Stocks Up on Improving U.S. Economy Data, Facebook Falls 6%

Bikram Pandey
16 Aug, 2012
New York City

The latest read on housing market and jobless claims added to the string of improving U.S. economic data. Stocks were higher after the largest networking equipment maker Cisco reported better than expected earnings Facebook extended the loss to a 60% plunge from the IPO price.

[R]4:55 PM New York – The latest read on housing market and jobless claims added to the string of improving U.S. economic data. Stocks were higher after the largest networking equipment maker Cisco reported better than expected earnings Facebook extended the loss to a 60% plunge from the IPO price.[/R]

U.S. indexes rose on positive comments after a generally positive trading sentiment on the economy. The latest data on housing starts and weekly jobless claims added to the upbeat market momentum after the release of the strongest retail sales growth rate in four months.

In addition, comments from the Chinese premier Wen Jiabao also helped global market sentiment in and German Chancellor Angela Merkel appeared to back a new bond buying program from the European Central Bank.

New housing construction in the U.S. fell 1.1% to annual rate of 746,000 from the revised pace in June of 754,000. And, Building permits increased to 812,000, the fastest pace since August 2008.

Tech stocks were also higher after Cisco said net surged 55.6% in the fourth quarter and profit excluding one-time items increased to 47 cents and revenues rose 4.4% to $11.7 billion. Applied Materials third quarter net plunge 54.2% and estimated current quarter sales to fall below estimate. Agilent net fell 26%. NetApp net tumbled 54.3%.

Facebook Inc ((FB)) stock plunged 6% to $19.88 and was cut nearly half from its initial public offering price after 271.1 million shares were available for additional trading today. And, in all 2 billion shares held by early investors and employees will be able to trade by May of next year.

Facebook’s trading volume on New York Stock Exchange shot up five times to 157 million from average of 30 million as early investors including Accel Partners and Goldman Sachs and other investors were permitted to trade shares.

Retail stocks were in focus after Limited Brands ((LTD)) second quarter net dropped 37.9%, Dollar Tree ((DLTR)) second quarter net climbed 26%, Ross Stores ((ROSS)) second quarter net soared 23% and Sears Holdings ((SHLD)) net loss narrowed.

Wal-Mart Stores, ((WMT)) the largest retailer said second quarter climbed 5.7% to $4.02 billion and revenues increased 4.5% to $114.3 billion.

The European indexes traded lower awaiting central bank action. German employment rose in the second quarter, the UK retail sales rose unexpectedly and euro zone annual inflation was stable in July. Telekom Austria earnings rose in the second quarter.

Stocks in Japan gained and the benchmark index Nikkei closed at a 6-week high after the yen fell. Comments from Chinese premier and the weakness in the yen prompted a sharp reversal in exports linked companies.

Australian stocks surged after the latest batch of earnings lifted sentiment. Coles, the supermarket division of Wesfarmers reported a surge in sales and earnings. Wealth manager AMP reported 7% increase in first half sales. However, the exchange operator ASX said annual net declined 4%.

Commodities, Bonds and Currencies

The yield on 10-year bond traded higher to 1.84% and on 30-year bond traded up to 2.96%.

The U.S. dollar inched higher to $1.2238 to a euro and increased against the Japanese yen to 79.33 yen.

Immediate delivery futures of Texas crude oil increased 82 cents to $95.16 a barrel and Brent crude added 9 cents to $114.41, futures of natural gas fell 3 cents to $2.73 per mbtu and gasoline price edged down 2.17 cents to 306.23 cents a gallon.

In metals trading, copper increased 3.4 cents to $3.39 per pound, gold added $9.60 to $1,616.20 per ounce and silver gained34 cent to $28.23.