Stocks on Wall Street Pause, World Markets Advance

Nichole Harper
12 Feb, 2014
New York City

U.S. investors paused after the best 4-day gain in a year. European markets gained and Asian markets surged. China reported a sharp increase in exports and imports in January and the best monthly surplus since 2009. The U.S. House approved debt ceiling without any conditions.

[R]1:35 PM New York – U.S. investors paused after the best 4-day gain in a year. European markets gained and Asian markets surged. China reported a sharp increase in exports and imports in January and the best monthly surplus since 2009. The U.S. House approved debt ceiling without any conditions.[/R]

U.S. indexes reversed earlier gains of as much as 0.2% to a loss after investors paused following the best 4-day gain in a year following reassuring comments from the newly appointed Fed Chairman Janet Yellen.

However, global markets extended gains for the second day in a row.

S&P 500 index gained 0.08 to 1,819.90 and Nasdaq Composite Index added 11.05 to 4,202.05.

Market indexes in Asia soared after investors reacted to solid gains in the U.S. and Europe in overnight trading.

Hang Seng index led the Asia-wide rally with a rise of 1.5% followed by a similar surge in Thailand and a gain of 1% in Australia. Indexes in India gained 0.4% and in Indonesia added 0.6%.

Indexes in South Korea and Kuala Lumpur advanced fractionally.

U.S. Debt Ceiling Passes in the House

The U.S. House approved the federal government’s borrowing authority without any conditions attached after Republican Party leaders dropped all policy demands to avoid a confrontation in an election year.

The debt ceiling was suspended until February 7 after a bipartisan deal in October that terminated a 16-day government shutdown.

If the measure had failed to pass the house, the next time lawmakers could vote on the bill would be on February 25 and too close to the deadline set by the Treasury Secretary when extraordinary maneuvers to sustain government finances would run out.

Lawmakers in a 221-to-201 vote approved the first in increase in debt ceiling without any conditions attached since 2009. Two Democrats voted no and 28 Republicans voted yes.

The measure lifts U.S. Treasury’s borrowing authority until March 2015, postponing any further showdowns in the Senate and the House until after mid-term elections in November.

The vote also ended the 3-year era brought by active blocking of Federal government functioning by the Tea Party faction of the Republican Party as voters turn away from their confrontation politics that favors spending in military and trims welfare and domestic infrastructure spending.

Surprise Rise in China’s Exports Raises Doubts

China reported a sharp jump in exports in January, surprising many analysts who were looking for a near flat growth in January.

Customs Administration in China reported exports in January increased 10.6% from a year ago, surpassing the highest estimate of 2% increase.

Imports also gained 10% from a year ago, as the second largest economy in the world imported record amount of iron ore, crude oil and copper.

Trade surplus in the month increased to $31.9 billion from $25.6 billion in December.

Analysts were surprised with the surge in exports and many were expecting a slowdown ahead of Chinese Lunar New Year.

Chinese data are seen with a skepticism as many exporters use weak months to recycle money from overseas to skirt capital control rules.

Despite the widespread practice of over-invoicing to re-route money to China through Hong Kong, the latest data does not explain the sharp rise. Four separate manufacturing indexes showed a decline in growth and also activities declined in Taiwan and in Korea.

Exports to Hong Kong in the month declined 18% after rising 2.3% in December.

European Markets

Market indexes in Europe extended gains for the second day in a row and the Bank of England lifted its economic growth outlook and sounded more optimistic on the employment gains as well.

The central bank revised higher economic growth in 2014 to 3.4% from the 2.8% estimate in November.

In London trading, FTSE 100 index fell 1.3 to 6,671.04 and in Frankfurt the DAX index increased 0.5% or 49.2 to 9,528.06.

In Paris, CAC 40 index gained 0.5% or 21.30 to 4,305.07.

U.S. Stocks in Review

Deere & Company ((DE)) slipped 1% or 78 cents to $86.68 after the agricultural equipment maker reported revenue in the first-quarter ending in January grew 3% to $7.65 billion.

Net income in the quarter jumped 5% to $681 million or $1.81 a diluted share compared to $650 million or $1.65.

The company forecasted equipment sales for fiscal 2014 to fall about 3% and for the second-quarter to drop approx 6% compared to the same periods of 2013.

For the year, net income is anticipated at $3.3 billion.

DaVita HealthCare Partners Inc. ((DVA)) climbed 6.4% or $4.07 to $68.44 the healthcare company reported total revenues in the fourth-quarter ending in December surged 24% to $3.1 billion.

Net income in the quarter soared 36% to $212.3 million or $1.01 a diluted share compared to $155.8 million or 77 cents.

Lorillard Inc ((LO)) declined 5.5% or $2.75 to $47.21 after the cigarettes maker stated net sales in the fourth-quarter ending in December rose 2.3% to $1.74 billion.

Net income in the quarter declined 5.2% to $293 million or 80 cents a diluted share compared to $309 million or 80 cents.

Owens Corning ((OC)) surged 12.8% or $5.07 to $44.81 after the building materials supplier net sales in the fourth-quarter ending in December soared 10.3% to $1.28 billion.

Net in the quarter swung to a profit $82 million or 69 cents a diluted share compared to a loss of $56 million or 47 cents.

Thomson Reuters Corporation ((TRI)) declined 4.4% or $1.61 to $34.99 after the news and information service provider reported revenue in the fourth-quarter ending in December dropped 3% to $3.28 billion.

Net in the quarter swung to a loss $343 million or 43 cents a diluted share compared to a profit of $368 million or 42 cents.

Tripadvisor Inc ((TRIP)) soared 6.8% or $5.73 to $89.93 after the online travel review site operator said revenue in the fourth-quarter ending in December climbed 26% to $212.7 million.

Net income in the quarter plummeted 39.6% to $20.3 million or 14 cents a diluted share compared to $33.6 million or 23 cents.

The Valspar Corporation ((VAL)) surged 7.1% or $5.01 to $75.60 after the coating and paint maker stated net sales in the first-quarter ending on January 24 climbed 9% to $956.1 million.

Net income in the quarter dropped 2.5% to $53.6 million or 61 cents a diluted share compared to $55 million or 60 cents.

The company reaffirmed its full-year adjusted diluted earnings per share between $3.95 and $4.15.