Wall Street Trims Losses, Debt Ceiling Talks Adds to Market Volatility

Bikram Pandey
15 Jan, 2013
New York City

Market indexes in New York steadily recovered from the morning decline after retailers gained. Apple, Intel and General Electric were in focus ahead of earnings this week. Debt ceiling concerns added to market volatility as lawmakers struggle to find a compromise.

[R]1:50 PM, New York – Market indexes in New York steadily recovered from the morning decline after retailers gained. Apple, Intel and General Electric were in focus ahead of earnings this week. Debt ceiling concerns added to market volatility as lawmakers struggle to find a compromise.[/R]

Stocks were under pressure in New York and staged a steady recovery to flat lines after retailer gained and earnings from Apple, GE and Inter were in focus.

Washington rhetoric put more investors on the defensive after Treasury Secretary Timothy Geithner said in a letter to House Speaker John Boehner that Treasury Department expects to run out of its resources “between mid-February and early March.”

Fitch, rating agency also chimed in and issued a statement that a failure by the U.S. lawmakers to increase debt ceiling would lead to a formal review of its credit rating.

General caution and negative sentiment prevailed ahead of the corporate earnings release this week. Apple declined below $500 on the rising worries that the company may be forced to build cheaper phones to expand sales and that will erode margins and Intel is expected to report its worst profit decline in ten quarters. General Electric earnings are also expected to be softer.

However, Lennar reported higher than expected earnings on an increase in new orders. Retailers traded higher after retail sales were ahead of expectations largely on the boost in auto sales.

Retail sales in December were ahead of expectations after consumers overlooked Washington gridlock and the prospects of future tax increase. Reported wholesale price index declined for the third month in a row, however the index does not capture the broader prices increases in the service sector.

Dell jumped on the speculation that the company may go private. Express, Inc lifted outlook for the fourth quarter and full year 2012. Forest Laboratories third quarter net swung to $153.6 million loss. Lennar fourth quarter jumped more than three-fold and new order climbed 32%.

European markets traded lower in the region ahead of corporate earnings. Markets accelerated losses on the worries that the U.S. debt negotiations may drag for another two months.

In Asian markets, Nikkei index in Tokyo closed at a 32-month high and the yen declined further prompting comments from Economics Minister Amari. The yen traded at a new 26-month low and markets are anticipating revised inflation target at the BoJ meeting next week.

In Mumbai trading the Sensex index advanced for the second day in a row. Axis Bank advanced 2.2% on third quarter net profit climbed 22% and Bajaj Finance net profit jumped 33%. Crompton Greaves plans to set up second power transformer manufacturing unit. Decolight Ceramics won export order for tiles.

Australian stocks turned lower after resource stocks and banks failed to hold on to the gains of the day. Rio Tinto plans to increase iron ore production by 15% in 2013 and said it is on track to commence production at its gold and copper mine in Mongolia.

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond closed down to 1.82% and on 30-year bond fell to 3.01%.

The U.S. dollar inched lower to $1.337 to a euro and increased against the Japanese yen to 88.65 yen, a new low in two years.

Immediate delivery futures of Texas crude oil decreased 17 cents to $93.96 a barrel and Brent crude decreased 69 cents to $111.19, futures of natural gas increased 9 cents to $3.46 per mbtu and gasoline traded down 2.35 to 273.06 cents a gallon.

In metals trading, gold increased $13.80 to $1,683.10 per ounce and silver increased 35 cents to $31.45 and copper closed up 0.45 cents to $3.64 a pound.