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Stocks Seeing Modest Strength On Upbeat GDP Data
With
traders reacting positively to upbeat U.S. economic data, stocks have
moved modestly higher in early trading on Friday. The major averages
have climbed into positive territory, adding to the slim gains posted in
the previous session.
The major averages have pulled back off their highs for the young session but currently remain positive. The Dow is up 11.25 points or 0.1 percent at 13,114.93, the Nasdaq is up 10.72 points or 0.4 percent at 2,996.84 and the S&P 500 is up 1.48 points or 0.1 percent at 1,414.45.
The
early strength on Wall Street comes on the heels of the release of a
report from the Commerce Department showing stronger than expected U.S.
GDP growth in the third quarter.
The report showed that U.S. gross domestic product rose
by 2.0 percent in the third quarter following a 1.3 percent increase in
the second quarter. Economists had been expecting third quarter GDP to
increase by about 1.8 percent.
The stronger than expected GDP
growth reflected positive contributions from consumer spending, federal
government spending, and residential fixed investment.
However, disappointing earnings news from Apple (AAPL)
is limiting the upside for the markets, as the iPad and iPhone maker
reported weaker than expected fiscal fourth quarter earnings despite
reporting stronger than expected revenue growth. Apple also issued
downbeat guidance for its fiscal first quarter.
Online retailer Amazon
(AMZN) reported a third quarter loss that was wider than analysts had
expected. The company's net sales also trailed expectations.
Merck (MRK)
reported better than expected third quarter earnings, although the drug
giant's revenues fell by more than analysts had anticipated. Looking
Ahead, Merck said 2012 revenues are still projected to be at or near
2011 levels on a constant currency basis.
Most of the major
sectors are showing only modest moves in early trading, although
strength is visible among telecom, networking, and semiconductor stocks.
In overseas trading, stock markets across the Asia-Pacific region came under pressure during trading on Friday. Japan's Nikkei 225 Index fell by 1.4 percent, while Hong Kong's Hang Seng Index ended the day down by 1.2 percent.
Meanwhile, the major European markets
have moved to the upside over the course of the trading day. While the
U.K.'s FTSE 100 Index is up by 0.1 percent, the German DAX Index is up
by 0.7 percent and the French CAC 40 Index is up by 0.8 percent.
In the bond market, treasuries are
regaining some ground after coming under pressure in the previous
session. Subsequently, the yield on the benchmark ten-year note, which
moves opposite of its price, is down by 3.7 basis points at 1.791
percent.
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TSX Edges Up At Open Friday
Bay Street stocks
edged up at open Friday amid marginal buying in metal stocks, with the
S&P/TSX Composite Index adding 26.36 points or 0.31 percent to
12,326.59.
Among base-metals stocks, First Quantum Minerals edged up 0.50 percent, while Inmet Mining and Teck Resources were losing around 1 percent each.
In the oil patch, Paramount Resources and Baytex Energy Corp. were down about 1 percent each.
Energy marketing company TransAlta Corp. gained over 1 percent after reporting improved third quarter funds from operations.
Insurance services provider Fairfax Financial Holdings Ltd. eased 0.25 percent after reporting a much lower net income for the third quarter.
Commercial and industrial equipment dealer Toromont Industries Ltd. shed 0.50 percent even after reporting improved third-quarter net earnings.
The price of crude oil
was flat, with crude for December edging up $0.22 to $86.27 a barrel.
The price of gold was moving back toward its seven-week low Friday
morning as the U.S. dollar was trading firm amid GDP data. Gold for
December lost $2.90 to $1,710.10 an ounce.
Crude oil and natural gas
distribution company Enbridge Inc. said it would transfer certain of
its assets to Enbridge Income Fund Holdings Inc. at a price of $1.164
billion.
Energy marketing company TransAlta Corp. reported
improved third quarter funds from operations at C$232 million or C$0.99
per share compared to C$168 million or C$0.75 per share in 2011.
However, comparable earnings declined to C$41 million or C$0.18 per
share from C$61 million or C$0.27 per share last year.
In
economic news from south of the border, the Commerce Department said
that U.S. gross domestic product rose by 2.0 percent in the third
quarter following a 1.3 percent increase in the second quarter.
Economists had been expecting third quarter GDP to increase by about 1.8
percent.
From the euro zone, confidence among German consumers
is set rise in November, according to the latest survey results from
market research group GfK. The consumer confidence index for November
rose to 6.3 from an upwardly revised 6.1 in October. Economists had
forecast the index to remain unchanged from October's original score of
5.9.
Meanwhile, consumer confidence in France deteriorated for
the fifth consecutive month in October, data released by statistical
office Insee showed. The consumer confidence index dropped to 84 in
October from 85 in September, in line with economists' expectations. The
index has declined for the fifth month in a row.
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European Markets In Negative Territory, Data Eyed
The European markets
are in negative territory in afternoon trading Friday, as investor
sentiment continued to be weak, ahead of the advance estimate of third
quarter GDP data from the U.S., after Apple reported unimpressive
earnings.
Confidence among German consumers is set rise in
November, reports said, citing the latest survey results from market
research group GfK. The consumer confidence index for November rose to
6.3 from an upwardly revised 6.1 in October.
Consumer confidence
in France deteriorated for the fifth consecutive month in October, data
released by statistical office Insee showed. The consumer confidence
index dropped to 84 in October from 85 in September, in line with
economists' expectations. The index has declined for the fifth month in a
row.
The Euro Stoxx 50 index of eurozone bluechip stocks is losing 0.70 percent, while the Stoxx Europe 50 index, which includes some major U.K. Companies is falling 0.60 percent.
The German DAX is losing 0.5 percent, the French CAC 40 is falling 0.4 percent and the FTSE 100 of the U.K. is dropping 0.7 percent. Switzerland's SMI is receding 0.4 percent.
In Frankfurt, Fresenius Medical Care is declining 1.8 percent and parent Fresenius is falling 1.7 percent. Deutsche Bank reduced its rating on Fresenius.
RWE is losing 0.8 percent. UBS added
the stock to ''Least Preferred List.'' SAP is gaining 1.1 percent after
Merrill Lynch raised the stock to "Buy" from "Neutral." Kloeckner is
falling 2.3 percent, following a broker downgrade.
In Paris, Credit Agricole, BNP Paribas and Societe Generale are falling between 3.6 percent and 2.5 percent.
Publicis Groupe
is dropping 1.6 percent. The advertising and communications firm said
its third-quarter revenues increased 14.7 percent, with an organic
growth of 2 percent. Carrefour is gaining 2.5 percent after Morgan
Stanley raised the stock to "Overweight'' from "Equalweight.''
In London, Kazakhmys is losing 2.5 percent and Fresnillo is falling 2.1 percent.
Chipmaker ARM
Holdings is dropping 2.4 percent on disappointing earnings report from
Apple. Anglo American is gaining 2.6 percent after announcing that its
chief executive is leaving.
Weir Group is rising 3 percent and Pearson is up 1.4 percent. Ericsson is losing 4.6 percent in Stockholm after reporting a 43 percent decline in third-quarter profit.
Statoil
is down around 1 percent in Oslo. The energy firm reported a rise in
third-quarter profit, reflecting mainly higher gas prices and volumes of
gas sold. KPN is gaining 1.8 percent in Amsterdam despite a broker downgrade.
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Asian Stocks Fall On Earnings Concerns
Asian stocks fell
broadly on Friday as weaker than expected regional corporate earnings
coupled with downbeat earnings from Apple last night dented investor
sentiment. Hopes that the U.S. economy is recovering gave way to caution
ahead of GDP data due tonight after the latest data on U.S. housing
showed the number of Americans signing contracts to buy previously-owned
homes rose only slightly in September from August, indicating that
sales may level off in the coming months after steady gains in the past
year.
Japanese stocks fell sharply as the yen's brief
rally against the dollar and the euro caused jittery investors to take
some profits off the table following recent gains. The Nikkei average and the broader Topix index fell about 1.4 percent each. Bellwether exporters such as Toyota Motor and Nikon fell 2-3 percent amid a steady yen ahead of BOJ policy meeting next week.
Japan's
consumer prices slid for a fifth month in September, data released
today showed, adding pressure on the Bank of Japan to expand monetary
easing to help fight deflation and achieve its inflation target. The
government of Prime Minister Yoshihiko Noda approved additional spending
to the tune 422 billion yen today to bolster a flagging economy, which
is feared to fall into a recession amid weakening domestic demand.
Heavyweight Fanuc
lost 3.1 percent on a brokerage downgrade after the industrial robot
maker posted a second-quarter operating profit of 47.7 billion yen, down
23 percent from a year earlier. Canon also tumbled 3.2 percent after
the world's largest camera maker reported weak results and cut its
full-year profit and sales outlook.
Shares of Fuji Electric
plummeted 7.5 percent on concerns it may miss its full-year operating
profit forecast. On the positive side, Advantest rallied 3.6 percent
after turning in group net profit of 1.52 billion yen in the first half
versus a 4.54 billion yen loss in the year-ago period. Sharp jumped 3.8
percent on reports that it has its eye on fresh talks with firms such as
Hewlett-Packard, Intel and Apple over a possible capital alliance.
China's Shanghai Composite index retreated 1.7 percent, dragged down by cement and steel companies on worries over weak earnings. Hong Kong's Hang Seng index
lost 1.2 percent, snapping a 10-day winning streak after mobile
operator China Unicom posted third-quarter net profit that missed
analysts' estimates.
Australian shares fell notably ahead of U.S. growth data due later in the global day. Both the benchmark S&P/ASX 200 and the broader All Ordinaries
index fell about 0.8 percent each. Resource stocks turned lower on
revelations the minerals resource rent tax failed to earn any revenue
from the three big miners in the first quarter.
BHP Billiton fell 1.5 percent while smaller rival Fortescue Metals Group lost 2.4 percent. Rio Tinto
declined 1.8 percent after an Australian lawyer working for Rio Tinto
subsidiary SouthGobi Resources in Mongolia was stopped from leaving the
country to quiz her about allegation of bribery. Gold miner Newcrest
added 0.6 percent.
Whitehaven Coal tumbled 4.7 percent after warning of a steep drop in its full-year earnings. Oil & gas firm Woodside and Oil Search
lost about 1.4 percent each, while Santos ended down 1.2 percent. Banks
ended on a subdued note after the collapse of prominent financial group
Banksia Securities. Westpac, NAB, ANZ and Commonwealth fell between 0.3 percent and 0.8 percent. Investment bank Macquarie Group
rallied 3.5 percent as it announced an 18 percent rise in first-half
profit on strong income from its trading and funds businesses.
Seoul shares
tumbled on foreign fund selling after data showed the South Korean
economy grew at the slowest pace in nearly three years in the third
quarter, as the global slowdown hurt corporate investment. According to
the latest figures from Bank of Korea, the gross domestic product
expanded 0.2 percent quarter-over-quarter in the third quarter, slower
than the 0.3 percent increase recorded in the second quarter. This
marked the weakest growth since the fourth quarter of 2009.
The benchmark Kospi average lost 1.7 percent. Market bellwether Samsung Electronics fell 2.7 percent despite announcing record third-quarter profit. Kia Motors plunged 5.6 percent after its third quarter profit came in below expectations.
New Zealand shares fell in thin trading, dragged down by losses in heavyweights. The benchmark NZX-50
index slipped 0.2 percent. Shares of Fletcher Building, the nation's
largest construction company, dropped 1.3 percent, F&P Healthcare,
the maker of breathing masks and respirators which gets more than 50
percent of its sales in U.S. dollars, lost 1.7 percent, utility Contact Energy shed 0.7 percent and Telecom, the biggest phone company on the exchange, edged down 0.2 percent.
Restaurant Brands
declined 1.6 percent after the fast-food franchise operator forecast a
flat annual profit. Freightways shed 1.6 percent after climbing to a
five-year earlier this week on improved Q1 performance. Stock market
operator NZX led the gainers on the exchange, climbing 4.1 percent, while investment company Infratil, dual-listed lender Westpac Banking and jeweler Michael Hill rose about 3 percent each.
Elsewhere, India's benchmark Sensex was moving down 0.8 percent, and the Taiwan Weighted average fell 1.8 percent, while the markets in Indonesia, Malaysia and Singapore were closed for holidays.
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Crude Eases Near $85
The price of crude oil
slipped Friday morning as traders await U.S. economic growth data due
today for clues about the health of the world's biggest economy.
Light Sweet Crude Oil
(WTI) futures for December delivery, lost $0.41 to $85.64 a barrel.
Yesterday, oil snapped its five-day losing streak to settle higher on
some upbeat macroeconomic data from the U.S. with initial jobless claims
indicating a sharp decline.
The price of gold was moving back toward its seven-week low Friday morning as the U.S. dollar was trading firm ahead of GDP data.
Gold
for December delivery, the most actively traded contract, shed $8.60 to
$1,704.40 an ounce. Yesterday, gold settled higher mostly on bargain
hunting and the Federal Reserve reiterating its continued commitment to
the highly accommodative monetary policy at the end of its FOMC policy
meet.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at 1,336.90 tons.
This morning, the U.S. dollar advanced
back toward a 2-week high versus the euro and leveling off from a
weekly low against sterling. The buck was hovering around its 4-month
high versus the yen and ticking higher against the Swiss franc.
In
economic news from the euro zone, Confidence among German consumers is
set rise in November, according to the latest survey results from market
research group GfK. The consumer confidence index for November rose to
6.3 from an upwardly revised 6.1 in October. Economists had forecast the
index to remain unchanged from October's original score of 5.9.
Meanwhile,
consumer confidence in France deteriorated for the fifth consecutive
month in October, data released by statistical office Insee showed. The
consumer confidence index dropped to 84 in October from 85 in September,
in line with economists' expectations. The index has declined for the
fifth month in a row.
Traders will look to the advance estimate of third quarter GDP report from the U.S. Commerce Department,
due out at 8:30 am ET. Economists expect sequential GDP growth for 1.9
percent for the growth compared to 1.3 percent growth in the second
quarter.
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