U.S. Stocks Rally Ahead of Fed; Toll, Macy's Up

Mayank Mehta
12 Aug, 2009
New York City

U.S. stocks advance ahead of Fed statement on interest rate later this afternoon. Toll Brothers surged after it retired debt and backlog fell 47%. Starwood Property lifted its offer size for initial public offering. JA Solar declined after it reported quarterly loss.

[R]10:00 AM New York – U.S. stocks advance ahead of Fed statement on interest rate later this afternoon. Toll Brothers surged after it retired debt and backlog fell 47%. Starwood Property lifted its offer size for initial public offering. JA Solar declined after it reported quarterly loss.[/R]

U.S. stocks edged higher in the early trading after Toll Brothers reported better than expected earnings. Earnings from Macy’s, Applied Materials and BHP Billiton were also in focus.

Trade deficit in June increased 4% as semiconductor prices fell and petroleum products prices increased.

June Trade Deficit Widens 4%

Trade deficit of goods and services in June increased 4% to $27 billion from revised $26 billion in May. In the month, exports increased 2% and imports gained 2.3% on higher oil prices. In June, the goods deficit increased $1.2 billion from May to $38.4 billion, and the services surplus increased $0.1 billion to $11.4 billion.

Starwood Property Raises Offer Size

Starwood Property Trust increased its initial public offer size to 40.5 million from 25 million that may be priced at $20 a share. The company focuses on investing debt related to commercial real estate debt and residential mortgages.

The public offerings are lagging significantly compared to the calendar last year. For the year, 14 companies have raised $3.6 billion compared to 33 offerings that raised nearly $30 billion in the same period last year. According to the 123jump.com data, no offerings were priced last year between September 7 and December last year.

Gainers & Losers

Applied Materials ((AMAT)) added 3.8% to $13.72 after revenues in the latest quarter dropped 39% and net loss of 4 cents a share.

BHP Billiton ((BHP)) added 0.9% to $62.48 after the mining company said full-year revenues fell 15.6% to $50.2 billion from $59.5 billion a year ago. Net profit in the full-year fell 62% to $5.9 billion compared to net profit of $15.4 billion a year ago. Earnings per share fell to $1.05 from $2.75 a year ago.

JA Solar ((JASO)) dropped 14.5% to $4.49 after it reported revenues declined of 54% and net loss in the quarter.

Macy’ ((M)) increased 0.4% to $15.53 after net income fell 90%.

Toll Brothers ((TOLL)) surged 10.6% to $22.66 after third quarter revenues declined 42% to $461.3 million and backlog at the end of the quarter fell 37% to 1,626 units. The company retired $295 million in debt in the quarter and has no debt maturing through the end of fiscal 2011.

Earnings Review

Applied Materials, Inc, the maker of equipment used to produce semiconductors said third quarter revenues fell 39% to $1.13 billion from $1.85 billion a year ago. Net loss in the quarter was $54.9 million or 4 cents per diluted share compared to net income of $164.8 million or 12 cents per share a year ago.

Macy''s, Inc, the department store operator reported second quarter sales fell 9.8% to $5.16 billion from $5.72 billion a year ago. Net income in the quarter fell 90.4% to $7 million or 2 cents per diluted share compared to net income of $73 million or 17 cents per share a year ago.

ING Groep N.V., the financial services company said first quarter gross premium income fell 22% to €7.3 billion from €9.4 billion a year ago. Net profit in the quarter fell 96% to €71 million or €0.3 per diluted share compared to net profit of €1.92 million or €0.94 per share a year ago.

BHP Billiton plc, the mining company said full-year revenues fell 15.6% to $50.2 billion from $59.5 billion a year ago. Net profit in the full-year fell 62% to $5.9 billion or $105.4 per diluted share compared to net profit of $15.4 billion or $274.8 per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 150.46 or 1.42% to 10,435.00, Hang Seng index in Hong Kong decreased 638.97 or 3.03% to 20,435.24 and CSI 300 index in China lower 158.98 or 4.47% to 3,397.40. ASX 200 index in Australia increased 11.10 or 0.26% to 4,343.10. The FTSE Bursa KL Composite index in Malaysia closed lower 5.74 or 0.48% to 1,180.54.

The Kospi Index in South Korea decreased 13.86 or 0.88% to close at 1,565.35 JSE Index in Indonesia decreased 51.92 or 2.16% to 2,347.36. The Sensex index in India decreased 54.43 or 0.36% to 15,020.16. The Thailand Market was closed today.

Europe Markets Review

In London FTSE 100 Index traded higher 29.41 or 0.63% to 4,700.75, in Paris CAC 40 Index increased 21.30 or 0.62% to 3,477.48 and in Frankfurt DAX index traded higher 36.68 or 0.69% to 5,322.49. In Zurich trading SMI decreased 7.33 or 0.12% to 5,942.65.