U.S. Consumer Prices Flat, Coca Cola Net Falls on Higher Costs

Arthi Gupta
17 Jul, 2012
New York City

U.S. indexes advanced after consumer prices remained unchanged but industrial output rose in June. State Street agreed to acquire Goldman Sachs Administration Services for $550 million. Coca-Cola quarterly earnings declined on higher costs.

[R]10:10 AM New York – U.S. indexes advanced after consumer prices remained unchanged but industrial output rose in June. State Street agreed to acquire Goldman Sachs Administration Services for $550 million. Coca-Cola quarterly earnings declined on higher costs.[/R]

U.S. indexes edged higher in early trading and traders await the comments of Federal Reserve Chairman Ben Bernanke later today.

On the earnings front, Coca-Cola quarterly net and revenues beat analyst estimates. Goldman Sachs exceeded lowered expectations and Johnson & Johnson earning declined in the quarter.

European indexes traded higher across the region and investors looked for hints of any additional stimulus from the Fed.

The International Monetary Fund approved the disbursement of €1.48 billion to Portugal but Moody’s downgraded 13 Italian banks.

Asian stocks closed higher tracking Wall Street.

U.S. Consumer Prices Flat

U.S. consumer prices were unchanged in June, according to a report released by the U.S. Labor Department today.

The Labor Department said its consumer price index came in flat in June following a 0.3% drop in May. Energy prices declined 1.4% in June after slumping 4.3% in May and food prices gained 0.2% in June after coming in unchanged in May.

Excluding food and energy prices, the core consumer price index rose 0.2% in June.

U.S. Output Climbs

Industrial production in the U.S. increased more than anticipated in June, according to a report released by the Federal Reserve today. The industrial production increase was led by a rebound in the manufacturing sector.

The Fed said industrial production climbed 0.4% in June following a revised 0.2% decrease in May with manufacturing output rising 0.7% in June after declining 0.7% in May.

State Street to Acquire Goldman Sachs Administration Services

State Street Corporation, the financial services provider agreed to acquire Goldman Sachs Administration Services, a hedge fund administrator from The Goldman Sachs Group, Inc. in a cash transaction with a total purchase price of $550 million.

The transaction is expected to be finalized early in the fourth quarter of 2012.

Earnings Review

Goldman Sachs Group, Inc. ((GS)), the investment bank reported second quarter net revenues declined 9% to $6.63 billion from the prior-year period. Net earnings declined 11% to $962 million or $1.78 a share from $1.09 billion or $1.85 a share a year earlier.

Investment banking revenues declined 17% to $1.21 billion.

Johnson & Johnson ((JNJ)), the consumer packaged goods manufacturer reported second quarter sales decreased 0.7% to $16.5 billion compared to the second quarter of 2011. Net earnings in the quarter plunged 49.3% on expenses related to acquisition and negative currency comparison to $1.41 billion and earnings per share fell to 50 cents.

J&J lowered its annual earnings per share estimate to between $5 and $5.07 from its earlier estimate of $5.07 and $5.17.

Mattel, Inc. ((MAT)), the toy products manufacturer reported second quarter net sales were flat $1.16 billion from last year. Net income in the quarter rose 20% to $96.2 million or 28 cents per share compared to net income of $80.5 million or 23 cents per share a year-ago quarter.

Earnings were higher on the resurging demand in toys linked to new Batman movie and Hot Wheels brands.

The Coca-Cola Company ((KO)), the non-alcoholic beverage maker said second quarter net operating revenues grew 3% to $13.1 billion from last year. Net income in the quarter was little changed at $2.79 billion or $1.21 a share compared with $2.8 billion or $1.20, a year earlier.

The largest beverage company in the world said revenues, operating income and volumes increased in every region except Europe. Volume in North America increased 1% and in Pacific region shot up 8%.