics agreed to acquire Dreams for $183 million.

[R]9:45 AM New York – U.S. indexes gained after the IMF lifted global growth outlook for this year and housing starts fell in March. IBM agreed to sell Retail Store Solutions business to Toshiba for about $850 million. Fanatics agreed to acquire Dreams for $183 million.[/R]

U.S. indexes edged higher after the IMF lifted global growth outlook for this year. However, new housing construction in the U.S. fell in March.

Corporate earnings to some extent lifted investor sentiment.

The European indexes rose after German confidence rose to a two-year high and the borrowing cost at the latest Spanish debt sale of €3.18 billion fell. Argentina nationalized the domestic oil company controlled by Spain based Repsol.

Yesterday, traders were rattled after Spanish 10-year government bond yields rose above the psychologically important 6% mark.

World Bank executive directors selected Jim Yong Kim as the new President of the World Bank Group.

Asian markets traded lower after foreign direct investment into China dropped for the fifth straight month in March.

Foreign direct investment into China declined 6.1% to $11.76 billion in March from a year ago, the Ministry of Commerce said today. In the first quarter, FDI decreased 2.8% annually to $29.5 billion.

The Reserve Bank of India lowered interest rates by 50 basis points for the first time in three years.

IMF Lifts Global Growth Outlook

The International Monetary Fund lifted the growth forecast for the world economy for 2012 to 3.5% from 3.3%. The U.S. economy is estimated to grow 2.1% this year from the previous forecast of 1.8%.

U.S. Housing Starts Decline

Housing permits in March increased 4.5% from February or rose 30.1% from a year ago month to 747,000. Housing starts in March fell 5.8% to 654,000 from February or increased 10.3% from a year ago month to 593,000.

IBM to Sell RSS Business

Toshiba TEC Corp., a subsidiary of Toshiba Corp. agreed to acquire IBM''s retail store point-of-sale solutions business for about $850 million.

Fanatics to Acquire Dreams

Dreams, Inc., a technology-driven, multi-channel retailer agreed to be acquired by Fanatics, Inc., a leading online seller of licensed sports products, for about $183 million, including debt.

Fanatics will buy all the outstanding shares of the company for $3.45 per share in cash and also take into account $25 million of outstanding debt. The offer represents a premium of 32.0% over Dreams'' closing share price of $2.61 on April 13, the last trading day prior to this announcement.

Earnings Review

Goldman Sachs Group, Inc. ((GS)), the investment banking and securities firm reported first quarter net revenues declined 163% to $9.95 billion from $11.89 billion in the prior year quarter. Net earnings in the quarter soared 128% to $2.07 billion or $3.92 per diluted share compared with net earnings of $908 million or $1.56 per share in the same quarter last year.

Johnson & Johnson ((JNJ)), the consumer goods and drug company stated first quarter sales declined 0.2% to $16.14 billion from $16.17 billion last year. Net earnings in the quarter rose 12.4% to $3.91 billion or $1.41 per diluted share compared with net earnings of $3.48 billion or $1.25 per share last year.

The Coca-Cola Company ((KO)), the beverage company reported first quarter net operating revenues rose 6% to $11.14 billion from $10.52 billion, as adjusted, a year ago. Net income in the quarter climbed 8% to $2.05 billion or 89 cents per diluted share compared to net income of $1.90 billion or 82 cents per share in the earlier year quarter.