U.S. Stocks Struggle as Home Sales Rise, SAP Offers $4.3 B for Ariba

Bikram Pandey
22 May, 2012
New York City

U.S. stocks struggled to hold gains and previously occupied home sales increased 4.3% in April and median home price jumped. The broad increase in home sales lifted sentiment but caution prevailed after growth outlook in Europe was lowered. SAP AG agreed to acquire Ariba for $4.3 billion.

[R]4:00 PM New York – U.S. stocks lost momentum and previously occupied home sales increased 4.3% in April and median home price jumped. The broad increase in home sales lifted sentiment in trading but caution prevailed after a private survey showed weakening economic conditions in Europe. SAP AG agreed to acquire Ariba for $4.3 billion.[/R]

U.S. indexes struggled to hold gains of the day and retailers reported better than expected earnings and existing home sales rose but caution prevailed after the estimate of growth in the euro zone were lowered and Japan debt rating was lowered.

Sales of existing homes increased 4.3% in April from March to a seasonally adjusted annual rate of 4.62 million, according to an industry group. The April increase matched March annual pace driven by the demand from fir time home buyers.

Sales increased 5.1% in the Northeast, 4.1% in the West, 3.5% in the South and 1% in the Midwest as first time home buyers across the nation accounted for 35% of all home sales. Median home price across the nation rose 10.1% from a year ago month to $177,400.

In earnings news, AutoZone ((AZO)) third quarter net increased 9% to $248.59 million. Best Buy ((BBY)) first quarter net declined 25% to $158 million. Medtronic fourth quarter net soared 28% to $991 million. Ralph Lauren fourth quarter net surged 29% to $94.4 million.

Germany based SAP AG offered to buy the maker of collaborative commerce software maker Ariba Inc for $4.3 billion or $45 a share. Benihana Inc ((BNHN)), the operator of 95 Japanese themed restaurants agreed to go private in a leveraged buyout that valued the company at $296 million.

The European indexes gained. The OECD lowered euro area growth forecast for this year. The UK annual consumer price inflation eased in April. Accor agreed to sell Motel 6 to Blackstone for $1.9 billion.

Stocks in Tokyo extended gains for the second day in a row and exporters were in focus after the yen weakened a fraction and political leaders in the euro zone and China supported growth measures. Resources linked companies closed higher. Renesas Electronics is planning to cut 15% of its workforce.

Australian index gained more than 1% and the dollar traded below the U.S. dollar parity. Leighton Holdings, the global infrastructure group reiterated its annual earnings outlook between $400 million and $450 million. GrainCorp lifted its annual earnings estimate by as much as 11%.

Commodities, Bonds and Currencies

The yields on 10-year U.S. bond increased to 1.79% and 30-year U.S. bond edged higher to 2.89%.

The U.S. dollar edged up to $1.271 to one euro and gained against the Japanese yen to 80.09 in New York trading.

Immediate delivery futures of Texas crude oil decreased $0.91 to $91.66 a barrel and Brent crude futures fell $0.55 to $108.26. Futures of natural gas increased 0.07 cents to $2.68 per mbtu and gasoline price decreased 0.36 cents to 293.65 cents a gallon.

In metals trading, copper decreased 2.1 cents to $3.48 per pound, gold decreased $16.10 to $1,572.60 per ounce and silver decreased 8 cents to $28.23.