U.S. Stocks Lower; UBS, RBS Worries

Mayank Mehta
03 Nov, 2009
New York City

U.S. stocks wavered as banks declined after Switzerland based UBS reported wider quarterly loss. Berkshire Hathaway agreed to acquire Burlington Northern Santa Fe at 31% premium. Royal Bank of Scotland plans to sell assets to meet bailout conditions. Gold surges.

[R]10:45 AM New York – U.S. stocks wavered as banks declined after Switzerland based UBS reported wider quarterly loss. Berkshire Hathaway agreed to acquire Burlington Northern Santa Fe at 31% premium. Royal Bank of Scotland plans to sell assets to meet bailout conditions. Gold surges.[/R]

Stocks in the early trading in New York traded lower after UBS reported a wider loss and Royal Bank of Scotland agreed to sell certain assets to meet bailout conditions set by the EU regulators.

The dollar edged higher against the euro and hovered near $1.46. Crude oil edged lower but gold jumped $21.60 to $1,075.60.

Berkshire Hathaway to Acquire Burlington Northern for $44 B

Burlington Northern Santa Fe agreed to be acquired by investment company Berkshire Hathaway controlled by Warren E. Buffett in a deal valuing the company at $44 billion that includes the assumption of $10 billion in debt.

Berkshire agreed to pay $100 in stock and cash for the 77.4% stake in the company that it does not own. Buffett, over the last two years accumulated 32.6% stake in the company.

Factory Orders Rise

New orders for manufactured goods in September, up five of the last six months, increased $3.3 billion or 0.9 percent to $356.1 billion, the U.S. Census Bureau reported today. This followed a 0.8 percent August decrease. Excluding transportation, new orders
increased 0.8%.

Earnings Review

Cognizant Technology Solutions Corporation, the provider of IT consulting and technology services reported third quarter revenues rose 16% to $853.5 million from $734.7 million a year ago. Net income in the quarter rose 21% to $136.6 million or 45 cents per diluted share compared to net income of $112.8 million or 38 cents per share a year ago.

Diebold, Incorporated, the ATM maker reported third quarter sales fell 26% to $645.2 million from $869.1 million a year ago. Net loss in the quarter was $7.2 million or 11 cents per diluted share compared to net income of $46.5 million or 70 cents per share a year ago.

Emerson Electric Co, the technology company reported fourth quarter sales fell 20.6% to $5.32 billion from $6.70 billion a year ago. Net income in the quarter fell 26.5% to $506 million or 67 cents per diluted share compared to net income of $688 million or 88 cents per share a year ago.

UBS AG, the Swiss bank reported third quarter net loss of Sfr564 million compared to Sfr283 million in the quarter a year ago, fourth quarterly loss in a row.

Australia Cuts Rates Again

Reserve Bank of Australia today cut its base rate by the forecasted 25 basis points as government announced that the interest rates can’t stay at 50-year emergency lows.

Asian Markets Review

Hang Seng index in Hong Kong decreased 380.13 or 1.76% to 21,240.06, and CSI 300 index in China higher 42.62 or 1.26% to 3,435.42. ASX 200 index in Australia decreased 8.90 or 0.20% to 4,531.50. The FTSE Bursa KL Composite index in Malaysia was higher 0.56 or 0.05% to 1,242.32. The markets in Tokyo were closed today.

The Kospi Index in South Korea decreased 9.17 or 0.59% to close at 1,549.92, SET index in Thailand closed lower 8.74 or 1.29% to 668.48. JSE Index in Indonesia decreased 37.54 or 1.58% to 2,334.11. The Sensex index in India decreased 491.34 or 3.09% to 15,404.94.

Europe Markets Review

In London FTSE 100 Index traded lower 108.55 or 2.13% to 4,995.95, in Paris CAC 40 Index decreased 78.55 or 2.16% to 3,560.91 and in Frankfurt DAX index traded lower 95.78 or 1.76% to 5,335.04. In Zurich trading SMI decreased 129.19 or 2.05% to 6,162.03.