U.S. Indexes Lack Direction, SAC Faces Insider Trading Criminal Charges

Nichole Harper
25 Jul, 2013
New York City

Market indexes on Wall Street drifted and earnings from FaceBook, General Motors, Qualcomm, Visa and Boston Scientific dominated the news. European markets declined from a two-month high on weaker than expected earnings. Nikkei declined 1.1% and indexes in China fell.

[R]3:05 PM New York – Market indexes on Wall Street drifted and earnings from FaceBook, General Motors, Qualcomm, Visa and Boston Scientific dominated the news. European markets declined from a two-month high on weaker than expected earnings. Nikkei declined 1.1% and indexes in China fell.[/R]

U.S. stocks lacked direction as earnings parade continued and 30-year mortgage loan fell to 4.31%.

The S&P 500 index increased 0.04% to 1,686.58 and the Nasdaq Composite Index gained 0.5% to 3,597.06.

On the earnings front, General Motors reported higher than expected earnings after the company conducted aggressive cost cutting in Europe.

European Markets Slide

In Europe, market indexes declined from 2-month high after BASF and ABB Ltd reported lower than expected earnings.

Axel Springer AG agreed to sell its regional newspapers and magazines for women and television for $1.2 billion.

In the news on the economy in Europe, gross domestic product in the UK expanded at a faster pace of 0.6% in the second quarter to June. The GDP increased 1.4% from a year ago quarter and the economy expanded at 0.3% in the first quarter.

In London FTSE 100 index decreased 0.5% and in Frankfurt the DAX index fell 1%.

Asian Markets

Markets in Asia closed mixed and the Nikkei in Tokyo dropped 1% after investors stayed on the sideline ahead of earnings from Nissan and other automakers. After the close Nissan reported better than expected earnings but Hyundai in Seoul lowered earnings estimates.

In India, Maruti Suzuki reported better than expected earnings and Ambuja Cements plunged after the parent Holcim Ltd asked the Indian company for $593 million to invest in a subsidiary.

Also, Canon, the camera maker reported weak outlook and said competition from better quality smartphone is eating into the camera market faster than expected. Worldwide smartphone sales are now running 13 times ahead of camera sales.

SAC Faces Criminal Charges

SAC Capital Advisors, one of the largest and active investment managers on Wall Street was indicted on criminal charges for its role in insider trading committed over a period of ten years by several of its employees.

The Manhattan U.S. Attorney General’s Office unsealed charges today and charged the Connecticut based investment manager and three of its affiliates with wire fraud and four counts of securities fraud.

However, no charges were filed against its billionaire founder Steve Cohen. The 41-page charges alleged a scheme that was “substantial, pervasive and on a scale without known precedent in the hedge fund industry.”

The investigation led by Preet Bharara led to an indictment that included charges of insider trading based on information was not publicly available and could lead to outflow of investors from SAC Capital.

The company earlier in the week in an email said it plans to continue normal operations and speculation rose on Wall Street that the company may turn as a family office and manage funds controlled by Steve Cohen that are estimated at $8 billion.

U.S. Stocks Review

Boston Scientific Corp ((BSX)) jumped 14% after the heart pace maker reported better than expected earnings and lifted its forecast and indicated demand for its defibrillators is stabilizing.

FaceBook Inc ((FB)) shot up 25% after the personal networking site reported revenues soared 53% to $1.81 billion and profits excluding certain items was 19 cents a share.

Pulte Group ((PHM)) dropped 10% after the home maker reported lower than expected second quarter earnings of 17 cents a share.

Qualcomm Inc ((QCOM)) soared 3% after the wireless devices communication chip maker estimated higher than expected revenues in the current quarter on higher demand in emerging markets.

TripAdvisor Inc ((TRIP)) soared 14% after the travel review site reported second quarter earnings jumped to 52 cents a share compared to analysts’ expectations of at least 42 cents.

Visa Inc ((V)) soared 4% after the credit card processor reported better than expected earnings.