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US stocks fall on poor Q1 growth

By AAP

Wall Street stocks have finished lower on news the US economy grew just 0.2 per cent in the first quarter.

The Dow Jones Industrial Average fell 74.61 points (0.41 per cent) to 18,035.53 on Wednesday.

The broad-based S&P 500 dropped 7.91 (0.37 per cent) to 2,106.85, while the tech-rich Nasdaq Composite Index fell 31.78 (0.63 per cent) to 5,023.64.

Stocks were in the red all day after first quarter growth came in well below the 1.0 per cent projected by analysts due in part to extremely harsh winter weather in some regions and the West Coast port strike.

The US Federal Reserve said the slower growth was due "in part" to transitory factors and that the economy should resume expanding at a "moderate pace."

That suggested the Fed still expects to begin a slow series of rate rises in the coming months, though not likely in June as many analysts had been expecting until recently.

Twitter fell another 8.9 per cent after Tuesday's 18.2 per cent loss, which followed the company's report that as first-quarter revenues came in at $US436 million ($A543.61 million), $US20 million below expectations.

Cloud-computing company Salesforce bolted 11.6 per cent higher on a Bloomberg report that it was working with bankers to field bids after being approached by a potential acquirer.

Wynn Resorts sank 16.6 per cent after reporting a first quarter loss of $US44.6 million and announcing it would slash its dividend from $US1.50 per share to 50 cents per share.

Both Delta Air Lines and United Continental fell 2.5 per cent on higher oil prices.

Food company Mondelez International gained 5.2 per cent as first quarter earnings nearly doubled to $US324 million from $US163 million in the year-ago period, despite the drag of the strong US dollar.

Starwood Hotels & Resorts Worldwide vaulted 8.3 per cent higher after announcing it hired investment bank Lazard to undertake a strategic review of the company to enhance shareholder value. The move sparked speculation that Starwood, which owns the Westin hotel chain, could be acquired.

Perrigo, which manufactures Sudafed and other over-the-counter drugs, fell 0.9 per cent after opposing the latest buyout offer from Mylan. Mylan, which is also fighting an unsolicited offer from Teva, rose 2.5 per cent. Teva gained 1.3 per cent.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.04 per cent from 2.00 per cent on Tuesday, while the 30-year advanced to 2.76 per cent from 2.70 per cent.

US durable goods orders rise for second consecutive month

The US Department of Commerce revealed new orders for manufactured durable goods rose by 0.5 per cent to US$178.1 billion in February. Inventories were up by 0.3 per cent, which is the second month of rises in a row. 

US pending home sales rise

The National Association of Realtors’ Pending Home Sales index in the US rose one per cent to 96.6 from 95.6 in November, and is 10.9 per cent higher than December 2008.

US manufacturing index rises in January

The Institute of Supply Management's index of manufacturing, the PMI, rose to 58.4 in January from 54.9 in December. Any reading above 50 indicates expansion, whereas under 50 mean contraction. 

Rise in US consumer confidence

US consumer sentiment rose in January, according to the Conference Board. Its Confidence Index increased to 55.9 from 53.6 in December. According to CNBC, economists had expected a reading of 54.      

Consumer sentiment higher in January

Consumer sentiment rose during January. The Westpac-Melbourne Institute Index of Consumer Sentiment gained 5.6 per cent in January to 120.1 from 113.8 in December. 

More job ads in December

Job ads continued to rise in December, according to the ANZ Job Advertisements Series.

Internet and major metropolitan newspaper job ads rose six per cent. Newspaper ads only were up 11.6 per cent, with the biggest gain in the Northern Territory, up 62.6 per cent. This was followed by New South Wales (up 13.9 per cent), Victoria (up 11.6 per cent), ACT (up 10.6 per cent), Queensland (up 9.5 per cent), and Western Australia (up four per cent). Job ads in Tasmania and South Australia were both lower in December.

Internet job ads only gained 5.6 per cent to average 138,432 per week.

According to the report, total job ads had its strongest monthly growth rate since May 2007. The total number of job ads are 19.1 per cent higher than "the cyclical trough", but are 22.6 per cent lower than December last year.

VIX at 19 month low

The CBOE Volatility Index (VIX), or 'fear index', finished at 18.13 on Friday. According to CNBC, this is the lowest reading since 30 May, 2008. 

Stocks up on mixed economic data

US markets were up for the session on mixed economic data and a rising dollar. Volumes are light with housing and energy companies pushing the index higher.

The Dow was up by 50.79 points or 0.49 per cent at 10,464.93

The NASDAQ was up by 15.01 points or 0.67 per cent at 2,252.67

The S&P 500 moved up by 3.97 points or 0.36 per cent at 1,118.02.

The markets made a firm start earlier this session amid news of a big jump in existing home sales for the month of November. The National Association of Realtors said Home sales rose 7.4 Per cent to a 6.54 million annual rate from a revised 6.09 million pace the prior month. The sales rate is the highest it's been since February 2007.

Stocks however pulled back from their morning highs after the Commerce department said that the economy grew at a 2.2 per cent annual rate in the third quarter, compared with a prior estimate of 2.8 per cent. Despite the downward revision, the economy still grew at its fastest pace in two years.

Home builder stocks were up on the housing data with Pulte Homes leading the pack. The stock was up by around 5 per cent when last reported. The SPDR Homebuilders ETF was also up by 2 per cent.

Airline stocks were among the best performers this session. Amex Airline Index gained more than 4.5 per cent to touch a fresh 52 week high earlier this session.

Ford shares gained after the company said it was offering buyouts and early retirement options to all 41,000 of its US factory workers. 

Sovereign debt worries continued to hit the market as Moody’s cut Greece’s rating to A2 from A1. The degree of the downgrade wasn't as severe as that already done by both Standard & Poor's and Fitch.

Commodities traded with broad losses as the dollar index rose to three month high. February gold futures bounced off the $1075 level. The February contract closed 0.8% lower at $1086.70 per ounce. Oil prices climbed over US$74 a barrel amid talk from OPEC that it wanted prices to stay in the $70-$80 range.

Earlier the Australian markets closed up by more than 1 per cent as banking and mining shares gained. The benchmark S&P/ASX200 index closed up 69.1 points, or 1.49 per cent, at 4704.2 points, while the broader All Ordinaries index gained 64.9 points, or 1.39 per cent, to 4724.4.

 

  

Manufacturing activity rising

Activity in the US mid-Atlantic region’s manufacturing sector is expanding, according the Philadelphia Federal Reserve’s Business Outlook Survey. The diffusion index of current activity, which is the survey’s broadest measure of manufacturing conditions, rose for the fifth month in a row to a four and a half year high of 20.4 points this month from 16.7 in November. Analysts had expected the index to drop to 16, according to Reuters.

And the Conference Board announced its Leading Economic Index for the US rose 0.9 per cent during November, following a 0.3 per cent rise in October and 1.2 per cent gain in September. 

Jump in US housing starts

US monthly housing starts for November rose 8.9 percent at a seasonally adjusted rate of 574,000 units from a revised 527,000 in October, the US Department of Commerce announced overnight. This was the largest percentage rise since May this year.

 

Wells Fargo to payback bailout money

Wells Fargo announced on Monday that it had reached an agreement with the US government to repay the entire US$25 billion bailout it received in under TARP. It also announced it will complete a US$10.4 billion common stock offering before repayment. 

Citigroup to repay bailout money

Citigroup announced it will repay US$20 billion in government assistance it received under the Troubled Asset Relief Program (TARP) after coming to an agreement with the US government and regulators. It also said it will issue US$17 billion in new stock.  

US consumer sentiment higher

The index of consumer sentiment in the Reuters/University of Michigan survey of consumers was up to 73.4 for December from 67.4 in November, according to Reuters. Economists had expected a reading of 68.5.

Retail and food services sales were also higher during November. Sales in this sector were 1.3 per cent higher to US$352.1 billion in November from the previous month and 1.9 per cent higher than a November last year, according to the US Department of Commerce, . Analysts had expected retail sales to gain 0.7 per cent according to Reuters.

Smaller US trade deficit

The US Department of Commerce announced the international trade deficit shrank 7.6 per cent to US$32.9 billion in October from a downwardly revised US$35.7 billion in September. According to Reuters, most analysts had expected the deficit would expand to US$36.8 billion.

US wholesale inventories higher

The US Department of Commerce announced wholesale inventories were up 0.3 per cent to US$379.6 billion in October. This is the first rise in 13 months and economists had expected a fall of 0.5 per cent, according to Reuters. 

US unemployment rate drops to 10pc

The unemployment rate in the US dropped to 10 per cent in November from 10.2 per cent in October, according to a report from the US Department of Labor. And the speed of job losses dropped to 11,000 from 111,000 in October. Employment in construction, manufacturing and information fell, while employment in temporary health services and health care were higher, the report said. Analysts had expected 130,000 jobs to be lost according to Reuters. 

US weekly jobless claims continue to fall

The US Department of Labor said weekly jobless claims continued to decline. Initial claims for unemployment insurance fell by 5,000 to a seasonally adjusted 457,000 in the week ending 28 November from the previous week’s revised result of 462,000. The four-week moving average was 14,250 lower to 481,250 from 495,500 a week earlier. 

Best Beige Book in two years

The latest edition of the Beige Book has been billed as the most positive in, wait for it, two years.

The Beige Book comes from the US central bank — the Federal Reserve — and it's a collection of regional reports on what the local economy is doing. It pointed to a rise in consumer spending but nothing over-the-top and better readings on home sales and construction. Commercial real estate still challenges and the job market isn’t promising to repair itself in a jiffy.

The bottom line view was that the economy had grown or improved even only slightly across most of the US between October and November. Improvement in consumer spending and manufacturing were the two best stories. 

US pending home sales higher in October

Pending home sales in the US rose during October according to the National Association of Realtors. Based on contracts signed in October, NAR’s pending home sales index, which is a forward looking indicator, rose 3.7 per cent to 114.1 from 110 in September. The result is 31.8 per cent above the same month last year. The index is at its highest level since March 2006. 

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