U.S. Stocks Rise; Rates on Hold in Europe

Mukesh Buch
05 Nov, 2009
New York City

U.S. stocks edged higher after the weekly jobless claims declined 20,000 in the last week and productivity increased at the fastest pace of 9.5%. Cisco, Whole Foods and Research in Motion traded higher. The Bank of England and the ECB left their rates unchanged.

[R]10:45 AM New York – U.S. stocks edged higher after the weekly jobless claims declined 20,000 in the last week and productivity increased at the fastest pace of 9.5%. Cisco, Whole Foods and Research in Motion traded higher. The Bank of England and the ECB left their rates unchanged.[/R]

Seasonally adjusted weekly jobless claims increased 20,000 to 512,000 from the revised previous week claims of 532,000. The preliminary unemployment rate in the week ending October 24 unchanged from the prior week's unrevised rate of 4.4%.

Nonfarm business sector labor productivity increased at a 9.5% annual rate during the third quarter of 2009. From the second quarter of 2008 to the second quarter of 2009, output fell 3.5% while hours fell 7.5%, resulting an increase in productivity of 4.3%.

Rates on Hold in Europe

The Bank of England left its key lending rate at 0.5% and the European Central Bank left its rate unchanged at 1%. U.S. Fed left its target rate between zero and 0.5% a day ago.

Central banks around the world are in a concerted effort to keep interest rates low and continue the purchase of government issued bonds to pump liquidity in the market.

The Bank of England has completed the purchase of 175 billion of government bonds and increased it by 25 billion today. The Monetary Policy Committee also noted that capacity utilization is “underutilized” and “that will continue to bear down on inflation for some time to come.”

The ECB President Jean-Claude Trichet also indicated that emergency liquidity provided “are phased out in a timely and gradual fashion.”

The euro advanced 0.35% against the dollar to $1.492 and the pound was nearly unchanged.

Earnings Review

Cigna Corporation, the health insurer reported third quarter sales fell 7% to $4.52 billion from $4.85 billion a year ago. Net income in the quarter rose 92.4% to $329 million or $1.19 per diluted share compared to net income of $171 million or 62 cents per share a year ago.

CVS Caremark Corporation, the pharmaceutical retailer reported third quarter sales rose 17.7% to $24.6 billion from $20.9 billion a year ago. Net income in the quarter rose 39% to $1.02 billion or 71 cents per diluted share compared to net income of $732.5 million or 50 cents per share a year ago.

BNP Paribas SA, the bank said third quarter revenues rose 41% to €10.7 billion from €7.6 billion a year ago. Net profit in the quarter rose 45% to €1.31 billion compared to net profit of €901 million a year ago.

Invensys plc, the global technology company said first-half revenues fell 3% to £1.06 billion from £1.09 billion a year ago. Net profit for the first-half rose 5.5% to £77 million or 9.5 pence per diluted share compared to net profit of £73 million or 9.1 pence per share a year ago.

Prudential Financial, Inc, the insurance and investment company said third quarter revenues rose 4% to $6.60 billion from $6.35 billion a year ago. Net income in the quarter was $1.09 billion or $2.35 per diluted share compared to net loss of $118 million or 25 cents per share a year ago.

Qualcomm Incorporated, the wireless chip supplier said fourth quarter revenues fell 18% to $2.7 billion from $3.3 billion a year ago. Net income in the quarter fell 8.5% to $803 million or 48 cents per diluted share compared to net income of $878 million or 52 cents per share a year ago.

Unilever PLC, the supplier of consumer products said third quarter revenues fell 2% to €10.2 billion from €10.4 billion a year ago. Net profit for the quarter fell 36% to €1.05 billion or €0.36 per diluted share compared to net profit of €1.64 billion or €0.57 per share a year ago.

Zurich Financial Services AG, an insurer said nine months net profit fell 21.4% to $2.2 billion compared to net profit of $2.8 billion a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 126.87 or 1.29% to 9,717.44, and Hang Seng index in Hong Kong decreased 135.69 or 0.63% to 21,479.08, and CSI 300 index in China higher 10.43 or 0.30% to 3,464.32. ASX 200 index in Australia decreased 32.10 or 0.71% to 4,508.00. The FTSE Bursa KL Composite index in Malaysia was higher 0.12 or 0.01% to 1,253.96.

The Kospi Index in South Korea decreased 27.69 or 1.75% to close at 1,552.24. SET index in Thailand closed lower 4.50 or 0.66% to 681.91. JSE Index in Indonesia decreased 4.64 or 0.20% to 2,367.21. The Sensex index in India increased 151.77 or 0.95% to 16,063.90.

Europe Markets Review

In London FTSE 100 Index traded lower 31.10 or 0.61% to 5,076.79, in Paris CAC 40 Index decreased 16.39 or 0.45% to 3,653.94 and in Frankfurt DAX index traded lower 22.62 or 0.42% to 5,421.61. In Zurich trading SMI decreased 44.64 or 0.71% to 6,222.47.