October Home Sales UP 10.1%; IMF Warns

123jump.com Staff
23 Nov, 2009
New York City

U.S. stocks traded higher after the release of better than expected existing home sales in October. European markets gained momentum after the home statistics and closed up more than 2.2%. IMF chief warned that banks have declared only half the losses.

[R]3:00 PM New York – U.S. stocks traded higher after the release of better than expected existing home sales in October. European markets gained momentum after the home statistics and closed up more than 2.2%. IMF chief warned that banks have declared only half the losses.[/R]

U.S. stocks edged higher after the release of October home sales data. European markets closed up and commodities and energy prices increased.

Three popular benchmarks S&P 500 index, Dow Jones Industrial Average and Nasdaq increased more than 1.2%.

U.S. existing home sales increased 10.1% to a 6.1 million annual rate in October supported by the tax credit according to the latest release from the National Association of Realtors.

Sales of single family homes increased 9.7% to a 5.33 million annual rate and foreclosure or distressed property sale share increased to 30% from 29% in September.

The inventory of homes declined to 7 months compared to 8 months backlog in September.

Home sales increased at the fastest pace since February 2007 after the U.S. Congress extended tax credit to the first time home buyers. Existing home sales surged 23.5% in October from a year ago and median price fell 7.1% in the period to $173,100.

IMF Chief Warns of Bank Losses

The International Monetary Fund chief Dominique Strauss-Kahn said on Monday that the global economy is in a holding pattern and vulnerable to more upheaval. He said a lasting recovery will depend on policymakers taking the proper steps in the coming months.

He also noted that only half the bank losses are still declared and said that banking system “remains undercapitalized.”

He added that global economy is “in a holding pattern” but still “highly vulnerable.”

In September IMF had lowered by 15% its projection of global losses to $3.4 trillion and noted that U.S. banks have declared 60% of their estimated losses and 40% of losses at banks in UK and Europe.

Ciena Acquisition

Ciena Corporation ((CIEN)) fell 7.2% or 92 cents to $12.25 after the network specialist, today announced that it has been selected as the successful bidder in the auction of substantially all of the optical networking and carrier Ethernet assets of Nortel’s Metro Ethernet Networks business. Company has agreed to pay $530 million in cash and issue $239 million in aggregate principal amount of 6% Senior Convertible notes due 2017 for a total consideration of $769 million for the assets.

U.S. Earnings Review

BJ Services Company, the provider of pressure pumping and oilfield services reported fourth quarter revenues fell 42% to $878.2 million from $1.51 billion a year ago. Net loss in the quarter was $9.9 million or 3 cents per diluted share compared to net income of $168.1 million or 57 cents per share a year ago.

Revenues for the fiscal year 2009 fell 23% to $4.12 billion from $5.36 billion a year ago. Net income for the year fell 75.4% to $149.9 million or 51 cents per diluted share compared to net income of $609.4 million or $2.06 per share a year ago.

Campbell Soup Company, the canned-food maker reported first quarter sales fell 2% to $2.20 billion from $2.25 billion a year ago. Net income in the quarter rose 17% to $304 million or 87 cents per diluted share compared to net income of $260 million or 70 cents per share a year ago.

Tyson Foods, Inc, the meat producer reported fourth quarter sales rose 0.1% to $7.21 billion from $7.20 billion a year ago. Net loss in the quarter was $455 million or $1.22 per diluted share compared to net income of $48 million or 13 cents per share a year ago.

Sales for the fiscal year 2009 fell 0.7% to $26.7 billion from $26.9 billion a year ago. Net loss for the year was $537 million or $1.44 per diluted share compared to net income of $86 million or 24 cents per share a year ago.

World Markets

Reliance Industries Limited advanced 3.2% to Rs 2,193.10 and the company is negotiating to acquire a controlling stake in LyondellBasell, the world’s third largest petrochemical company for at least $10 billion. The bankrupt chemical maker refiner has operations in Europe and in Houston, Texas generated revenues of $51 billion in 2008 and debt of $23 billion.

The all cash deal between Reliance and LyondellBasell will provide much needed cash to the troubled chemical giant but will also wipe out current shareholders and eliminate most of its debt. Reliance after the acquisition will have combined revenues of $81 billion.

Lloyds Banking Group plc rose 2.9% to 90.79 pence is planning covert its junior loans to enhanced capital notes. The £7 billion will be converted to ECNs and £1.48 billion may be converted to cash, new shares or ECNs.