U.S.Stocks Lacks Direction, January Auto Sales at 8-Year High

Nichole Harper
04 Feb, 2015
New York City

Stocks in New York traded sideways and oil fell from its one-month high and commodities retreated after rising for four days in a row. Staples agreed to acquire Office Depot for $6.3 billion. European markets closed nearly unchanged. China lowered bank reserve ratio and increase liquidity.

[R]1:15 PM New York – Stocks in New York traded sideways and oil fell from its one-month high and commodities retreated after rising for four days in a row. Staples agreed to acquire Office Depot for $6.3 billion. European markets closed nearly unchanged. China lowered bank reserve ratio and increase liquidity.[/R]

Stocks in New York traded sideways and oil fell from its one-month high and commodities retreated after rising for four days in a row.

On Wall Street trading, Tollbooth Strategy Index gained 0.2% or 19.87 to 10,204.50.

S&P 500 index slid 0.72 or 0.03% to 2,049.01 and the Nasdaq Composite Index edged up 3.95 or 0.09% to 4,732.03.

U.S. auto sales in January rose 14% from a year ago with 1.15 million, the highest sales in the month since 2006, according to Autodata.

General Motors said sales rose 18%, Ford sales increased 15% and Fiat Chrysler sales rose 14% in the month from a year ago.

Toyota sales rose 16%, Nissan sales increased 15% and Honda sales advanced 12%. Volkswagen sales less than one percent.

China Cuts Bank Reserve Ratio

China joined other nations in offering more monetary support to economy as the economic growth slows and factory output growth struggles.

People’s Bank of China lowered at least 50 basis points reserve required by banks to improve liquidity as capital outflow accelerates and economic growth slows.

The latest cut will allow banks to have only 19.5% in reserves and some banks active in rural areas and lend to small businesses will be able to decrease ratio in certain conditions as low as 19%.

At least ten central banks around the world from Japan, India, Turkey, Canada and the euro zone have offered monetary support to the economy this year after commodities prices extended losses and oil dropped to a five-year low.

The required reserve ratio, or RRR, is cut for the first time since May 2012 and the latest move is expected to inject as much as 630 billion yen or $98 billion to the economy according to an estimate from several economists in Shanghai and Hong Kong.

According to data available from Chinese government agencies and central bank, capital outflow picked up to highest level in fifteen years last quarter.

U.S. Movers

General Motors Company ((GM)) jumped 2.9% or 99 cents to $34.97 after the automobile company reported revenues in the fourth-quarter ending in December fell 2.2% to $39.6 billion a year ago period.

Net income in the quarter climbed 22.2% to $1.1 billion or 66 cents a diluted share compared to $0.9 billion or 57 cents from the same quarter last year.

For the year, the company’s total automotive liquidity dropped to $37.2 billion from $38.3 billion and cash and marketable securities totalled to $25.2 billion compared to $27.9 billion a year ago.

Merck & Co., Inc ((MRK)) declined 4.1% or $2.50 to $58.51 after the pharmaceutical company reported sales in the fourth-quarter ending in December plunged 7% to $10.48 billion a year ago period.

Net income in the quarter jumped 837.2% to $7.32 billion or $2.54 a diluted share compared to $781 million or 26 cents from the same quarter last year.

The company’s pharmaceutical sales dropped 4% to $9.37 billion while sales animal health segment rose 2% to $885 million.

Staples, Inc ((SPLS)) plunged 10.7% or $2.02 to $16.99 after the office product retailer agreed to acquire its rival Office Depot Inc for about $6.3 billion in a cash and stock.

In last September, Staples began discussions to acquire Office Depot for $7.25 per share in cash and 0.2188 of its shares for a total of $11.

The transaction is expected to close by the end of this year and has agreed to pay deal termination fee of $250 million.

Walt Disney Co ((DIS)) jumped 8% or $7.57 to $101.68 after the media conglomerate reported revenue in the first-quarter ending in December climbed 9% to $13.39 billion from a year ago period.

Net income in the quarter climbed 18.5% to $2.18 billion or $1.27 a diluted share compared to $1.84 billion or $1.03 from the same quarter last year.

European Markets

In London trading, FTSE 100 index slipped 0.8% or 56.06 to 6,815.74 and in Frankfurt the DAX index fell 0.3% or 34.43 to 10,856.52.

In Paris, CAC 40 index slid 0.2% or 11.85 to 4,666.05.

GlaxoSmithKline Plc gained 0.5% to 1,460.50 pence after the U.K.-based healthcare company said group revenues in the fourth-quarter ending in December declined 10.4% to £6.19 billion from £6.91 billion a year ago period.

Profit in the quarter tumbled 58.9% from a year ago to £1.03 billion compared to £2.51 billion and diluted earnings per share dropped to 21.3 pence from 50.4 pence.

Heidelberger Druckmaschinen AG plunged 6.8% to €2 after the Germany-based printing machines maker reported group sales in the third-quarter ending in December declined 5.4% to €556.22 million from €587.91 million a year ago period.

Net loss in the quarter widened from a year ago to €15.58 million compared to €12.99 million and loss per share increased to €0.22 from €0.03.

Heidelberg forecasted sales for the year to decline of about 5%.

Sky Plc increased 1.9% to 961.62 pence after the U.K.-based pay television service provider reported revenues in the first-half ending in December soared 17% to £4.30 billion from £3.67 billion a year ago period.

Net profit in period surged 165.2% from a year ago to £1.09 billion compared to £411 million and diluted earnings per share increased to 64.5 pence from 26 pence.

Asian Markets

Stocks in Tokyo gained following better than expected profits from the largest bank Mitsubishi UFJ, Toyota Motor and Yamaha Corp. Astella Pharma said net income increased 38% in the nine-month period.

Japanese stocks soared after Mitsubishi UFJ surprised investors with an increase in profit and resource stocks advanced after oil extended its rebound for the fourth day in a row from the 2009 low.

The Nikkei 225 Stock Average climbed 342.89 or 1.9% to 17,678.74 and the broader Topix index jumped 24.61 to 1,417.

The yen closed at 117.18 against one dollar.

Market indexes in Mumbai declined and the Sensex in four sessions fell 1,000 points or 3% after oil price surged back to one-month high.

Declines in trading in capital goods companies and banks continued to drag market sentiment as most large banks report rising bad loans.

Indian rupee closed at 61.75 against one dollar.

The Sensex Index dropped 117.03 or 0.4% to close at 28,883.11. The CNX Nifty slid 32.85 or 0.4% to 8,723.70.

Bharti Airtel Limited fell 1.1% to ₹367.85 after the largest wireless service provider said net in the third-quarter surged 135.4% to ₹1,436 crore.

Total revenues rose 5.8% to ₹23,217 crore.

Bharti Infratel Limited increased 0.4% to ₹377 after the telecommunications service provider said net in the third-quarter climbed 23.48% to ₹506.90 crore.

Net revenues advanced 8.77% to ₹3,070.40 crore.

Tata Power Company Limited jumped 3.3% to ₹90.20 after the integrated power company said net in the third-quarter swung to profit ₹197.74 crore compared to a loss of ₹74.91 in the same quarter last year.

Net revenues advanced 8.31% to ₹9,321.34 crore.