Retail Sales Lift U.S. Stocks; Vulcan Drops

Darlington Musarurwa
11 Jun, 2009
New York City

U.S. stocks rallied after retail sales increased for the first time in three months. Unemployment claims declined to the lowest in six months. Vulcan Materials plunged on stock offering and dividend cut. Bank of America, Regions Financial and Fifth Third Bank led gainers.

[R]10:25 AM New York – U.S. stocks rallied after retail sales increased for the first time in three months. Unemployment claims declined to the lowest in six months. Vulcan Materials plunged on stock offering and dividend cut.[/R]

U.S. stocks traded higher in the morning after the release of retail sales, unemployment claims and an increase in global oil demand.

Retail sales in May increased 0.5% from April, unemployment claims decreased 24,000 to 601,000 and the International Energy Agency increased its global demand for oil by 120,000 barrels to 83.3 million.

Of the stocks in S&P 500 index, 408 increased 88 declined and 4 were unchanged. Regions Financial, Bank of America and Fifth Third Bank led gainers.

Retail Sales Edge Up

Retail sales in May increased 0.5% from April to $340 billion but still 9.6% lower from a year ago. Sales for three months ending in May declined 9.7% from a year ago period.

Retail sales in April increased 0.5% but were 10.8% lower from a year ago.

Gasoline stations sales declined 33.8% from a year ago in May and motor vehicles and parts dealer sales fell 19.6% from a year ago.

Auto sales are down sharply from a year ago but have been on the rise after hitting 27-year low to 9.1 million annual rate in February. Sales of vehicles increased to 9.3 million in April and to 9.9 million in May.

Unemployment Claims

The initial claims of unemployment in the last week ending June 6 decreased 24,000 to 601,000 from the revised 625,000. The advanced seasonally insured unemployment rate was 5.1%.

At the end of third week of May, Michigan claimed the highest insured unemployment of 7.2% followed by Oregon with 6.9%, Puerto Rico 6.4% and Nevada 6.3%.

Gainers & Losers

Banks in early morning trading rallied after Morgan Stanley lifted Bank of America earnings estimates for this and the next year. Bank of America increased 6.3% to $12.74.

JP Morgan Chase, Citigroup and Wells Fargo increased less than 1%.

Vulcan Materials ((VMC)) plunged 5% to $41.69 after it proposed to issue 11.5 million shares and reduce quarterly dividend to 25 cents a share.

The company in a regulatory filing noted, “New highway spending as a result of federal stimulus legislation is expected to contribute to earnings growth at Vulcan from the second half of 2009 through 2012.”

During this period, the company anticipates aggregates shipments from the stimulus plan of 35 to 45 million tons, asphalt shipments of 3 to 4 million tons, and concrete shipments of 250 to 300 thousand cubic yards. And estimated between 45% and 65% of these shipments are expected to occur by the end of 2010.

Chindex International ((CHDX)) surged 29% to $13.94 after it reported fourth quarter net income of 22 cents a share compared to a loss of 20 cents a share. Revenues in the quarter increased 72% to $60 million and for the year 32% to $171.4 million.

Europe Markets Review

In the late afternoon, in London FTSE 100 Index traded higher 19.79 or 0.45% to 4,456.54, in Paris CAC 40 Index increased 7.32 or 0.22% to 3,322.59 and in Frankfurt DAX index traded higher 32.05 or 0.63% to 5,083.23.In Zurich trading SMI increased 57.27 or 1.05% to 5,493.66.

Asian Markets at Close

The Nikkei 225 Index in Tokyo closed lower 10.16 or 0.10% to 9,981.33, Hang Seng index in Hong Kong increased 5.37 or 0.03% closed to 18,791.03, CSI 300 index in China lower 27.97 or 0.94% closed to 2,961.63. ASX 200 index in Australia increased 22.80 or 0.57% closed to 4,047.20. The KL Composite index in Malaysia higher 5.99 or 0.55% closed to 1,088.96.

The Kospi Index in South Korea increased 4.51 or 0.32% to close at 1,419.39.SET index in Thailand closed higher 2.52 or 0.40% to 627.07 and JSE Index in Indonesia decreased 19.23 or 0.91% closed to 2,089.58. The Sensex index in India decreased 55.34 or 0.36% closed to 15,411.47.