U.S. Stocks Struggle Ahead of Fed Statement, P&G Lowers Outlook

Arthi Gupta
20 Jun, 2012
New York City

U.S. stocks struggle ahead of Fed statement later today and G20 leaders focused on Europe and pledged to support and work together to arrest widening debt contagion. Procter & Gamble lowered fourth quarter guidance.

[R]10:30 AM New York – U.S. stocks struggle ahead of Fed statement later today and G20 leaders focused on Europe and pledged to support and work together to arrest widening debt contagion. Procter & Gamble lowered fourth quarter guidance.[/R]

U.S. indexes struggled in early trading on the hopes that the Fed may extend Operation Twist beyond its expiry in June.

The Fed is scheduled to end its 2-day meeting later today and is expected to hold its asset purchase program and interest rate near zero.

European markets traded slightly higher and political leaders at G20 meeting pledged to focus on Europe and leaders in the region promised concrete plans to expedite integration.

The G20 statement noted that euro are countries are committed to “take all necessary political measures” to preserve the currency union and the region also plans “to consider concrete steps towards a more integrated financial structure” that will include common bank supervision and recapitalization and closure of failed banks and extend deposit guarantee to bank depositors.

G20 leaders urged European leaders to accelerate the banking industry integration in the region that will severe the cycle of highly indebted countries forced to rescue local banks that only add to the government debt.

Greek political leaders are expected to finalize the new coalition government and cabinet ministry as early as this evening and local media reported that Antonis Samaras is expected to be sworn as Prime Minister as early as this week.

New Democracy’s leader Antonis Samaras is scheduled to meet the leader of Pasok party Evangelos Venizelos and Democratic left leader Fotis Kouvelis today to form a government with stable majority in the parliament.

The soon-to-be formed Greek government is expected to push for revision of the bailout terms from international lenders and relax some of the harshest austerity measures including lowering of minimum wages.

In Asian trading, benchmark indexes in Tokyo and Jakarta gained more than 1% and in Hong Kong and Seoul added more than 0.5% and in Mumbai, Sydney and Kuala Lumpur advanced fractionally.

Japan’s merchandise trade deficit expanded to 907.25 billion yen in May following the 520.3 billion yen shortfall in April, the Ministry of Finance said today.

Annually, exports increased 10% and imports expanded 9.3%. The trade deficit rose as the industrialized nation increased its energy import as nuclear power plant remain shut for more than a year.

P&G Lowers Estimate

The Procter & Gamble Company lowered its fourth quarter earnings forecast and provided an overview for the fiscal 2013.

For the fourth quarter, organic sales growth is estimated to be in the range of 2% to 3% compared to a prior range of 4% to 5%. Net earnings per share are expected to be in the range of $1.17 to $1.26 per share compared to a prior range of $1.21 to $1.32 and include the gains from the sale of snacks business of between 47 cents and 50 cents.

For the next fiscal year starting July, the company estimates organic sales to increase in the range of 2% to 4%. Core earnings per share are expected to be in-line to up mid-single digits percentage compared to fiscal 2012 results.

Earnings Review

Actuant Corporation ((ATU)), the diversified industrial company reported third quarter consolidated sales were $429.22 million, 9% higher than the comparable prior year quarter. Net earnings in the quarter fell 5.4% to $34.4 million or 45 cents per diluted share compared to net earnings of $36.36 million or 49 cents per share a year ago.

Adobe Systems Incorporated ((ADBE)), the publishing software maker said second quarter total revenue rose 10% to $1.12 billion from $1.02 billion in the same quarter last year. Net income in the quarter fell 2.4% to $223.9 million or 45 cents a diluted share compared to net income of $229.4 million or 45 cents per share for the year-ago quarter.

Jabil Circuit, Inc. ((JBL)), the electronic manufacturing services provider said third quarter revenue rose 2.4% to $4.3 billion compared to $4.2 billion last year. Net income in the quarter fell 3.2% to $101.3 million compared to net income of $104.7 million last year. On a diluted share basis, earnings per share increased to 48 cents compared to 47 cents, on a reduced share count.

La-Z-Boy Inc. ((LZB)), the home furniture maker reported fourth quarter sales dropped 3.4% to $327.4 million from $338.9 million last year. Net profit in the quarter surged 90% to $19.6 million or 37 cents per diluted share compared to net profit of $10.3 million or 19 cents per share in the same quarter last year.