Personal Consumption Rises; Stocks Fall

123jump.com Staff
04 Aug, 2008
New York City

U.S. stocks fell after the release of June personal income, spending and savings data. The income in the month rose 0.6% but after adjusting for inflation fell 1.9%. Personal savings rate hovered near a low 2.5%. The PCE price index, a measure of prices paid by consumer rose 4.1% from a year ago and may increase in the coming months. Church & Dwight and Humana rose after the release of earnings.

[R]10:20AM New York – Consumer spending in June rose on tax rebate but the increase was muted as price increase mostly took a bite out of the one-time benefit. Asian markets closed lower in the overnight trading. Church & Dwight rose after it reported better than expected earnings.[/R]

Personal consumption rose 0.6% in June after the revised increase in May of 0.8% according to the latest data released from the Commerce Department. Personal income after adjusting for seasonality in the month rose 0.1% after increasing at a revised rate of 1.8% in May.

The PCE price index increased 4.1% in June and excluding food and energy costs, the so called core rate increased at 0.3% above the central bank comfort level of 0.2%. The Fed is expected to announce its decision on interest rate tomorrow. The core rate of price increase measure has widely been discredited by investors as most people do have to eat and travel to work, but the Fed continues to focus on a narrow measure of price increase.

Personal disposable income in the month, income available for spending after paying taxes fell 1.9% and from May after rising 5.7% in May and personal savings rate as a percentage of disposable personal income was 2.5% in June.

The U.S. benchmark indexes dropped in the morning trading hours after the release of inflation report. Dow Jones fell 57 to 11,269.67, Nasdaq index declined 15.25 to 2,295.71 and S&P 500 index fell 7.52 to 1,252.79.

Church & Dwight Co, a maker of consumer products among other its including toothpaste, condoms and baking soda reported second quarter sales rose 9% to $594 million from $546.5 million a year ago. Net income in the quarter rose 13% to $45.8 million or 66 cents per share compared to net income of $40.5 million or 59 cents per share, a year ago.

Church & Dwight Co ((CHD)) in the morning trading rose $2.65 to $57.34 and in the last one year traded as high as $58.43 in April 2008 and as low as $42.36 in September 2007. Based on the yesterday’s closing price the company has a market cap of $3.64 billion.

Humana Inc, a health insurer reported second quarter revenues rose 14% to $7.3 billion from $6.4 billion a year ago. Net income in the quarter decreased 3% to $209.9 million or $1.24 per share compared to net income of $216.8 million or $1.28 per share, a year ago.

Humana Inc ((HUM)) in the morning trading rose $2.39 to $47.02 and in the last one year traded as high as $88.10 in January 2008 and as low as $33.45 in July 2008. Based on the yesterday’s closing price the company has a market cap of $7.55 billion.

IntercontinentalExchange, Inc, an operator of global exchanges and over-the-counter markets reported second quarter revenues rose 44% to $197.2 million from $136.7 million a year ago. Net income in the quarter increased 58% to $85 million or $1.19 per share compared to net income of $54 million or 75 cents per share, a year ago.

IntercontinentalExchange, Inc ((ICE)) in the morning trading fell $4.71 to $91.43 and in the last one year traded as high as $194.92 in January 2007 and as low as $80.20 in July 2008. Based on the yesterday’s closing price the company has a market cap of $6.79 billion.

Europe Markets Review

In London FTSE 100 Index closed higher 15.80 or 0.30% to 5,370.50, in Paris CAC 40 Index decreased 4.90 or 0.11% to close at 4,309.44 and in Frankfurt DAX index lower 26.36 or 0.41% to close at 6,370.10. In Zurich trading SMI decreased 13.84 or 0.19% to close at 7,127.37.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 161.41 or 1.23% to 12,933.18, Hang Seng index in Hong Kong decreased 347.68 or 1.52% closed to 22,514.92. ASX 200 index in Australia decreased 16.30 or 0.33% to close 4,887.70. The KL Composite index in Malaysia decreased 10.42 or 0.90% closed to 1,148.68.

The Kospi Index in South Korea decreased 30.72 or 1.95% to close at 1,543.05, SET index in Thailand closed lower 3.99 or 0.59% to 674.67 and JSE Index in Indonesia decreased 21.08 or 0.94% to 2,227.68. The Sensex index in India decreased 78.82 or 0.54% to 14,577.87.