U.S. Stocks Down Ahead of Fed Action

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

U.S. stocks traded lower ahead of rate decision from the Fed this afternoon. New Home sales in December declined 7.6% and dropped 23% in 2009. Yahoo and McGraw Hill edge higher after earnings. Commodites edge lower and the dollar retained upward bias.

[R]10:45 AM New York – U.S. stocks traded lower ahead of rate decision from the Fed this afternoon. New Home sales in December declined 7.6% and dropped 23% in 2009. Yahoo and McGraw Hill edge higher after earnings.[/R]

U.S. stocks declined after new home sales fell more than expected in December and investors fear the end of the $1.25 trillion Fed support for the mortgage bonds market may slow home sale.

Seasonally adjusted new home sales decreased 7.6% to 342,000 and below 8.6% from a year ago. The median sale price of new homes sold in the month was $221,300 and average price was $290,600 with 8.1 months of inventory.

Sales in 2009 declined 23% to 374,000, the lowest since 1963 when record keeping began. Two days ago the National Association of Realtors said existing home sales in December plunged 17% and for 2009 increased 4.9% to 5.16 million.

Federal Reserve is expected to stick to its plan to end the mortgage market support program with $1.25 trillion by March as previously announced. The Fed is scheduled to release its statement at the conclusion of two-day meeting this afternoon.

Federal Reserve is expected to hold its interest rate target range between zero and 0.25% and the Fed is likely to begin the unwinding of several unconventional policy measures initiated in the last two years.

In addition, the governments in Europe and the U.S. are facing ballooning budget deficits and the U.S. Federal Reserve is likely to trim its support for mortgage market sooner than expected and the European Central Bank is preparing for ways to exit the stimulus measures to support lending.

Crude oil inventories at the end of last week decreased 3.9 million barrels to 326.7 million barrels. Motor Gasoline inventories increased 2.0 million barrels and inventories of finished gasoline increased and distillate inventories increased by 0.4 million barrels.

Crude oil futures declined 61 cents to $74.10 and natural gas futures decreased 17 cents to $5.32 per mBtu. Gold dropped $7.50 to $1,092 an ounce and copper edged 7.6 cents lower to 326.35 cents for a pound.

The dollar edged higher against the euro to $1.4042 and lower to 89.43 yen.

Yield on 10-year U.S. Treasury bonds traded lower to 3.59% and 30-year bonds at 4.53%.

Earnings Review

BlackRock, Inc, an investment management firm reported fourth quarter revenues rose 45% to $1.54 billion from $1.06 billion a year ago. Net income in the quarter rose 392.3% to $256 million or $1.62 per diluted share compared to net income of $52 million or 39 cents per share a year ago.

Total revenues for the fiscal year 2009 fell 7% to $4.70 billion from $5.06 billion a year ago. Net income for the year rose 11.6% to $875 million or $6.11 per diluted share compared to net income of $784 million or $5.78 per share a year ago.

BlackRock, Inc ((BLK)) in the last one year traded as high as $243.80 in January 2010 and as low as $88.91 in March 2009. Based on the yesterday’s closing price of $224.71 the company has market cap of $42.41 billion.

The McGraw-Hill Companies, Inc ((MHP)) in the last one year traded as high as $35.24 in December 2009 and as low as $17.22 in March 2009. Based on the yesterday’s closing price of $34.23 the company has market cap of $10.78 billion.

Yahoo! Inc., the Internet portal said fourth quarter revenues fell 4.4% to $1.73 billion from $1.81 billion a year ago. Net income in the quarter was $153 million or 11 cents per diluted share compared to net loss of $303 million or 22 cents per share a year ago.

Revenues for the fiscal year 2009 fell 10.4% to $6.46 billion from $7.21 billion a year ago. Net income for the year rose 42.7% to $598 million or 42 cents per diluted share compared to net income of $419 million or 29 cents per share a year ago.

Yahoo! Inc ((YHOO)) in the last one year traded as high as $18.02 in September 2009 and as low as $10.81 in January 2009. Based on the yesterday’s closing price of $15.99 the company has market cap of $22.40 billion.