Markets Extend Gains, U.S. Trade Deficit Flat

Arthi Gupta
11 Sep, 2012
New York City

U.S. indexes extend gains ahead of the Fed meeting. U.S. trade deficit rose slightly in July. The U.S. Treasury priced AIG stock at $32.50 per share. The OECD unemployment rate increased slightly in July.

[R]10:05 AM New York – U.S. indexes extend gains ahead of the Fed meeting. U.S. trade deficit rose slightly in July. The U.S. Treasury priced AIG stock at $32.50 per share. The OECD unemployment rate increased slightly in July.[/R]

Stocks and indexes on Wall Street traded higher after thirty minutes of opening and markets are increasingly taking optimistic view of the next round of stimulus as early as this week.

World markets have advanced from the low of June and the S&P 500 and the Nasdaq Composite Index are trading near 4-year high on the expectations of another monetary policy action from the Fed.

S&P 500 index has gained 14% in the year so far and extending gains for the fourth year in a row. The index gained 6.5% in 2011 and added 5.9% in 2010 and jumped 23.5% in 2009 after plunging 39% in 2008.

European indexes edged lower ahead of the ruling by the highest court in Germany that may delay the setting up of the permanent rescue fund that will provide additional financing to struggling euro zone nations.

Greece is in focus after Prime Minister Antonis Samaras failed to convince coalition members on spending cuts demanded by lenders. The troika has demanded modifications in the austerity measures presented by the Greek government to receive the next tranche of the bailout.

In Asian news, Chinese premier Wen Jiabao said at the World Economic Forum in Tianjin that the country’s economy is on track to meet its growth target of 7.5% this year.

Business confidence in Australia worsened in August. The business confidence index in Australia fell to -2 in August from 3 in July. The business conditions index rose to 1 in August from -3 in July.

U.S. Trade Deficit Rises

U.S. trade deficit rose slightly in July, according to data released by the U.S. Commerce Department today.

Total exports increased 2.8% to $183.3 billion and imports edged up 0.6% to $225.3 billion resulting in a deficit of $42 billion in July, up from the revised $41.9 billion in June.

OECD Jobless Rate Up

The OECD unemployment rate increased slightly to 8% in July compared with 7.9% in June.

In the euro area, the jobless rate remained stable at 11.3% in July, following 13 months of continuous rises.

The unemployment rate fell 0.2 percentage point in the United States to 8.1% in August.

U.S. Treasury Prices AIG Stock Offering

The U.S. Department of Treasury agreed to sell a total of 553.85 million shares of AIG at $32.50 per share for approximately $18 billion in an underwritten public offering. AIG agreed to buy 153.85 million shares, representing about $5 billion of the expected proceeds.

Following the offering, the Treasury’s ownership would decline to 21.5% from 53.4%.

Earnings Review

Casey''s General Stores, Inc. ((CASY)), the convenience stores operator reported first quarter revenues decreased to $1.868 billion from $1.874 billion last year. Net profit dropped to $39 million or $1.01 per diluted share from $39.4 million or $1.03 per share last year.

McDonald’s Corporation ((MCD)), the foodservice retailer said global comparable sales increased 3.7% and U.S. comparable sales rose 3% in August.

Palo Alto Networks, Inc. ((PANW)), the network security software maker reported fourth quarter revenues for the quarter soared 88% to $75.6 million from last year. Net loss narrowed to $4.6 million or 18 cents per diluted share from $6 million or 40 cents per share last year.

For the full year, total revenue grew 115% to $255.1 million compared with $118.6 million last year. Net income for the year was $0.7 million or zero per diluted share compared with a net loss of $12.5 million or 88 cents a year ago.

Shuffle Master, Inc. ((SHFL)), the casino cards and accessories maker reported third quarter revenues increased 9% to $63.4 million from last year. Net income for the quarter rose 14% to $10.4 million or 18 cents per diluted share compared to $9 million or 17 cents per share last year.

Sonoco Products Company ((SON)), the packaging services provider estimates third quarter base earnings per diluted share in a range of 51 cents to 53 cents compared with previously announced guidance of 62 cents to 66 cents per diluted share.

United Natural Foods, Inc. ((UNFI)), the specialty foods distributor reported fourth quarter net sales grew 16% to $1.34 billion from the same period last year. Net income for the quarter surged 46.4% to $25.1 million or 51 cents per diluted share, from $17.18 million or 35 cents per share in the year-ago period.

For the full year, net sales grew 15.6% to $5.24 billion over the prior fiscal year. Net income for the year rose to $91.34 million or $1.86 from $76.67 million or $1.60 per share in the previous year.