Large Gains in Stocks as Lawmakers Talk Budget Compromise

Bikram Pandey
19 Nov, 2012
New York City

U.S. stocks surged as optimism reigned high on the budget compromise. Also existing home sales increased for the seven months in a row in October and confidence among home builders surged to a six-month high. European markets and commodities extended gains.

[R]4:00 PM, New York – U.S. stocks surged as optimism reigned high on the budget compromise. Also existing home sales increased for the seven months in a row in October and confidence among home builders surged to a six-month high. European markets and commodities extended gains.[/R]

U.S. indexes and stocks advanced as lawmakers show willingness to avert the so called ‘fiscal cliff’ and existing home sales increased for the seventh month in a row.

Optimism on Wall Street ran high after the recently reelected President Barack Obama met with senior Democrats and Republicans on Nov 16 and to devise a plan to avoid automatic tax increases and spending cuts to kick in from the beginning of 2013.

Cisco agreed to acquire Meraki for $1.2 billion and Electronics for Imaging agreed to buy Technique.

In corporate news, Cisco agreed to buy Meraki Inc. for $1.2 billion in cash and Medtronic purchased China based Kanghui Holdings for $755 million. Wright Medical agreed to acquire BioMimetic for $380 million. Lowe’s third quarter net surged 76% beating the expectations set by analysts. Tyson Foods quarterly net climbed 91%.

Across the Atlantic, the European indexes soared ahead of the euro zone finance ministers meeting in Brussels tomorrow and are likely to offer more time to Greece to implement new austerity measures. Spanish bad loans surge to a new record in September.

Euro zone construction activities fell in September 1.4%. French leading economic index rose for the third month in a row. Greek current account swung to a surplus. Italian industrial new orders declined more than estimated.

Natuzzi third quarter net loss narrowed to €5.2 million. ING reached agreement on amended EC Restructuring Plan. Intertek first ten months reported revenue growth was 20.1%. HICL sold Doncaster Schools PFI project for £5.3 million.

The UK indexes rose and average asking price for a home fell in November. Households in the UK report slowest deterioration in their finances in almost two years. Lloyds agreed to sell its Irish commercial real estate loans portfolio to Risali for £149 million.

Stocks in Tokyo advanced for the fourth day in a row as investors took bet for the change of power in the general election next month and see more stimulating measures from the central bank. The Nikkei index closed at a 2-month high and the yen fell to a 7-month low.

Australian market indexes and the dollar closed higher after resource prices increased. Billabong’s U.S. head of business is looking to make an offer for the company with the help of private equity funds.

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond decreased to 1.62% and on 30-year bond rose to 2.77% and traders adjust to truncated week to celebrate Thanksgiving Holiday.

The U.S. dollar inched lower to $1.281 to a euro and fell against the Japanese yen to 81.23 yen.

Immediate delivery futures of Texas crude oil increased 2.48 to $89.40 a barrel and Brent crude rose $2.62 to $111.57, futures of natural gas decreased 0.04 cents to $3.75 per mbtu and gasoline traded up 5.4 cents to 276.27 cents a gallon.

In metals trading, gold increased $18.70 to $1,733.40 per ounce, silver increased 74 cents to $33.19 and copper closed up 7.95 cents to $3.54 per pound.