S&P Lifts U.S. Debt Outlook, Stocks Struggle

Nichole Harper
10 Jun, 2013
New York City

U.S. stocks traded sideways and resource sector stocks declined after China reported weak exports and imports data. U.S. debt rating outlook was revised by S&P.

[R]10:55 AM New York – U.S. stocks traded sideways and resource sector stocks declined after China reported weak exports and imports data. U.S. debt rating outlook was revised by S&P.[/R]

U.S. stocks traded sideways as international news dominated market sentiment.

The 10-year bond yield increased to 2.19% after the U.S. debt rating outlook was revised to ‘stable’ from ‘negative’ by Standard & Poor’s.

Two year ago the rating agency stripped the largest economy in the world from its top ranking after lawmakers struggled to cut government spending and devise a plan to lower government debt.

European Markets

European markets traded sideways and Italian economic shrinkage was revised to 0.6%. French industrial output increased in April from March but the production was still lower than a year ago month.

In London trading, FTSE 100 index slid 0.2% or 10.45 to 6,402 and in Frankfurt the DAX index increased 0.8% or 68.05 to 8,323. In Paris, CAC 40 index inched lowered 0.1% or 2.63 to 3,870.

Resource stocks in Europe declined after China reported weak trade data.

Asian Markets

Japan’s Cabinet Office revised its estimate of March quarter economic growth to 4.1% from the previous estimate of 3.5%. The yen also declined 1.3% against the dollar as the Bank of Japan started its 2-day policy meeting today.

Weaker than expected economic data also weighed on the sentiment and resource companies led the decliners.

The General Administration of Customs in China reported May export growth declined to 1% and imports declined 0.3%. The latest government data showed export weakness after Chinese regulators cracked down on phony export invoicing.

The increase in exports was the smallest in a year and imports declined against the estimate of an increase of as much as 6% by several economists.

Brent Crude declined to $104 a barrel after the release of softer Chinese economic data and copper decreased to a 3-week low of $7.139 a ton.

Indian rupee hit a new record low and dipped to 57.63 against one dollar ahead of latest inflation data scheduled to release tomorrow.

Stocks in Review

Apple Inc ((APPL)) increased 1.1% ahead of its developers conference in San Francisco today where the company is expected to release simpler user interface and more tools for its smartphones and tablets.

AstraZeneca Plc rose 0.8% to 3,328.50 pence in London after the UK based biopharmaceutical agreed to acquire a privately held Pearl Therapeutics valued $1.15 billion for respiratory disease.

The proposed transaction is expected to close in the third quarter of 2013.

Facebook Inc ((FB)) increased 4% on the speculation that the largest social networking site with market cap of $60 billion may be added to the S&P 500 index.

McDonald’s ((MCD)) increased 1.4% after the fast food chain operator said same store sales at stores open at least a year increased 2.6% on dollar menu and breakfast items.

Monsanto ((MON)) increased 4% on broker comments and expectations of higher sales in the second half of this year from an analyst at Macquarie Securities.