Consumer Confidence Data; Market Worries

Mukesh Buch
28 Jul, 2009
New York City

Weakening U.S. consumer confidence and a slight uptick in U.S. home prices did not sway market indexes near close. Disappointing earnings drove shares of Interpublic, Valero, Viacom and U.S. Steel lower. U.S. steel offered optimistic outlook and recalled about 800 workers. IBM acquires SPSS.

[R]4:00 PM New York, 9:00 PM London, 6:00 AM Sydney – Weakening consumer confidence and a slight uptick in the home prices did not sway market indexes near close. Disappointing earnings drove shares of Interpublic, Valero, Viacom and U.S. Steel lower. U.S. steel offered optimistic outlook and recalled about 800 workers. IBM acquires SPSS and Sprint Nextel buys Virgin Mobile.[/R]

In the absence of government economic data, U.S. investors focused on the decline in consumer confidence and a rise in metropolitan home prices. Crude oil prices declined for the first time in three days and metals prices closed lower.

The controversial Case-Shiller index of home prices in 20 metro areas increased 0.5% in May from April, first monthly in nearly three years. The prices from a year declined 17.1%.

Consumer confidence in July declined to 46.6 as measured by the Conference Board after falling to 49.3 in June. The index reached its bottom to 25.3 in February and managed to rebound next three months.

SPSS soared 41% on a buyout offer from IBM that valued the Chicago based business-analytics company at $1.2 billion. Virgin Mobile surged after Sprint Nextel agreed to acquire the debt laden pre-paid wireless firm for $483 million.

Disappointing earnings drove shares of Interpublic, Valero, Viacom and U.S. Steel lower. U.S. steel offered optimistic outlook and recalled about 800 workers.

Virgin Mobile surges after Sprint agrees to acquire the pre-paid telephone service operator. Bank of Hawaii Corp second quarter net falls on higher provision. Office Depot, Inc second quarter loss widens to $82 million. Valero reports loss in the second quarter on lower diesel demand.

European markets closed lower after rallying for more two weeks. Deutsche Bank set aside sharply higher loan loss reserves. Pfeiffer Vacuum second quarter revenues exceeded expectations. EADS report higher quarterly profit as Airbus deliveries increase. BP issues cautious outlook.

UK home prices in June edged 0.1% higher from May but declined 14% from a year ago. London prices increased 2% in the month and fell 12.5% from a year ago. BP Plc second quarter net profit dropped 53%. Investec plans to raise £90 million.

Hitachi Ltd plans to spend nearly $3 billion to acquire five subsidiaries in information and technology areas. Sapporo Holdings lowered its estimate of first half loss. JFE increased after it issued optimistic outlook by reported a loss in the first quarter.

The Reserve Bank of India left its key lending rate unchanged at 3.25% but lifted its inflation outlook in the current financial year. Adani Power Limited initial public offering is oversubscribed by anchor investors. Grasim Industries profit surged 68%.

North American Markets

Dow Jones Industrial Average decreased 11.79 or 0.1% to a close of 9,096.72, S&P 500 Index decreased 2.56 or 0.3% to 979.62, and Nasdaq Composite Index edged higher 7.62 or 0.4% to close at 1,975.51. Toronto TSX Composite Index decreased 186.89 or 1.7% to 10,570.54.

Of the stocks in S&P 500 index, 200 increased, 294 declined and 6 were unchanged.

Office Depot, Inc led the decliners in the S&P 500 index with a loss of 18.1% followed by losses in The Interpublic Group of Companies, Inc of 12.6%, in the Manitowoc Company, Inc of 10.4%, in Plum Creek Timber Company, Inc of 8.1% and in Paccar Inc of 7.3%.

Textron Inc led gainers in the S&P 500 index with a rise of 17.6% followed by gains in Masco Corporation 14.1%, in Tenet Healthcare Corporation of 13.1% and in Coventry Healthcare of 12.7%.

South American Markets Indexes

Mexico Bolsa Index increased 35.45 or 0.1% to 26,850.75. Brazil Bovespa Stock Index decreased 77.45 or 0.1% to 54,471.54.

Argentina Merval Index decreased 1.2%. Chile Stock Market Select index edged lower 0.2%, Peru Lima General Index added 0.6% and Colombia IGBC General Index decreased 1.7%.

Europe Markets Review

In London FTSE 100 Index closed lower 57.29 or 1.25% to 4,528.84, in Paris CAC 40 Index decreased 41.39 or 1.23% to close at 3,330.97 and in Frankfurt DAX index lower 76.81 or 1.46% to close at 5,174.74. In Zurich trading SMI decreased 12.09 or 0.21% to close at 5,762.80.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 1.40 or 0.01% to 10,087.26, Hang Seng index in Hong Kong increased 372.92 or 1.84% to 20,624.54 and CSI 300 index in China higher 12.19 or 0.33% to 3,755.82. ASX 200 index in Australia increased 29.90 or 0.72% to 4,169.50. The FTSE Bursa KL Composite index in Malaysia closed higher 15.95 or 1.38% to 1,172.38.

The Kospi Index in South Korea increased 1.98 or 0.13% to close at 1,526.03. SET index in Thailand closed higher 4.13 or 0.67% to 621.96 and JSE Index in Indonesia increased 28.00 or 1.27% to 2,237.10. The Sensex index in India decreased 43.10 or 0.28% to 15,331.94.

Commodities, Metals, and Currencies

Crude oil decreased $1.59 to close at $66.79 a barrel for a front month contract, natural gas decreased 7 cents $3.53 per mBtu and gasoline decreased 2.22 cents to 191.25 cents.

Wheat futures closed down 4.25 cents in Chicago trading to $5.16 a bushel. Sugar increased 0.05 cent in trading at 18.50 cents a pound. Soybean future closed up 20.50 cent to $9.27 a bushel.

Gold decreased $16.70 in New York trading to close at $939.60 per ounce, silver closed down $0.27 to $13.72 per ounce and copper for the front month delivery decreased 1.15 cents to $2.53 per pound.

Dollar edged higher against euro to $1.416 and closed down against the Japanese yen to 94.55.

Yield on 10-year U.S. bond increased to 3.68% and with 30-year maturities increased to 4.55%.