Markets in New York, Europe Higher on Housing Reports

Bikram Pandey
18 Jul, 2012
New York City

U.S. indexes gained after two housing reports showed improvements. Bank of America said it plans to cut a total of $8 billion by 2015 and improved its Tier 1 ratio. Capital One agreed to pay $210 million from charges related to misleading customers.

[R]4:05 PM New York – U.S. indexes gained after two housing reports showed improvements. Bank of America said it plans to cut a total of $8 billion by 2015 and improved its Tier 1 ratio. Capital One agreed to pay $210 million from charges related to misleading customers.[/R]

U.S. indexes traded higher after two separate reports on the housing industry indicated a rebound.

Housing starts for June surged 6.9% to a seasonally adjusted annual rate of 760,000 above the revised May estimate of 711,000, according to data released by the U.S. Commerce Department today. A separate report by the industry organization showed that builder confidence is at a five year high.

Bank of America Corp, the second largest U.S. lender said it plans to cut annual expense of $3 billion in investment banking, private banking and trading units. The bank also said its Tier-1 ratio increased to 8.1% compared to its previous guidance of 7.5%.

The bank reported earnings of $2.46 billion compared to a loss of $8.8 billion a year ago but majority of the earnings were driven by changes in reserves and reduction in liabilities. The bank also cut provision for credit losses by 46% to $1.8 billion compared to $3.3 billion a year ago and consumer and business deposits increased only 2.2% or $10.3 billion.

At the end of June, company had 275,460 full-time employees, down 3,228 from the end of the previous quarter and 12,624 fewer from the quarter a year ago. When adjusted for part time employees hired for special projects, the number of full-time employees is down 20,000 from a year ago.

In other earnings news, Abbott second quarter net declined 11.2% to $1.73 billion and Bank of America net swung to $2.46 billion profit. BlackRock second quarter net slumped 11% and Honeywell net soared 11.4%. Intel second quarter net slid 4% to $2.83 billion.

Capital One Financial agreed to pay $210 million to U.S. regulators for charges linked to misleading consumers to pay for extra credit card products. The enforcement action is the first by the Consumer Financial Protection Bureau that was set up by the 2010 Dodd-Frank financial reform law.

The European indexes gained on better-than-anticipated earnings. Germany raised €4.17 billion in a bond auction at negative yield. Credit Suisse planned to boost capital by Sfr15.3 billion before year-end.

The UK indexes gained after jobless rate fell in the quarter to May. Consumer demand growth in the UK slowed in July. The Bank of England policymakers split on quantitative easing decision.

Stocks in Japan declined as the yen edged lower from its one-month peak. The Nikkei index traded below its 25-day moving average and few export sensitive stocks closed higher. Electric utilities declined after two nuclear power plants were found to be on top of n active fault line.

Commodities, Bonds and Currencies

The yield on 10-year bond traded lower to 1.48% and on 30-year bond decreased to 2.58%.

The U.S. dollar inched lower to $1.226 to a euro and decreased against the Japanese yen to 78.81 yen.

Immediate delivery futures of Texas crude oil increased 62 cents to $89.40 a barrel and Brent crude gained $1.21 to $105.21, futures of natural gas fell 0.17 cents to $2.97 per mbtu and gasoline price increased 4.6 cents to 289.10 cents a gallon.

In metals trading, copper increased 1.25 cents to $3.46 per pound, gold decreased $16.20 at $1,573.30 per ounce and silver decreased 21 cent to $27.11.