Narrower U.S. Current Account Deficit, Stocks Open Lower

Arthi Gupta
18 Sep, 2012
New York City

U.S. indexes traded lower and oil slipped for the second day as the effectiveness of the latest Fed stimulus was questioned. FedEx lowered its profit view. Dole Food agreed to sell its worldwide packaged foods and fresh produce businesses in Asia to Itochu for $1.7 billion.

[R]10:15 AM New York – U.S. indexes traded lower and oil slipped for the second day as the effectiveness of the latest Fed stimulus was questioned. FedEx lowered its profit view. Dole Food agreed to sell its worldwide packaged foods and fresh produce businesses in Asia to Itochu for $1.7 billion.[/R]

U.S. indexes edged lower in early morning trading after current account deficit narrowed and new doubts rose about the effectiveness of the latest monetary stimulus and FedEx lowered its profit view.

The U.S. current account deficit narrowed to $117.40 billion in the quarter to June from $133.6 billion in the previous quarter, according to the latest data released by the Commerce Department.

The current account deficit as a percentage of the GDP declined to 3% from 3.5% in the previous quarter. The deficit is expected to widen as exports are expected to slow to Europe and oil prices increase will drive the import bill higher.

European indexes traded lower as traders refocused on the widening crisis in Spain and the government is said to inch closer to seek a larger bailout. Spanish government is resisting the calls for a bailout from the euro zone on the worries that adding new austerity measures will create more pressure on unemployment and government tax receipts.

In Asian trading, the ongoing rift between Japan and China took a new dimension after Japanese companies urged their executives to avoid public places and plan to close several manufacturing facilities.

Dole to Sell Packaged Foods Businesses

Dole Food Company, Inc. inked an agreement with Itochu Corporation to sell its worldwide packaged foods and fresh produce businesses in Asia for $1.685 billion in cash.

Cash proceeds from the transaction will be used by Dole for debt reduction and for restructuring and other corporate purposes.

Lenovo to Acquire Stoneware

Lenovo Group Ltd. said it would acquire Stoneware Inc, a software technologies company, to strengthen its cloud computing operations. Financial terms of the acquisition were not disclosed.

Alpha Natural Resources Plans Job Cuts

Alpha Natural Resources, a U.S.-based coal miner said it plans to reduce approximately 1,200 positions from the current workforce of 13,100 in the next five months and idle eight mines in Virginia, West Virginia and Pennsylvania.

Also, Alpha plans to cut corporate overhead support cost of $150 million that includes the $50 million to $60 million of cost cut announced on June 8.

Earnings Review

FedEx Corp. ((FDX)), the parcel delivery service provider reported first quarter revenue increased 3% to $10.79 billion from the same quarter last year. Net income for the quarter fell 1% to $459 million or $1.45 per diluted share from $464 million or $1.46 per share in the prior-year quarter.

HNI Corp. ((HNI)), the office furniture maker estimated third quarter sales to increase between 7% and 10% compared to the previous guidance of 11% to 14%.

Intuit Inc. ((INTU)), the financial management solutions provider estimated revenue of $630 million to $640 million for the first quarter and revenue of $4.55 billion to $4.65 billion for fiscal year 2013.

Schiff Nutrition International Inc. ((SHF)), the nutritional supplement company reported first quarter net sales rose to $85.1 million compared to $58.2 million for the same period in fiscal 2012. Branded sales increased 49.3% to $74.8 million.

Net income for the quarter climbed to $6 million or 20 cents per diluted share compared to net income of $4.7 million or 16 cents per share last year.