U.S. Stocks Gyrate on Budget Talks, World Markets Advance

Bikram Pandey
19 Dec, 2012
New York City

Market indexes in New York traded lower after protracted budget negotiations took a negative turn. General Motors soared 6% after it plans to repurchase 200 million shares from the U.S. government. Housing starts declined in November. Nikkei index in Tokyo surged 2.4%.

[R]5:05 PM, New York – Market indexes in New York traded lower after protracted budget negotiations took a negative turn. General Motors soared 6% after it plans to repurchase 200 million shares from the U.S. government. Housing starts declined in November. Nikkei index in Tokyo surged 2.4%.[/R]

Stocks on Wall Street faltered in late trading after budget negotiations turned negative and the White House officials and lawmakers appear divided.

U.S. House is set to pass a bill to increase tax on taxpayers with more than $1 million in income, far less than $400,000 tax increase cut-off income level demanded by President Obama.

In economic news, housing starts fell in November but new building permits, an indicator of future construction rose.

Markel Corp, the seller of property-casualty coverage provider agreed to acquire Alterra Capital Holdings Ltd for $3.13 billion. Oracle profit rose 18% but FedEx earnings declined 12% in the second quarter.

General Motors soared 6% after the company plans to purchase 200 million shares from the U.S. government.

Herbalife Ltd, the maker of nutrition supplement plunged 12% after it became a target of hostile investor William Ackman controlled hedge fund Pershing Square Capital Management according to a TV report on CNBC.

On the earnings front, Actuant first quarter net slipped 2% and FedEx second quarter net dropped 12% and reaffirmed fiscal outlook. General Mills second quarter net climbed 22% and lifted guidance. Navistar Intl. said fourth quarter net loss of $2.77 billion. Oracle second quarter net soared 18%.

The European indexes gained after a rating agency upgraded Greek credit. UBS estimates loss in the fourth quarter on litigation and regulatory charges.

Euro area construction output declined in October. German business confidence improved more than anticipated in December. The Dutch economy is set to contract this and next year.

DSM completed its acquisition of Fortitech for €495 million. TUI financial year 2012 sales increased 5% to €18.3 billion from last year. UBS agreed to pay nearly Sfr1.4 billion in fines to resolve LIBOR-related investigations.

The UK indexes extended global markets gains. BP plc agreed to sell its interest in the Yacheng gas field for $308 million. Balfour Beatty was awarded two major National Grid gas contracts valued at £1.2 billion. Bunzl completed two acquisitions in Canada and Australia.

The Nikkei index soared 2.4% on the expectations of stimulus budget of as much as $110 billion and the Bank of Japan starts a two-day meeting under an intense political pressure to purse easier monetary policy.

Australian benchmark index closed higher on the rising international markets and improving economic outlook in the euro zone and positive undertone in the U.S. budget negotiations. Resource sector stocks gained after iron prices improved to a 3-month high.

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond increased to 1.80% and on 30-year bond rose to 2.99%.

The U.S. dollar inched lower to $1.323 to a euro and increased against the Japanese yen to 84.41 yen.

Immediate delivery futures of Texas crude oil increased $1.36 to $89.73 a barrel and Brent crude gained $1.26 to $110.09, futures of natural gas decreased 8 cent to $3.34 per mbtu and gasoline traded up 4.95 cents to 274.04 cents a gallon.

In metals trading, gold decreased $1.40 to $1,669.30 per ounce and silver eased 53 cents to $31.19 and copper closed down 4.50 cents to $3.607 a pound.