Pick Up in Inflation and U.S. Stocks Rest Ahead of Memorial Day Weekend

Nichole Harper
22 May, 2015
New York City

Core rate of inflation in April rose faster than expected as prices excluding food and fuel advanced. Stocks meandered ahead of Memorial Day weekend. The Dutch government announced a plan to sell its stake in ABN Amro as early as in the fourth quarter.

[R]12:25 PM – Core rate of inflation in April rose faster than expected as prices excluding food and fuel advanced. Stocks meandered ahead of Memorial Day weekend. The Dutch government announced a plan to sell its stake in ABN Amro as early as in the fourth quarter.[/R]

Stocks opened higher on Wall Street and after one hour of trading dipped to negative territory ahead of a 3-day weekend.

Investors turned cautious ahead of Memorial Day weekend as most number of travelers are expected to hit the road in 10 years. Nearly 35 million U.S. travelers are expected to advantage of a five-year low in gasoline prices and travel.

Consumer prices excluding food and fuel rose at a faster than expected pace in April as inflation inched near the target by the Federal Reserve.

The index of consumer prices increased 0.1% in April from March. For the year, all item index before seasonal adjustment fell 0.2%., the Department of Labor said.

On Wall Street, Tollbooth Strategy Index gained 0.3% or 29.16 to 10,862.

S&P 500 index fell 0.2% or 3.38 to 2,127.45 and the Nasdaq Composite Index slid 2.88 to 5,087.97.

Crude oil in New York slipped $1 to $59.72 a barrel and gold rose $1.50 to $1,205.60 an ounce.

U.S. Movers

Expedia Inc ((EXPE)) jumped 4.4% or $4.13 to $110.03 after the online travel services provider agreed to sell its 62.4% stake in China-based travel group eLong, Inc to China-based Ctrip.com International, Ltd and others at an average price of $14.63 per share or for about $671 million.

Hewlett-Packard Company ((HPQ)) soared 4.3% or $1.45 to $35.27 after the computer peripheral maker said net revenues in the second-quarter ending in April declined 7% to $25.5 billion from a year ago period.

Net income in the quarter plunged 23.1% to $1 billion or 55 cents per diluted share compared to $1.3 billion or 66 cents from the same quarter last year.

HP said revenues in personal systems in the quarter dropped 5% to $7.7 billion and revenue from printing segment slumped 7% to $5.5 billion.

The company added revenue in company''s enterprise group slipped 1% to $6.6 billion and enterprise services revenue plummeted 16% to $4.8 billion. Revenues in software business dropped 8% to $892 million and financial services revenue slipped 7% to $805 million.

European Markets

In a preliminary estimate, EU28 external current account recorded a surplus of €15.1 billion in March compared with a surplus of €18 billion in February and a surplus of €7.6 billion in a year ago month, the Statistical Office of the European Communities said.

In London trading, FTSE 100 index gained 0.6% or 42.92 to 7,056.31 and in Frankfurt the DAX index fell 0.3% or 36.62 to 11,827.99.

In Paris, CAC 40 index edged down 5.27 to 5,141.43.

For the week, FTSE 100 index increased 1.4% and in Frankfurt the DAX index climbed 3.3%.

In Paris, CAC 40 index jumped 3%.

Compagnie Financiere Richemont SA slipped 1.1% to 85.90 Swiss francs after the Switzerland-based luxury goods maker reported revenues in the year ending in March jumped 4% to €10.4 billion from €10 billion in a year ago period.

Net profit in the period tumbled 35.6% from a year ago to €1.3 billion compared to €2.1 billion and earnings per share dropped to €2.36 from €3.68.

Severn Trent Plc decreased 1.3% to 2,154 pence after the U.K.-based water services provider reported revenues in the year ending in March increased 2.3% to £1.80 billion from £1.76 billion in a year ago period.

Net profit in the period plummeted 72.4% from a year ago to £120.2 million compared to £434.9 million and diluted earnings per share dropped to 49.6 pence from 181.3 pence.

Asian Markets

Bank of Japan offered a slightly upbeat assessment of the economic recovery and held its unprecedented monetary stimulus. Stocks rallied for the sixth session in a row.

Nikkei average in Tokyo surged for the sixth day in a row in thin trading after the Bank of Japan offered mildly optimistic assessment of the economic recovery.

The central bank kept it unprecedented bond buying program and offered an upbeat view of the modest rebound in consumption.

As expected, the Bank of Japan kept monetary policy committee decided to keep monetary policy on hold by 8-1 vote.

Earlier in the day, the bank maintained its large easing program of purchasing 80 trillion yen of assets annually, the Policy Board of the Bank of Japan said.

The policymakers refrained from providing additional monetary stimulus as the economy in the first-quarter expanded at 2.4% annual rate from a year ago.

The Nikkei 225 Stock Average gained 61.54 or 0.3% to 20,264.41 and the broader Topix index edged up 1.05 to 1,647.85. For the week, Nikkei 225 climbed 2.7%.

The yen closed at 120.75 against a dollar.

The market capitalization of all stocks listed on the main board of the Tokyo Stock Exchange closed at a record high, surpassing the previous record at the height of the asset bubble in December 1989.

Market capitalization on the main board rose to 591.30 trillion yen, ahead of the previous record of 590.09 trillion yen, according to a report compiled by the Tokyo Stock Exchange and reported by Reuters.

Stocks powered ahead in India after State Bank of India reported better-than-expected earnings and Britannia net soared 55%.

The largest bank reported 23% increase in consolidated earnings, beating the expectations set by several analysts and the bank also lowered its non-performing assets in the quarter.

Rupee strengthened 10 paisa to 63.54 against one U.S. dollar.

The Sensex Index increased 148.15 or 0.5% to close at 27,957.50. The CNX Nifty rose 37.95 or 0.5% to 8,458.95.

For the week, the Sensex Index and the CNX Nifty climbed 2.3%.

State Bank of India advanced 2.2% to ₹295.80 after the financial services provider said net in the fourth-quarter soared 23.1% to ₹3,742.02 crore.

Total revenues in the quarter climbed 14.5% to ₹48,616.41 crore.

The bank said ratio gross non-performing assets in the quarter declined to 4.25% against 4.95% in the same period a year ago.

The ratio of net non-performing assets in the quarter also slipped 2.12% compared to 2.57% in the same period last year.