Home Sales and Mixed Earnings Lift Wall Street Sentiment

Bikram Pandey
26 Apr, 2012
New York City

U.S. investors focused on positive earnings and the number contracts to buy homes increased. However, initial claims of weekly unemployment were flat in the last week and weak earnings from Pepsi, UPS, Dow Chemical and Aetna kept market gains in check.

[R]4:00 PM New York – U.S. investors focused on positive earnings and the number contracts to buy homes increased. However, initial claims of weekly unemployment were flat in the last week and weak earnings from Pepsi, UPS, Dow Chemical and Aetna kept market gains in check.[/R]

U.S. indexes advanced but the gains were kept in check after a mixed bag of economic news and generally better earnings.

On the economic front, after new unemployment claims were nearly flat but the number of contracts to buy homes rose according to the industry association.

Earnings were weak at Pepsi, Aetna, Dow Chemical and UPS and H&R Block said it plans to eliminate 350 positions and close 200 underperforming offices. Colgate-Palmolive earnings improved 3% in the quarter but Exxon Mobil quarterly net fell.

Aetna first quarter net slipped 13% to $511 million and Bristol-Myers net increased 12% to $1.1 billion. Chrysler first quarter net quadrupled to $473 million. Colgate first quarter net rose 3% on sales rise. Dow Chemical first quarter net declined 30% on weak demand. Lockheed Martin and Starwood Hotels reported earnings ahead of expectations.

The European indexes struggled to advance after the euro area sentiment fell more than estimated in April. Italian borrowing costs rose in debt sale and the UK confidence improved in March.

Fresenius planned to acquire Rhön-Klinikum for €3.1 billion. Deutsche Bank quarterly net plunged 33%.

The euro zone confidence index declined in March after additional weakness in the service sector. Italian treasury sold €8.5 billion of short term bonds that yielded 1.77%. Sentiments in Portugal and UK improved.

Stocks in Japan were in a holding pattern as the earnings season began in earnest and ahead of central bank comments tomorrow. Fanuc plunged 6% after it estimated 3% decline in operating profit for the six months to September.

Australian indexes gained a fraction and media stocks declined after Seven West Media lowered its profit outlook. Mining stocks were in focus after Caterpillar reported sales weakness in China.

Commodities, Bonds and Currencies

The yields on 10-year U.S. bond decreased to 1.95% and 30-year U.S. bond edged lower to 3.13%.

The U.S. dollar edged lower to $1.3241 to one euro and inched lower against the Japanese yen to 81 yen.

Immediate delivery futures of Texas crude oil increased 47 cents to $104.59 a barrel and Brent crude futures rose 78 cents to $119.90.

In New York trading, futures of natural gas decreased 0.03 cents to $2.04 per mbtu and gasoline price added 2.76 cents to 319.97 cents a gallon.

In metals trading, copper gained 7.8 cents to $3.78 per pound, gold added $15.50 to $1,657.80 per ounce and silver increased 72 cents to $31.15.