Fed Repeats with No New Insights, Trading in New York Disrupted

Bikram Pandey
01 Aug, 2012
New York City

U.S. stocks turned lower after Fed statement failed to shed new light on the economy and the central bank did not offer any new measures to revive employment. Investors shifted attention to the European Central Bank anticipating specific steps to curb stress in sovereign bond market.

[R]4:05 PM New York – U.S. stocks turned lower after Fed statement failed to shed new light on the economy and the central bank did not offer any new measures to revive employment. Investors shifted attention to the European Central Bank anticipating specific steps to curb stress in sovereign bond market.[/R]

U.S. indexes turned lower after a vague statement from the Fed and weak manufacturing reports from the U.S., euro zone, Germany and China.

Stocks declined in the afternoon after the rate setting committee released a statement that repeated usual views about the economy and offered no immediate and clear steps to revive employment and economic growth.

In New York trading today 148 stocks faced a wave of orders and traded in 10% band on no material news.

Later in the day Knight Capital Group Inc confirmed that the trading platform operator was facing technical difficulties and its market making function was affected. Knight plunged 26% and traded at the lowest in seven years.

Separately, New York Stock Exchange said it will cancel all trades between 9:30 a.m. and 10:15 a.m. ET that traded above or below the opening price today. The list of companies include: Wizard Software, American Reprographics Co, Quicksilver Resources, E-House China Holdings, Reaves Utility Income Fund and China Cord Blood Corp.

A survey conducted by ADP showed private sector employment exceeded expectations in July and manufacturing weakened in Europe and struggled in China.

A private consortium of investors won control of Toronto Stock Exchange and Torchmark agreed to acquire Family Heritage for $218.5 million.

On the earnings front, Devon Energy second quarter net tumbled 83% and Exelon net dropped 54%. Harley-Davidson second quarter net surged 30% but said stronger dollar will affect earnings in the year. MasterCard second quarter net surged 15% to $700 million and the company plans to push more aggressively in emerging markets. Hyatt Hotels Corp said second quarter earnings increased on stronger demand in large U.S. metropolitan areas.

Allstate second quarter net swung to $423 million profit and chief executive is seeking permission to increase insurance rates. Comcast net surged 47% to $1.35 billion. Ecolab second quarter net surged 47% and fiscal outlook narrows. Hanesbrands net tumbled 99% and Time Warner net declined 33%.

Career Education Corp plunged 20% after the company reported a loss in the second quarter and disclosed a regulatory investigation.

General Motors and Ford Motor said July sales of new vehicles declined from a year ago as Japanese automaker rebuild supply chain and improve production after tsunami and severe floods in Thailand.

European markets overlooked the weakening manufacturing in the euro zone and in Germany and focused on the central bank action as early as this week. Manufacturing recession deepened in the euro area with UK manufacturing at 38-month low in July. BMW quarterly net fell 28%.

Stocks in Tokyo traded lower and domestic earnings dominated market sentiment. Honda Motor declined o weaker than expected earnings and Komatsu fell on weak outlook. Seiko Epson fell to a record low after it cut its guidance but NEC and Panasonic gained.

Australian stocks halted a 4-day rally and the dollar closed flat in weak trading volume. Country Road agreed to acquire fashion retailer Witchery Australia for $172 million. Western Australia focused casino operator Crown plans to spend $568 million to build a luxury hotel in Perth.

Commodities, Bonds and Currencies

The yield on 10-year bond traded higher to 1.53% and on 30-year bond increased to 2.60%.

The U.S. dollar inched higher to $1.225 to a euro and was flat against the Japanese yen to 78.48 yen.

Immediate delivery futures of Texas crude oil increased 77 cents to $88.83 a barrel and Brent crude rose 83 cents to $105.79, futures of natural gas decreased 0.04 cents to $3.16 per mbtu and gasoline price increased 5.61 cents to 283.09 cents a gallon.

In metals trading, copper decreased 5.7 cents to $3.35 per pound, gold fell $9.20 to $1,605.40 per ounce and silver declined 51 cents to $27.39.