Wall Street in Holding Pattern as European Indexes Extend Gains

Nichole Harper
23 Jun, 2015
New York City

Market indexes on Wall Street hugged flat lines and investors reacted to corporate earnings. BlackBerry said phone unit sales continued to decline in the latest quarter and the maker of smartphone is allocating more resources to software. European markets traded higher.

[R]1:10 PM – Market indexes on Wall Street hugged flat lines and investors reacted to corporate earnings. BlackBerry said phone unit sales continued to decline in the latest quarter and the maker of smartphone is allocating more resources to software. European markets traded higher.[/R]

Stocks on Wall Street hugged flat line and market indexes generally retained a mild negative bias after durable goods orders declined in three of the last four months and new home sales increased.

Durable goods orders in May dropped 1.8% to $228.9 billion, followed by 1.5% decrease in April. Orders declined in three of the last four months.

Orders excluding transportation increased 0.5% and defense slipped 2.1%, the Department of Commerce said.

In a separate report the department reported seasonally adjusted new home sales in May increased 2.2% to 546,000 from the revised April rate of 534,000 and surged 19.5% from a year ago month to 457,000.

On Wall Street, Tollbooth Strategy Index edged up 2.30 to 10,861.96.

S&P 500 index slid 0.65 to 2,122.19 and the Nasdaq Composite Index fell 5.18 to 5,148.95.

Crude oil in New York gained 56 cents to $60.94 a barrel and gold slipped $6.90 to $1,177.20 an ounce.

U.S. Movers

BlackBerry Ltd ((BBRY)) slipped 1.7% or 16 cents to $9.04 after the Canada-based mobile devices maker said revenues in the first-quarter ending in May plunged 31.9% to $658 million from a year ago period.

GAAP-based net income in the quarter soared 195.7% to $68 million compared to $23 million and diluted loss per share narrowed to 10 cents from 37 cents from the same quarter last year.

The company said software and technology licensing revenue surged 150% to $137 million while hardware revenue declined 30.6% to $263 million and service revenue tumbled 51.4% to $252 million from a year ago period.

BlackBerry added smart-phone revenue in the quarter dropped 30.6% to $263 million with an average selling price of $240.

On a conference call, CEO John Chen said he is allocating more capital to software side of the business. The company said it sold 1.1 million phones in the quarter, 500,000 less than in the previous quarter.

Darden Restaurants, Inc ((DRI)) increased 4.6% or $3.16 to $72.53 after the full-service restaurant operator reported total sales in the fourth-quarter ending in May soared 13.9% to $1.88 billion from a year ago period.

Same-restaurant sales in the quarter jumped 3.8%.

Net income in the quarter surged 79.5% to $129.7 million or $1.01 per diluted share compared to $72.3 million or 54 cents from the same quarter last year.

The company forecasted diluted earnings per share for the year between $3.05 and $3.20 and same-restaurant sales in the range of 2% to 2.5%.

Separately the company plans to separate a portion of its real estate assets to a new real estate investment trust and transfer about 430 owned restaurants.

The company expects to complete the REIT transaction by the end of this year.

European Markets

European markets extended advance for the second day on the hopes that Greece and international lenders may strike a deal and avert a debt default.

However, local lawmakers in Greece showed resistance to a list of concessions offered by Prime Minister Alexis Tsipras.

The latest proposal is based on additional government spending cuts and higher contributions to pension and healthcare plans which are unpopular with the lawmakers.

In London trading, FTSE 100 index gained 0.4% or 22.87 to 6,848.61 and in Frankfurt the DAX index jumped 1.4% or 155.19 to 11,615.48.

In Paris, CAC 40 index increased 1.4% or 72.06 to 5,070.28.

Lloyds Banking Group Plc fell 0.2% to 86.90 pence after the U.K. government sold 1% stake in the financial services provider and lowered it to 16.87%.

Ladbrokes Plc surged 19.6% to 146 pence after the U.K.-based betting and gambling company confirmed that it was in merger talks with the privately owned Gala Coral Group’s online businesses.

Thomas Cook Group Plc slipped 0.9% to 145.20 pence after the tour operator completed the redemption in full of its €400 million 6.75% guaranteed bond due 2015.

Asian Markets

Nikkei and Topix soared nearly 2% and the yen eased on the hopes that Greece and European lenders are nearing a compromise and avoid a debt default in the euro zone.

SoftBank formed a joint venture with India-based Bharti Enterprises to bid for solar power projects.

Nikkei and Topix jumped nearly 2% following a surge in international markets on the hopes that Greece and European lenders are nearing a compromise and avoid a debt default in the euro zone.

The Nikkei 225 Stock Average jumped 381.23 or 1.9% to 20,809.42 and the broader Topix index gained 27.79 to 1,676.40.

The yen closed at 123.64 against a dollar.

Softbank Corporation gained 1.5% to 7,425 yen after the mobile services provider together with India-based Bharti Enterprises Pvt Ltd and Taiwan-based Foxconn Technology Group plans to invest about $20 billion in solar projects in India.

SBG Cleantech, the joint venture will be majority controlled by SoftBank and Bharti and Foxconn will take minority stake under certain conditions.

India is ramping up its solar and wind power output by five-fold in the next seven years as local governments assign new power projects across the nation.

Sensex index in Mumbai traded higher for the eighth session in a row, the longest advance in five months.

Rupee weakened and markets in Europe surged on the optimism that Greece and European lenders are inching closer to a compromise.

Rupee weakened 7 paisa to 63.58 against one U.S. dollar.

The Sensex Index gained 74.16 or 0.3% to close at 27,804.37. The CNX Nifty rose 28.45 or 0.3% to 8,381.55.

Bharti Enterprise agreed to form a venture with Japan-based SoftBank and Taiwan-based Foxconn Technology and bid for solar projects in India.

DLF plans to raise up to ₹5,000 crore through a non-convertible debentures offering.