Morning Rally on Wells Fargo Outlook

123jump.com Staff
09 Apr, 2009
New York City

U.S. stocks rallied after Wells Fargo reported better than expected earnings. Jobless claims rose above 600,000 for the fifth moth in a row. Trade deficit in February declined as imports plunged.

[R]11:00AM New York – U.S. stocks rallied after Wells Fargo reported better than expected earnings. Jobless claims rose above 600,000 for the fifth moth in a row. Trade deficit in February declined as imports plunged.[/R]

Weekly claims of unemployment were more than 600,000 for the fifth month in a row as the U.S. economy continues to shed jobs.

Actual claims of unemployment at the end of last week unadjusted were 618,451 in the week ending April 4, an increase of 19,149. The seasonally adjusted initial claims for the week declined 20,000 to 654,000. The insured unemployment rate rose to 4.4% for the week and from prior week’s unrevised 4.3%.

Unemployment in March surged 8.5% and is likely to increase to 10% before the end of the year.

Commerce Department reported that a sharp fall in trade deficit in February. The deficit declined to $26 billion from $36.2 billion in January on a sharp decline in manufactured import from China and fall in crude oil imports from the Middle East.

Compared to the month a year ago, goods and service deficit declined $35.9 billion in February. Exports declined 16.9% to $25.7 billion and imports fell $61.7 billion or 28.8%.

Deficit with China decline to $14.2 billion from $20.6 billion in January and with Japan fell by $2.2 billion from $4.3 billion.

Separately, U.S. Department of Labor reported an increase in Import Price Index by 0.5% in March. The fall in non-petroleum price index was off-set by an increase of 10.5% in imported petroleum prices.

Barclays Plc agreed to sell its popular exchange traded index fund operation with the name iShares to CVC Capital Partners. The 80% state sale will generate $4.4 billion and book capital gain of $2.2 billion.

The gains will enhance the capital ratio by 54 basis points and pro forma Tier 1 capital ratio at the end of December 2008 would have been 10.3% and pro forma Tier 1 equity ratio of 7.2%.

The deal values the iShares unit at 10.1 times 2008 operating earnings and Barclays will provide $3.1 billion in financing for the purchase. Barclays manage 1.04 trillion pounds in assets.

The exchange traded funds business has grown in five years organically and assets under management increased to $260 billion in the period.