Tech Stocks Weak, Euro at 2-year Low; Oil Extend Losses

Bikram Pandey
10 Jul, 2012
New York City

Stocks in New York turned lower after tech companies issued cautious outlook. AMD reported lower chip sales and Applied Materials lowered annual outlook. European leaders took steps to expedite the rescue of Spanish banks but bond yields failed to materially weaken.

[R]4:05 PM New York – Stocks in New York turned lower after tech companies issued cautious outlook. AMD reported lower chip sales and Applied Materials lowered annual outlook. European leaders took steps to expedite the rescue of Spanish banks but bond yields failed to materially weaken.[/R]

U.S. indexes extended losses after investors digested cautious outlook from tech companies, the euro declined to a 2-year low and oil dropped after China imported less crude oil last month.

Stocks in New York opened higher in cautious trading after ministers in the euro zone agreed to release bailout funds of €30 billion to Spain. In addition, China reported slowing growth in international trade and especially imports growth was slower in June than in the previous month.

Alcoa second quarter net swung to a loss. Applied Materials lowered its annual outlook and Advanced Micro Devices Inc reported a declined sales. Helen of Troy first quarter net slumped. Shaw Group third quarter loss narrowed. Wolverine second quarter net slid and reaffirms fiscal outlook.

Intel said it plans to invest €3.3 billion for a 15% stake in chip equipment maker ASML based in the Netherlands.

The euro area finance ministers approved the releasing of €30 billion aid to Spain and the bond yield decreased only a fraction from the unsustainable level near 7%.

The elevated bond market yields in peripheral euro zone nations is a real concern to many investors and yields may flare up above 7% in thin trading in summer months forcing Spain to seek a much larger bailout.

In economic news, French, Swedish and the Netherlands output fell in May. Norwegian inflation remained stable but Romanian consumer price index increased in June.

German Finance Minister Wolfgang Schaeuble argued at the highest German court and urged the panel that any delay in approving measures to expand bailout fund for the euro zone could add volatility to financial markets.

German court began hearing about the proposed changes to the European Stability Mechanism are compatible with the German laws.

The UK indexes advanced after Spanish concerns eased for now. UK retail sales climbed in June and production improved and deficit narrowed in May. Barclays former CEO Bob Diamond agreed to give up his bonus but will keep his salary.

The benchmark Nikkei index in Tokyo fell for the fourth day and wiped off the gains of the month after Chinese international trade data fell short of expectations. Bank of Japan is schedule to release its measures later in the week.

Australian stocks traded lower for the fourth day in a row after investors focused on the latest imports growth from China. The dollar held firm. IAG said it plans to target markets in India, Indonesia and Malaysia to drive its future growth.

Commodities, Bonds and Currencies

The yield on 10-year bond was unchanged at 1.51% and on 30-year bond fell to 2.61%.

The U.S. dollar inched higher to $1.225 to a euro and increased against the Japanese yen to 79.43 yen. The euro fell to 97.20 yen and closed at 97.37 yen according to several foreign exchange trading platforms.

Immediate delivery futures of Texas crude oil decreased 87 cents to $85.12 a barrel and Brent crude decreased $1.36 to $98.96, futures of natural gas decreased 0.11 cents to $2.77 per mbtu and gasoline price increased 0.42 cents to 276.35 cents a gallon.

In metals trading, copper decreased 3.5 cents to $3.39 per pound, gold decreased $11.90 to $1,577.20 per ounce and silver decreased 58 cents to $26.84.