Stocks Turn Lower in New York, Divided Fed Policymakers

Bikram Pandey
03 Jan, 2013
New York City

Attention on Wall Street shifted to the upcoming debt negotiations and traders turned cautious. U.S. auto sales jumped 12.5% in 2012 and sales of new cars are expected to reach 15 million units in 2013. Retailers posted higher holiday sales on deep discounts.

[R]2:30 PM, New York – Attention on Wall Street shifted to the upcoming debt negotiations and traders turned cautious. U.S. auto sales jumped 12.5% in 2012 and sales of new cars are expected to reach 15 million units in 2013. Latest Fed minutes showed a division in the committee on when to pull back on bond buying.[/R]

Stocks on Wall Street traded sideways and lacked direction in the session after rallying sharply yesterday after lawmakers passed tax increase and delayed spending cuts to two months.

Attention on Wall Street shifted to the upcoming debt ceiling revision in February and the market is expected to slide to ahead of tough negotiations. U.S. government needs to increase its self imposed debt ceiling by another $1 trillion to meet its spending plans.

Latest Fed minutes of December meeting showed a division among policymakers when to pull back from buying bonds and members expressed concerned about the benefits of buying more government bonds.

On the economic front, weekly jobless claims rose more than expected and private sector added 215,000 net new jobs in December. For the year, U.S. economy has added 151,000 net new jobs. Retailers reported comparable sales increased 4.5% on deep discounting.

Major retail chains report higher sales in December after shoppers held out for deep discounts.

Data tracked by 123jump.com research team indicated same store sales at 17 chains increased 4.5% in December from a year ago month.

Specifically, Costco Wholesale Corp reported monthly comparable sales increased 9% and Nordstrom reported monthly sale increase of 8.6%. Ross and TJX Cos. both reported same store sales increase of 6% in December but Target reported flat sales in the month.

U.S. auto sales increased to a new high in December month in the last five years. Auto sales in 2012 increased to 14.4 million units from 12.78 million in 2011. New car sales are expected to increase to 15 million vehicles according to data tracked by 123jump.com research team as consumers replace the ageing vehicles and take advantage of the discounts and cheap financing.

GM said sales in December increased 4.9%, Ford sales rose 1.6% and Chrysler sales surged 10%. Toyota sales said December month sales increased 9% to 194,143 units.

In corporate news, Family Dollar first quarter net edged up and lifted second quarter outlook. Macy’s December same store sales grew 4.1%. SunPower divested solar projects to MidAmerican Solar. Worthington second quarter net climbed. UniFirst first quarter net soared 19%.

European markets trimmed losses and Swiss market index played a catch up after holiday break. The benchmark index soared 2.9% in Zurich trading. Indexes across the region traded lower as resource and banks closed down.

Germany reported unemployment held steady at 6.9%, lowest in two decades. Spain said registered unemployed people fell by 59,000 in December as employers in service sector added jobs. Lending to households and companies fell in November in the euro zone.

Alcatel-Lucent gained after Credit Suisse revised higher its views. K+S AG dropped after Chinese company bought fertilizer at a cheaper price from North American manufacturers. Next Plc gained on higher annual profit estimate. Swiss stocks rallied on higher luxury goods sales in Hong Kong.

Financial markets in Japan and mainland China were closed today and scheduled to reopen on Friday.

The Sensex index in Mumbai gained 0.3% and markets were volatile ahead of the economic data next week. The Sensex index was the second best performing market in 2012 with the rise of 25% among the 10 largest economies of the world.

In corporate news, Indian Overseas Bank approved equity rights issue. Manappuram Finance surged on the expectations that the Reserve Bank may increase loan-to-value ratio on gold loans to 75%. Ramky Infrastructure arranged debt syndication.

Australian stocks advanced to a new 19-month high following a rally in international markets. The Aussie dollar gained and resource stocks advanced after prices of crude oil jumped to a two-month high and metals prices increased.

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond closed at 1.86% and on 30-year bond rose to 3.08%.

The U.S. dollar inched higher to $1.304 to a euro and increased against the Japanese yen to 87.30 yen.

Immediate delivery futures of Texas crude oil decreased 3 cents to $93.05 a barrel and Brent crude fell 27 cents to $112.24, futures of natural gas decreased 3 cents to $3.25 per mbtu and gasoline traded down 0.06 to 279.40 cents a gallon.

In metals trading, gold decreased $14.70 to $1,674.10 per ounce and silver fell 32 cents to $30.69 and copper closed down 2.45 cents to $3.71 a pound.