While you were sleeping: Wall St's strong week, mixed earnings

Monday 20th July 2009

Shares on Wall Street ended mixed on Friday, rounding out the biggest gain in four months as investors took heart from better-than-expected earnings International Business Machines, Goldman Sachs Group and Intel Corp.

The Dow Jones climbed 0.4% to 8,743.94 on Friday and advanced 7.3% in the week. The Standard & Poor’s 500 slipped 0.4% to 940.38 for a 7% weekly advance. The tech-heavy Nasdaq Composite rose 0.1% to 1,886.61 on Friday and rose 7.4% in the week.

IBM gained 4.3 percent to US$115.42 after announcing a 13% jump in second-quarter profit after the close of trade on Thursday in the US and lifting its full-year guidance. JPMorgan Chase rose US$2.10 to US$36.89 and Intel climbed 1.6% to US$18.79.

General Electric fell 6.1% to US$11.65 after posting a drop of almost 50% in profit. Google Inc. fell 2.8% to US$430.25 after posting results which showed weaker advertising weighed on revenue.

CIT Group soared 71% to 70 cents after reports that the lender is in talks with bankers including Goldman Sachs and JPMorgan for short-term financing that may help is avoid bankruptcy.

Bank of America fell 2% to US$12.89 after the biggest US bank reported a 25% drop in second-quarter profit and warned of further weakness from consumer credit, mortgages and loans to businesses.

Citigroup posted a quarterly profit of US$4.3 billion thanks to a US$11.1 billion pretax gain from selling most of its Smith Barney brokerage into a joint venture with Morgan Stanley’s brokerage unit.

US housing starts rose 3.6% to an annual 582,000 last month, from 562,000 in May, according to the Commerce Department. Starts for single-family homes soared 14.4%, the biggest gain since December 2004.

Permits issued in June to begin building homes rose 8.7% to 563,000 units.

US Treasuries fell after the housing data, which lifted optimism for a recovery from the US recession.

The yield on the benchmark 10-year notes climbed 10 basis points to 3.66% on Friday. The yield on 30-year Treasuries jumped 11 basis points to 4.55%.

President Barack Obama on Friday said the US must press on with reforms to the health-care system, amid signs of wavering support in the House.

"Now we've got to get over the finish line, and part of this process is figuring out how to pay for it," Obama said, referring to a price tag for health-care that exceeds US$1 trillion.

His administration's US$787 billion stimulus package is working and the focus must stay on restoring the economy rather than turning attention to the soaring budget deficit, said Lawrence Summers, head of the National Economic Council.

Neil Barofsky, special inspector general of the Troubled Asset Relief Program, urged Treasury Secretary Timothy Geithner to seek more details from banks of how they use more than US$200 billion of government aid.

Barofsky surveyed 360 banks that had received TARP funding, which showed 83% of banks used the money for lending, while 43% bolstered their balance sheets and 31% made new investments.

Copper futures rose on Friday, bringing its advance this year to 72%, after the housing data stoked optimism demand for the metal used to make pipes and wires will increase.

Copper futures for September gained 1.4% to US$2.423 a pound on the New York Mercantile Exchange.

Gold futures for August delivery rose 0.2% to US$937.50 an ounce on the New York Mercantile Exchange. Crude-oil futures rose 3.2% to about US$64 a barrel.

The US dollar rose on Friday as mixed earnings result helped underpin demand for the greenback as a haven. The euro weakened 0.3% to $1.410 while edging up 0.2% to 132.84 yen. The dollar rose 0.4% to 94.21 yen.

European shares rounded out a week of gains on Friday, with the Dow Jones Stoxx 600 climbing 0.4% to 210.67. Swedbank jumped 12%, leading stocks higher, while Vopak NV, a bulk liquids storage company, rose 8.5%.

The UK’s FTSE 100 gained 0.6% to 4388.75 and Germany’s DAX 30 rose 0.4% to 4978.40. France’s CAC 40 rose 0.6% to 3218.46.

British Airways rose 3% after announcing it had raised about US$1 billion, including US$540 million in bank loans, helping avert a cash crisis.

Businesswire.co.nz

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