U.S. Growth Rate Slowed to 1.5%, Lower Yields in Europe

Arthi Gupta
27 Jul, 2012
New York City

U.S. indexes advanced after economic growth declined to 1.5% rate in the second quarter. Italy raised

[R]9:35 AM New York – U.S. indexes advanced after economic growth declined to 1.5% rate in the second quarter. Italy raised €8.5 billion from a bond auction today at lower yields. Samsung net soared on smartphones sale.[/R]

The U.S. economy slowed down in the second quarter after business investment and consumer purchases slowed and the slowdown in the euro zone and a stronger dollar weighed.

The economic growth in the first quarter was revised to 2% from the previous estimate of 1.9%, according to the data released by the Commerce Department.

The government also issued revised economic growth rates for the three years to 2011.

The Commerce Department in its final and revised estimate said economic activities declined 3.1% in 2009 compared to previous estimate of 3.5% and rebounded by 2.4% in 2010 compared to the previous estimate of 3%. Economic growth in 2011 was higher at 1.8% compared to previous forecast of 1.7%.

The revised estimates are based on more comprehensive data and suggested that state and local government spending was higher than earlier expected in 2009 and corporate rebound was slower than reported in earlier estimates.

In European debt sale, the Italian Treasury raised €8.5 billion from its 6-month bill auction at lower borrowing costs. The average yield fell to 2.454% from 2.957% at the last auction on June 27. The bid-to-cover ratio was 1.61, the same as last month.

Asian markets gained tracking the U.S. and European indexes.

Japan''s retail sales rose 0.2% from a year earlier in June, the Ministry of Economy, Trade and Industry said. Separately, Japan''s consumer prices fell 0.2% annually compared to a 0.1%t drop in May.

U.S. Economy Expands

The U.S. gross domestic product expanded 1.5% in the second quarter from the revised 2% growth recorded in the first quarter, according to data released by the Commerce Department today.

Earnings Review

Arch Coal Inc. ((ACI)), the coal producer reported second quarter revenues rose to $1.06 billion, from $985.53 million in the prior-year period. Net loss in the quarter swung to $435.5 million or $2.05 per diluted share compared to a profit of $6.31 million or 4 cents per share in 2011.

Barnes Group Inc. ((B)), the aerospace and industrial components manufacturer stated second quarter net sales decreased 2% to $293.4 million from $297.8 million in the second quarter of 2011. Net income was up 9% to $24.8 million, or 45 cents per diluted share, from $22.7 million or 41 cents per diluted share, a year earlier.

D.R. Horton, Inc. ((DHI)), the homebuilder reported third quarter revenue increased 14% to $1.1 billion from $975.4 million in the same quarter of 2011. Home sales closed in the quarter increased 9% to 4,957 compared to 4,555 homes in the year ago quarter.

Net profit increased to $787.8 million or $2.22 per diluted share compared to $28.7 million or 9 cents per diluted share in fiscal 2011.

Facebook, Inc. ((FB)) plunged 15.1% or $4.06 to $22.78 after the social network site operator reported revenue in the second quarter ending in June edged up to $1.18 billion compared to $895 million in the same period of last year. Net loss in the quarter swung to $157 million or 8 cents per diluted share compared to net income of $240 million or 11 cents per share a year ago.

Merck & Co., Inc. ((MRK)), the health care provider reported second quarter sales rose 1.3% to $12.31 billion. Net income declined to $1.79 billion or 58 cents per diluted share, from $2.02 billion or 65 cents per share in the same quarter last year.

Samsung Electronics Co., Ltd., the South Korean conglomerate reported second quarter total sales increased around 21% to 47.60 trillion won from 39.44 trillion won last year. Net profit surged 48% to 5.19 trillion won from 3.51 trillion won in the prior-year quarter.

Weyerhaeuser Copany ((WYY)), the forest products company reported second quarter net sales and revenues grew to $1.79 billion from $1.61 billion for the same period last year. Net earnings soared to $84 million or 16 cents per share, from $10 million or 2 cents per share in the prior-year quarter.