U.S. Retail Sales, Producer Prices Drop

Arthi Gupta
13 Jun, 2012
New York City

U.S. indexes fell after retail sales and producer prices declined more than estimated in May. The International Energy Agency cut its oil demand growth forecast for 2012. Johnson & Johnson received U.S. regulatory approval for its proposed acquisition of Swiss-based Synthes in a $19.7 billion deal.

[R]9:35 AM New York – U.S. indexes fell after retail sales and producer prices declined more than estimated in May. The International Energy Agency cut its oil demand growth forecast for 2012. Johnson & Johnson received U.S. regulatory approval for its proposed acquisition of Swiss-based Synthes in a $19.7 billion deal.[/R]

In early morning trading, U.S. indexes dropped after retail sales for the second month in a row and producer prices fell in May.

European markets were on the defensive after Spanish yields rose for the fourth day and Italy completed auction that yielded short term debt near 4%. The market confidence was on the wane as Greek election approached this Sunday and bank deposit withdrawals accelerate.

Euro-zone industrial output fell 0.8% on a monthly basis in April after declining 0.1% in March, according to a report released by Eurostat today.

The Italian Treasury raised the targeted €6.5 billion from the sale of its 12-month bills but higher borrowing costs and lower demand. The average yield on the 1-year paper rose to 3.972% from 2.34% in the previous sale on May 11.

Separately, Germany sold €4.04 billion from 10-year bund auction, Bundesbank said. The average yield rose to 1.52% from 1.47% in the previous sale on May 16.

U.S. Producer Prices Drop

The producer price index for finished goods in the U.S. dropped 1% in May, marking the largest drop since July 2009, according to data released by the U.S. Labor Department today.

The core producer prices, which exclude the somewhat volatile food and energy sector, rose 0.2% for May, the third consecutive monthly increase in a row.

U.S. Retail Sales Fall

Retail sales in the U.S. fell in May, according to a report released by the U.S. Commerce Department today. Retail sales fell 0.2% in the month and matched the revised decrease in April.

Excluding a 0.8% increase in sales by motor vehicle and parts dealers, retail sales fell 0.4% in May compared to a 0.3% drop in April. The monthly sales declined for the second month in a row.

IEA Lowers Fiscal Outlook

The International Energy Agency forecasted growth in 2012 oil demand to remain flat at 0.8 million barrels per day.

The agency said that OPEC supply declined in May to 31.86 mbd from 31.89 million barrels a day in April with reduced output from Saudi Arabia and Iraq offsetting higher production in Angola, Nigeria and Libya.

OPEC is scheduled to meet in Vienna, Austria this week.

Philip Morris Shares Buy Back Program

Philip Morris International, the tobacco company announced a new three-year share repurchase program of $18 billion in addition to the existing three-year program of $12 billion. The company has a share repurchase target for 2012 of $6 billion.

Also, the board declared a regular quarterly dividend of 77 cents per share.

JNJ Receives Approval for Synthes Acquisition

Johnson & Johnson received U.S. regulatory clearance for its proposed acquisition of Swiss medical device maker Synthes Inc. for $19.7 billion in cash and stock. The company expects the deal to close on June 14.

Earnings Review

Casey''s General Stores, Inc. ((CASY)), the operator of convenience stores said fourth quarter revenues rose 13% to $1.75 billion compared to $1.55 billion last year. Net income in the quarter climbed 1% to $23 million compared to net income of $22.8 million last year and earnings per share remained flat from last year at 60 cents.

Dell Inc. ((DELL)), the information technology company plans to pay quarterly cash dividends on its common stock from fiscal third quarter. The company said it expects the initial dividend of 32 cents per share annually or 8 cents per share a quarter.

Scotts Miracle-Gro Co. ((SMG)), the manufacturer and supplier of consumer lawn and garden products forecasted earnings and sales to fall short of its previous guidance for the full-year 2012. The company had earlier expected sales growth of 6% to 8% and adjusted earnings per share between $2.65 and $2.85 for the full year 2012.