NY Settles Stan Chat Probe for $340 M, Internet Stocks Down

Bikram Pandey
14 Aug, 2012
New York City

U.S. stocks gained after retail sales increased the most in four months. However, euro zone economies struggled in the second quarter. In trading, Internet stocks were in focus after Groupon plunged 23% and Yelp, Angies List and Facebook extended losses. New York settles Standard Chartered probe.

[R]4:00 PM New York – U.S. stocks struggled and retail sales increased the most in four months. However, euro zone economies struggled in the second quarter. In trading, Internet stocks were in focus after Groupon plunged 23% and Yelp, Angies List and Facebook extended losses.[/R]

U.S. indexes opened higher after retail sales rose more than expected in July as consumer spending increased at department stores, auto dealers and specialized retailers. However, the market began losing steam in early afternoon and closed down.

The monthly increase of 0.8% was the strongest in four months after the revised 0.7% drop in June. A separate report showed wholesale prices increased 0.3% in the month after rising 0.1% in June. The wholesale price increase was driven by the rise in costs for automobiles, pharmaceuticals and cigarettes.

Retailers and Internet stocks were in focus after the earnings release. Cautious outlook from Groupon knocked several other Internet stocks.

The daily-deals site operator Groupon Inc plunged 23% after it issued a cautious earnings outlook. The online review site, Angie’s List Inc dropped 15% after the expiry of the lock up period and dragged down Yelp Inc fell 6%. Facebook continued its steady slide and declined 4% and extended its loss to 45% since it went public in May.

On the earnings front, the designer apparel maker Michael Kors soared 14% after it reported a sharp upswing in earnings. Home Depot gained after the retailer reported better than expected earnings. TJX was flat after earnings met expectations and same store sales at U.S. locations increased 7% in the quarter.

The European indexes gained after the German economy expanded more than estimated in the second quarter and the activities in the euro zone declined 0.2%. The UK home prices declined in July. RWE planned to cut 2,400 positions globally.

The UK based Standard Chartered Plc agreed to settle New York State money laundering probe for $340 million ahead of the hearing tomorrow in front of the state regulators. The bank with most its operations in Asia, Africa and the Middle East is still facing probe from Federal Reserve, the Justice Department, U.S. Treasury and the Manhattan District Attorney.

Stocks in Tokyo traded higher for the first time in three days as most investors stayed away for a weeklong holiday. Investors focused on international events after the winding down of the earnings season and the lack of domestic economic news.

Australian indexes closed higher and the Aussie dollar edged lower after the latest batch of earnings lifted market sentiment. International worries linked to China, Japan and the euro zone restrained the market advance.

Commodities, Bonds and Currencies

The yield on 10-year bond traded higher to 1.72% and on 30-year bond traded up to 2.82%.

The U.S. dollar inched higher to $1.232 to a euro and increased against the Japanese yen to 78.76 yen.

Immediate delivery futures of Texas crude oil increased 63 cents to $93.36 a barrel and Brent crude added 37 cents to $113.97, futures of natural gas added 10 cents to $2.84 per mbtu and gasoline price edged up 0.70 cents to 299.77 cents a gallon.

In metals trading, copper increased 0.4 cents to $3.36 per pound, gold fell $10.10 to $1,602.50 per ounce and silver fell 2 cent to $27.76.