U.S. Consumer Spending Flat, Home Price Index Falls

Arthi Gupta
31 Jul, 2012
New York City

U.S. indexes rose after better-than-estimated corporate earnings. Home price index declined 0.7% in May and U.S. personal income rose more than estimated in June. Valero, U.S. Steel, Cummins and Pfizer gained on better than expected earnings.

[R]9:45 AM New York – U.S. indexes rose after better-than-estimated corporate earnings. Home price index declined 0.7% in May and U.S. personal income rose more than estimated in June. Valero, U.S. Steel, Cummins and Pfizer gained on better than expected earnings.[/R]

Market sentiment was cautious on Wall Street ahead of the 2-day Fed meeting and mixed earnings report. Coach, Aetna and Anheuser Busch InBev declined on weaker than expected earnings but U.S. Steel, Valero, Cummins and Pfizer on exceeding expectations.

Apple Inc gained more than 1% on the speculation that the company is likely to release the next version of its mobile phone on August 12.

Consumer spending in June was stable in June as Americans used the recent gains in income to boost savings.

The metropolitan home price index tracking 20 largest cities declined 0.7% in May from a year ago after falling 1.8% in April. The monthly decline was the smallest since September 2010.

On a monthly basis and after adjusting for seasonality, home prices increased 0.9% in May and rose 2.2% on an unadjusted basis.

On a yearly basis, Phoenix led with a rise of 12% and Atlanta led the decline with a fall of 15%.

The U.S. Federal Open Market Committee is set to meet today for a two-day policy meeting and expectations of another round of stimulus are running high.

U.S. Treasury Secretary Timothy Geithner and the German finance minister Wolfgang Schaeuble after an informal meeting in Europe pledged to stabilize the global economy.

European indexes dropped after unemployment in the region rose to a record high and the latest batch of earnings disappointed investors.

Deutsche Bank said it will cut 1,900 positions including 1,500 in investment banking and securities trading and will help to save €350 million. Most of the job cuts are expected to be conducted outside of Germany.

U.S. Personal Income Rises

U.S. personal income rose more than estimated in June, according to the U.S. Commerce Department report released today.

The Commerce Department said that personal income in the U.S. rose 0.5% to $61.8 billion and disposable personal income increased $52.4 billion or 0.4% in June.

ConAgra to Acquire Frozen Meals Businesses

ConAgra Foods, Inc. agreed to acquire the Bertolli and P.F. Chang''s Home Menu frozen meals businesses from Unilever PLC for $265 million in cash.

The agreement includes a license for the use of the Bertolli brand name and the transfer of Unilever’s existing license with P.F. Chang’s for use of the P.F. Chang’s Home Menu brand name.

Earnings Review

Aetna Inc. ((AET)), the health insurer reported second quarter revenues increased 6% to $8.83 billion from $8.32 billion last year. Net income for the second quarter fell 15% to $457.6 million or $1.32 per share compared to net income of $536.7 million or $1.39 per share for the second quarter of 2011.

Coach, Inc. ((COH)), the fine accessories and gifts marketer said fourth quarter sales rose 12% to $1.16 billion compared with $1.03 billion in the same period prior year. Net income for the quarter rose 24% to $251.43 million or 86 cents per diluted share compared with $202.48 million or 68 cents per share last year.

Pfizer Inc. ((PFE)), the biopharmaceutical company reported second quarter revenues were $15.1 billion, a decrease of 9% compared with $16.5 billion in the year-ago quarter. Net income attributable to the company increased 25% to $3.25 billion or 43 cents per diluted share, from $2.61 billion or 33 cents per share in the same quarter last year.

Thomson Reuters Corporation ((TRI)), the information services provider said second-quarter revenues decreased 4% to $3.31 billion from $3.45 billion last year. Net earnings rose to $922 million or $1.11 per share from $563 million or 67 cents per share last year.