Pearson, Bertelsmann in Merger Talks, Berkshire Won Subprime Loan Auction

Bikram Pandey
25 Oct, 2012
New York City

Stocks struggled and indexes stayed near the flat line after several corporations report weaker than expected results. Pearson and Bertelsmann are looking to merge their publishing divisions. Berkshire Hathaway won a bankruptcy auction of subprime loans from Residential Capital.

[R]4:000 PM New York – Stocks struggled and indexes stayed near the flat line after several corporations report weaker than expected results. Pearson and Bertelsmann are looking to merge their publishing divisions. Berkshire Hathaway won a bankruptcy auction of subprime loans from Residential Capital.[/R]

U.S. indexes were generally flat after weekly jobless claims fell and durable goods orders rebounded 9.9% in September on the large increase in civilian aircraft orders.

Weekly jobless claims declined 23,000 to 369,000 and durable goods orders rebounded in September but some of the weak underlying data could affect negatively the third quarter gross domestic product which is scheduled to be released on Friday. Economists are looking for an increase between 1.8% and 1.9%.

In merger news, Yahoo agreed to acquire mobile-app maker Stamped for about $10 million, first purchase under newly appointed chief executive. Berkshire Hathaway was selected for a portfolio of loans from Residential Capital sold in a bankruptcy auction by the subprime unit of Ally Financial.

Pearson and Bertelsmann are in talks to merge their publishing units, Random House and Penguin to create global market leader as the book publisher tackle fast growing ebook business.

In corporate news, Aetna third quarter net gained 2% on higher premiums. Altria quarterly net tumbled 44%. Biogen third quarter net jumped 13%. Colgate-Palmolive plans to reduce global workforce by 6% by 2016. Occidental Petroleum third quarter net declined 22% to $1.38 billion.

Apple is scheduled to release earnings after the close today. Zynga ((ZNGA)) soared 13% after the social networking site operator swung to a third quarter loss and announced a U.K. gambling website.

Ryland Group ((RYL)) gained as the home builder reported earnings and revenues ahead of expectations on gains in new orders, average closing prices, and gross margin.

The European indexes gained on better than expected earnings. Sweden left its key rate unchanged and IMF approved €1.5 billion disbursement for Portugal. Euro zone money supply growth fell and the UK economy expanded in the third quarter.

Banco Santander net plunged 94% and Credit Suisse quarterly net dropped 63%. Logitech second quarter net surged. WPP and BASF sales rose 8% to €19 billion reported revenues rose 1.6% to £2.496 billion in the third quarter.

In Asian markets, Hong Kong index gained 0.2% to close at a 14-month high and rallied for the tenth day in a row. In Japan, the Nikkei index advanced 1.1% on the hopes that the Bank of Japan will expand its asset purchase program after the meeting next week and the yen softened to a 4-month low.

Nintendo and Sharp fell on earnings worries and Hitachi Metals lowered operating earnings outlook.

Australian markets closed marginally higher and defensive stocks led the gainers. Real estate manager Mirvac reaffirmed its current year outlook and Westfield Retail Trust swapped interests in seven shopping centers with AMP Capital. ANZ reported 6% increase in full year earnings.

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond increased to 1.83% and on 30-year bond rose to 2.98%.

The U.S. dollar inched lower to $1.297 to a euro and increased against the Japanese yen to 80.28 yen.

Immediate delivery futures of Texas crude oil increased 26 to $85.96 a barrel and Brent crude rose 62 cents to $108.43, futures of natural gas decreased 0.02 cents to $3.43 per mbtu and gasoline traded up 7.13 cents to 267.47 cents a gallon.

In metals trading, copper decreased 1.25 cents to $3.55 per pound, gold increased $11.40 to $1,719.20 per ounce and silver increased 50 cents to $32.18.