Wall Street Trims Early Losses, Russia Tightens Control on Energy Supply

Bikram Pandey
22 Oct, 2012
New York City

Stocks in New York and in Europe drifted after earnings worries resurfaced. Japan reported a sharp decline in exports for the fourth month in a row and Caterpillar lowered outlook. Russia controlled Rosneft agreed to acquire TNK-BP joint venture for $55 billion and tighten control of energy supply.

[R]4:00 PM New York – Stocks in New York and in Europe drifted lower after earnings worries resurfaced. Japan reported a sharp decline in exports for the fourth month in a row and Caterpillar lowered outlook. Russia controlled Rosneft agreed to acquire TNK-BP joint venture for $55 billion and tightened control of oil supply.[/R]

Stocks in New York were flat in a choppy session after Caterpillar lowered its outlook on weak economy.

On merger Monday, Russia controlled Rosneft agreed to acquire the entire joint venture TNK-BP for $55 billion.

The deal ends the nine years of often contentious relationship between BP PLC and Russia based oil company controlled by several billionaires.

Under the terms of the deal, BP will sell its 50% stake in the joint venture for $17.1 billion in cash. And, BP will use $4.8 billion of cash to acquire additional 5.66% stake in Rosneft from the Russian government.

The online genealogy site, Ancestory.com, agreed to today to be acquired by the European private equity firm Permira for $1.6 billion.

The purchase price of $32 a share is a 9.7% premium from the closing price on Friday.

Peabody Energy ((BTU)) soared more than 12% after the largest coal miner reported earnings that were ahead of expectations and lifted the lower end of the year full-year earnings and estimated higher than expected annual earnings outlook.

The coal miner lifted its full-year sales outlook to between 240 million and 250 million tons from its July estimate between 230 million and 250 million tons.

Peabody also said it is targeting adjusted earnings per share between $2.10 and $2.30 a share in the current year.

Revenues in the quarter jumped 3.9% to $2.06 billion and net profit declined to $42.9 million or 16 cents a share from $274.1 million or $1 a share.

Caterpillar ((CAT)) said third quarter net rose 49% to $1.7 billion or $2.54 a share compared to $1.14 billion or $1.71a share. Revenues in the quarter increased 4.6% to $16.45 billion.

The construction and mining equipment maker said it now estimates 2012 revenues of $66 billion and net income between $9 billion and $9.25 billion a share.

Freeport McMoran ((FCX)) opened higher after the metals and mining company reported quarterly earnings and revenues ahead of expectations.

Monster Beverage plunged 11% to $47.46 after the energy drinks were cited in the death of five people in the last one year, according to reports filed by doctors with the federal regulatory agency.

Lennox Intl. net dropped 13% and lifted fiscal outlook and V.F. Corp. net surged 27%. Coach Inc ((COH)) dropped 4% ahead of earnings release tomorrow.

The European indexes edged lower on weak Japanese trade data. Euro area government deficit dropped in 2011. The German economy is estimated to shrink in the fourth quarter. The UK household finance index rose in October.

Electrolux net sales rose 5.9% to SEK 27.17 billion and Philips earnings more than doubled from last year in the third quarter. BP agreed to sell its 50% share in TNK-BP to Rosneft and JCDecaux agreed to acquire a 25% stake in Russ Outdoor.

The benchmark Nikkei index rose for the sixth day in a row after dropping as much as 1.5%. Exports in September dropped for the fourth month in a row after shipments to China plunged 14%. Regional manufacturing survey showed economic weakness across.

Australian stocks turned lower from a new 15-month high on the weakness in resource sector. Australian government lowered its estimate of surplus and mining industry tax receipts over next four years.

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond increased to 1.79% and on 30-year bond rose to 2.95%.

The U.S. dollar inched higher to $1.304 to a euro and increased against the Japanese yen to 79.88 yen.

Immediate delivery futures of Texas crude oil decreased $1.32 to $88.76 a barrel and Brent crude fell 81 cents to $109.33, futures of natural gas decreased 0.17 cents to $3.44 per mbtu and gasoline traded down 4.93 cents to 264.70 cents a gallon.

In metals trading, copper decreased 2.35 cents to $3.61 per pound, gold increased $2.80 to $1,726.80 per ounce and silver increased 18 cents to $32.28.