U.S. Stocks React to Earnings, Potash Makers Plunge on Russian Cartel Collapse

Nichole Harper
30 Jul, 2013
New York City

U.S. stocks traded higher on better than expected earnings from Eastman Chemicals and Herbalife and Goodyear Tire. Community Health agreed to buy Health Management for $3.9 billion. Potash market was rocked after a Russian cartel collapsed and stock price of three leading makers in North America plunge.

[R]1:35 PM New York – U.S. stocks traded higher on better than expected earnings from Eastman Chemicals and Herbalife and Goodyear Tire. Community Health agreed to buy Health Management for $3.9 billion. Potash market was rocked after a Russian cartel collapsed and stock price of three leading makers in North America plunge.[/R]

U.S. stocks traded higher after companies meet lowered earnings expectations and investors await a statement from Federal Reserve later in the afternoon.

On Wall Street, the S&P 500 index increased 0.2% and the Nasdaq Composite Index gained 0.6% and the narrow index of 30 large companies that is increasingly not followed by institutional investors added 0.03%.

Consumer sentiment declined in July after reaching a 5-year high in the previous month as Americans grew weary about the economy and employment.

The controversial metropolitan home price index increased 12.2% in May from a year ago, the largest annual increase since March 2006. The S&P/Case-Shiller index gained 12.1% in the month in March 2006.

Home prices increased 1% from the previous month compared to 1.7% in April.

European Markets

The makers of potash in the U.S. and Europe plunged after Russia based Uralkali decided to leave its joint venture with Belasrussian partner Belasruskali.

The two companies could not agree on the international price for the export of potash and two partners are expected to rival for exports market. Current potash price of $400 a ton is expected to plunge to $300 a ton according to chief executive of Urakali.

Potash Corp of Sasketchwan, Agrium and Mosaic Co plunged between 8% and 25% and Germany based K+S plummeted 25%, a six-year low. Farmers in India and China are expected to benefit from the cartel collapse in Russia and also U.S. listed Canpotex – jointly owned by Potash Corp

The plunge in potash price is expected to weaken the stranglehold of U.S. and European companies in world market and farmers in India, China and other developing regions are expected to benefit.

In London, FTSE 100 index gained 0.2%, the DAX index in Frankfurt added 0.1% and in Paris CAC 40 index increased 0.4%.

U.S. Stocks in Review

Coach dropped 9% after the maker of luxury hand bag said fiscal fourth-quarter net declined 12%. The company also said sales at its U.S. retail store locations declined 1.7% in the period.

Eastman Chemical increased 6% after the largest maker of chemicals lifted its annual earnings outlook to a range between $6.40 and $6.50 a share from the previous estimate range of $6.30 and $6.40 a share.

Goodyear Tire & Rubber Co. surged 10% after the largest tire maker said second-quarter earnings were 76 cents a share ahead of estimates of 46 cents a share according to analysts tracked by Ticker.com.

Community Health Systems Inc agreed to acquire Health Management for $3.9 billion in cash and stock.

Health Management Associates declined 11% after the company received more legal inquiries from regulators related to emergency room operations in additions to the ongoing inquiries since 2011.

Herbalife Ltd soared 5% after the nutrition supplement maker reported better than expected quarterly earnings and revised its earnings outlook for the year to $4.95 a share from $4.80 a share.

Mosaic Co plunged 22% and Agrium declined 5% after chief executive of Uralkali said international prices of potash may fall more than 25% to $300 a ton.

In addition, the largest maker of potash, Uralkali also quit from a trade venture with its Belarusian partner.