Pending U.S. Home Sales at 9-Year High, World Markets Struggle

Nichole Harper
28 May, 2015
New York City

Stocks on Wall Street lagged and market indexes meandered after a deal in the semiconductor industry dominated news flow. Home purchase contract index rose at the fastest pace in nine years. Stalled Greece negotiation with international lenders dragged market sentiment in Europe.

[R]1:45 PM – Stocks on Wall Street lagged and market indexes meandered after a deal in the semiconductor industry dominated news flow. Home purchase contract index rose at the fastest pace in nine years. On again off again Greece negotiation dragged market sentiment in Europe.[/R]

Stocks on Wall Street struggled and investors reacted to deal news in semiconductor industry.

On the economic front, Americans signed home purchase contract in April at the fastest pace in nine years.

Seasonally adjusted pending home sales index increased 3.4% to 112.4 last month, the fourth monthly increase in a row. The index is at a high not seen since May 2006.

Separately, seasonally adjusted weekly jobless claims climbed 7,000 to 282,000 from the previous week''s revised claims of 275,000, the Department of Labor said.

On Wall Street, Tollbooth Strategy Index slid 0.2% or 25.79 to 10,764.92.

S&P 500 index fell 0.3% or 5.90 to 2,117.58 and the Nasdaq Composite Index slid 0.3% or 14.57 to 5,091.81.

Crude oil in New York slipped 0.63 cents to $56.88 a barrel and gold rose $1.30 to $1,187.80 an ounce.

U.S. Movers

Avago Technologies Ltd ((AVGO)) climbed 3.7% or $5.21 to $141.49 after the Singapore-based analog chip maker agreed to acquire Broadcom Corporation in a cash and stock deal worth about $37 billion.

Avago will pay $17 billion in cash and rest in 140 million in Avago shares valued $20 billion.

The combined company will be worth about $77 billion and is expected to generate annual revenue of $15 billion.

Separately, the chip maker said net revenues in the second-quarter ending on May 3 dropped 1% to $1.61 billion from a year ago period.

Net income in the quarter surged 117.7% to $344 million or $1.21 per diluted share compared to $158 million or 61 cents from the same quarter last year.

Costco Wholesale Corporation ((COST)) fell 58 cents to $144.84 after the discount stores operator reported total revenues in the first-quarter ending on May 10 slipped 1% to $25.52 billion from a year ago period.

Comparable store sales in the quarter decreased 1%.

Net income in the quarter climbed 9% to $516 million or $1.17 per diluted share compared to $473 million or $1.07 from the same quarter last year.

European Markets

European market indexes traded down on mixed messages about a deal between international lenders and Greece.

Deadlines have come and gone and Greece and lenders remain far apart in finding a political and financial solution to cut its pension and operating costs. Greece is scheduled to pay next payment of 1.6 billion euros in June and the latest deadline set for the end of May is not expected to be fulfilled.

Euro zone politicians may swing into action as the current bailout will end and the money earmarked for Greece will no longer be available after the end of June.

Neither the euro zone politicians nor the ECB and IMF officials are willing to take steps and bring the crisis to a head. But, the time and money is running out for Greece.

In London trading, FTSE 100 index fell 0.3% or 24.06 to 7,009.05 and in Frankfurt the DAX index slipped 0.7% or 91.50 to 11,679.55.

In Paris, CAC 40 index dropped 1.1% or 58.85 to 5,123.68.

After the second estimate, the U.K.’s economic growth in the second quarter was unrevised at 0.3% and at 2.8% from a year ago, the UK National Statistics reported.

Separately, the department said seasonally adjusted UK service sector index jumped 2.8% in March from a year ago month.

Kingfisher Plc jumped 2.5% to 376 pence after the U.K.-based home improvement retailer reported total group sales in the first-quarter declined 4.6% to £2.59 million from a year ago period.

Same store sales in the quarter increased 0.8%.

Retail profit in the quarter dropped 4.8% from a year ago to £150 million compared to same period a year ago.

Tate & Lyle Plc dropped 2.7% to 583 pence after the U.K.-based food ingredients provider reported sales in the year ending in March plunged 14.2% to £2.36 billion from £2.75 billion in a year ago period.

Profit in the year tumbled 89% from a year ago to £30 million compared to £273 million and diluted earnings share dropped to 6.5 pence from 58 pence.

As of March, the company said net debt increased to £504 million from £353 million in a same period a year ago.

Asian Markets

Ten day rally lifts Nikkei average in Tokyo by 5% and the yen traded at a new 8-year low.

The benchmark Nikkei 225 average extended gains for the tenth day in a row and the yen traded at a new eight-year low.

Retail sales in April increased 5% from a year ago month and seasonally adjusted sales rose 0.4% from a month ago. Sales data have been distorted ahead of last April sales tax increase.

Retail sales in April climbed 5% to 11.56 trillion yen after 9.7% decline in March, the Ministry of Economy, Trade and Industry said today.

The department added on seasonally adjusted basis retail sales in April increased 0.4% from 1.8% decline in a month ago.

In April, sales from large retailers soared 8.6% to 1.61 trillion yen and recovered from the 13.1% plunge in March.

The Nikkei 225 Stock Average increased 78.88 or 0.4% to 20,551.46 and the broader Topix index gained 11.43 to 1,672.76.

The yen closed at 123.75 against a dollar, a low not seen since July 2007.

Universal Studios Japan, after six years the entertainment company plans to apply for re-listing on the Tokyo Stock Exchange with a total investment of around 45 billion yen.

In a lacklustre trading, market indexes in Mumbai closed down and rupee edged slightly higher after the U.S. dollar traded lower against international currencies.

Rupee strengthened 26 paisa to 63.76 against one U.S. dollar.

The Sensex Index decreased 57.95 to close at 27,506.71. The CNX Nifty fell 15.60 to 8,319.

Bharat Petroleum Corporation Limited jumped 3.3% to ₹823 after the central government controlled oil marketing company said net in the fourth-quarter declined 29.9% to ₹2,852.89 crore.

Net revenues in the quarter tumbled 30.9% to ₹51,928.12 crore.