Stocks Off Lows But Remain Negative as Europe Tops Investor Concerns; Consumer Confidence Provides Support

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Stocks have pared some earlier losses but are still in negative territory following new data that show a mixed picture of the U.S. economy, while Europe's debt worries continue to roil investors.

Certain analysts had credited yesterday's late recovery in U.S. stocks to a decoupling of U.S. and European markets. But Europe continues to overshadow, as questions remained about whether European Union officials will have to bail out Spain, Portugal and other euro members following approval of a financial aid package for Ireland over the weekend.

In the newest economic data, the Standard & Poor's S&P/Case-Shiller index was disappointing. The widely watched index fell 0.6% in September from August. Eighteen of the 20 cities recorded monthly price declines with prices falling faster in the nation's largest cities.

Meanwhile, the Chicago Purchasing Managers' Index came in at 62.5 in November, better than the 60.0 reading economists were projecting. Also, the Conference board reported its November reading of consumer confidence came in at 54.1, better than economists' forecast of 52.5.

In company news, Google Inc. ( GOOG ) is near a deal to acquire closely held online discounter Groupon Inc. for as much as $6 billion, the New York Times reported on its website late Monday, citing people with direct knowledge of the matter. A deal in the $5 billion to $6 billion range would be the largest acquisition ever for Google, and could be inked as soon as this week, though there remained some risk the talks could fall apart, the report said.

American International Group ( AIG ) shares are down following a report that the insurance giant is planning to sell bonds for the first time since the government bailed the company out in 2008. Proceeds from the sale will be used for general corporate purposes.

Merck ( MRK ) shares are down down fractionally after promoting president Kenneth Frazier to be the new CEO. Frazier comes to the post having made his reputation at the drug giant as general counsel having negotiated a mountain of litigation following the withdrawal of its Vioxx painkiller.

Seagate Technology ( STX ) shares are down after the company said its board of directors terminated discussions with private equity firms regarding a going private transaction. Also, Seagate management said it believes that the demand for hard disk drives has improved, and the current expectation for the total available market in the December 2010 quarter is approaching 170 million units.

Shares of UnitedHealth Group ( UNH ) are just higher after the insurance giant projected enrollment growth of up to 2.5% across its health insurance plans in 2011, Reuters reported. UnitedHealth projected growth in benefit plans excluding any acquisitions of up to 830,000 members, making the total 33.64 million.

Bank of America (BAC) shares are down after a Bloomberg report that a former bank employee in New Jersey said the bank regularly kept mortgage promissory notes after loans were bundled into bonds and sold to investors. Securitization contracts require the documents to be transferred to the trustee. The testimony, which came in the form employee's personal bankruptcy case, could give ammo to homeowners and investors as the battle banks over defaulted mortgages.

Shares of Lowe's Companies (LOW) are just higher after the hardware and home-improvement chain reiterated its prior sales and earnings guidance for the 2010 fiscal year. Total sales are expected to increase 3% to 4%, with EPS in the range of $1.37 to $1.40 per share. The Street view is 3% sales growth and EPS of $1.41 per share. The guidance came at a company analyst conference.

Shares of Seadrill (SDRL) are down after the company said Q3 earnings per share are $0.85, better than the Street view of $0.79 per share. Revenue was $1.075 billion, in line with the analyst consensus on Thomson Reuters. Also, Bloomberg reported that Seadrill and other companies such as DryShips (DRYS) have ordered 20 deepwater rigs and shallow water rigs since BP's (BP) Gulf of Mexico Spill.

Barnes & Noble (BKS) said Q2 sales were $1.9 billion, missing the $1.98 billion Wall Street analysts were expecting, according to Thomson Reuters. It lost $0.22 per share, wider than forecasts for an $0.08 loss. It sees Q3 earnings between $0.90 to $1.20 per share, below Wall Street's forecast of $1.29.

Commodities are mixed. February gold contracts are up $18, or $1.34%, to $1,386. an ounce while January crude oil contacts are down 0.75%, or $0.64, at $85.09 a barrel.

In energy ETFs, the United States Oil Fund (USO) is down 0.92% to $36.44 and the United States Natural Gas fund (UNG) is down 1.38% to $5.72

In precious metal ETFs, the SPDR Gold Trust (GLD) is up 1.44% to $135.43. Market Vectors Gold Miners (GDX) is up 1.38% to $59.68. iShares Silver Trust (SLV) is up 3.5% to $27.48.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

Referenced Stocks: AIG , GOOG , MRK , STX , UNH

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