U.S. Stocks Fall on Weak Housing Starts

123jump.com Staff
20 Jan, 2010
New York City

U.S. stocks traded lower after December housing starts declined 4% and completion fell 11.2%. Bank of America quarterly loss widened but loan loss provisions were elevated but stable. Wells Fargo swings to net income.

[R]9:45 AM New York – U.S. stocks traded lower after December housing starts declined 4% and completion fell 11.2%. Bank of America quarterly loss widened but loan loss provisions were elevated but stable. Wells Fargo swings to net income.[/R]

U.S. stocks opened lower after a barrage of earnings that included reports from Bank of America, Wells Fargo, Charles Schwab and IBM. Producer price index increased 0.2% in December and housing permits increased in December but the starts fell.

The Producer Price Index increased 0.2% in December on a seasonally adjusted basis after rising 1.8% rate in November and rising 0.3% in October. On an unadjusted basis prices of finished goods increased 4.4% from a year ago month.

Housing permits in December increased 10.9% from November or 15.8% a year ago month to 653,000. Housing starts in December fell 4% from November. Housing completion fell 11.2% from November and plunged 25.3% from a year ago month to 865,000.

Commodities edged lower in the early trading. Crude oil decreased $1.53 to $77.49 a barrel and gold decreased $18.40 to $1,121.60 an ounce. Natural gas decreased 3 cents to $5.52 per mBtu.

Yields on 10-year bonds traded at 3.66% and 30-year Treasuries hovered near 4.56%.

Earnings Review

Bank of America Corp reported fourth quarter loss increased to $5.2 billion or 60 cents a share compared to $2.4 billion or 48 cents a share. Excluding the cost of repaying TARP funds, the quarterly loss was $194 million. The bank provisioned $10.1 billion for credit losses, lower than the average of $12.8 billion in the previous three quarters.

International Business Machines Corporation, the information technology company said fourth quarter revenues rose 0.8% to $27.2 billion from $27.0 billion a year ago. Net income in the quarter rose 8.6% to $4.81 billion or $3.59 per diluted share compared to net income of $4.43 billion or $3.27 per share a year ago.

The Charles Schwab Corporation, the brokerage company said fourth quarter revenues fell 23% to $986 million from $1.28 billion a year ago. Net income in the quarter fell 47% to $164 million or 14 cents per diluted share compared to net income of $308 million or 27 cents per share a year ago.

Total net revenues for the fiscal year 2009 fell 18.6% to $4.19 billion from $5.15 billion a year ago. Net income for the year fell 35% to $787 million or 68 cents per diluted share compared to net income of $1.21 billion or $1.05 per share a year ago.

The Charles Schwab Corporation ((SCHW)) in the last one year traded as high as $19.87 in August 2009 and as low as $11.00 in March 2009. Based on the yesterday’s closing price of $19.29 the company has market cap of $22.42 billion.

Wells Fargo reported fourth quarter profit of $2.82 billion or 8 cents a share compared to a loss of $2.55 billion or 79 cents a share a year ago. The second largest home lender increased provision for loan losses by $500 million to $25 billion.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 27.38 or 0.25% to 10,737.52, and Hang Seng index in Hong Kong decreased 391.81 or 1.81% to 21,286.17, and CSI 300 index in China lower 113.05 or 3.22% to 3,394.43. ASX 200 index in Australia increased 7.00 or 0.14% to 4,868.20. The FTSE Bursa KL Composite index in Malaysia was higher 6.27 or 0.48% to 1,306.62.

The Kospi Index in South Korea increased 4.16 or 0.24% to close at 1,714.38. SET index in Thailand closed lower 4.68 or 0.64% to 731.80. JSE Index in Indonesia increased 1.20 or 0.04% to 2,667.27. The Sensex index in India decreased 11.57 or 0.07% to 17,474.49.

Europe Markets Review

In London FTSE 100 Index traded lower 18.05 or 0.33% to 5,495.09, in Paris CAC 40 Index decreased 6.77 or 0.17% to 4,002.90 and in Frankfurt DAX index traded lower 8.90 or 0.15% to 5,967.58. In Zurich trading SMI increased 14.81 or 0.22% to 6,648.67.