U.S. Import Prices Drop, Chinese Data Disappoint

Arthi Gupta
10 Aug, 2012
New York City

Stocks on Wall Street struggled after Chinese exports grew 1% in July and bank lending was significantly lower than expected in the month. J. C. Penney swung to quarterly loss and Yahoo stock fell after the company may not return proceeds of its stake in Alibaba.com to shareholders.

[R]11:35 AM New York – Stocks on Wall Street struggled after Chinese exports grew 1% in July and bank lending was significantly lower than expected in the month. J. C. Penney swung to quarterly loss and Yahoo stock fell after the company may not return proceeds of its stake in Alibaba.com to shareholders.[/R]

Stocks in New York opened lower after China reported weak international trade data and the euro declined. In seasonally weak trading, stocks trudged higher as the day progressed and closed up for the fifth week in a row on the hopes that central banks will offer additional support to the economies of Europe and the U.S.

China''s trade surplus narrowed to $25.1 billion in July from $31.7 billion in June, the latest data from the General Administration of Customs showed.

The central bank in China lowered rates for two times in June and July and lowered the bank reserve ratios to revive the domestic demand as the external demand remained weak for Chinese products.

Banks in China also lent 540.1 billion yuan or $85.9 in new loans in July, significantly lower than most estimates near 700 billion reported in Chinese media.

The latest data released today from China follows the weakening growth in retail sales and industrial output reported a day ago.

Japan’s industrial output rose 0.4% from a month ago in June compared to the 0.1% increase estimated initially.

The Reserve Bank of Australia lifted its economic growth outlook for 2012 to 3.5% from a prior forecast of 3% announced in May.

U.S. Import Prices Drop

U.S. import prices declined 0.6% in July, after decreasing 2.4% in June and 1.5% in May, the U.S. Bureau of Labor Statistics reported today. In each of the past three months, falling prices for both fuel and nonfuel imports contributed to the overall drop.

In contrast, U.S. export prices rose 0.5% in July following a 1.7% decline the previous month.

IEA Lowers Global Oil Demand Outlook

The International Energy Agency lowered its 2013 oil demand growth forecast by 0.4 million barrels per day to 90.50 mbd citing sluggish economic growth.

The agency that represents oil consuming western nations said global oil supply grew by 0.3 mbd on a monthly basis to 90.7 mbd in July, with non-OPEC contributing 60% of the increase.

Earnings Review

J. C. Penney Company, Inc. ((JCP)), the retailer reported second quarter total net sales slumped 22.6% to $3.02 billion from the quarter a year ago. Comparable store sales for the second quarter declined 21.7%.

Net loss in the quarter swung to $147 million or 67 cents per diluted share compared with a $14 million or 7 cents per share profit last year.

Lions Gate Entertainment Corp. ((LGF)), the entertainment company reported first quarter revenues surged 81% to $471.8 million from last year. Net loss for the quarter swung to $44.2 million or 33 cents per diluted share compared to a profit of $10.3 million or 8 cents per share last year.

Nordstrom, Inc. ((JWN)), the fashion specialty retailer said second quarter net sales rose 7.4% to $2.92 billion on same-store sales rise of 4.5%. Net earnings fell to $156 million or 75 cents per diluted share compared with net earnings of $175 million or 80 cents per diluted share, for the same quarter last year.

Nvidia Corporation ((NVDA)), the graphic chip maker said second quarter revenues rose to $1.044 billion from $1.016 billion in the prior year. Net income for the quarter declined to $119 million or 19 cents per diluted share, from $151.6 million or 25 cents per share last year.